Washington, DC—Senate Majority Leader Harry Reid made the following statement today on the floor of the U.S. Senate. Below are his remarks as prepared for delivery:
“Last night I met, at the Administration’s request, with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. They expressed their views on the deepening economic turmoil and laid out the plan that has been reported in the media this morning regarding AIG. They have promised to provide more details of their plans in the near future, which I believe must address the broader, underlying structural issues in the financial markets.
“Secretary Paulson and Chairman Bernanke gave every impression that they understand the plight of America’s financial institutions. But the good intentions of these two decent men cannot escape the reality that the Bush Administration’s willful neglect of oversight and overzealous embrace of big business is directly responsible for the crisis we now face.
“The most important job of the president is to safeguard the American people from physical and financial harm. When it comes to the financial sector, this means ensuring that institutions do not impose systemic risks on the entire system, because of the ripple effect that can have on the economy.
“Democrats and Republicans who served before our current President have all understood that providing oversight of the financial sector is not somehow anti-capitalist. Just the opposite — it helps capitalism flourish.
“That all changed when George Bush and Dick Cheney came to power. They are such devout followers of a top-down, big-business-first approach to the economy that they see any oversight as a threat to their greed. They put cronies and ideologues in charge of our most critical regulatory agencies who ensured that special interests would always come before the common good. They refused to exercise their regulatory authority over the mortgage industry, allowing massive fraud and widespread predatory lending to pave the way for the largest mortgage crisis in American history – which they continued to ignore long after the plundering and pillaging of the mortgage market became a crisis.
“And remember last Christmas? We discovered that the Bush Administration hates oversight so much that the Consumer Product Safety Commission had literally one man in a tiny room in charge of testing every toy in America for safety. Our children were not protected by a team of engineers, but by a single employee who could do little more but drop a toy from his desk to the floor to see if it would break.
“The financial turmoil we are now seeing is a direct outcome of the irresponsible Bush/Cheney approach to governing. Their fervor to favor big business has now crippled the very companies they sought to strengthen, and now the American people are the ones who have been hurt the most.
“History will show that while Bush and Cheney were giving away the keys to the castle to big business, Democrats in Congress were trying to restore fiscal sanity.
“In 2000, Senator Paul Sarbanes of Maryland, the senior Democrat on the Banking Committee, introduced the Predatory Lending Consumer Protection Act to restrict abusive predatory lending practices. The same year, Senator Schumer introduced the Predatory Lending Consumer Protection Act. In 2002, Senator Sarbanes reintroduced his bill. In 2004, Senator Sarbanes and the current chairman of the Banking Committee, Senator Dodd, called on the Federal Reserve to take action on alternative mortgages. Senator Dodd called them a ‘nightmare’ for low-income Americans.
“In 2005, the House of Representatives passed bipartisan legislation to reform the regulation of Government Sponsored Enterprises like Fannie Mae and Freddie Mac. After passing the House 331-90, the Democratic minority in the Senate tried to pass it, but we were blocked by the White House and Senate Republicans. Representative Mike Oxley, a one-time chairman of the House Banking committee and a devout Republican, brought this legislation to the White House. As he put it, the administration gave the legislation the ‘one-finger salute.’
“In February 2008, Senate Democrats introduced the Foreclosure Prevention Act, which was blocked by Senate Republicans after a veto threat from the White House. In June 2008, the White House threatened to veto the Federal Housing Finance Regulatory Reform Act, which would have improved oversight of Fannie and Freddie. The reason for the veto threat? They didn’t want to help communities struggling with foreclosed properties. If the President had signed this bill in June, we perhaps could have saved the billions we now must spend to bail out Fannie and Freddie.
“In every one of these instances, Democrats saw the storm clouds gathering and attempted to pass legislation that could have steered our course away from the crisis we now face. But every time, the White House and Senate Republicans chose to continue along their own irresponsible path.
“Even this year, with the housing market fully in crisis, Republicans broke all Senate records by filibustering the housing bill not once, not twice, not three, but seven times. Every day the Republicans blocked us from finally passing housing legislation, 9,000 Americans went into foreclosure. During the time that Republicans delayed,more than 160,000 homes went into foreclosure. When Republicans had a chance to help, they chose to stall.
“Now, after eight years of this failed approach, President Bush is ready to leave office and leave a financial nightmare to the next president. President Bush’s preferred candidate is a disciple of the Bush/Cheney school of economics. If there is any doubt about it, just look to the man John McCain hired to tell him what to say on the economy – former Senator Phil Gramm.
“This is the same Phil Gramm who pushed through the legislation that allowed firms like Enron to avoid regulation and destroy the life savings of its employees – and now allows Wall Street traders today to bid up the price of oil without oversight, leaving us to pay the bill. A respected economist at the University of Texas, James Galbraith, said that Gramm was ‘The most aggressive advocate of every predatory and rapacious element that the financial sector has” and that “he’s a sorcerer’s apprentice of instability and disaster in the financial system.’ Warren Buffett called the result of Gramm’s legislation ‘Weapons of Mass Destruction.’
“I don’t know about you, but after all that’s gone on in the financial sector, the last person I want whispering into the ear of the next President of the United States is the chief architect and number-one cheerleader for the elimination of responsible oversight – Phil Gramm.
“On Monday, with one major investment bank headed for bankruptcy, another sold at a bargain price to avoid the same fate, and one of the world’s largest insurance companies teetering, John McCain declared that the fundamentals of the economy are strong. Yet yesterday, even John McCain finally acknowledged what everyone else already knew: that the economy is not fundamentally sound; it is broken.
“But who does McCain think broke it? It was George Bush, Dick Cheney, Phil Gramm, and McCain’s own Republican Congress.
“The economy is not going to turn around overnight. We can’t snap our fingers or pass a bill and expect our problems to be solved instantly. This won’t be easy, but I know for certain that we’re not going to fix our economy with a candidate who only yesterday woke up and realized there’s a problem.
“Six-hundred-and-six thousand Americans have lost their jobs this year alone. That didn’t happen yesterday. We are paying record prices for gas, groceries and health care. That didn’t happen yesterday. Millions of families are losing their homes to foreclosure or seeing their home equity disappear. That didn’t happen yesterday.
“Monday’s McCain said our economy is strong. Tuesday’s McCain said our economy is broken. Perhaps today’s McCain will explain how a candidate who has spent thirty years in Washington siding with Wall Street over Main Street, who changed his view on the economy 180 degrees in 24 hours, is prepared to lead us on the road to economic recovery.
“The extraordinarily economic challenges we now face demand leadership and a new approach. The United States Senate will continue to listen intently to any proposal the Administration offers, but we know that the real change we need will only come when we have a President who will act as guardian for the American people, rather than as guarantor for the titans of Wall Street.”