Tom Harkin

Mr. HARKIN

Mr. HARKIN. I ask my friend from Arkansas----

Mr. HARKIN. I will enter into kind of a colloquy on the floor here. I thought I would ask a question----

Mr. HARKIN. I ask unanimous consent to have a colloquy.

Mr. HARKIN. I submit to my friend from Arkansas that one of the greatest myths about the guaranteed loan program is that the agencies are the real guarantors of the loans. I listened to the Senator and I listened to the Senator from Vermont also talk about putting the agencies in jeopardy by reducing the amount of money to pay for defaulted loans--at least that is what I heard--that my amendment might put them in jeopardy. I think, contrary to popular belief, the Federal Government is the guarantor, and this changed in 1992. So I think there is a holdover from the previous era. In 1992--and I will just read to the Senator from the law itself: ``Consequence of guaranty agency insolvency. In the event that the Secretary has determined that a guaranty agency is unable to meet its insurance obligations under this part, the holder of loans insured by the guaranty agency may submit insurance claims directly to the Secretary, and the Secretary shall pay to the holder the full insurance obligation of the guaranty agency.''

Mr. HARKIN. I think the Senator makes a good point. As I pointed out, even with this modest cut of 25 percent, that leaves, over the next 5 years, $4.58 billion for these guaranty agencies. I haven't seen any evidence that this would be at all insufficient in the future for these agencies.

Mr. HARKIN. And I understand that. I want to make a couple points, I hope, clear, and that is, the Federal Government is the ultimate guarantor, not the guaranty agency.

Mr. HARKIN. That is correct.

Mr. HARKIN. Parliamentary inquiry, Mr. President. On the unanimous- consent agreement just propounded, did that include the yeas and nays on all of the amendments?

Mr. HARKIN. Mr. President, I will wrap up my comments on the amendment I offered. Again, Mr. President, I listened to the Senator, my good friend from Indiana, talk about schools choosing to stay out of the Direct Loan Program. Well, I point out that in the first 2 years there was a tremendous increase in schools joining the Direct Loan Program. But then in 1995 Congress began to make all of these threats about ending or killing the Direct Loan Program. So what has happened is that schools are apprehensive about whether or not they want to keep the Direct Loan Program, and that put a dampening effect on the tremendous growth we had in the first couple of years. Secondly, I can't help but be somewhat amused by all this talk about the private sector--the private sector involved in these students loans. We want this private sector to keep going --this private sector. Let me point out, Mr. President, that the ``private sector'' involved in this Guaranteed Loan Program gets a subsidy from the taxpayers of this country to the tune of $7.5 billion a year. That is right--this private sector enterprise gets a subsidy from the Federal Government every year of $7.5 billion. Private sector? Hardly. Subsidized sector? Yes. So all of this talk about this private sector out there in the Guaranteed Loan Program is nonsense. Now, if you want to make it private sector, let's not give them any subsidies. Let's knock out the $600 million to lenders for the special allowance payment. Let's knock off the $3 billion to cover defaults. Let's knock off the $2.5 million for interest subsidy for students. Knock off all that stuff--the $7.5 billion a year in subsidies that we put out for the guaranty loan agencies. If you want to talk about competition, that is fine; I don't mind having competition. In fact, it might be pretty good. But let's keep it balanced. The point is that this amendment that I have offered for the students cuts their taxes by 25 percent on both the Guaranteed Loan Program and on the Direct Loan Program. It cuts it by 25 percent on both. It keeps them both even in that regard. So if you want to keep competition, I say vote for my amendment. You get a tax cut for the students, which allows them to buy textbooks, and it keeps the Direct Loan Program and the subsidized, private sector Guaranteed Loan Program in balance. I yield the floor.

Mr. HARKIN. I just want to ask the Senator again on this chart--this is outrageous--there is the return on equity for commercial banks. For a number of years it averaged about 11, 12 percent. Now it is up over 14 percent. That is a return on equity for banks. Is the Senator saying that this bill that we are passing will guarantee them a 16-percent return on guaranteed student loans?

Mr. HARKIN. If I could ask the Senator to yield just briefly.

Mr. HARKIN. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. HARKIN. Mr. President, my amendment cuts the tax on subsidized student loans by 25 percent--from 4 percent to 3 percent. So it puts more actual money into the pockets of students so they can buy textbooks. It also continues to pay guaranty agencies over the next 5 years. If you hear an argument that somehow this is going to put our guaranty agencies at risk and jeopardize the banks, I point out that even under my amendment by cutting this tax by 25 percent on students, the guaranty agencies will get almost $4.6 billion over the next 5 years, more than enough to handle any contingency. So this basically is a tax cut for students. It is supported by a long list of colleges and student organizations. I think it is the least we can do for our students--to give them a tax break, also.

Mr. HARKIN. Mr. President, I send an amendment to the desk.

Mr. HARKIN. Mr. President, I have an amendment at the desk.

Mr. HARKIN. I believe I have the floor.

Mr. HARKIN. In the State of Arkansas, the Harkin amendment would continue to give $3.8 million over the next 5 years. That is hardly going insolvent.

Mr. HARKIN. That is right.

Mr. HARKIN. $7.9 billion as of the end of the last fiscal year.

Mr. HARKIN. $6.8 million. Even under my amendment----

Mr. HARKIN. The Senator just said the reserve fund was $6.8 million as of the end of this last month; is that what the Senator said?

Mr. HARKIN. The Senator may be right. My figures are from the end of the last fiscal year.

Mr. HARKIN. Again, Madam President, I just want to point out, again, I do happen to have these figures available. For the State of Arkansas right now, the reserve fund is $7.9 million--$7.9 million that Arkansas has in its reserve fund. Even under my amendment, the yearly revenue for the next 5 years will be $3.8 million a year. So for the next 5 years, that will be another almost $20 million coming into Arkansas, and Arkansas has, as I said, a $7.9 million reserve fund right now.

Mr. HARKIN. Yes, $171.

Mr. HARKIN

Mr. HARKIN. Mr. President, our former colleague, Senator John Culver of Iowa, brought to my attention an article, which recently appeared in the Cedar Rapids Gazette, about Bill Fitch. Mr. Fitch was an outstanding athlete when he attended Cedar Rapids' Wilson High School and, also, during his college years at Coe College in Cedar Rapids. Later on, Mr. Fitch coached at Coe College, Creighton University (where he coached Bob Gibson, the famous baseball pitcher), and North Dakota (where he coached Phil Jackson, now coach of the Chicago Bulls). He won the 1981 NBA title as the Boston Celtics' coach with Larry Bird. He coached in the NBA for 25 years and was the only person to coach 2,000 regular-season games and his 944 wins ranked second only to NBA coach Lenny Wilkens. I am grateful to Mike Hlas of the Cedar Rapids Gazette for writing this column about one of Iowa's great athletes, and I am thankful to my friend, Senator John Culver, for bringing it to my attention. At this point, I ask that Mr. Hlas' article be printed in the Record. The article follows: [From The Gazette, Apr. 22, 1998] C.R.'s Fitch a Big Winner (By Mike Hlas) No one will ever put a sign at Cedar Rapids' city limits proclaiming it the hometown of the NBA's all-time losingest coach. That's good. Bill Fitch, who attended Wilson back when it was a high school and coached at Coe, deserves respect. You don't last long enough to lose 1,106 times unless you were good. You don't become the only coach in NBA history to coach 2,050 times in the regular season unless you were good. Fitch, fired by the Los Angeles Clippers Monday at age 63, was good. But as Casey Stengel once said, I managed good, they just played bad. Perhaps none of Fitch's 25 NBA squads was as bad as the 1997-98 Clippers, who won 17 and lost 65, and did so without a hint of style. It didn't even feel this rotten for Fitch in 1970, when he and the Cleveland Cavaliers spent their first years in the NBA together. The original Cavs were so bad they were unaffectionately nicknamed the Cadavers. Somehow, Fitch kept a sense of humor and his sanity. By the time Fitch's nine-year engagement closed in Cleveland, the Cavs had made the playoffs three times. As the years passed, Cedar Rapids could take more and more pride in calling Fitch a homeboy. Especially when NBA coaching legend Red Auerbach, then a general manager--brought him to Boston to coach the then-stale Celtics. When surrounded by people who could play the game better than anyone, Fitch turned out to be quite a coach. He had three consecutive 60-game winners in Boston, and won the NBA title in 1981 with young Larry Bird. Houston was Fitch's next stop. The Rockets had four winning seasons in five years under Fitch, and once reached the NBA finals, only to lose to Bird's Celtics. The NBA's heights were great, but Fitch was one of the few coaches who could survive in its depths. His last seven teams were in New Jersey and Los Angeles, where talent was inadequate. Last year, though, he did lead a very young Clipper club to the playoffs. The promise gave way to a nightmare season. A very good player (Bo Outlaw) left as a free agent, and another star (Loy Vaught) missed most of the year with a bad back. So the coach got fired because he's 63 years old, because his players supposedly began to tune him out, and because the Clippers are about to move into a big new arena in downtown Los Angeles and want a sharper image. Fitch, who had worked with Bird and Kevin McHale and Moses Malone, was surrounded in his final season with youngsters who had never won a thing in the NBA. They were tuning him out? He should have turned them out. For anyone to endure four years with the Clipper's and 25 seasons in the NBA as a coach is semi-amazing. If meddling management isn't giving you a headache, some underachieving knucklehead player is giving you heartache. You need a cast-iron stomach to coach in the NBA for 25 years. To be the only person to coach 2,000 regular-season games in the league tells how highly regarded Fitch was held. His 944 wins rank second only to Lenny Wilkens. It is something worth honoring. As any coach will tell you, losing one game tears you apart. To drop 1,106 and keep plugging is wonderful. ``It's depressing,'' Fitch said about this season, days before he was fired. ``But it's also one that makes you want to say, `Never again,' We'll get it going in the right direction again.'' If you spend four years with the Bad News Clippers and can still say a thing like that, you are a winner for the ages.