Marcy Kaptur

Ms. KAPTUR

Ms. KAPTUR. Madam Speaker, today, I would like to recognize the legacy contributions of a great father, grandfather, athlete, teacher, and coach Mr. Bob O'Connell of Toledo, Ohio. Recently, Bob was acknowledged by a wonderful story published in the Toledo Blade tracing his many accomplishments. Our entire community applauds him for his life's achievements, and thanks him. Bob has taught and mentored thousands and thousands of young athletes across our community in his chosen sport of tennis. For 21 years, he coached students at Rogers and Ottawa Hills High Schools during the regular school year and summer. Truly, he has been a teacher's teacher and a coaches' coach and has been recognized in the Ohio High School Tennis Coaches Hall of Fame. Bob also taught history and worked to develop his students as well-rounded persons who are both academically and physically fit. I can personally attest to his skill and patience having been one of his many students so many years ago. Bob taught not just the skills of tennis and endurance, but also what it meant to be a good sport. He held his racket with distinction, kept focus, and airily breezed across the court with an ease that demonstrated this indeed was his sport. Bob raised another generation of O'Connell's who follow in his footsteps, his son Kevin, Sr., was the No. 1 singles player for 3 years at St. Francis and earned a scholarship to college as a result. Now his children, Kevin Jr. achieved rank as an All-City League first team player all 4 years as a high school and Kelly O'Connell was the No. 1 singles player at St. Ursula for 3 years. It is hard to place an adequate value on a man who has played such a significant father-figure role not just to his family but to our community, using his teaching and coaching abilities to rear the next generation. I feel personally honored to have been coached by Bob O'Connell and recognize his extraordinary accomplishments as an American who gave so much of himself, so quietly and effectively, to the next generation. He is the kind of man that deserves admiration for he exemplifies what it means to be a man for others. May he and his family enjoy many years together and may he and they know how truly our community expresses its gratitude to him. Onward.

Ms. KAPTUR

Ms. KAPTUR. I thank the distinguished chairman for yielding and rise to oppose the amendment and in support of the Paycheck Fairness Act. Today, this House moves America's working women into the 21st century. And, in so doing, I believe it is important to place on the record the story of our mother, Anastasia, who when she began work back in the middle of the last century as a counter waitress as Liberty Lunch on Broadway in Toledo, Ohio did not even earn the minimum wage. That was made possible only by the Fair Labor Standards Act passed in 1938. But even when that Act passed, her boss would then cash her check and deduct the increase from her, and pocket it himself. I am privileged that I now, as a Congresswoman, came from a family that did not spare its children the story of hardship and struggle that still characterizes the lives of millions of women in our country today. In passing this act, I do so in memory of our mother and millions and millions of American women who ask only to be treated fairly in the workplace and earn equal pay for equal work and get that check. It is a commentary on the struggle of working people everywhere that it takes a Nation centuries to enact into law what is decent and right on the merits. Today we do what is morally right and economically just. Today we give America's working women a real dose of liberty. Mr. Chairman, I thank you for yielding me time today, oppose this amendment but strongly support this measure.

Ms. KAPTUR

Ms. KAPTUR. Madam Speaker, I rise today to recognize Sergeant Richard Burton Murphy. It is with the deepest appreciation that I pay tribute to retired Sergeant Richard Burton Murphy. May 16, 2008 marked the day Sergeant Murphy retired from the Toledo Police Department. Sergeant Murphy began his career in law enforcement for the City of Oregon, Ohio Police Department, in January 1967. Two years later, he was appointed to the Lucas County Sheriff Office as a road deputy. In 1971, Sergeant Murphy traversed to Ft. Lauderdale, Florida to obtain a new position; however, he returned to Toledo, Ohio in 1973. In March of that year, he was appointed to the Toledo Police Department where he served for 35 years. After hard work and dedication to the Toledo Police Department, he was promoted to Sergeant in 1979. Among other achievements, Sergeant Murphy served as the official and unofficial public information officers for 12 years. Additionally he performed duties in patrol, communication, and in the chief of police's office during these years. While I have the honor to acknowledge his years of public service, the citizens of Toledo, OH have given Sergeant Murphy many exceptional reports. From the Toledo/Lucas County Safety Council, he obtained the Citizen Policeman Award in 1975, Certificate of Appreciation in 1976, Good Samaritan Award in 1992, and Heroism Reward in 1996. He was presented a proclamation from the Mayor's office of the City of Toledo in 1998 and 1999. Sergeant Murphy is a U. S. Navy Veteran who fulfilled active duty from 1962 to 1964, completing four years of reserve duty to follow. He is married to Patricia Ann Murphy, has two daughters Robin and Jill and 6 grandchildren. He is a member of Ottawa River Yacht Club, and plays in 3 golf leagues. All of Toledo thanks Sergeant Murphy for his commitment to public service and helping keep safe the community of Toledo. When an officer in blue goes to work in the morning, that officer never knows if they will return home at night. Our community values and recognizes the valor, patriotism, and community-mindedness of Sergeant Murphy and his colleagues, who protect and serve a broader community beyond their family. May he find happiness and satisfaction as he enters into a new milestone of his life.

Ms. KAPTUR

Ms. KAPTUR. With a heavy heart, I rise in opposition to this rule and the Wall Street rescue bill. Why? The key provision added over the weekend amounts to a huge elephant galloping over the American people with its blank check to Wall Street. In exchange, the American people get to cling to fool's gold--a few billion dollars to cities and States which are facing hundreds of billions of dollars of loss. Ohio alone needs the total amount of meager funds allocated to workouts. Sadly, less than one percent of the assistance in this bill is targeted to those local communities! We need a bill that strengthens each community's real estate values through Federal bond guarantees to them, not to the big investment banks and uninsured housing enterprises that caused this problem in the first place. I thank the gentleman very much for yielding. Introduction President Franklin Roosevelt aptly gave a name to the Wall Street financial manipulators who, time and again, put our nation in enormous financial peril. He called them ``malefactors of wealth''-- ``malefactors,'' from the Latin ``mal'' meaning ``bad,'' and ``factor,'' meaning ``makers'' . . . makers of bad. That is, people who do great harm with the use of wealth. As a scion of old wealth himself, Roosevelt knew them well. He knew the lengths to which they would go to satisfy their cravings for more, and more, and more-- as if reason and prudence didn't apply. And they did not care who they ran over in their quest. Their deeds have placed our nation at risk, time and again. Now, with the mortgage foreclosure crisis, they have done it again--this time, the damage is so huge it dwarfs the savings and loan fiasco of the 1980's when they ponzi-schemed up housing markets, saw them crash, and then ran to Congress to bail them out. Back then, the perpetrators centered their attention on California, Texas, Arizona, and the hot housing markets. Yet all Americans, from all states--like Ohio which was not one of the epicenters of their gluttony--were forced to pay the bills for their bad deeds. Today, Congress will vote to burden the American people with another blank check, totaling hundreds of billions of dollars lasting three generations, to Wall Street brokerages and the shareholders of Freddie Mac and Fannie Mae. It is times like this that my heart feels very heavy for my fellow countrymen and women, as I cannot save us from this wrongful debt being imposed. This bailout of Wall Street giants never had a hearing in Committee. Why should our people be made to pay for them? What will our communities get for this added, massive debt obligation? The Legislation The Foreclosure ``Rescue'' bill we're being asked to vote on today won't live up to its name. I challenge any Member to tell me how much help your district will receive from this trickle down to turn around local housing markets. This bill does not measure up to the challenge The Congressional Budget Office under estimates that the bailout package will cost the American public $25 billion. This estimate isn't a good indication of the potential cost since $25 billion is just an estimate based on many faulty assumptions. The potential cost to the public actually is several hundred billion dollars. Fannie Mae and Freddie's current debts total $5.2 trillion, which equals our national debt of $5 trillion. The fig leaf offered--and that our communities are clinging to is the promise of a mere $4 billion in community aid plus $10 billion for state housing authorities to counteract the nearly $356 billion loss in property values and property taxes in 2007 and 2008. $4 billion doesn't even meet the City of Cleveland's needs; Ohio alone is estimated to need $164.2 billion, just the gap for the state housing authority is $20 billion. With blocks of abandoned, vandalized, and stripped homes to contend with, along with an onslaught of displaced families, our communities are being asked to do more than ever, with fewer and fewer resources. This bill asks taxpayers to issue a blank check with the words ``stand by authority''--to Wall Street--for the first time to federally uninsured investment houses and secondary market housing agencies. This critical provision never went through Committee, there were no hearings. This was a Boardroom deal. The former head of Goldman Sachs is now the Secretary of Treasury under a Republican administration; under the former Democratic administration, the Secretary of Treasury was from Goldman Sachs. Just this week, Goldman Sachs' top banker, Ken Wilson, will take a leave from his job there to join his former boss at Treasury, Secretary Paulson. Who's running whose show here? Is Treasury serving the American people or simply Goldman Sachs, IndyMac Bank, and Bears Stearns? Further, under this bill the Department of Treasury that failed to regulate, examine, and audit is now going to be given even more power to create another bureaucracy to regulate the Department that didn't regulate. This house of cards only gets more topsy. Last year, Freddie Mac Chairman and Chief Executive Richard Syron received $19.8 million in compensation--even though the company's stock lost half its value. During the same period, Fannie Mae President and Chief Executive Daniel Mudd was paid $12.2 million, including a $2.2 million bonus. But curbing their excess doesn't even come close to offsetting the huge debt this bill anticipates for the American people. Our cities are left holding the bag, yet the greedy corporations that blew through town are being made whole. Meanwhile, homeowners have lost decades of savings and equity. Once tight-knit communities are left shattered, shuttered, and dangerous. In order to make things even worse, big banks like Citigroup are now plundering our local communities even more by offering land contracts. How much lower can these banks sink? And yet Congress rewards them? Savings and Loan Crisis Background Even worse than the proposed no strings attached bailout is the fact that this is deja vu all over again. The Savings and Loan bailout of the 1980s cost the American taxpayers upwards of half a trillion dollars. The American people were asked to grin and bear it for the good of the Nation. States like Ohio were not among the worst abusers, yet our taxpayers were forced to bear this debt load too. The savings and loan scandal destroyed an entire class of community banks, moved more power to Wall Street and money center banks, and exploded our public debt. Back then, they told Americans that if they were bailed out, such catastrophes would never happen again. They claimed a new money instrument was being developed by Wall Street called the mortgage backed security. Through its magic, the public would never have to worry again about greedy bankers in the housing market. Your mortgage would be safer, as it would be packaged with others and sold through securities Wall Street would invent, like an anonymous piece of paper. Meanwhile, face to face community banking, and necessary underwriting and regulation first enacted for home lending in the Great Depression, were destroyed. Financing became more and more hot wired, more absentee, even over the phone and internet. A deluge of promotional materials from the banks arrived at our doorsteps, almost daily, urging mortgagees to borrow more and more against their shrinking home equity, to borrow for almost anything--a vacation, a car, to put on a roof. Few cautioned against it, and the debt pushers pushed on. Home values inflated beyond their worth. But the regulators, like FNMA and Freddie, the OTS and FDIC stood frozen in place. The mortgage itself--which is a debt that must be repaid--was rolled up and packaged with thousands of other mortgages and, as America itself is in debt, sold into the international market for the first time to foreign buyers. Try to work out a loan when your financier is located in China. Sadly, their entire modus operandi is an old trick--create a house of cards with money by pushing risk beyond what can be considered prudent, leverage the money pyramids where the underlying asset is purposely poorly appraised, and voila--the perpetrators make billions until the market they have created busts. Then blame the American people and run to Congress to close the gap by borrowing, borrowing, and borrowing from the very people they thought so little of. Oh yes, and then, blame the whole washout on ``them,'' the public. Wall Street's money grabbers are back, this time stretching their long arms even deeper into your pockets to cover their latest craze-- draining out our home equity and home values. Americans have built their equity over decades in their mortgages. Yet Wall Street set its sights on families' home equity, and went after it with a vengeance. It was the only major savings pool America had left other than our public assets like roads, water systems, and public works. Millions of families succumbed to the snake oil. Overall, home equity in our nation, our largest source of savings-- has now dipped below fifty percent for the first time in modern history. Millions of Americans have negative equity in their homes, they own more on their homes than their homes are worth. So, to fill the gap, Wall Street wants the American taxpayer--the people they bilked--to bail them out, again. Bear Stearns succeeded to the tune of $30 billion. So now there is a longer line of bankers lined up to prop up their profligacy. This bill legitimizes their behavior and gets crumbs in return for the American people. The malefactors wealth manipulated and created panic in the market. They got the Bush Administration to propose an ``emergency'' bailout plan. And then they got Congress to ``limit'' executive pay as a fig leaf to cover over their real motherload in this bill. Not a bad bit of insider dealing. But what about the American people? What about their interests? Meeting the Needs and Strengthening of Our Communities Let's get something real for the taxpayer. And let's get it now. As the Economist proposed this week, Fannie Mae and Freddie Mac could issue their own debt and exchange it for loans from the government-- this way, our taxpayers who are on the hook at least get something if markets recover. Otherwise, all this bill does is hand over the U.S. Mint to Wall Street. I ask any Member: how much of this bill is going to your district relative to what it is going to cost to turn your local real estate market around? If you don't know the details, you shouldn't vote for the bill. And how do you know when the help will arrive? This bill is a trickle down from Wall Street; communities across this nation will be left holding an empty bag. Our communities need expanded bonding power at the grass roots, not more rewards for Wall Street brokers who got us into this sorry situation in the first place. We need trickle up, not trickle down. Our communities need expanded bonding power at the grassroots level to raise the funds to combat this crisis, not more rewards to the very institutions and people who created this mess. I have a better idea. Rather than Congress vowing to borrow more money--plus interest--from the American taxpayer for three generations to come, to make Wall Street whole, why not instead design a refinancing approach that benefits the taxpayer, and the communities they live in? Rescue local real estate markets. Give the bulk of assistance there. Let any refinancing medium reach deep into every affected community across this country. Stop the hemorrhage. Accelerate workouts now to save real estate values from plummeting even further-- including on families who own properties that had nothing to do with this ponzi scheme. Strengthen each community's real estate values through federal bond guarantees to local countries and cities, not Wall Street. Empower local people. Empower local housing authorities' ability to respond. Democratize this bond offering. The largesse of the American people should not trickle down from the big bond houses on Wall Street who caused the problem, traffic in debt, and operate far from home. The bill being proposed in Congress is weighted WAY too heavily in their favor. For affected localities, less than 1 percent of this proposed aid is targeted to them; Wall Street gets the lion's share. Imagine a bill that strengthens local real estate markets NOW, and into the future through additional federal bond guarantee authority to those same communities. The ability of hundreds of affected jurisdictions to do refinancing and workouts will be direct, local and not just through Wall Street. Direct support to localities should be at a level commensurate with the scale of the foreclosure crisis--not just one percent of the largesse while Wall Street cleans up. Conclusion This approach makes sense as real estate markets are local. There is a greater likelihood that units will be turned around more responsibly and expeditiously at the local level. Wall Street is too far away. And they are already hawking their disgusting ``land contracts'' to move foreclosed units which are further blighting troubled neighborhoods. Let's democratize this bond offering in community after community. Let's not give it away to the same Wall Street crowd that bleeds us time and again, but pays us no respect. Franklin Roosevelt understood the difference between money and wealth. He was about creating wealth in community after community, household after household, not letting Wall Street raid us dry. This Congress should remember how his policies built a middle class. We should champion that democratic vision of capitalism. It's long overdue. As this bill moves to the Senate, perhaps someone there will remember what representative democracy is all about and make this a much better bill. My vote is cast for the American people and against the malefactors of wealth. Addendum Fannie Mae and Freddie Mac A Better Approach: Based upon Treasury Secretary Paulson's emergency announcement and proposal on July 13, 2008, ``The two companies could issue their own debt and exchange it for loans from the government--at least the American people might yield something rather than giving wall street the equivalent of having access to the printing press.'' (Source: The Economist, July 19th-25th, 2008) Additional Facts: According to a Federal Reserve economist, because the U.S. government has essentially guaranteed Fannie Mae and Freddie Mac's debt, the ability of home buyers to borrow has remained difficult, while the savings Fannie and Freddie have realized--about $79 billion--instead went straight to their shareholders. (Source: The Economist, July 19th-25th, 2008) Current regulation, ``allowed Fannie and Freddie to operate with tiny amounts of capital. Their capital reserves (as defined by the regulator, Office of Federal Housing Enterprise Oversight [OFHEO]) of $83.2 billion at the end of 2007 supported $5.2 trillion of debt and guarantees, a ratio of 65 to one.'' Imagine if a household earned $83,000 a year and was able to borrow $5.2 billion on that salary. In 1998 Freddie Mac owned $25 billion of other securities, according to OFHEO and by the end of 2007 it had $267 billion. Fannie Mae's outside portfolio grew from $18.5 billion in 1997 to $127.8 billion at the end of 2007. This shift in investing in outside securities does not meet Fannie and Freddie's core mission of increasing home ownership. OFHEO as recently as July 10th said that both Fannie Mae and Freddie Mac had enough capital. Freddie Mac lost $3.5 billion in 2007; Fannie Mae reported a $2.2 billion loss in the first quarter, having lost $2.05 billion in 2007. Each had credit-related write-downs of between $5 billion and $5 billion last year. Currently, Freddie Mac only has a market value of $5.3 billion. On a fair-value basis, Freddie Mac had a negative net worth of $5.2 billion at the end of the first quarter. fannie mae and freddie mac's debt and foreign ownership ``Paulson said the Fannie and Freddie have issued $5 trillion in debt and mortgage backed securities. Of that amount more than $3 trillion is held by U.S. financial institutions and over $1.5 trillion is held by foreign institutions.'' (AP; Crutsinger, July 22, 2008) Fannie Mae and Freddie Mac's foreign debt has tripled from $504 billion in 2001 to $1.5 trillion in 2007. Fannie Mae and Freddie Mac's $1.5 trillion foreign debt is owned by China $376 billion, Japan $228 billion, Russia $75 billion, South Korea $63 billion, and Middle Eastern Oil-Exporters $29 billion. Now, both interest and principal is owed to foreign bondholders. The current proposal will allow Bank of America to purchase Countrywide's portfolio. Then if Bank of America works out a refinancing, FHA stands ready to insure it. If the owner fails to make payments, FHA assumes the unit. This is a great bonanza for Bank of America. what the legislation needs A better solution would be to let Fannie Mae and Freddie Mac issue debt and then exchange that for a government loan. At least our people would get something back on the upside-- just as America did when Chrysler Corporation was refinanced through redeemable warrants. Democratize the bond offerings by diverting some of the securitized debt that is intended to prop up Wall Street, Fannie Mae, and Freddie Mac. Direct it to Main Street--our counties, our cities, our housing agencies and authorities. Make the approach more equitable to the taxpayer. This approach allows communities, not only corporations, mega- banks, and investment houses, to actually own something. Isn't that a value worth fighting for?

Ms. KAPTUR

Ms. KAPTUR. Madam Speaker. I rise to recognize the sesquicentennial celebration of Davis College in Northwest Ohio. The Toledo, Ohio college has offered post-secondary business education to generations of students for 150 years and continues to grow. Toledo Business College was established in 1858. It came into its own in 1881, when ``Matthew H. Davis left his chairmanship in the mathematics department and his position as director of the business department at Albert College, Belleville, Ontario, to accept the management of Toledo Business College.'' Under his tutelage the school grew tenfold, from 35 students to 350. The college's history recounts that under Davis' direction, four other schools were absorbed and the school was renamed Davis Business College. ``The curriculum was gradually changed from Latin, German, Greek, calculus, and epistolary writing to banking, mercantile trades, shorthand, and typing. ``After Davis' death in 1904, his son, Thurber P. Davis, left the University of Michigan to take over the management of Davis Business College. Under the leadership of the younger Davis, electric typewriters were added, making the College one of the best equipped in the United States. Stenotype and data processing augmented the expanding curriculum. ``In 1948, when Thurber became ill, his daughter, Ruth L. Davis, became the third generation of the Davis family to lead the school. In 1953, Davis Business College was among the first to be accredited by the Accrediting Commission for Business Schools. In 1964, it met commission requirements for a junior college of business. Office management, payroll accounting, and the Automation Institute were added to meet the growing needs of business and technology. ``In 1983, John Lambert became President of Davis College. President Lambert expanded the Davis curriculum to include allied health, aviation, computer, and graphic design programs, which doubled the College's enrollment. In 1986, Davis met the requirements for accreditation by the American Association of Medical Assistants. In 1991, Davis College was granted accreditation by the Higher Learning Commission of the North Central Association. ``In 1993, Diane Brunner became the fifth President of Davis College. At the time of her appointment, she was the youngest female college president in Ohio. In 2002, Davis College hosted its first student conference, bringing nationally renowned authors to the institution. As was true of all past Davis College leadership, President Brunner is dedicated to the promotion of higher educational standards and continuing the College's service to the community.'' This family owned century business in Toledo, Ohio remains a standard of business education in our region, all the while expanding into other fields of study. In the present day, the college was named as one of the 2008 Ohio's best employers by the Ohio Chamber of Commerce. This year as well, Davis College earned the Better Business Bureau's Torch Award for marketplace ethics. As Davis College grows into its third century in the business of educating people, it remains true to its founders' dedication to preparing its students for success while adhering to the highest standards and latest technologies in the fields of study. Standing on the shoulders of those who built its foundation, Davis College honors the vision of its past leaders while looking forward to a bright future.

Ms. KAPTUR

Ms. KAPTUR. Well, Madam Chair, that is really good news. And I know that you have been the strongest voice in the committee to try to strengthen the bill. We from Ohio are doing everything possible to even make it stronger, and to make sure that the communities that have been ravaged by this subprime crisis--and I include my own among them--that somehow that those who are in the lead in these various committees in the House here think about democratic capitalism, and not just empowering Wall Street, but thinking of ways to move the billions, hundreds of billions of dollars of insurance that will benefit the bond houses that helped get us in this mess in the first place, think about the bonding power of cities, think about the bonding power of our housing authorities at the local level, think about how to move some of that money to re-empower communities across this country, not just a pittance, but at least have a scale of justice. If you're going to reward Wall Street, the wrongdoers who helped get us in this mess, what are you going to do for Main Street that's paying the bill? Are you going to give them a pittance? I come from a tradition in a party with Franklin Roosevelt who believed you empower at the grass roots level and that you build wealth from the bottom up, not reward the top. And I would hope that there would be balance in the bill that is brought before us as we move into this debate. And I would hope there would be a chance at least to offer amendments, at least to be welcomed into the committee. We don't want to delay the process, but that if we have ideas, we have the respect that should be given to Members who come from affected communities and States. And I want to thank Chairwoman Waters for her gracious acceptance of the invitation of the bipartisan delegation from Ohio. We feel, as so many people do, very frustrated by how slow the wheels of government sometimes turn and what is happening out there in community after community, where people are not able to do their workouts. I would hope that the chairman of the full committee here in the House, Mr. Frank, who has been meeting with some of the Members and been very involved in the committee, I hope that he would share his draft bill ahead of time because I think it would be disastrous--and I speak only for myself when I say this--if a bill is rushed to the floor and we don't have a chance to review it. This is too important. When we're talking $100 million, that's a lot of money. A billion dollars is a lot of money. When you get into the trillions, it's overwhelming. And we are here to do due diligence for our people, so please afford us the respect and the consideration that you would want for yourself, and that we actually have a responsibility for that due diligence for the American people, the people that sent us here. Madam Chairman, I want to submit for the Record a story from the Wall Street Journal about the influence of outside giving from Wall Street to Federal elections and the important role, unfortunately, that it plays sometimes in influencing opinion. I think it's very important that it be placed on the Record as well. And I thank the gentlewoman from California for joining us this evening.

Ms. KAPTUR. I would be pleased to yield to the chairwoman.

Ms. KAPTUR. They closed their eyes, and it wasn't until 2001, because this was one of the leading institutions to invent the sub-prime instrument when they collapsed, and they couldn't meet the calls of people coming in for their money, that FDIC started investigating and placed the largest fine in American history, $450 million, a half a billion dollars, on one institution. Where is the investigation now? You read a little bit about what the FBI is doing; you read a little bit about what FDIC is doing. We need a massive investigation of which institutions led us into this subprime crisis that the country is facing. Who was the first one? I've asked everybody, who was the first one? Give me the first three or four. And through which institutions did they broker those loans and how did they get to Wall Street? Nobody knows. Nobody knows; or else they're not saying. Where was the Office of Thrift Supervision? What happened to HUD's appraisal and underwriting standards? Assuming many of these loans were moved to market through Freddie Mac and Fannie Mae, why did their regulatory standards and HUD's oversight fall short? Why did HUD change its appraisal and underwriting practices in 1993 and 1994? How were the boards and executives in these entities compensated during those years when the risky practices proliferated? Because it isn't just these fellows, it's the people in the regulatory agencies and the government secondary market enterprises that were involved. Which board members at which financial institutions and brokerages, regulators and secondary market bodies voted to allow these risky and predatory policies that escalated this equity drawdown? Do we have evidence that any of those board members personally benefited from their board decisions? Through which domestic and international institutions were the original securitizations first moved? Which persons did it? Which regulatory agencies sanctioned the process? What role did the U.S. Secretary of the Treasury and the Office of Thrift Supervision play-- the Securities and Exchange Commission, how about the Federal Reserve-- in allowing these practices to flourish? I say to the chairwoman, I know the great work that you have done. There should be many committees in this institution involved in unraveling what has happened before we're asked to do a trillion dollar bailout here in the Congress of the United States. You know, it's sort of interesting to me that even the New York Times editorialized that we've got to do this right now; you Congress, you pass a trillion dollars more--or who knows how much--because these institutions are too big to fail. And therefore, we can't do due diligence; we can't make good decisions for the American people. I can't even tell my constituents today--I hope I can find out by Thursday or Friday or Saturday this week--what exactly is in the bill that is being written somewhere here so that I can see exactly how much money has to be appropriated and how big the drawdown will be from the Federal Reserve. Right now we don't know. There isn't a final bill that is available to the Members. I know it's being worked on somewhere in this place. I hope that there is a regular markup session by the respective committees that have to be involved here and an open rules process.

Ms. KAPTUR. I would say to the chairwoman, you mentioned about what happened to regulation, and one of the first institutions to embark on sub-prime lending was Superior Bank of Hinsdale, Illinois, ultimately bought by Charter Bank from Ohio. And Superior was created by the Resolution Trust Corporation when the savings and loans collapsed in the 1980s, but by the late 1990s, Superior's return on assets--now, think about this--was 7\1/2\ times the industry average and held a very risky portfolio. It had a CAMEL rating of two, and yet its executives were financially rewarded for presiding over ruin. How could America let that happen? No Federal regulator stepped in to properly examine the industry institution. What happened to the Office of Thrift Supervision over at Treasury and its Chicago office?

Ms. KAPTUR. Frankly, thank you, Chairwoman Waters, for coming to Ohio. You were an oasis in a desert. You gave us hope by coming there and listening to us and allowing our people to put their stories of our communities, of what's going on in this mortgage market on the record. And what is really disheartening about all of this is it seems that the financial system is getting so far away from community, from neighborhood, from our people, our people feel powerless to make a difference, and now you say these services are even over in India. Frankly, I had trouble with all this stuff moving to Wall Street and not being able to get a phone call returned when we're trying to do a workout at the local level. We need to turn this financial system upside down, and I'm hoping that the chairman of the full committee is listening in this House and that whatever we do to bail out Fannie Mae, Freddie Mac, these investment banks on Wall Street--and I have some problems with doing that. I'm not a happy traveler in this party here--that power devolves back to the local level, that however this financial system is rearranged, that we go back to character, collateral, and collectibility, the old principles when we had a system that functioned well at the local level, and re-empower communities to handle their housing systems. This system we have now has given us a multi-trillion dollar disaster. How can anybody say when you move away from home, so far away, how can that be good, when our people feel powerless to make a difference? Our mayors feel powerless. Our communities, our credit unions, the Realtors, how can this system be good when it so disempowers?

Ms. KAPTUR. I congratulate you for that proposal. It is the only one I know that would stick to the wall locally. I know how hard Chairwoman Waters has fought to even get this embedded in this legislation, and I have to say to the people here tonight, when you think about $1 trillion or more, a $15 billion proposal is very, very modest. Our community development dollars for the whole country I think total about $8 billion a year. It's very, very modest. Frankly, I wish you well and hope that you can expand that significantly because Wall Street will be rewarded with a $1 trillion bailout, and yet we're going to give our mayors and local housing authorities pennies to deal with the level of foreclosure that is being experienced across this country. I would think they would roll out the red carpet for you in that committee and do everything they could to help you make this bill not just efficient but equitable, particularly to the American taxpayers who are going to bear the brunt of this cost.

Ms. KAPTUR. Yes, I would be happy to yield to the gentleman.

Ms. KAPTUR. Thank you also, Congressman Kucinich, for being a champion for Democratic capitalism. As to your point about the whole financial system's becoming unreachable and so concentrated, whatever happens here, the ordinary American family and the ordinary American community will benefit by whatever Congress does. As I listen to what is being talked about in this Chamber and over in the Senate, one of my biggest worries is that very big institutions on Wall Street are going to be bailed out or are going to be propped up by the American taxpayer. My question is: What does the American taxpayer get for that? Our Federal Housing Administration is literally going to become the insurance company for Wall Street. When these big Wall Street firms get all of these homes, how does the average American get in on this equation? I'm putting in the Record tonight an article that was in The Observer. It talks about an effort to allow homeowners who are losing their homes at the local level to work with their local governments and local housing authorities to transfer those homes, perhaps, to them. Then in a lease-back provision, they would be able to pay that locality back for that home. [From the Observer, July 13, 2008] Credit crunch: Emergency Scheme To Help Cash-Strapped Homeowners (By Gaby Hinsliff and Jamie Elliott) Homeowners struggling to meet their mortgage payments would be able to sell their homes to the local authority and rent them back as tenants under radical proposals being considered by the government to prevent the misery of repossession. Emergency measures to allow families to keep a roof over their heads are being drawn up as the scale of repossessions proceedings becomes increasingly apparent. In Newcastle upon Tyne alone, the newly nationalised Northern Rock is monopolising at least one day a week in the county court to pursue defaulting borrowers. The latest rescue package reflects growing fears about the seriousness of the crisis, with some analysts predicting that house prices could fall by 35 per cent. Ministers are worried about the 13 per cent of fixed-rate borrowers whose cheap deals expire this year, some of whom may by then be in negative equity and therefore unable to switch to a new fixed rate with another lender. Caroline Flint, the Housing Minister, told The Observer yesterday: `I am looking at what more we can do with our colleagues in local authorities--what they can do as well as actually building [homes], and what support they could give to people who might be feeling under pressure on mortgages.' Asked to confirm that she was considering rent-back schemes, enabling homeowners to become council tenants in their original houses rather than be repossessed, she said: `We are looking at that. I have to be certain that the choices I make do actually help to limit the damage; and, importantly, is it a short-term fix or a long-term impact?' The scheme be expensive. Councils would need central government funds to buy the houses. But it could save on the long-term costs of rehousing homeless families and allow councils to increase their housing stock at relatively low prices. Flint also suggested the Bank of England could increase the size of its 50bn fund designed to stimulate mortgage lending, admitting she was `disappointed' that the cash that has been pumped in so far had not led to cheaper home loans. `No doubt our colleagues in the Bank and the Monetary Policy Committee will also be looking at the issue in terms of whether any extra has to be provided,' she added. She has suggested that country landowners could be freed to build cheap houses for their workers on their own land, in a return to the system of `tied cottages'. `It's recognising that sense of community and how everybody has a part to play,' she said. Debt advice experts warned yesterday that, despite the Chancellor's calls for leniency from lenders, Northern Rock was now aggressively pursuing defaulting borrowers as part of its efforts to repay the 25bn rescue package it received from the government. Chris Jary, director of Action for Debt in Durham, said: `There used to be a small group of sub-prime lenders who you knew would always go straight to court. But recently it's Northern Rock who have become more aggressive, taking legal action as soon as they can.' House repossessions at Northern Rock are running at twice the rate they were before the bank was nationalised in February. Rather than Wall Street's making all the money in their bond houses, why don't we use the bonding power of our cities and of our housing authorities to help move some of that money back down rather than move the money out, back up again to Wall Street?

Ms. KAPTUR. I would be pleased to yield to the gentleman.

Ms. KAPTUR. You know, the bankers who worked in our communities years ago, they didn't make that kind of money, and that doesn't count all of his stocks and everything else. Countrywide is one of the worst abusers, the worst abuser, in this scandal. So, during the 1990s, the mortgage process became hooked to Wall Street. Then for the first time in American history, those mortgages, rather than being held by your local banks where you had to go in where they knew you and where they knew whether your father had a job or whatever else, were traded up to these anonymous institutions, to people who didn't even live in your community. Then they did something they'd never done before in American history. They sold them into the international market. One of the real problems in places like Toledo and, I'm sure, in Cleveland, Congressman Kucinich, is that the workouts are very difficult to do because you're not sure who is the ultimate holder of your loan. How many of the millions of people being hurt by this go to the telephone and try to work out a deal with one of these companies? As for IndyMac, the company that just went belly-up last week, their CEO made a salary of $1 million, a bonus of $1 million, whatever. Now that institution from California is in trouble. Try to work out your loan. Who holds your paper? How do you get that person on the phone? It's a totally anonymous, faceless system for millions of Americans, and it was meant to happen, and now the American people are being asked to become the insurance company for Wall Street--for investment banks and for Freddie Mac and Fannie Mae, which are not insured institutions of the Government of the United States of America--to the tune of who knows how much--$1 trillion? $2 trillion? $3 trillion?

Ms. KAPTUR. You know, it used to be that most people in this country, when they would get home loans, would go to financial institutions in their communities or in their neighborhoods if there were a financial institution. You had a person who would make a judgment about you. What was your character? What was the ability of that institution to collect the loan? What was your collateral? Character. Collateral. Collectibility. Then back in the 1980s, we had this big savings and loan crisis, and the cost of keeping our financial system whole was dumped on the taxpayers of the United States. We have now paid a quarter of $1 trillion, $250 billion, going back to the 1980s. What has happened in this crisis after the savings and loans were demolished--really, gotten rid of--is that in the 1990s, I can remember their saying, well, you know, we won't have that problem anymore because now we're going to create something new. It's called a mortgage-backed security, and Wall Street will solve our problem. We will never have a banking crisis again in the United States of America. We're going to create this cute, little paper instrument, and we're going to let Wall Street break up your mortgage into parts, and all these mortgage banks will have it, and then there won't be any one bank that will get in trouble, right? So, during the 1990s, there was complete financial deregulation. We got rid of something called the Glass-Steagall Act, that goes back to President Roosevelt, where we separated banking from commerce, and they got rid of the appraisal standards of HUD in 1993 and 1994, and Freddie Mac, Fannie Mae and the Office of Thrift Supervision at the Treasury Department didn't do their jobs. What happened was these new securities moved from the local communities. Our local thrifts were gotten rid of--the agencies that created the mortgage instrument and helped people have savings accounts with real passbooks that earned interest. Then we started working with Wall Street, and your loan would go from your local communities--this is Countrywide right here. If we look at Angelo Mozilo, he didn't live in Cleveland or in Toledo. He made over $2.8 million.

Ms. KAPTUR. If the gentleman, my dear friend Congressman Kucinich would agree with this, in many of those neighborhoods there literally were no regular banks. In other words, they red lined the community providing no decent financial institutions, leaving them with those payday cash checking or check cashing operations in those communities. Then all of the money that would flow into those communities, whether it was Social Security for senior citizens who had worked, veterans disability benefits for people who had served our country, where would they take that check to cash it? There was no place. It was redlined. So those dollars were systematically removed. That's what redlining was about--their money systematically removed from those communities and put somewhere else--and then the very people in those communities couldn't get mortgage insurance for their homes, so they were sucked dry. That's why we had the Home Mortgage Disclosure Act. It was to say, hey, people in these neighborhoods have savings; they have income; they shouldn't have to pay all this money to cash a check. Then when we made them abide by the law and treat every citizen with the respect they're due, they came up with the subprime gimmick.

Ms. KAPTUR. Absolutely, and each red dot on this map of Ohio represents 10 foreclosures. If we look at the same period of time and how many new filings are fueling this foreclosure growth, we can go back to 1997 and look at 21,000 filings every single year. The number increases to where last year there were over 83,230 filings. Many of those, the gentleman states, so-called subprime, concentrated in communities that were working class and poor. There was a targeting going on around this country.

Ms. KAPTUR. I thank the gentleman for raising these points and also to say that, when you have a system of debt, certain people get very, very wealthy. These are some of the people who got very, very wealthy. Whether it was Mr. Mozilo of Countrywide or, of course, Michael Perry from IndyMac, which went broke, or Richard Carrion from Popular, these men were making millions and millions of dollars. This doesn't even include the big bond houses on Wall Street. Bear Stearns was the first one to go belly up. Now we're asking our government to prop up the risky investment practices of Wall Street and to reward the very bondsmen who have placed the American people in the position of servant hood. They make out in terms of selling their bonds and by indebting the people of the United States. They get their fees. What is amazing to me is that, if you look at the list of the bonding houses that got us in this fix--if you look at Countrywide--would you believe, even though our government knew what it was doing, it kept them on the list of primary securities dealers at the U.S. Treasury Department? HSBC, one of the primary violators, is on the list of primary dealers of the Federal Reserve. You start looking down that list and start saying to yourself, hey, wait a minute. What is this, a circle? They all just circle the wagons. They are the same people who cause the trouble. Then they come to the American taxpayer to bail them out. Congressman Kucinich talked about the Roosevelt administration and the creation of the Reconstruction Finance Corporation. The Reconstruction Finance Corporation was not just about bailing out Wall Street. What was interesting about what President Roosevelt did was that he created a special jobs program. If you look at what that Reconstruction Finance Corporation really did, people around America got work. There was a homeowners' loan association for cities and then a farm credit administration for homeownership in the countryside. The Works Progress Administration, the WPA, built infrastructure across this country--zoos and libraries and highways. Yes, they did prop up Wall Street, but they created new types of savings institutions, not to create debt but to create equity, to say to the American family, ``Look, you can own a home. Here is a passbook.'' These are savings and loan institutions. You would get a passbook. You could put money in there. You would actually get an interest rate worth something--4 or 5 percent a year. People learned a savings habit. Tell me the last time you got a letter from a financial institution in this country asking you to save. All you get are credit cards. ``Get this loan, zero percent down.'' I keep a stack. I've got it in my office. It's about this high. If I signed up for all of those credit cards, I couldn't even manage to keep in touch with all of them. The debt posture that these institutions have pushed have helped push America to the precipice. And every American who's listening knows what I'm talking about. It is not an accident that we are in this situation. The entire financial system was turned inside-out during the 1990s. We got rid of something called the Glassed Eagle Act which had been in existence from the time of Roosevelt that said you can't mix banking with commerce. You can't mix banking and commerce with real estate. They have to be separate because there are too many bad things that can happen because you know what? Some people are very greedy. They are very, very greedy. And some people don't have information to make informed financial decisions. So we are now inheriting a situation here which is very, very serious. And today in the Financial Times--and I will place this in the Record this evening as well, and then my colleague would like to assume her role here; when she is comfortable, we will move to that--but the Financial Times had an article called ``Goodbye capitalism'' by Joshua Rosner. And what he said is, ``We have nationalized the losses from Bear Stearns,'' which is an investment bank, not a regular savings bank, ``through a transfer of risk onto the Federal Government's balance sheet and have now nationalized the losses generated by Fannie's and Freddie's poor management and functionally taken $5 million in obligations on to the government's balance sheet.'' That means not just us, our children and grandchildren are going to pay for generations. And that makes the bond houses on Wall Street so happy because they make money while the American people suffer. The article says, ``we will see the continued nationalization of bad assets, placing the burden on the shoulders of the already overburdened American taxpayer. ``We have done this without forcing the disgorgement of undeserved gains by the management and without replacing managements who are now controlling government-owned businesses. Instead of protecting those who made bad bets, we should use our rule of law to address the situation.'' We need a special investigatory panel with subpoena authority to look at every single person back through the 1990s who helped place America and her families in this situation. The article says, ``Rather than making the taxpayer liable for debts and debts of the government-sponsored enterprises, it would be more sensible to effect a smooth, prepackaged reorganization plan.'' But you know what? That's not in the bill that is likely to be considered here soon. They just want the money, but they don't want to reorganize the system in order to prevent further damage in the future. We're being pushed by the Bush administration: Do this now because the markets are really nervous, but we won't get the reform that we need in order to avoid these crises in the future. We're merely going to reward bad behavior and put the American people at risk. ``As part of a prepackaged reorganization,'' the article goes on to say, ``the government could explicitly assure investors they will receive all of their guaranteed interest payments. Instead of giving ineffective management a line of credit,'' which is what the bill proposes to do, ``Treasury could provide the GSE's regulator with a line of credit used to assure timely payments for these obligations. This is the tool that Treasury provides the Federal Deposit Insurance Corporation with to sort out failed banks.'' That's what Roosevelt used. ``Over time that line will be repaid by the running-off of the portfolios, active servicing of mortgages and through payment of claims by private mortgage insurers who guaranteed first losses on GSE mortgages. ``The next step would create $150 billion in new equity capital and enable the GSEs, without governmental support, to achieve more fully their chartered mission. Over the past decade'' Fannie Mae, Freddie Mac ``have increasingly used their portfolios to speculate,'' and this is the first time I have read this, ``in aircraft leasing, manufactured housing, interest-only mortgages, and other securities they are specifically prohibited from buying as part of their financial mission. ``In recent years, through these portfolios they funded nearly 50 percent of the riskier private label alternate Alt-A mortgage market, invested in aircraft, lease securities, manufactured housing and other assets that leveraged them into trouble. To achieve the speculative, hedge fund-like growth they issued almost $1.500 billion of senior corporate debt. By their investments, debt buyers supported speculation in non-mission-related activities and did so with a clear understanding they with funding non-mission-related activities. ``They also knew GSE debt was explicitly not an obligation of the U.S. taxpayer and that was repeated constantly by the government and the companies. ``In exchange for their current debt, these holders should receive 90 cents on the dollar of new, long-dated senior debt in the companies and 10 cents of new subordinated debt.'' ``This approach would send a very strong signal, from the government, that investors fully consider the risks of bad asset allocation.'' And ``though it would cause pain for equity and subordinated debt investors, those investors received the majority of returns over the past several years and, in our great system, they are supposed to be subordinated.'' I want to put this article in the Record. I think it is very, very well written. And I go back to my initial question for this evening. I wonder if the American taxpayer knows they are now the insurance company for Wall Street and Wall Street's high-risk investors. We have to figure out a way, as we work our way out of this serious situation, for some of the dollars that are being directed to Wall Street, rewarding them, in a sense, for their behavior, go the other way back to community and that mayors and that local housing authorities be provided with the kind of wherewithal it's going to take to rescue our local housing markets and to create the kind of mortgage activity at the local level that will help lift our real estate industry, that will help prevent further foreclosures of our families and that will help people, face-to-face at the local level again, assure that that housing market is more secure than we have had with this very indirect, anonymous kind of relationship that has resulted from this mortgage-backed security industry that we moved into in the 1990s. I would like to ask the extraordinarily qualified and engaged chairwoman of the Housing and Community Development Subcommittee of Financial Institutions who's worked so hard on this issue, Congresswoman Maxine Waters of California, to assume her time this evening and perhaps to give us further insight on what the committee is about and what we, as a Congress and the American people, might do to help us help ourselves as a country right the ship of our economic state. Congresswoman Waters, thank you so much for joining us this evening. Thank you for your extraordinary efforts as a Chairwoman and for bringing your committee to Ohio to witness what we are dealing with there is emblematic of what is happening across this country. Thank you for joining. [From the Financial Times, July 15, 2008] Goodbye Capitalism (By Joshua Rosner) In a capitalist economy, losers are expected to take losses and winners to gain. Private enterprise is best able to allocate capital efficiently and, where it fails to do so, markets make adjustments and capital is reallocated to efficient users. This basic tenet supports good and productive assets moving from the hands of weak players to stronger. Where this is not possible, the U.S. system gives the government a hand in fostering that move through an efficient process called bankruptcy or reorganisation. This rule of markets and of law has always been the basis of our national supremacy in innovation and the reason ours was the world's clear choice of a reserve currency. That was the world we lived in previously. Our elected officials have repeatedly demonstrated that even equity holders, who are supposed to have the most subordinated claims on assets, cannot be allowed to take losses and instead believe we should all communally share in losses that result from poor allocation and risk management decisions. We have nationalised the losses from Bear Stearns through a transfer of risk on to the federal government's balance sheet and have now nationalised the losses generated by Fannie's and Freddie's poor management and functionally taken $5 trillion in obligations on to the government's balance sheet. This has been done even though every equity or debt offering of Fannie and Freddie explicitly states that these ``are not guaranteed by the U.S. and do not constitute an obligation of the U.S. or any agency or instrumentality thereof other than'' of Fannie or Freddie. By the time we are finished with this tragic period in U.S. economic history, the government is likely to have to choose whether to do the same for at least one more large bank, investment bank, bond insurer, mortgage insurer, multiple large regional bank, airline or car manufacturer. Given the choices we have seen from officials, who obviously have little faith in the ability of capital markets or our system of law, we will see the continued nationalisation of bad assets, placing the burden on the shoulders of the already overburdened American taxpayer. This commitment by misguided officials to print more money, to stoke the embers of inflation and to debase further our already hobbled currency invites foreign investors to pick through our assets and buy our remaining strong businesses (Anheuser Busch) on the cheap. As the strength of our remaining industries is further weakened, along with taxpayers' buying power, it will become increasingly necessary, as a matter of survival, for American workers to demand increases in their wages. While some might applaud the government's policy action, it will prevent the rational and orderly repricing of over inflated assets, ensure they remain overvalued, uneconomic and unaffordable to a populous that will see an increasing percentage of their wages allocated for the support of our national debt. We have done this without forcing the disgorgement of undeserved gains by managements and without replacing managements who are now controlling government ``owned'' businesses. The same economists who have repeatedly argued efficient market theory have chosen this path. Instead of protecting those who made bad bets, we should use our rule of law to address the situation. That would mean we allow weak players either to fail or to reorganise through an orderly transfer of good assets from weak hands to strong hands. This would protect the once-mighty U.S. dollar and affect the necessary and repricing of assets to sustainable equilibrium. Doing so would also decrease moral hazard and send a strong message of faith in our great system as the model for global financial advancement. There is another option in relation to Freddie Mac and Fannie Mae. Rather than making the taxpayer liable for debts the debts of the government-sponsored enterprises, it would be more sensible to effect a smooth, prepackaged reorganisation plan. This could be done quite simply and would strengthen the GSEs' ability to meet their congressionally mandated purpose of supporting liquidity in the secondary mortgage market. The core of the GSEs' mission is to purchase mortgages from mortgage originators, charge a guarantee fee to issuers to protect their ability to stand behind these loans, and securitise these mortgage-backed securities with assurances to MBS holders they would receive 100 per cent of their anticipated returns. To this end the GSEs have guaranteed $3.5 trillion in mortgage-backed securities. These securities are backed by real housing assets and there is little question that, assuming they are well serviced, there will be relatively little loss over a longer period. As part of a prepackaged reorganisation the government could explicitly assure MBS investors they will receive all of their guaranteed interest payments. Instead of giving ineffective management a line of credit, Treasury could provide the GSEs, regulator with a line of credit used to assure timely payments on these obligations. This is the tool that Treasury provides the Federal Deposit Insurance Corporation with to sort out failed banks. Over time that line will be repaid by the running-off of the portfolios, active servicing of mortgages and through payment of claims by private mortgage insurers who guaranteed first losses on GSE mortgages. Because these debts are core to the GSEs' social mission and real assets back these debts, this would be an appropriate resolution. The next step would create approximately $150bn in new equity capital and enable to GSEs, without governmental support, to achieve more fully their chartered mission. Over the past decade the GSEs have increasingly used their portfolios to speculate in aircraft leasing, manufactured housing, interest-only mortgages and other securities they are specifically prohibited from buying as part of their mission. In recent years, through these portfolios they funded nearly 50 per cent of the riskier private label Alt-A mortgage market, invested in aircraft lease securities, manufactured housing and other assets that leveraged them into trouble. To achieve this speculative, hedge fund-like growth they issued almost $1,500bn of senior corporate debt. By their investments, debt buyers supported speculation in non-mission-related activities and did so with a clear understanding they were funding non-mission-related activities. They also knew GSE debt was explicitly not an obligation of the U.S. taxpayer and that was repeated constantly by the government and the companies. In exchange for their current debt, these holders should receive 90 cents on the dollar of new, long-dated, senior debt in the companies and 10 cents of new subordinated debt. The companies would then have enough capital to support their core, chartered mission and could increase the social returns and financial returns of investors in their core mission. This approach would send a very strong signal, from the government, that investors fully consider the risks of bad asset allocation. It would almost certainly strengthen the dollar. Though it would cause pain for equity and subordinated debt investors, those investors received the majority of returns over the past several years and, in our great system, they are supposed to be subordinated.

Ms. KAPTUR. Perhaps I could point out on the map, of course, Cleveland the most affected region of Ohio, Cuyahoga County, if we look back to 1997, here, and you just look at the colors alone, you have a sense of how many people are actually losing their homes in that region versus Columbus, Ohio; Cincinnati, Ohio; my own region, the greater Toledo area. The change between 2007 and 1997 in the last decade, it's just, it's profound.

Ms. KAPTUR. If the gentleman would yield just for a moment.

Ms. KAPTUR. Mr. Speaker, I wonder if the American taxpayers know that they are now the insurance company for Wall Street and for Wall Street's high-risk investors. I am very pleased to begin this evening joined by our dear and respected colleague from the great City of Cleveland, Congressman Dennis Kucinich, and would yield the first portion of the hour and such time as he may consume on the very important subject of the mortgage foreclosure crisis and the financial crisis facing our Nation.

Ms. KAPTUR

Ms. KAPTUR. Mr. Speaker, last week's rattling of Fannie Mae and Freddie Mac and the failure of IndyMac Bank are the latest wreckage of our held-hostage economy enlarged to a trillion-dollar hole. When we think about what is happening, the seeds of the ruin were sown in the 1990s, and those who planted the seeds got rich while pushing America financially to the precipice. The repeal of the Glass-Steagall Act by Congress in 1999 contributed to our financial system's vulnerability. For the first time in a half a century, the firewall between banking and commerce was breached. I voted against abandoning Glass-Steagall, but the act passed overwhelmingly in this chamber by a vote of 362-57 and over in the other body, 90-8. As a result, the American taxpayers are now being asked to bail out Wall Street. The biggest high-risk investment banks and some uninsured government instrumentalities are going right to the American people, where they said they would never go. As these risky practices were standardized, the question is, what happened to the regulatory bodies charged with maintaining the safety and soundness of our financial system? Why didn't Fannie Mae and Freddie Mac exert due diligence and oversight? Where was Treasury's Office of Thrift Supervision? What happened to HUD's appraisal and underwriting standards, when in 1993 and mortgage letter 93-2, and then in 1994, in HUD's mortgage letter 94-54, HUD gave authority to lenders like Countrywide to approve their own loans and select their own appraisers. Assuming many of these loans were moved to market through Freddie Mac and Fannie Mae, why did their regulatory standards fall short? Who served on their boards of directors and voted for these high-risk practices? How much were those boards and executives compensated during those years when these risky practices proliferated? Evidence is beginning to surface that many of those board members personally benefited from their own decisions. Well, through which domestic and international institutions were the original mortgage securitizations first moved? Which persons and which firms did it, and which regulatory agencies sanctioned the process? Why did Treasury's Office of Thrift Supervision fail to bat an eye when Superior Bank, one of the first institutions to embark on subprime lending, was earning 7\1/2\ times the industry's average return on assets? Where was its Chicago Office of Thrift Supervision? When FDIC finally caught up and charged Superior in 2001, it was fined $450 million, the largest fine in U.S. history much. But why haven't other hot-dog banks been brought to justice? This subprime crises happened because people at the highest levels wilted, they placed America in bondage for another generation. The gaming of our financial markets is not a new phenomenon, but each crisis seems to get bigger, and the big fish, the kingfish, aren't brought to justice. All the men and women who served on the boards of Freddie Mac and Fannie Mae during the 1990s and voted for these high-risk practices should be investigated. They made millions off their stock options and industry connections. Are they to remain anonymous to the American people who are being asked to pick up their horse dung after the parade has gone through town? Who were they, and how did their votes, as board members, contribute to this unfolding American tragedy? I am going to place in the Record tonight the list of all the board members at Freddie Mac from the early nineties until the early 2000s and will be placing the same names in the Record for Fannie Mae in future days. Let me just say that the trillion-dollars debt that is being proposed to be financed through the sale of U.S. bonds, let me remind the American people, our coffers are empty as a country. Our country will borrow more money from foreign interests to close this gap, and our children will owe principal and interest to the bondholders, just as they paid nearly a quarter trillion dollars on the savings and loan crises from the 1980s. Let me remind you the meaning of the word ``bondage,'' a state of being bound, captive, a serve, subjugated to a controlling person or force, subservient, dependent, a bond slave, a lackey. What is happening to our country is truly very, very dangerous. This never should have happened, and every single person responsible at the highest levels in this government, who did not regulate, who did not have oversight, who did not properly manage their regulatory systems in order to guard against this kind of risk-prone behavior, should be investigated, and the American people should know whose bill they are paying for. What a tremendous tragedy for our country. Board of Directors Leland C. Brendsel, Chairman of the Board and CEO, Freddie Mac. George L. Argyros, Chairman and CEO, Arnel and Affiliates. Thomas Ludlow Ashley, President, Association of Bank, Holding Companies. Armando J. Bucelo, Jr., Attorney-at-law, Law Office of Armando J. Bucelo, Jr. John C. Etling, President and CEO, General Reinsurance Corporation. Shannon Fairbanks, Managing Partner, Castine Partners. David W. Glenn, President and COO, Freddie Mac. George D. Gould, Vice Chairman, Klingenstein, Fields & Company. Barbara C. Jordan, Holder, Lyndon B. Johnson Centennial Chair in National Policy, University of Texas in Austin. Henry Kaufman, President, Henry Kaufman & Company, Inc. John B. McCoy, Chairman and CEO, Banc One Corporation James F. Montgomery, Chairman and CEO, Great Western Financial Corporation. Russell E. Palmer, Chairman and CEO, The Palmer Group. Ronald F. Poe, Chairman and CEO, Dorman and Wilson, Inc. Donald J. Schuenke, Chairman and CEO, Northwestern Mutual Life Insurance Company. Christina Seix, Chairman and CEO, Seix Investment Advisors, Inc. William J. Turner, Chairman and CEO, Turner & Partners, Inc. Board of Directors (as of March 7, 1994) Leland C. Brendsel, Chairman & Chief Executive Officer, Freddie Mac. David W. Glenn, President & Chief Operating Officer, Freddie Mac. John C. Edling, President & Chief Executive Officer, General Reinsurance Corporation. George D. Gould, Vice Chairman, Klingenstein, Fields & Company. Jerry M. Hultin, Partner, Warner & Hultin. Barbara C. Jordan, Professor of Public Service, University of Texas. Henry Kaufman, President, Henry Kaufman & Company, Inc. Raymond J. McClendon, Vice Chairman & Chief Executive Officer, Pryor, McClendon, Counts & Co. John B. McCoy, Chairman & Chief Executive Officer, Banc One Corporation. James F. Montgomery, Chairman & Chief Executive Officer, Great Western Financial Corporation. James B. Nutter, President, James B. Nutter and Co. Russell E. Palmer, Chairman & Chief Executive Officer, The Palmer Group. Ronald F. Poe, Chairman & Chief Executive Officer, Dorman & Wilson, Inc. Donald J. Schuenke, Retired Chairman, Northwestern Mutual Life Insurance Company. Christina Seix, Chairman & Chief Executive Officer, Seix Investment Advisors, Inc. William J. Turner, Chairman & Chief Executive Officer, Turner & Partners, Inc. Board of Directors (as of March 10, 1995) Leland C. Brendsel, Chairman & Chief Executive Officer, Freddie Mac. David W. Glenn, President & Chief Operating Officer, Freddie Mac. John C. Etling, President & Chief Executive Officer, General Reinsurance Corporation. George D. Gould, Vice Chairman, Klingenstein, Fields & Company. Jerry M. Hultin, Partner, Warner & Hultin. Barbara C. Jordan, Professor of Public Service, University of Texas. Henry Kaufman, President, Henry Kaufman & Company, Inc. John B. McCoy, Chairman & Chief Executive Officer, BANC ONE

Ms. KAPTUR

Ms. KAPTUR. Mr. Speaker, last Friday, Senator John McCain, campaigning for President in Canada, of all places, criticized opponents of NAFTA, the godfather of all troubled trade agreements. Incredibly, the Senator said, ``Since NAFTA was concluded, it has contributed to strong job growth and flourishing trade.'' He didn't say where. He then said, ``Since the agreement was signed, the U.S. has added 25 million jobs and Canada more than 4 million.'' Wherever is he getting his data? Most Americans know this so-called free trade agreement is anything but free. We know it has created huge job losses and trade deficits, and we know the harm it has caused in this country and across our continent. NAFTA has created a gaping net hemorrhage of jobs, lost jobs and wealth for our country. I beg Senator McCain to look at the discipline of the numbers. Look at the trade accounts. They don't lie. Since NAFTA's passage in 1993, our country has suffered $1 trillion of NAFTA trade loss, amassing a huge deficit with both Mexico and Canada. The figures get worse every single year. NAFTA has not only cost our country over 1 million lost jobs, we would have added even more economic growth and jobs if we had not allowed all these jobs and production lines to be outsourced. Robert Scott of the Economic Policy Institute points out that ``growing trade deficits with Mexico and Canada have pushed more than 1 million U.S. workers out of higher wage jobs and into lower wage positions in non-trade related industries. Thus, the displacement of 1 million jobs from traded to non-traded goods industries reduced wage payments to U.S. workers by $7.6 billion in 2004 alone.'' Those are staggering figures. That loss packs a wallop by any measure. I will place in the Record a list of just some of the factories that have outsourced production and relocated to Mexico. They go from A to Z: Allied Signal, Amana, Maytag, you can go all the way down the list, Medtronics, Stanley Works, Zenith. I will place the entire list in the Record. Now, it is interesting where Senator McCain was making his speech. He had not just outsourced himself to Canada to make the speech, he spoke before the Economic Club of Canada, a business organization whose membership cheered his remarks. And they should. They alone have made out handsomely under this lopsided trade agreement. Listen to what the leader of the New Democratic Party in Canada, Parliamentarian Jack Layton, has to say about what is going on in Canada. In a recent letter to Senator Obama, Leader Layton stated clearly: ``Despite the fact that most Canadians are working longer hours, 80 percent of families have lost ground or stagnated in both earnings and after tax returns compared to the previous generation. Real wages have not increased in Canada for more than 30 years. Yet the share of corporate profits in our Canadian economy is at its highest point since 1961.'' Thoughtful leaders in Canada disagree with Senator McCain. They know the income washout that can come from ill-cast trade agreements. He should pay attention to their views. Before NAFTA, the United States had a trade surplus with Mexico of over $1 billion a year. Jobs were increasing in our country. Today, since NAFTA's passage, the U.S. has racked up an astounding $452.3 billion deficit with Mexico and an even larger $606 billion trade deficit with Canada. At a minimum, our Nation should seek balance and reciprocity, not deficits with these nations. In Mexico, its civil society has been pleading with us to correct the abuses of NAFTA. Former Mexican Parliamentarian Victor Suarez pleads, ``We want good trade, not free trade.'' He should know well. The Mexican countryside has been devastated as the result of NAFTA as over 2 million poor farm families have been thrown off their land, uprooted in the most cruel of ways. A visible sign of their plight here is their illegal immigration to our Nation out of sheer desperation. A group of farmers in Mexico calling themselves ``The Countryside Can't Take It Anymore'' literally rode their horses down to the Mexican Parliament to draw attention to the washout of livelihoods of their country men and women. When NAFTA was first debated, many Members here tried to amend the agreement to avoid these negative consequences on people and communities. Senator McCain didn't lift a finger to help. Senator Obama was not a Senator then. America should advance trade agreements that produce jobs, balances and surplus, not deficits. Deficits are not good, in your checkbook or in America's accounts. Trade should lift all boats, not create a race to the bottom. Good trade means fair trade for all, not ``gotcha'' trade. Good trade means good jobs, living wages, the right to bargain the worth of your labor by contract, a sustainable environment, and sovereign food rights for all people. For a rich Nation like America, I think good trade also means a conscience for the poorest people on this continent, not exploitation. NAFTA has produced none of this. It has produced negatives. It is time America voted for positives. A Mexican worker observed to me, on one of my several trips there, that their futures were put at even more risk as these global companies work them for pennies an hour, always threatening to move elsewhere. The worker said to me: ``Poor countries are like crabs in a bucket. Every time one country starts to climb up out of the bucket, another one pulls it back down.'' NAFTA has produced none of this. It has produced negatives for the vast majority, and vast wealth for a few. For Senator McCain and any others who do not know which outsourced firms have contributed to America's growing trade deficits on this continent with accompanying job and benefit losses, let me place them in the Record: Companies Relocated to Mexico Since NAFTA 20th Century Plastics; 3 Day Blinds; Aalfs Manufacturing; Acer Peripherals; Advance Transformer; Alcoa Fujikura; Allied Signal; Amana; American Olean Tile; American Standard; Ametek; AMP; Amphenol; Anchor Glass Container; Anvil Knitwear; Autoliv ASP; AZT Sewing; Bali Company, Inc.; Bassett Furniture Industries; Batts; and Bayer Corp./Medsep. BMW; Borg Warner Automotive; Breed Technologies; Brunswick Bicycles; Burlington Industries; Capital Mercury Apparel; Canon Business Machines; Casio Manufacturing; C-Corps Electronics; Champion Products; Chrysler; Clothes Connection; Commemorative Brands; Cross Creek Apparel; Daewoo; Dayco Products; Dean Foods Vegetable Company; Dyersburg Fabrics; Dixon Ticonderoga; and Eastman. Eaton Corporation; Kodak/Verbatim; Eberhard-Faber; Eli Lilly Corporation; Emerson Electric; Ericsson; Exide; Federal Mogul; Fisher-Price; Fiskars; Flexel; Ford; Foster Grant; Fruit of the Loom Corporation; General Electric; JVC; General Motors; Gerber Childrenswear; Haggar Clothing; and Hamilton Beach-Proctor-Silex. Hasbro; Henry I. Seigel; Hershey Chocolate; Hewlett Packard; Hitachi Home Electronics; Honda; Honeywell, Inc.; House of Perfection; Household Perfection; Hughes Aircraft; Hyundai Precision America; IBM; Ithaca Industries; Jeanerette Mills; John Deere; Johnson Controls; Kellogg Company; Kemet Electronics; and KLH Industries. Kodak Polychrome Graphics; Lee Apparel; Levi Strauss; Lexington Fabrics; Mallinckrodt; Martin Mills; Master Lock; Matsushita; Mattel; Maytag; Maxell Corporation; McCulloch Corp.; Medtronic; Mercedes Benz; Mitsubishi Electronics Corp; Monon Corp.; Motorola; Nissan; and Nokia. Oneita Industries; Oshkosh B'Gosh; Oxford Industries; Parker Habbifin; Philips; Pioneer Speakers; PL Industries; Plaid Clothing; Ransom Industries; Regency Packing Company; Russell Corporation; Samsonite Corporation; Samsung; Sanyo North America; Sara Lee; Scientific Atlantica; Seton Company; Siemens; Singer Furniture; Smith Corona; and SMTC Manufacturing. Spangler Candy; Sola optical; Solectron Corporation; Sony Electronics; Square D; Stanley Works; Stony Creek Knitting Mills; Strick Corporation; Stroh Brewery; Sun Apparel; Sunbeam; Texas Instruments; Thomas and Betts; Tiffany; and Toshiba. Tri-Con Industries; Trinity Industries; TRW, Tultex Corporation; Tyco Electronics; United State Leather; United Technologies; Automotive; Vanity Fair Intimates; VF; VW; Walls Industries; Weiser Lock; Westinghouse; Wilkins Industries; William Carter; Woolrich; Wrangler; Xerox; and Zenith.

Ms. KAPTUR

Ms. KAPTUR. Madam Speaker, Elizabeth A. Zepf, a Toledo treasure to her family, friends and community, departed this life on Friday June 6, 2008. Elizabeth was born July 6, 1903, in Cincinnati, Ohio, to Matthew and Elizabeth McCarty. Elizabeth, a consummate and indefatigable social activist throughout her life, was engaged in community and religious affairs. Her broad range of interests spanned the horizon--higher education, leadership development, the advancement of women, the advancement of religious efforts, music, and health care. In fact, she championed the cause of mental health. With her husband, Arthur, she led the effort to create the Zepf Community Mental Health Center in Toledo to more effectively serve this population. She positively influenced the lives of all who met her. A committed Roman Catholic, she was devoted to her husband, Art, and her family but made the time to advance the broader human family through her many church-related organizations, locally and nationally. She held the office of president in the Blessed Sacrament Altar Society, the Toledo Diocesan Council Catholic Women, and then was elected nationally to serve as its president of the National Council Catholic Women 1960-1962. Her community involvement included: Serving 13 years on the board of trustees for the University of Toledo with 7 of those as Vice-Chairman of the Board. She remained a member of St. Vincent Medical Center Advisory Board for 11 years, established the Women's Cancer Education Council and was a past president of the board of trustees of Toledo Mental Hygiene Clinic. Elizabeth was one of the founding members of the Toledo Opera Guild and chairman of the Sapphire Ball in 1965. President John F. Kennedy recognized her gifts when he named her to the board of directors of the American Freedom from Hunger Foundation, serving as its vice president. More so, she served as vice chairman of the board of the Lucas County Mental Health from 1963 and is now an Honorary Life member. She has served on the board of the March of Dimes. For her dedication improving the quality of life of her community, in 1960 she received the Distinguished Citizenship Award from the Toledo Blade ``for outstanding service to her community''. Additionally, a clinic, in San Salvador, for homeless mothers and children, was named the Elizabeth Zepf Madonna Shelter. In 1974, the Elizabeth Zepf Community Mental Health Center was opened by the Lucas County Mental Health Board. In September 1988, the Satellites of the Medical College of Ohio honored her as one of the ``Treasures of Toledo.'' She was an honorary member for 5 years of Family Child Abuse Prevention Center. She was a life long member of Our Lady of Perpetual Help Church as well as the Maumee River Yacht Club and the Toledo Club. She is the widow of Arthur L. Zepf and is survived by her son, Arthur Zepf Jr. and grandsons, Kurt, Reilly and Arthur. Our entire community celebrates her life, her ever present smile and all her good deeds that flowed from her productive and generous spirit.