The Economy

Floor Speech

THE ECONOMY -- (Senate - September 24, 2008)

Mr. CORNYN. Mr. President, I want to say a few words about the principles that will guide my consideration and my vote on the proposal made by the administration, by the Secretary of Treasury, Henry Paulson, and Ben Bernanke, the Chairman of the Federal Reserve Board.

I have to tell you I am extremely upset we find ourselves in this terrible situation. I can tell you the phone calls I have been getting from my constituents are that they are overwhelmingly angry at how we could possibly find ourselves in this situation.

First of all, I think there has been a perception that--listening to Treasury Secretary Hank Paulson--is actually not true: that this is somehow a bailout for Wall Street. In other words, the people who have profited mightily from the enormous sums of money that have been made recently on Wall Street, in the end, they are going to get off scot-free and the taxpayer is going to end up holding the tab. That is completely unacceptable.

First and foremost, I think we need to ask ourselves how we can protect the American taxpayers. The vast majority of Americans played no part in the collapse of some of the largest financial institutions in America, and they should not be forced to pay the price for the irresponsible and risky conduct of those who were at fault.

Secondly, we need to make sure this American economy remains stable and that small businesses, which are the lifeblood and the job creators in our economy, have the ability to grow and to create new jobs.

I think in the end economic growth is the key. What can we do to keep this great economy growing and producing jobs? I believe responsible tax relief helps small businesses grow and helps create jobs. Now, how would I know that? Well, all I would have to do is look back to the tax relief we passed in 2003, which cut the dividends and capital gains rate, which gave rise to a net increase of about 7 million jobs in America. That is what life was like before we hit the subprime mortgage crisis and high energy prices.

But we ought to look to what works, and we should not use this as an excuse to grow the size of Government and increase the size of the tax burden on hard-working American families and small businesses because that will make things worse, not better.

Third, we need to ask ourselves if this proposal does enough to safeguard transparency and accountability. Frankly, I think a lot of work needs to be done here. I think the very fact that Moody's and other entities which actually grade the investment value of many of these mortgage-backed security projects completely missed the target and failed to predict the precipitous drop in value of these subprime mortgages and the securities that are backed by these mortgages is evidence this is simply an opaque and nontransparent system and that not even the people who should know were able to evaluate what the true value of these mortgage-backed securities were. So I think we need to have certainly more transparency in this process, and we need to make sure those who are responsible are held accountable.

I am very pleased to hear in today's news that the Federal Bureau of Investigation has decided to investigate, among others, the actions of Freddie Mac and Fannie Mae to determine whether fraud or corruption on the part of key players was the cause or contributed to the cause of our current financial turmoil. After the collapse of Freddie and Fannie, I sent a letter to the Attorney General of the United States, Michael Mukasey, and asked for a full investigation because in 2006 the very titans of industry who reaped millions of dollars in financial gain ended up with a slap on the wrist and no criminal penalty for cooking the books in order to generate larger bonuses and financial returns for themselves. That is completely unacceptable.

We need to make sure those who are responsible for precipitating this financial crisis are held accountable. If that means they are guilty of crimes, they should go to prison and pay the price as an example to others who would take advantage of the American taxpayer and would be motivated by the kind of greed that lets them forget their responsibilities not only to their shareholders but to the American people themselves.

So I am pleased the Attorney General is taking an aggressive posture and the Federal Bureau of Investigation is going to be conducting a thorough investigation. I say let the chips fall where they may. I do not care who it is. I hope they will pursue that to the fullest extent of the law.

Mr. President, I appreciate the opportunity to come and address these very important topics, and I hope that as the days go by Congress can work together in a bipartisan manner to try to find a way to address these problems. But certainly the initial proposal by the Secretary of Treasury is unacceptable on a number of bases, but he has my commitment, as do my colleagues, that I will do my best to work with him to try to protect the American taxpayer.

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