Military Construction, Veterans Affairs And Related Agencies Appropriations Act, 2010
Floor Speech
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Mr. SANDERS. Mr. President, as a result of the greed, the recklessness, and the illegal behavior of a handful of executives on Wall Street, we are in the midst of the worst economic crisis since the Great Depression. Millions of Americans from one end of this country to the other have lost their jobs, they have lost their homes, they have lost their savings, they have lost their ability to send their kids to college, and they have lost their hope. In fact, just this morning, we have learned that the official unemployment rate is now a staggering 10.2 percent--the highest in over 26 years.
Since the recession began in December of 2007, 8.2 million Americans have lost their jobs and the unemployment rate has more than doubled. In total, today 15.7 million Americans are officially unemployed; another 9.3 million are working part time--they want to work 40 hours a week, but they are only working part time; and 2.2 million workers have given up looking for work altogether. When you add those three factors together--official unemployment, people who have given up looking for work, and people working part time who want to work full time--what you are left with is an incredible 17.5 percent of the American workforce unemployed or underemployed--27 million Americans. And when we go out and we find that people are angry or hurt or depressed, that is one of the reasons.
Over a year has gone by since Congress--against my vote--passed the $700 billion bailout for Wall Street. The Federal Reserve has committed trillions of additional dollars in virtually zero-interest loans and other assistance to large financial institutions. Add it all together, and you are looking at the largest taxpayer bailout in the history of the world.
Then-President Bush, Secretary of the Treasury Paulson, and Fed Chairman Ben Bernanke told us at that time that we needed to bail out Wall Street because we could not allow these huge financial institutions and insurance companies to fail because if they failed, their failure would be systemic and would impact every aspect of our economy and would take down large segments not only of financial services but the entire economy as well. We all remember: This is not a bailout of Wall Street, this is a bailout to help Main Street.
One might think, if these institutions were ``too big to fail,'' one kind of obvious solution--and you don't need a Ph.D. in economics to figure this out--is that you might want to make them smaller. If they are too big to fail, maybe you would want to reduce their size. Yet, under the leadership of the Bush administration and Fed Chairman Ben Bernanke, these financial institutions did not get smaller, they got bigger.
Last year, Bank of America, the largest commercial bank in this country, which received a $45 billion taxpayer bailout, purchased Countrywide, the largest mortgage lender in this country, and Merrill Lynch, the largest brokerage firm in this country. You don't become smaller when you incorporate other large institutions into your existence.
Last year, JPMorgan Chase, which received a $25 billion bailout from the Treasury Department and a $29 billion bridge loan from the Fed, acquired Bear Stearns and Washington Mutual, the largest savings and loan in the country.
Last year, the Treasury Department provided an $18 billion tax break to Wells Fargo to purchase Wachovia, allowing that bank to control 11 percent of all bank deposits in this country.
Today, these huge financial institutions have become so big that, according to the Washington Post, the four largest banks in America--and I want people to hear this--Bank of America, Wells Fargo, JPMorgan Chase, and Citigroup, now issue one of every two mortgages. Got that? The largest four financial institutions issue half of the mortgages in America. They issue two out of three credit cards and hold $4 out of every $10 in bank deposits in the entire country.
The face value of over-the-counter derivatives at commercial banks has grown to $290 trillion, 95 percent of which are held at just five financial institutions in the entire country--JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley. Derivatives are nothing more than side bets by Wall Street gamblers that oil prices will go up or down or that the subprime mortgage market will continue to get worse or on the weather or whatever can make them a quick buck. Risky derivative schemes led to the $182 billion bailout of AIG, the collapse of Lehman Brothers, the downfall of Bear Stearns, and precipitated the largest bailout in the history of the world.
If any of these financial institutions were to get into major trouble again--and, frankly, there is no reason to believe that will not happen because they are spending millions of dollars trying to influence Congress to prevent any action to stop them from going back to the way they were before the collapse--we would be in line for a bailout that would be even larger than the bailout that took place over a year ago. Obviously, we cannot allow that to happen.
Not only are too-big-to-fail financial institutions bad for taxpayers, the enormous concentration of ownership in the financial sector has led to higher bank fees, usurious interest rates on credit cards, and fewer choices for consumers.
Mr. President, I am sure you have gotten the same calls I have gotten from people who say: You know, I pay my credit card bills on time every single month, and suddenly they raise my interest rates to 29 percent, to 30 percent. And one of the reasons these guys can get away with doing that is there is not a heck of a lot of competition out there. One out of four American families, as a result of this greed, this usury, is now paying an interest rate of at least 20 percent on their credit cards. That is another issue that, obviously, we have to deal with.
According to BusinessWeek:
Bank of America sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28 percent.
These are people who pay their bills on time.
According to a recent study by the Pew Charitable Trusts, credit card interest rates went up by an average of 20 percent in the first 6 months of this year, even as banks' cost of lending declined. In other words, as banks get bigger, consumers are having to pay twice--once to bail out these institutions when they screw up altogether and a second time to pay higher fees and interest rates.
The time has come for us to do exactly what Teddy Roosevelt, a good Republican, did in the early 1900s; the time is now to do what I think most Americans understand we have to do; that is, break up these huge financial institutions.
Yesterday, I introduced S. 2746, the Too Big To Fail, Too Big To Exist Act, which would do just that, and that is the bottom line. The bottom line here is that if a financial institution is too big to fail, that financial institution is too big to exist, and we have to start breaking them up.
This legislation is all of two pages. So when people ask you if you have read it, unlike the 1,900-page health care legislation, you can say with all confidence that you have read it, because it is all of two pages. What it says is, first, that the Secretary of the Treasury has to identify every single financial institution and insurance company in this country that is too big to fail within 90 days. In other words, what are the institutions that if they fail would cause widespread economic harm to the country? The Secretary of the Treasury does that within 90 days. After 1 year, the Secretary of the Treasury would be required to break up these institutions so that their failure would not lead to the collapse of the U.S. or global economy.
There is growing support in our country and around the world for breaking up too-big-to-fail financial institutions. Let me give you a few important examples of that growing sentiment all over the world.
It was reported in the Washington Post and major media all over the world that the British Government, in fact, is moving in that direction. Let me quote from the Washington Post:
The British Government will break up parts of major financial institutions bailed out by taxpayers. Spurred on by European regulators, the British Government is forcing the Royal Bank of Scotland, Lloyds Banking Group and Northern Rock to sell off parts of their operations. The Europeans are calling for more and smaller banks to increase competition and eliminate the threat posed by banks so large that they must be rescued by taxpayers, no matter how they conducted their business, in order to avoid damaging the global financial system.
That is about it. Ain't more complicated than that. Let's break them up before they again lead this world to a major financial crisis. Let's break them up before they require hundreds and hundreds of billions of dollars in bailout. And in my view, it is a positive thing that the Government of the UK is moving in that direction.
But it is not just the Government of UK. On October 15, 2009, Bloomberg News reported that former Federal Reserve Chairman Alan Greenspan--perhaps more than any other individual, the person most responsible for the deregulatory efforts which led us to where we are today--said this. This is what Greenspan said on October 15, 2009:
If they're too big to fail, they're too big. In 1911, we broke up Standard Oil--so what happened? The individual parts became more valuable than the whole.
Former Fed Reserve Chairman Paul Volcker, the head of President Obama's Economic Recovery Advisory Board, said:
Keep banks small so that any failure won't have systematic importance ..... People say I'm old-fashioned and banks can no longer be separated from nonbank activity. That argument brought us to where we are today.
That is former Fed Chairman Paul Volcker.
Robert Reich, President Clinton's former Labor Secretary, said:
No important public interest is served by allowing giant banks to grow too big to fail ..... Wall Street giants should be split-up--and soon.
Sheila Bair, the head of the Federal Deposit Insurance Corporation, has said:
We need to reduce our reliance on large financial institutions and put an end to the idea that certain banks are too big to fail.
On and on, people all over our country, conservatives, progressives, are making that point.
Let me conclude by saying this. As Members of the Senate, Members of Congress, we are besieged every day by enormously powerful and wealthy special interests. The health insurance industry is spending over $1 million a day on lobbying, huge amounts of campaign contributions. The drug companies, the military defense contractors, you name it, they are all outside the door, fighting to make sure that their special interests are getting more and more. But at the top of that list of powerful special interests certainly are the large financial interests. Over a 10-year period they spent over $5 billion in lobbying and campaign contributions in order to make sure that Congress deregulated their activities so they could merge, so they could engage in reckless financial speculation.
They won and the American people have lost, and the American people are paying that price today. The time is now for us to say enough is enough, for us to do what I think the vast majority of the American people want us to do and that is, if an institution is too big to fail, it is too big to exist.
Let's start breaking them up for two basic reasons. No. 1, I don't want to see a huge bailout having to take place again, hundreds and hundreds of billions of dollars of taxpayer money going to these guys. No. 2, it is unhealthy for the economy when so few people have such a concentration of ownership in terms of credit cards, in terms of mortgages, in terms of other financial transactions. The small business community and middle business community desperately need credit and they are not getting credit. You have people on there who are controlling a whole lot of our financial system.
Now is the time to do what Teddy Roosevelt did well over 100 years ago, and that is to stand up to these guys. For the well-being of the economy and for the American people, let's break them up.
Mr. President, I yield the floor.
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