The Progressive Caucus

Floor Speech

BREAK IN TRANSCRIPT.

Mr. JOHNSON of Georgia. Mr. Speaker, ladies and gentlemen out there in TV land, I could not go to sleep tonight until I got off my heart what has been on it, particularly over the last few days. What's on my heart is such pain and empathy for the people of this country who want to work but can't find a job, people who have worked all of their lives only to be caught victimized by the financial meltdown that took place in October of 2008.

The biggest downturn since the Great Depression. Eight million jobs lost. Those are real jobs affecting real people, affecting their children, affecting their parents and grandparents; people who had been accustomed to being a part of the middle class and now they find themselves out of a job, out of work for an extended period of time.

And, by the way, I must tell you that this portion of today's proceedings is a Special Order of the Progressive Caucus.

And so these 8 million jobs were caused--or the loss of these 8 million jobs were caused by the shenanigans on Wall Street. There was an endless, or what must have seemed like an endless party for the Wall Street crowd. Stocks, bonds, dividends. They couldn't be happy just with those profits. They had to come up with other ways of making money. They came up with these hedge funds that enabled someone to sit at a computer without producing anything and make money just by buying and selling various security instruments.

And those secured instruments or instruments of securities--or securities--were largely the product of these 8 million people who lost these jobs. Largely, those securities were generated on the backs of the middle class people who had used their money, used their earnings, used their savings to buy a home, and they bought a home. Oftentimes, they were steered into what we call a predatory loan, which is nothing more than a high-cost loan, a loan with exorbitant costs. And these loans were primarily directed to minority communities. And once those targeted communities had been saturated with those predatory high-cost loans, then that industry turned its attention to another vast market untapped. It was middle class America, all over America.

And all of these high-cost loans were packaged together and sold as securities on Wall Street. These loans featured such attributes as no money down or low downpayments. Sometimes no documents required or a no-doc loan. They had adjustable rates, adjustable mortgage rates. They had other features like clauses that prevented you from refinancing without suffering a penalty. These high-cost loans, once the requisite amount of time had gone by, then the loans would be adjusted upwards. And when that adjustment was made, the people found out that they were unable to meet those new monthly payments. And so, therefore, they would simply refinance, pay another yield spread premium, stripping the equity from their property and giving it to the mortgage broker in return for placing them in another predatory loan.

And everything was going fine, these high-priced loans packaged as securities being sold on Wall Street, or being sold by Wall Street to entities and people throughout the world. And it was all based on the rising home values that everyone just assumed would continue to go up.

But at some point, people started defaulting on those high-cost predatory loans all across this Nation. And when that happened, the people who had purchased the securities that were backed by those now unperforming loans realized that they had worthless paper in their hands, and so it became a run on the bank.

Now, keep in mind, these people and entities that had bought or purchased these securities had also purchased insurance from AIG to make sure that, if the security ended up becoming useless, then AIG, like an insurer should, would pay them for that loss. And so AIG was put in a perilous situation.

And so what happened there, then it became a bailout situation. Are you going to let AIG fail along with all of these other investment banks which were steeped heavily with these toxic securities?

So, along came the Bush plan to restabilize the economy through the Wall Street, the notorious Wall Street bailout, $700 billion. And you would think that the banks would have used that money to lend to smaller banks, the Wall Street banks would have used that money to lend money to the smaller banks, and those smaller banks then could use that money to lend to small businesses and to large businesses as well; and in that way, we would have had more job creation to try to put a dent in this 8 million jobs lost. But no, they did not do that.

What did those Wall Street banks do? They didn't loan money to small businesses to expand and hire new workers. And, in fact, in 2009, total lending by U.S. banks fell 7.4 percent, the steepest drop since 1942. Now, keep in mind, they just got $700 billion in October of 2008. 2009, total lending fell 7.4 percent, the steepest drop since 1942. And the 22 firms that received the most bailout money cut small business loans by $12 billion in 2009.

Meanwhile, the top 38 largest financial firms gave out $145 billion in taxpayer money, in record pay, to their employees--this was in 2009--and an 18 percent increase in pay for their employees over 2008. In the first 3 months of 2010, four of the leading financial firms, including Goldman Sachs, reported profits of $14 billion.

It is time for that money, ladies and gentlemen, to be returned to Main Street. What Wall Street has done is taken that money that should have been invested in Main Street to create jobs for the American people. Instead, they took that bailout money, and they gave record pay to their employees--$145 billion in the year 2009. Nobody is crying about that. Everybody is crying about the deficit. Nobody is talking about job creation.

Are you a job creator, or are you a deficit reducer? What is most important? What would be most important to you? If you are sitting on your couch, listening to what I have to say, and if you have heard all of the stories about how deficit and spending has to be cut and if you know the government is driving us into the ground with deficit spending and then if you're sitting there without a job, what is more important to you--deficit reduction or job creation?

I submit to you that, if you are not a job creator, then you are barking up the wrong tree as far as what can be done to ease the deficit and to eliminate it eventually. You won't do it unless you have jobs. You won't do it unless you have an economy based on jobs, based on middle class people, based on people going to work every day, spending their money purchasing cars, purchasing homes, purchasing consumer goods. That's how the economy starts thriving again. It's not trickle down, the old Ronald Reagan trickle-down theory, which later was called ``voodoo economics'' and which has been in force all the way up through this Wall Street meltdown. That trickle-down economics is what actually caused this right here.

So we have got to build our economy from the ground up, not from the top down. This $700 billion should have gone to help create more jobs from the ashes of that failed economic policy instead ended up going--where?--right into the pockets of the folks on Wall Street.

So I am here tonight, ladies and gentlemen, to talk about job creation. I am here to try to ease your mind a little bit about the deficit, because what is really important is for Americans to go back to work.

END.

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