Capitol Words a project of the Sunlight Foundation

Sen. Edward E. Kaufman

Mr. President, there is not a quorum call, is there?

Sen. Edward E. Kaufman

Mr. President, I rise once again to speak about one of our Nation's great Federal employees. All of us here, along with our colleagues in the House, have returned from a busy work period. I know we, like all Americans, appreciate the extra day off we had on Monday to rest and recharge, to spend time with family, and to enjoy a barbecue. It is important, though, not to lose sight of what Labor Day represents.

America was founded on the belief that if you work hard, you can achieve your dream. When American workers set themselves to a task, no challenge is too great.

Since the 19th century, Labor Day has served as an opportunity to appreciate those who have made our economy the strongest in the world. Even with the challenges we face on Wall Street and on Main Street, I remain confident in our economy precisely because of our great workers.

American workers built the canals and railroads that fueled the westward expansion of our early years. They labored in those first industrial factories, weaving textiles, smelting iron, and manufacturing new products. Our workers electrified America's cities and made possible our soaring skylines.

Whenever they were called upon to serve, they laid down their tools and took up arms to defend liberty at home and overseas.

Today, our workers produce microchips, complex machine parts, and quality products sold in markets worldwide. I know that American workers will continue to excel as we transition to a green economy.

The history of labor in our country can be told through the stories of Americans who have worked hard because they dream of providing a decent life for themselves and their families.

The great labor leader Samuel Gompers, when asked what motivated American workers to organize for better pay and conditions, said:

We want more schoolhouses and less jails; more books and less arsenals; more learning and less vice; . . . in fact,

It took American workers many decades to win fair wages and safe working conditions. Today, the dedicated employees of the Department of Labor continue to ensure that American workers are safe, treated fairly, and have access to employment opportunities. This also includes a commitment to protecting workers' hard-won benefits.

The men and women of the Department's Plan Benefits Security Division engage in legal proceedings to make certain that employees' rights under retirement income security legislation are upheld. It is a busy office, and its attorneys and staff work on behalf of our Nation's labor force and retirees.

On July 4, 2006, Christine Spicer, who had worked as a secretary in the division for 25 years, suffered a debilitating stroke. It left her hearing and sight impaired and unable to walk. Unable to perform the office tasks she had done for a quarter of a century, Christine could have chosen to retire on disability.

However, she was determined to return to work and keep serving the public. Christine engaged in a difficult course of physical, speech, and occupational therapy. She returned to work in 2007, and now serves as the lead secretary for the division chief--a job entailing great responsibility.

Despite lingering problems with speech and difficulty walking, Christine oversees the division's payroll system, personnel paperwork, and a number of special assignments in addition to her secretarial role. She has been cited by her colleagues as disciplined and cheerful, and she is truly one of the Labor Department's unsung heroes.

The employees of the Department of Labor continually serve American workers by safeguarding their right to a living wage and providing what our dear friend, the late Senator Ted Kennedy, called ``hope that the price of their employment'' is not ``an unsafe workplace and a death at an earlier age.''

I call on my colleagues and on all Americans to join me in honoring Christine Spicer and all of the outstanding public servants at our Department of Labor.

Mr. President, I yield the floor and suggest the absence of a quorum.

Sen. Richard J. Durbin

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Sen. Michael Bennet

Without objection, it is so ordered.

Sen. Richard J. Durbin

Mr. President, I ask to speak as in morning business.

Sen. Richard J. Durbin

Mr. President, I rise today to express my strong support for the nomination of Cass Sunstein from Chicago, IL, to be Administrator of the Office of Management and Budget, Office of Information and Regulatory Affairs. It is a long title. But this office is critically important. It is the gateway for all the major Federal regulatory proposals that protect public health and the environment.

The Administrator needs a demonstrated record of impartiality and openness. President Obama has made it clear that objective science will guide his administration in their Federal rules and regulations.

Cass Sunstein is one of the Nation's most respected legal scholars who has shown a commitment to objective, evidence-based regulation. Cass Sunstein is a friend, he is a well-respected legal scholar, and he has taken insightful approaches to analyzing public policy. He has often proposed insightful ways to protect the public welfare, the environment, and worker safety.

Until he was nominated by President Obama, he served as the Felix Frankfurter professor of law at Harvard University, where his research spanned administrative and constitutional law, behavioral economics, environmental law, and labor law. I know him best from the 27 years he served as a member of the faculty of the University of Chicago Law School, where he taught one of my sitting colleagues, Senator Amy Klobuchar, the senior Senator from Minnesota, and was a teaching colleague of the President of the United States.

He has also served as attorney-adviser in the Office of Legal Counsel to the U.S. Department of Justice, law clerked for Justice Benjamin Kaplan of the Supreme Court of Massachusetts, and clerked for Supreme Court Justice Thurgood Marshall. His academic credentials are the best.

His nomination has been endorsed by many groups and many Nobel Prize winners and many former OIRA Administrators. His professional record indicates he would use his knowledge and experience to develop and implement smart, objective Federal policies and regulations.

I am going to support him enthusiastically. I believe he will be honest in dealing with this critical office, an office which is often hidden from the public sight because it deals in the world of rules and regulations but one which can have a great impact on the future of this Nation. President Obama has chosen well. I hope the Senate will endorse his choice.

Mr. President, all of us understand we are in the midst of a recession. It has been known as the Great Recession, not as bad as the Great Depression, thank the Lord, but certainly not your average run-of-the-mill economic downturn.

Last week, the Labor Department reported that the unemployment rate has reached 9.7 percent, the highest we have had in 25 years. I remember the last time it was even higher because that was the year 1982 when I was elected to Congress and the economy of my State was in terrible shape. The unemployment rate in Decatur, IL, where I was a candidate for Congress, was over 20 percent, and many communities had the same experience. I certainly hope this situation does not deteriorate to that level. There is evidence it is starting to turn for the better. But 216,000 Americans lost jobs last month, which brings the total number of jobs lost since this recession started in December of 2007 to 7 million Americans. Economists do not expect the job situation to stabilize until next year. So this Labor Day was not a great day of celebration for working Americans worried about their jobs and worried about their income.

There is some hope that the economy is starting to turn. The administration expects to report this week that the stimulus bill, which we enacted earlier this year, will have created or saved 750,000 jobs in just a few months. That is one reason the number of jobs lost in July was not as bad as other months. Mr. President, $300 billion of the stimulus money has been obligated or distributed through tax relief directly to working families. Those who come to the floor opposed to the President's stimulus bill are opposing his proposal which gave tax relief to working families. And $160 billion of that has already been spent, and more to follow, giving those families a fighting chance to deal with the expenses of daily life.

In addition, the success of the recent Cash for Clunkers Program is expected to create or save 42,000 jobs over the second half of this year. We know this in Illinois because last week while I was home, while some of the political observers were criticizing cash for clunkers, the Chrysler plant in Belvidere, IL, announced it was going to bring back 850 employees and put them to work because the stock and inventory of Chrysler products had been depleted by this program. So don't tell me cash for clunkers did not breathe some life back into the automobile industry. There are 850 workers in Belvidere, IL, who could tell you just the opposite.

Unfortunately, many sparks of economic regeneration are still being overwhelmed by the mutating disease at the center of our economic ills. If you remember, this recession really started in the housing market, and unfortunately it continues to grow there.

As I pointed out many times in this Chamber, the economic crisis that began in the housing market is not going to get better and is not going to change until the housing markets in America stabilize. Families who are afraid they are going to lose their homes to foreclosure will not buy things they need. When families do not buy things, companies do not make things and people are laid off. It is just that basic. Since 12 million people could lose their homes to foreclosure during this recession, there are a lot of people who could end up losing jobs, stop purchasing, creating even a deeper recession.

Here is the tough part of where we are right now. It is now because people are losing their jobs that they are losing their homes. It is a vicious cycle. According to the Mortgage Bankers Association, 6 million loans were either past due or in foreclosure in the second quarter, the highest level ever recorded in the United States of America. Nearly one in eight borrowers is behind or in foreclosure, and well over half of these households in trouble are solid, sound borrowers. In Illinois, 14 percent--one out of seven mortgages is in trouble since the second quarter of this year. And the scary part: we have not peaked yet when it comes to the foreclosure crisis. The reason? Millions of families are now underwater, meaning they owe more to the bank than their home's value.

The best predictor of whether a house could fall into foreclosure is whether the homeowner has positive equity. Homeowners with a financial stake in keeping a home are far more likely to save it. The bad news, according to Deutsche Bank, is 14 million homeowners--over one-fourth of home borrowers in America--have negative equity; that is, over one-fourth of all home borrowers are underwater with negative equity, and 25 million homeowners, half of them, will be underwater when the prices stabilize in the first quarter of 2011. Home equity fell $5.9 trillion between 2005 and the end of 2008, likely to fall even further in 2009. These families are at serious risk of foreclosure. This is not a crisis that we pass through. Sadly, it is a crisis we are living through and entering into a new phase.

One more problem: A new wave of mortgages is coming up later this year. These mortgages are facing a reset. They are called option arms. They are soon going to dwarf subprime loans in size. These loans allowed the borrowers to pick what they wanted to pay each month, even if they wanted to pay less than the principal amount owed. Forget the interest. Under these terms you didn't even have to keep up with the principal payments. Of course, you have to catch up when the initial reset hits.

Fitch Ratings estimates $134 billion in option arms will reset in the next 2 years, even as unemployment remains high. What began as a risky subprime mortgage crisis has now morphed into a solid prime mortgage and crazy option-arm crisis. What began as an underwriting problem is now an income problem. What began as a rate reset challenge is now also a negative equity nightmare.

If we want to turn this economy around, we must attack this problem with everything we have. Imagine this financial sector which dreamed up these ways of financing homes--luring people into homes that were way beyond them, now facing a recession and foreclosures on those same loans and mortgages--has now refused to cooperate in dealing with this issue. They have washed their hands of it. They have made their money and now they want to walk away from it.

Sadly, what we are doing now in this country isn't enough. Two years after the cruelly named Hope Now Alliance was launched by then-Secretary of the Treasury and the big banks, the response to this crisis is awful. As Congress has looked on with a hands-off attitude, millions of our constituents have been thrown out on the street by the same banks that drove us into this economic ditch. I give credit to the Obama administration for creating a targeted program called the Home Affordable Modification Program which, if implemented aggressively, could save at least some of the families at risk. But even this modest effort has been stymied by the absolute failure of the banks to aggressively implement it.

Under this program the banks get paid--bribed really--with several thousand dollars for every mortgage they modify to keep families in their homes. Let me tell you what the data released by the Treasury Department this week tells us about this program which gave money to banks to renegotiate mortgages. Only 125,000 modifications under this program were started last month by the mortgage servicers, even though nearly 3 million homeowners were eligible for these modifications.

Let me do the math--125,000 out of 3 million. If I understand that correctly, we are dealing roughly with \1/24\th of those who were eligible for modification who actually got help. That is about 4 percent.

Bank of America has started modifications with just 7 percent of their homeowners that were eligible; Wells Fargo, only 11 percent; American Home Mortgage Servicing has nearly 100,000 troubled borrowers eligible for mortgage modification offers yet less than 1 percent of these borrowers have even received an offer.

The situation is deplorable. If the banks don't start offering money and modifications to these families, perhaps Congress needs to make the banks some offers they can't refuse. We have tried this voluntary approach for too long and it has failed. The banks are not voluntarily going to step up to this responsibility of negotiating and renegotiating a mortgage so people can stay in their homes. Maybe we should fine banks for not following the administration's plan rules. Maybe we should provide matching funds for States and municipalities that decide to require mandatory face-to-face arbitration between a bank and a homeowner before a bank can ask for a foreclosure. Maybe we should ensure families have the right to rent their home after a bank takes it over until the home can be sold. And maybe we should look again to changing the Bankruptcy Code to allow judges to help families save their primary loans.

This is called cram-down by its critics, but it is a basic change in bankruptcy law, which I have brought to the floor of the Senate twice and lost. I lost because the banks said: Don't worry about it, we are going to take care of this. They are not. The situation is getting worse by the day.

Last week I was in Chicago and went to an area known as Marquette Park on the south side of the city. I have been visiting that neighborhood for years. It has changed a lot. Originally it was an area where many Lithuanian Americans settled. My mother was an immigrant from Lithuania, and I used to take her there when she was alive. We would go to the bakeries and restaurants, and it was a wonderful neighborhood. It has changed many times. It is now primarily a Black and Hispanic neighborhood. As you visit some of the folks who have lived in that neighborhood for 10, 15, 20 years now, you see a lot of proud homeowners.

I met a family--a man who said he had been in his home 19 years. Obviously, he was retired. His wife was there. They had a well kept, neat yard. I talked to him about his street because right across the street from him was an eyesore that no one would want to wake up to every morning. It was a brand-new home built and abandoned about 2 years ago. It had been boarded up and vandalized. They had ripped out all the copper plumbing and anything they could take out of it. It was a home that, sadly, had become a haven for homeless people and vagrants, drug activity, and gangs. Welcome to my neighborhood.

I thought about this poor man, who had devoted his whole life to his little home that he loved, and that he and his wife were keeping so neat, now had to look across the street to that mess every morning for 2 straight years. It wasn't the only home on the block. Three doors down there was another one, all boarded up and falling apart; a few doors down the other direction, exactly the same thing.

I went through this area with a community group called SWOP--Southwest Organizing Project. They work with a lot of churches and individuals trying to keep people in their homes. I asked: What is the problem? Well, they said, we have some major banks that are holding these mortgages in foreclosure and won't lift a finger.

Deutsch Bank, you hear about Deutsch Bank. Don't they sponsor tennis or golf or something? I can't keep up with their image building. But I can tell you they are not building their image in this neighborhood in Chicago. They are nowhere to be found. They are not even talking to these people about their homes.

U.S. Bank out of Minnesota, another situation, similar situation. We don't have buy-in by these banks to help these families. They would much rather let these homes go into foreclosure--bank ownership, as they call it--and sit there rotting, destroying these good neighborhoods in the city of Chicago, bringing down the value of the homes around them, creating crime havens for those who use these abandoned homes. They are nowhere to be found.

What is the answer, Mr. President? The answer is we have asked these banks and many others to volunteer to solve the problem. Guess what. There aren't enough hands going up, not enough banks volunteering. A few of them are starting to try, and I want to give credit to Bank of America, which is working with SWOP and others to try to renegotiate mortgages, but it is still a halfhearted effort. They could do a lot more.

I could go through the long list of banks, including banks that I have worked with in the past and thought pretty highly of. They aren't getting involved. There is no reason for them to because our government and our Congress tell them they do not have to, and they do not. Well, that has to change.

All told, I hope this economy recovers quickly and that Americans can get back to work. I don't think it is going to happen until the housing market stabilizes. If the banks will not help us get that done on their own, it is time to consider something radical--a change in the law. Where would be a good place to start with the change in the law? How about the Senate? How about the Senate making the Bankruptcy Code so that a judge can say to that bank owning that home: Incidentally, the last stop in bankruptcy is my courtroom. If you don't sit down and negotiate with that homeowner, who still has a job and still can make a payment, this court is going to impose new terms in terms of principal and interest.

Does that sound like a radical idea? It is not radical if you are talking about a second home because the bankruptcy court can already do that. It is not radical if you are talking about a vacation home because a bankruptcy court can already do it. But under our law they cannot touch that primary residence. It is a bad idea, and as a result the banks and their lobbyists have prevailed twice on the floor of the Senate. They rolled over this effort to reform, and they sit there and watch America's neighborhoods, America's communities, America's towns and cities deteriorating before our eyes.

Well, the lesson is clear for the Obama administration, for Secretary Geithner, and others. Waiting for these banks to act voluntarily, to show good faith in dealing with our foreclosure crisis is not paying off. It is time for the Senate to step forward, show its own leadership when it comes to dealing with this national housing crisis.