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By: T. Cahill
Washington, D.C. (July 15) – In his address on the Senate floor, July 14, Senator Durbin reminded us all who, how, and when the economy imploded. He revisited the scene of the crime, so to speak, and the tailspin of unemployment and Wall Street greed. In his speech regarding the affirmation of much-needed financial regulatory reform, the Senator stated, “[sic] reform the financial laws in America, to make certain that our country never faces again what we faced a short time ago under President Bush.”
During October 2008, prior to the end of the Bush administration, “when the economy started to go into a tailspin”, Senator Durbin recalls a special meeting, a rare event in Washington, that brought together the leaders of both the House and the Senate, Republican and Democrat, with Ben Bernanke, Chairman of the Federal Reserve. Mr. Paulson, Treasury Secretary, was also present.
It was at the October 2008 meeting that lawmakers received their clearest picture. “These two leaders of our economy came forward and told us that we were facing the collapse of major businesses in America. Specifically, they pointed to the collapse of AIG,” reiterated Durbin. It also was in that meeting that the disclosure was made that AIG “had engaged in some practices where it had promised as an insurance policy that it would back up commercial transactions.”
The reality was, as so many worldwide now know, AIG had overextended itself and “did not have the sufficient reserves to meet their promises”.
Another truth revealed during that October 2008 meeting was that it “came as a surprise to many of us in the room, unaware of the fact that the Federal Reserve had both the resources and the legal authority” to assist AIG in weathering the crisis. It was made apparent that the authority to do so had been created almost 80 years ago.
“That was the first meeting. It was an indication of a terrible, rocky, rough road ahead for America and ultimately for the world. Subsequent meetings were even more alarming, as we were told by Secretary of the Treasury Hank Paulson that unless we came up with $800 billion in what was known as the TARP fund, which would be used to basically bail out the largest financial institutions in America, America’s economy and the global economy could collapse,” Senator Durbin continued. “I have been involved in public life for a number of years. That is the type of conversation you never forget. Many of us were at a loss to argue the other side of the case that the problem was not that large or that the response did not have to be that significant or that the strategy and tactics were not the right ones. This was really uncharted water.”
The uncharted territory meant, “we relied on our economic leaders from the Federal Reserve and from the Department of the Treasury to suggest what we needed to do to go forward.”
Fast forward a few months, and with an economic crisis in full swing, as President Obama was taking office, prior to being sworn in, almost 750,000 individuals were losing their jobs. “The President [Obama] walked into a terrible situation, with the economy still in decline, with the TARP program President Bush had started in process but not completed, with unemployment reaching modern-day record levels, and with no end in sight,” stated Senator Durbin. “He inherited the biggest deficit in the history of the United States from President Bush. What a contrast to what President Bush inherited 8 years before.”
Mathematics is a wonderful tool. It has no political agenda. Numbers are what they are, and the facts reveal that when George W. Bush took office, “as Budget Director under President Clinton, Jack Lew, in January of 2001, left President George W. Bush a surplus in the Federal Treasury of $236 billion. That is an amazing legacy, to end 8 years of President Clinton’s administration with a surplus in the Federal Treasury, the deficit coming down, Social Security getting stronger, and to hand it off to President Bush.”
Many have stated the mathematical fact that from the time of President George Washington until the end of President Clinton’s administration, more than 200 years later, the entire accumulated U.S. debt was approximately $5 trillion. Plus the $236 billion sitting as surplus within the treasury.
It is old news that President Bush, with treasury surplus money, proceeded to spent every penny. It is also old news that as George W. Bush left office, the debt had accumulated to $12 trillion. In eight of the longest years in political history for many, President George W. Bush managed to more than double the national debt, deregulate financial oversight, allow without penalty American jobs to be shipped overseas, and turn the U.S. economy into rubble. Rubble that swiftly created a global impact.
Senator Durbin, yesterday, brought to the American public’s attention the very questions we all need to be asking ourselves. “Why don’t we have the support of more Republicans? Why won’t they step up with us and make this [Financial Reform] bipartisan? Four or five of them will have the courage to do it, and I tip my hat to them. I am glad they are joining us.” However, he continued, “This should be a bipartisan effort. But the others [GOP] need to explain why they do not want us to move forward with financial regulatory reform. They have to explain why they wanted to stand for the status quo, leave the laws as written, and run the risk of another recession in another day, leading to millions of people losing their jobs and businesses failing.”
Senator Durbin, along with the rest of the country know the reason, “Their vote against this will be good news to the banking industry, the special interest groups, such as credit card companies, but it certainly doesn’t face the responsibility we all have to deal with the economic crisis facing this Nation.”
There does exist a “political reality”, as Senator Durbin stated toward the end of his address, “In the Senate, there are 41 Republican Senators. The bill I have described should be a bill supported by both sides of the aisle. We will be fortunate to have four or five Republicans step up and join us to pass this bill. The overwhelming majority of Republicans will oppose this bill and side with the banking industry.”
Source: 111th Congressional report, July 14, 2010