Over the last few days, we have seen clearly what's at stake in this
election. The news from Wall Street has shaken the American people's faith in
our economy. The situation with Lehman Brothers and other financial
institutions is the latest in a wave of crises that have generated tremendous
uncertainty about the future of our financial markets. This is a major threat
to our economy and its ability to create good-paying jobs and help working
Americans pay their bills, save for their future, and make their mortgage
payments.
Since this turmoil began over a year ago, the housing market has collapsed.
Fannie Mae and Freddie Mac had to be effectively taken over by the government.
Three of
A few hours later, his campaign sent him back out to clean up his remarks,
and he tried to explain himself again this morning by saying that what he meant
was that American workers are strong. But we know that Senator McCain meant
what he said the first time, because he has said it over and over again
throughout this campaign - no fewer than 16 times, according to one independent
count.
Now I certainly don't fault Senator McCain for all of the problems we're
facing, but I do fault the economic philosophy he subscribes to. Because the
truth is, what Senator McCain said yesterday fits with the same economic
philosophy that he's had for 26 years. It's the philosophy that says we should
give more and more to those with the most and hope that prosperity trickles
down. It's the philosophy that says even common-sense regulations are
unnecessary and unwise. It's a philosophy that lets
We've had this philosophy for eight years. We know the results. You feel it
in your own lives. Jobs have disappeared, and peoples' life savings have been put
at risk. Millions of families face foreclosure, and millions more have seen
their home values plummet. The cost of everything from gas to groceries to
health care has gone up, while the dream of a college education for our kids
and a secure and dignified retirement for our seniors is slipping away. These
are the struggles that Americans are facing. This is the pain that has now
trickled up.
So let's be clear: what we've seen the last few days is nothing less than
the final verdict on an economic philosophy that has completely failed. And I
am running for President of the
If you want to understand the difference between how Senator McCain and I
would govern as President, you can start by taking a look at how we've
responded to this crisis. Because Senator McCain's approach was the same as the
Bush Administration's: support ideological policies that made the crisis more
likely; do nothing as the crisis hits; and then scramble as the whole thing
collapses. My approach has been to try to prevent this turmoil.
In February of 2006, I introduced legislation to stop mortgage transactions
that promoted fraud, risk or abuse. A year later, before the crisis hit, I
warned Secretary Paulson and Chairman Bernanke about the risks of mounting
foreclosures and urged them to bring together all the stakeholders to find
solutions to the subprime mortgage meltdown. Senator McCain did nothing.
Last September, I stood up at NASDAQ and said it's time to realize that we
are in this together - that there is no dividing line between Wall Street and
In January, I outlined a plan to help revive our faltering economy, which
formed the basis for a bipartisan stimulus package that passed the Congress.
Senator McCain used the crisis as an excuse to push a so-called stimulus plan
that offered another huge and permanent corporate tax cut, including $4 billion
for the big oil companies, but no immediate help for workers.
This March, in the wake of the Bear Stearns bailout, I called for a new,
21st century regulatory framework to restore accountability, transparency, and
trust in our financial markets. Just a few weeks earlier, Senator McCain made
it clear where he stands: "I'm always for less regulation," he said,
and referred to himself as "fundamentally a deregulator."
This is what happens when you confuse the free market with a free license to
let special interests take whatever they can get, however they can get it. This
is what happens when you see seven years of incomes falling for the average
worker while Wall Street is booming, and declare - as Senator McCain did
earlier this year - that we've made great progress economically under George
Bush. That is how you can reach the conclusion - as late as yesterday - that
the fundamentals of the economy are strong.
Well, we have a different way of measuring the fundamentals of our economy.
We know that the fundamentals that we use to measure economic strength are
whether we are living up to that fundamental promise that has made this country
great -that
Americans have always pursued our dreams within a free market that has been
the engine of our progress. It's a market that has created a prosperity that is
the envy of the world, and rewarded the innovators and risk-takers who have
made
Too often, over the last quarter century, we have lost this sense of shared
prosperity. And this has not happened by accident. It's because of decisions
made in boardrooms, on trading floors and in
Let me be clear: the American economy does not stand still, and neither
should the rules that govern it. The evolution of industries often warrants
regulatory reform - to foster competition, lower prices, or replace outdated
oversight structures. Old institutions cannot adequately oversee new practices.
Old rules may not fit the roads where our economy is leading. But instead of
sensible reform that rewarded success and freed the creative forces of the
market, too often we've excused an ethic of greed, corner-cutting and inside
dealing that threatens the long-term stability of our economic system.
It happened in the 1980s, when we loosened restrictions on Savings and Loans
and appointed regulators who ignored even these weaker rules. Too many S&Ls
took advantage of the lax rules set by
And it has happened again during this decade, in part because of how we
deregulated the financial services sector. After we repealed outmoded rules
instead of updating them, we were left overseeing 21st century innovation with
20th century regulations. When subprime mortgage lending took a reckless and
unsustainable turn, a patchwork of regulators systematically and deliberately
eliminated the regulations protecting the American people and failed to raise
warning flags that could have protected investors and the pensions American
workers count on.
This was not the invisible hand of the market at work. These cycles of
bubble and bust were symptoms of the ideology that my opponent is running to
continue. John McCain has spent decades in
Make no mistake: my opponent is running for four more years of policies that
will throw the economy further out of balance. His outrage at Wall Street would
be more convincing if he wasn't offering them more tax cuts. His call for
fiscal responsibility would be believable if he wasn't for more tax cuts for
the wealthiest Americans, and more of a trillion dollar war in Iraq paid for
with deficit spending and borrowing from foreign creditors like China. His
newfound support for regulation bears no resemblance to his scornful attitude
towards oversight and enforcement. John McCain cannot be trusted to reestablish
proper oversight of our financial markets for one simple reason: he has shown
time and again that he does not believe in it.
What has happened these last eight years is not some historical anomaly, so
we know what to expect if we try these policies for another four. When
lobbyists run your campaign, the special interests end up gaming
the system. When the White House is hostile to any kind of oversight, corporations
cut corners and consumers pay the price. When regulators are chosen for their
disdain for regulation and we gut their ability to enforce the law, then the
interests of the American people are not protected. It's an ideology that
intentionally breeds incompetence in
Just today, Senator McCain offered up the oldest
History shows us that there is no substitute for presidential leadership in
a time of economic crisis. FDR and Harry Truman didn't put their heads in the
sand, or hand accountability over to a Commission. Bill Clinton didn't put off
hard choices. They led, and that's what I will do. My priority as President will
be the stability of the American economy and the prosperity of the American
people. And I will make sure that our response focuses on middle class
Americans - not the companies that created the problem.
To get out of this crisis - and to ensure that we are not doomed to repeat a
cycle of bubble and bust again and again - we must take immediate measures to
create jobs and continue to address the housing crisis; we must build a 21st
century regulatory framework, and we must pursue a bold opportunity agenda that
creates new jobs and grows the American economy.
To jumpstart job creation, I have proposed a $50 billion Emergency Economic
Plan that would save 1 million jobs by rebuilding our infrastructure, repairing
our schools, and helping our states and localities avoid damaging budget cuts.
I worked with leaders in Congress to create a new FHA Housing Security
Program, which will help stabilize the housing market and allow Americans
facing foreclosure to keep their homes at rates they can afford. Going forward,
we need to replace Fannie Mae and Freddie Mac as we know them with a structure
that is focused on helping people buy homes - not engaging in market
speculation. We can't have a situation like the old S&L scandal where its
"heads" investors win, and "tails" taxpayers lose. That's
going to take ending the lobbyist-driven dominance of these institutions that
we've seen for far too long in
To prevent fraud in the mortgage market, I've proposed tough penalties on
fraudulent lenders, and a Home Score system that will ensure consumers fully
understand mortgage offers and whether they'll be able to make payments. To
help low- and middle-income families, I will ease the burden on struggling
homeowners through a universal homeowner's tax credit. This will add up to a 10
percent break off the mortgage interest rate for 10 million households. That's
another $500 each year for many middle class families.
Unlike Senator McCain, I will change our bankruptcy laws to make it easier
for families to stay in their homes. Right now, if you're a family that owns
one house, bankruptcy judges are actually barred from helping you keep a roof
over your head by writing down the value of your mortgage. If you own seven
homes, the judge is free to write down any or all of the debt on your second,
third, fourth, fifth, sixth or seventh homes. Now that may be of comfort to
Senator McCain, but that's the kind of out-of-touch
But as we've seen the last few days, the crisis in our financial markets now
reaches well beyond the housing market. That's why it's time to do what I
called for last September and again this past March - and it is only more
overdue today.
Our capital markets cannot succeed without the public's trust. It's time to
get serious about regulatory oversight, and that's what I will do as President.
That starts with the core principles for reform that I discussed at Cooper
Union.
First, if you're a financial institution that can borrow from the
government, you should be subject to government oversight and supervision. When
the Federal Reserve steps in as a lender of last resort, it is providing an
insurance policy underwritten by the American taxpayer. In return, taxpayers
have every right to expect that financial institutions with access to that
credit are not taking excessive risks.
Second, we must reform requirements on all regulated financial institutions.
We must strengthen capital requirements, particularly for complex financial
instruments like some of the mortgage securities and other derivatives at the
center of our current crisis. We must develop and rigorously manage liquidity
risk. We must investigate rating agencies and potential conflicts of interest
with the people they are rating. And we must establish transparency
requirements that demand full disclosure by financial institutions to
shareholders and counterparties. As we reform our regulatory system at home, we
must address the same problems abroad so that financial institutions around the
world are subject to similar rules of the road.
Third, we need to streamline our regulatory agencies. Our overlapping and
competing regulatory agencies cannot oversee the large and complex institutions
that dominate the financial landscape. Different institutions compete in
multiple markets -
Fourth, we need to regulate institutions for what they do, not what they
are. Over the last few years, commercial banks and thrift institutions were
subject to guidelines on subprime mortgages that did not apply to mortgage
brokers and companies. This regulatory framework failed to protect homeowners,
and made no sense for our financial system. When it comes to protecting the
American people, it should make no difference what kind of institution they are
dealing with.
Fifth, we must crack down on trading activity that crosses the line to
market manipulation. The last six months have shown that this remains a serious
problem in many markets and becomes especially problematic during moments of
great financial turmoil. We cannot embrace the administration's vision of
turning over the protection of investors to the industries themselves. We need
regulators that actually enforce the rules instead of overlooking them. The SEC
should investigate and punish market manipulation, and report its conclusions
to Congress.
Sixth, we must establish a process that identifies systemic risks to the
financial system like the crisis that has overtaken our economy. Too often, we
end up where we are today: dealing with threats to the financial system that
weren't anticipated by regulators. We need a standing financial market advisory
group to meet regularly and provide advice to the President, Congress, and
regulators on the state of our financial markets and the risks they face. It's
time to anticipate risks before they erupt into a full-blown crisis.
These six principles should guide the legal reforms needed to establish a
21st century regulatory system. But the change we need goes beyond laws and
regulation. Financial institutions must do a better job at managing risks.
There is something wrong when boards of directors or senior managers don't
understand the implications of the risks assumed by their own institutions.
It's time to realign incentives and CEO compensation packages, so that both
high level executives and employees better serve the interests of shareholders.
Finally, the American people must be able to trust that their government is
looking out for all of us - not the special interests that have set the agenda
in Washington for eight years, and the lobbyists who run John McCain's
campaign.
I've spent my career taking on lobbyists and their money, and I've won. If
you wanted a special favor in
When I got to
The most important thing we must do is restore opportunity for all
Americans. To get our economy growing, we need to recapture that fundamental
American promise. That if you work hard, you can pay the bills. That if you get
sick, you won't go bankrupt. That your kids can get a good education, and that
we can leave a legacy of greater opportunity to future generations.
That's the change the American people need. While Senator McCain likes to
talk about change these days, his economic program offers nothing but more of
the same. The American people need more than change as a slogan- we need change
that makes a real difference in your life.
Change means a tax code that doesn't reward the lobbyists who wrote it, but
the American workers and small businesses who deserve it. I will stop giving
tax breaks to corporations that ship jobs overseas, and I will start giving
them to companies that create good jobs right here in America. I will eliminate
capital gains taxes for small businesses and start-ups - that's how we'll grow
our economy and create the high-wage, high-tech jobs of tomorrow.
I will cut taxes - cut taxes - for 95% of all working families. My opponent
doesn't want you to know this, but under my plan, tax rates will actually be
less than they were under Ronald Reagan. If you make less than $250,000 a year,
you will not see your taxes increase one single dime. In fact, I offer three
times the tax relief for middle-class families as Senator McCain does - because
in an economy like this, the last thing we should do is raise taxes on the
middle-class.
I will finally keep the promise of affordable, accessible health care for
every single American. If you have health care, my plan will lower your
premiums. If you don't, you'll be able to get the same kind of coverage that
members of Congress give themselves. And I will stop insurance companies from
discriminating against those who are sick and need care the most
I will create the jobs of the future by transforming our energy economy.
We'll tap our natural gas reserves, invest in clean coal technology, and find
ways to safely harness nuclear power. I'll help our auto companies re-tool, so
that the fuel-efficient cars of the future are built right here in
And now is the time to finally meet our moral obligation to provide every
child a world-class education, because it will take nothing less to compete in
the global economy. I'll recruit an army of new teachers, and pay them higher
salaries and give them more support. But in exchange, I will ask for higher
standards and more accountability. And we will keep our promise to every young
American - if you commit to serving your community or your country, we will
make sure you can afford a college education.
This is the change we need - the kind of bottom up growth and innovation
that will advance the American economy by advancing the dreams of all
Americans.
Times are hard. I will not pretend that the changes we need will come
without cost - though I have presented ways we can achieve these changes in a
fiscally responsible way. I know that we'll have to overcome our doubts and
divisions and the determined opposition of powerful special interests before we
can truly reform a broken economy and advance opportunity.
But I am running for President because we simply cannot afford four more
years of an economic philosophy that works for Wall Street instead of
I don't want to wake up in four years to find that more Americans fell out
of the middle-class, and more families lost their savings. I don't want to see
that our country failed to invest in our ability to compete, our children's
future was mortgaged on another mountain of debt, and our financial markets
failed to find a firmer footing.
This time - this election - is our chance to stand up and say: enough is
enough!
We can do this because Americans have done this before. Time and again,
we've battled back from adversity by recognizing that common stake that we have
in each other's success. That's why our economy hasn't just been the world's
greatest wealth generator - it's bound America together, it's created jobs, and
it's made the dream of opportunity a reality for generation after generation of
Americans.
Now it falls to us. And I need you to make it happen. If you want the next
four years looking just like the last eight, then I am not your candidate. But
if you want real change - if you want an economy that rewards work, and that
works for Main Street and Wall Street; if you want tax relief for the middle
class and millions of new jobs; if you want health care you can afford and
education so that our kids can compete; then I ask you to knock on some doors,
and make some calls, and talk to your neighbors, and give me your vote on
November 4th. And if you do, I promise you - we will win