March 14, 2007

Chairman Dodd's Remarks Before the National League of Cities Conference

I'm honored to be here and to be once again a part of an organization that I respect immensely and during my 26 years in the Senate I have enjoyed working with my delegation in Connecticut on many, many issues that are common to all of you here in this room. And as of a few months ago I have now become the new chairman of the Senate Banking, Housing and Urban Affairs Committee. And I intend to put the "Urban" back into that committee's title, with the work that you are interested in and I'm interested in as well. So I'd like to acknowledge, if I could, some of my congressional colleagues as well. You've just heard from my good friend and colleague from New York. And you've heard from Norm Coleman. I gather you're going to hear from Joe Biden as well and Jim Oberstar yesterday. And I'm delighted these individuals are here to participate. I would hope we might get more of the bipartisan participation as well. I don't think the country can survive much longer 51-49. The cities and communities that you represent have to count on all of us up here to listen to you carefully, to understand your agenda, how important it is to the people you represent, and to do our very best to solve these problems that you grapple with every single day. So I'd like to speak to you this morning, if I could, just about change, what's in front of all of us here, whether you serve at the local, state or national level. And specifically, I want to talk about what I believe we can and must do, as public citizens, in the next few years, to put our nation and our country back on track. I can't imagine a better forum, frankly, to discuss those issues than the National League of Cities. And I mean that very sincerely. You do tremendous work every single day. I always say the toughest job in American politics is at the local level. Those of us who serve at the national legislature get to come to Washington. State legislators go to their state capitals. But if you serve at the local level, you're there every single day, grappling with the issues that confront the people you represent, very directly. And you have to face them every single day about the decisions you make. It's been said that everything that happens in America first happens in our cities and towns. Since the founding of your organization some 80 years ago, this organization has been dedicated to making a positive difference for the American people and to our cities and towns throughout the country. In a sense, I wish we celebrated more what happens in our urban areas. I look around the world and in many countries there is a celebration of the urban areas. There's a sense of pride throughout nations about their major urban populations. Too often, we haven't done that in our country, and fail to recognize how important our cities are, not just to the people who live in them but people throughout our country who benefit and enjoy a quality of life because of what happens in our major urban areas and cities. So we gather this morning at what I would consider to be a critical moment in the life of our country. This is a time when the gap between America's promise and America's progress is wider than it has been in many years, I believe; certainly in my lifetime. So much is at stake here. I'm preaching to the choir, obviously, about this. On the one hand, it's a time of nearly unparalleled possibility in our country. Every day we read about and hear about breakthroughs in technology and medicine and science. These developments harbor vast potential to create new and a better life for all of our people. Yet as all of you know better than most, these are also times of some dire warnings as well. Far too many of our children in this country are forced to learn in crumbling schools. Too many families find it impossible to get decent health care or child care. Too many working men and women struggle to find well-paying jobs and security in their retirement with pensions. Too many parents look in on their children every night and wonder if they will inherit a lesser life in a lesser land. And as you hear from many people that you represent, so do I, and I hear the persistent refrain that our nation is on the wrong path in too many areas, misgivings about where America is being led at home and abroad. Six short years ago, of course, President Bush inherited the largest budget surplus in American history. Six years later, the record of surpluses has turned into the largest national debt in our nation's history. Five years ago, America weathered the storm of 9/11. The civilized world rallied to America's side and looked toward the United States to lead a community of nations to confront the common effort to defeat terror. Five years later, we're terribly isolated in the world, we're mired in a war that has cost us over 3,000 lives, $2 billion a week, $8 billion a month, and tens of thousands of Iraqis have suffered as well. A war, I would add, that has distracted us from the true threats of Al Qaida, nuclear proliferation in Iran and North Korea; a war that even the president's own intelligence experts say has made America less safe, unfortunately. These are the times that truly call out for some new and bold thinking to solve the challenges that we all face. Now, I'm an optimist and I have a lot of confidence in our people in this country. But the hour is growing late, and I think all of us need to take stock of that and decide whether or not we're going to get the job done on some of these critical issues. I firmly believe that we only have a few years to put our national house in order. And I'm convinced that the decisions we make over the next decade will largely determine the quality of life that our children and grandchildren will live in the 21st century. Now, again, I know I'm preaching to the choir. Those of you who lead our nation's cities and towns understand, I think, the urgency of this situation. Certainly, people in my home state talk to me about it all the time, what goes on in my cities and small towns in Connecticut. That understanding is reflected in your legislative priorities that you presented to all of us with your presence here this week and the conference materials you've given to us. And I think if we listen to you, your vision can help create safer streets in this country, increased and more sustainable homeownership, cleaner environment for our nation, more innovation, good jobs for our people; all of those things. For too long, it seems to me, the needs of our nation's cities and towns have been ignored by the United States Congress. And I'm here to tell you this morning that as far as I'm concerned, as the new chairman of the Senate Banking Committee, those days are over with. As the chairman of that committee, let me say this clearly – as clearly as I possibly can: I'll stand with you. I support your agenda. I'll stand by the people that you serve in your communities. I look forward to working with you on your agenda. And so your mission will be my mission as well. Your presence here is very, very important. No one can make a better case to my colleagues in the Congress or to the administration than those who represent our cities and towns. So let me just say very briefly -- because I'd like to talk about two subject matters that aren't directly on your agenda. I'm a strong supporter of the Community Development Block Grant; have been for 26 years, not going to change now. I understand the importance of that. A strong supporter of the Hope VI program, of Section 8 housing and other investments that we ought to be making to create good and safe affordable homes for people in our country. Because nothing is more fundamental to America's ability to succeed, of course, than safe, affordable housing. I also want to ask for your help as the author of the FIRE Act and the SAFER bill to see to it that we don't lag behind in our attempts to provide those first responders in your communities with the tools necessary for them to do their jobs. It's going to be critically important. Together we can fight to have affordable health care in our country. Better schools -- we need to reform the No Child Left Behind Act, a federal mandate that doesn't provide the resources or has too strict restrictions on the ability to educate children—this is something that we need to change. And obviously, safer streets for our people is something all of us care about. I want to mention, as well, support for transit funding and for security in transit funding. There are 1.8 million people who travel on our airways every single day. Roughly 14 million use mass transit systems in our cities and towns. We have spent $24 billion to improve the security of our airports and air travel over the last four to five years. We've spent $386 million to improve the security of our mass transit systems. I had a hearing just a few weeks ago and invited the head of the transit systems of Madrid, Spain, and London, England; two transit systems that have suffered the tragedies of terrorist attacks on their systems. Fifteen hundred people were injured in Spain, 192 were killed. In London, not quite that many, but certainly a horrendous attack. There have been far more incidents worldwide on mass transit systems than there have been on the aviation systems. I don't take a back seat to anyone in doing what we need to do to protect our airports and our airways, but I want to see us do more if we can here to help make our mass transit systems far more secure. We had our very first hearing of the banking committee on transit issues. You have my commitment we'll do everything we can to get resources back to you to make sure that these transit systems will be safe and solid, and that our citizens across the country will have the protections that they deserve. And like many of you -- of course, I chose a life in public service for one simple reason. And that was to try and make a difference for the people in my state of Connecticut – the cities and towns -- and people around the country as a member of the United States Senate, for people who ask nothing more than a chance to work hard, to build a good life for themselves and their families, and to be part of this great experiment in freedom and equality. In the few minutes that I have left with you here this morning, I'd like to raise two other issues that I think are critically important: one of them we've talked about already, I think, to some degree, and the other I'd like to draw your attention to and ask your support for. The two issues are the access to capital and credit in some of our major areas in this country, and the second is the infrastructure needs of our nation, of the arterial system that our nation is falling behind on, I'm very worried about. First, let me address, if I can, the issue of access to capital and to credit in our country. I've always believed that the best social program anyone ever created was a decent-paying job in this country. To create those jobs, of course, we must work create the conditions in which people can succeed as entrepreneurs and as workers within our free market system. In a modern economy, this requires creating the conditions that allow people and communities to prosper. It requires fostering a financial system that fuels enterprise and rewards work. We, first of all, need to do that by ensuring that financial institutions in our country run in a safe and sound manner, promoting fiscal and monetary policy that is geared for long-term growth and stability, and working to ensure that our capital markets remain the most transparent, fair, liquid and competitive in the world. But, frankly, these steps taken alone are not enough to rekindle America's promise. We also must address what I call the opportunity gap that keeps millions of Americans from fully and fairly participating in our free market economy. Today there are 10 million household in the United States of America, where no one has ever entered a bank, a thrift or a credit union. They have no place to borrow at affordable rates, no place to save for the future, no place to finance their dreams for a better life. The financial mainstream for these customers is the check-cashing shop down the block, the pay-day lender at the neighborhood strip mall, or the money-wiring location in the back of a convenience store. For the residents of these neighborhoods, the lack of access to capital has staggering costs, in my view. The price to obtain basic financial services -- getting that check cashed, sending money to a loved one back home, or paying a gas or electricity bill -- can cost them thousands and thousands of dollars over a lifetime. Those extra dollars could obviously be used for other things: retirement security, down payment on a first home, paying for a child's tuition. We've got to find a way in our country to bring more Americans into the financial mainstream. That means working to bring more mainstream financial institutions into these underserved areas, many of which you represent as mayors and first-select people and leaders in your local communities across this country. We are awash in capital in the United States today. These wonderful developments and hedge funds and other things have created incredible wealth in our nation. But it's seeking places to park. And unfortunately, the places it seeks to park are not always in the places where it's needed most. If United States capital and credit can find their way to some of the most remote markets in the world, we can surely find a way for these markets to find the same kind of access in our cities and towns. If the United States government can create incentives to invest capital overseas as we do, then I believe we ought to create incentives for investment in forgotten corners of America's cities and towns in this country. Why not have a domestic overseas private investment corporation? Why not have a domestic export-import bank which provides guarantees to banks where investments are made where risky capital is at stake? That's why I have been focusing in the Banking Committee in these early months on improving access to affordable credit and other financial services. For far too many years, mainstream financial institutions have known how to take capital out of the people in these areas, but too often don't understand how you need to put it back in as well. Just look at the credit card situation, if you will. The average American family has a revolving debt problem of over $9,300; 98 percent of that is in credit cards and it's growing. When you consider that a median income for an American family is $43,000, with that kind of credit card obligations growing by the day, it's going to be very difficult for these people to put aside the savings or make the kind of investments for their own financial security and future. When you have these kinds of interest rates and gimmicks that are being used to make it impossible for people to get out from under these obligations, then the problems only get worse and worse. I'm a strong advocate of credit cards; don't misunderstand me. But the abuse by the financial institutions in making it impossible for people to get out from underneath these financial problems is causing us serious, serious problems. We've already had hearings on this, and my hope is that we'll pass legislation that'll prohibit some of the practices that have made it so difficult for people to manage their financial affairs in a more solid and safe way. The opportunity gap also exists in the area of affordable housing and homeownership. By some measures, this is growing. Nothing is more emblematic, in my view, of the fulfillment of the American dream than buying a home. A home is more than a symbol, in many ways, of achievement. It still represents the most substantial financial asset that most Americans will ever own. It is the cornerstone of most Americans' financial prosperity and security. And homeownership is vital to the stability of our neighborhoods and our communities. As you're all painfully aware in this room, new challenges to homeownership are emerging -- merely look at the headlines of the morning newspapers today -- challenges that not only keep families from buying homes, but increasingly prevent them from keeping their homes that they've already bought. According to a recent study, in the next 18 months, 2.2 million families with non-traditional or subprime loans made since 1998 have faced or will soon face foreclosure because of mortgage lending practices that have been described as predatory in nature, and it's what they are. These foreclosures will cost homeowners as much as $164 billion in lost wealth, mostly in home equity that has been or will be striped away as a result of the foreclosures. For these consumers, the American dream will become the American nightmare. If left unaddressed, the ripple effect on our communities and cities will be enormous. Mayors, select-people, leaders in our communities will have to contend with greater rates of poverty in your communities, homelessness and blight in too many cases. We need to do something on this, we need to do it soon. The kind of lending that is going on here is unacceptable. We've been pushing both industry and regulators to quickly make changes to their lending practices so that borrowers are not given loans they simply can't afford to pay back over the length of that loan. We've already had some success in this area. At the end of last month, Freddie Mac, one of the nation's largest players in the housing market, announced that it will buy and securitize mortgages only when the borrowers are reasonably able to repay their loans. Also this month, the federal financial institutions in our country came out with new guidelines that will ensure that lenders can no longer make high-cost loans to homebuyers without reasonably establishing their ability to repay those loans. So we look forward to these changes. But we need to do more, in my view. We need to find a way to help these millions of families that are currently trapped in predatory loans. If we do nothing, many of these families will lose their homes and their dreams. This is a very tough problem to solve. I'm not suggesting there's some easy answer. And I invite the participation of this organization to come up with some ideas because you will be the ones who feel this first and foremost when it happens in your community. Predatory lending has got to stop. Subprime lending has been a wonderful vehicle for making it possible for an awful lot of Americans who never could have given thought about owning a home to be able to get into the housing market. We don't want to turn that wonderful opportunity now into a serious, serious economic problem for too many of our fellow citizens. The last issue I want to talk about is infrastructure; again, not a subject that normally gets people to jump out of their seats, but an issue that I feel is terribly important if we're going to grow economically in the 21st century. Presently, our infrastructure accommodates an economy of the 1970s, or maybe even earlier. We have not been investing in the new things that need to be done in order for us to grow and to provide the quality of services for our people. And we're also making it difficult, of course, for these infrastructures, the ones we have, to be maintained. It's rather clear we must come to terms with the reality of America's crumbling infrastructure in the country. We cannot hope to sustain 21st-century cities and towns in our community when you have an infrastructure that's, in many cases, built in the 19th and early part of the 20th century. If Americans are going to succeed as entrepreneurs and employees, then we need the roads, we need the rails, the buses to get them to work safely and quickly. We need fresh water, sewage systems, treatment plants, clean energy, state-of-the-art communication networks, air traffic controllers. There's no end to what we need to be doing to make sure that we have the infrastructure capability to accommodate a growing economy. I've been working, over the last couple of years, with the Center for Strategic International Studies, along with my colleague from Nebraska, Chuck Hagel, Warren Rudman and Bob Kerrey, to put together a plan that would allow us to take advantage of some of the private capital that exists in the country today, much of which is leaving the nation, as I said earlier to you, to invest in some of the very same ideas all over the world to attract that capital to be invested here in the United States, so that we can address this critically important issue for economic growth in the 21st century. If America can rebuild war-torn Europe, if we can invest billions of your dollars to help rebuild the infrastructure of Iraq, I think the time has come for us to start talking about rebuilding the infrastructure in the United States of America something I hope you'll get involved in and care about. Let me just say, lastly, to you. I have two very young children. I have a 5-year-old and a 2-year-old. In fact, I'm the only candidate for president that gets mail from AARP and diaper services. I have a rather broad reach here from constituencies. And my daughter, Grace, was born two days after 9/11--born here in Arlington. And the morning she was born, looking out the window and seeing the Pentagon burn. Obviously, the conflictive emotions of watching your first child come into this world and see your nation suffer the worst attack that it maybe ever had. And this child of mine, who I just brought to school before coming over here this morning -- to a little preschool – several months ago, just after her fifth birthday, asked me the following two questions one morning. She said to me, she said, "Daddy, what sort of a day do you think I'm going to have?" Well, I was struck by her brilliance and eloquence, and immediately submitted an application to Yale for her, so she'd have a future. And I thought I gave a pretty good answer in describing what her day would be like in preschool. About 30 seconds later, she asked me the following question, in exactly these words. She said, "Daddy, what sort of a life do you think I'm going to have?" And I didn't answer the question -- I was dumbfounded by the question. But I realized I'd been asking that question about her since the day she was born, particularly under the circumstances that were occurring in our country at that hour, wondering what kind of a life she'd have, what kind of a world she'd grow up in. And I know all of you have probably asked that question about your own children or grandchildren a zillion times. And it really is a question that provokes all of us to some extent, I believe, to doing what we've chosen to do; why you are a part of this organization, why you've made the decision to be involved in local government and your communities. It certainly has an awful lot to do with why I've decided to stay in public life. Because someday, that daughter of mine -- and your children -- will ask their parents and grandparents the simple question of "What did you do at the outset of the 21st century to get this right? When you fully understood that things weren't necessarily heading in the right direction and you had different choices to make, what choices did you make?" I don't think any of us here in this room, regardless of party or ideology or political persuasion, want to answer that question that we didn't do what we should have done. It's really our watch, in a sense, yours and mine now, whether you be a mayor or a United States senator, a governor, a state legislator or a private citizen. It's our turn to try and do what we can to see to it when our time comes to a close for whatever reason or whenever that occurs, that we'll be able to look back on the moment of time we had a chance to make a difference and we made good choices -- we made good choices, giving people a chance to grow and to prosper in the most remarkable land in the history of the world, for that matter, to see to it they had a chance to have a decent education, to visualize their dreams and achieve them, if possible, and to grow up with the safety and security that they ought to in this wonderful country of ours, in a safer world. So today, more than anything else in the litany of issues we have before us, is the sort of collective responsibility I think all of us feel. And that is on our watch, in our time, to get this right, so when that question is asked of us, we'll be able to say, in a broken time, in an uncertain time, we made awfully good decisions, not only of our cities and communities, but for every person in this country, to see to it that America can grow and blossom and be the great country of the 21st century it has been in the past. And I thank you immensely for listening this morning.