On the floor of the United States Senate this afternoon, Sen. Robert Menendez (D-Hoboken) addressed the ongoing financial crisis, tried to ascertain its real world impact, and argued for why Congress needs to act decisively.
"What’s not making the headlines is what this economic crisis means for people in our hometowns," said Menendez, who acknowledged a Star-Ledger editorial, which criticized elected officials for not making a cogent argument for why the package is necessary. The $700 billion Wall Street bailout failed yesterday.
Simultaneously, the Dow lost $1 trillion, $200 billion in value.
"The problem is we see no stability, so losses are real," said Menendez, a member of the Senate Banking Committee. "…Each member of the Senate, each member of the House needs to find the courage to act on something that isn't very popular."
Embattled banks have cut back on lending, which ripples down to every level of commerce in the country, depriving contractors, farmers and small business owners of credit and thereby weakening their ability to maintain payroll.
Unemployment already stands at 6.1 percent, but is likely to grow without market stability.
Giving one industry example, Menendez said, "For farmers, crop planting depends on the amount of available credit, they can’t plant next year’s crop without depending on this year’s loans, The credit crunch creates a higher and higher standard for the terms and conditions in which you borrow. …That has a direct consequence to the food we put on our dining room tables."
As banks look for ways to recoup their losses, they will continue to raise credit card interest rates, pushing people beyond their limits, deepening their debt. When there is a multiplicity of foreclosures in a community – as there is now – other people’s home values diminish, while the rateable base begins to shrink. When the rateable base shrinks, local government must either cut services or raise taxes, said the former mayor of Union City.
With "hundreds of thousands of Americans losing their jobs and millions of Americans losing their homes… most Americans are outraged," said Menendez, specifically acknowledging people’s wariness about bailing out Wall Street.
"But let’s be very clear, the reality is we are facing a consequence," Menendez said. Even though the multi-millionaire CEO should be punished, "We can’t watch two to three million Americans lose their jobs" just to punish the few CEOs whose irresponsibility created the crisis.
As Congress in the course of the next 48 hours attempts again to break the deadlock on the bailout package, Menendez says he wants to see strengthened provisions concerning emergency loans for small businesses, relief for home-owners, and overall stronger regulation and enforcement.
"If we have to rescue Wall Street, we should also rescue homeowners," Menendez said. "It doesn’t make sense to sign off on a package that keeps the CEO in his office and kicks the family out of their home."
The senator hinted in his remarks that he would prefer to see the changes added to the bailout package before the Senate votes on the measure, but that if it can't get those changes, the governing body needs to approve the package anyway now and then revist the reforms later.