Hillary Clinton on the economy: "We have a crisis of confidence"

Just over a month ago, Congress passed, and President Bush signed, a $168 billion stimulus package. But this package did next to nothing to help homeowners and communities struggling with foreclosures. I said at the time, if we did not address the housing crisis, we would not be able to stem the bleeding. Congress is trying to combat a recession caused by the housing crisis without doing anything to address that crisis.

Well, if the Fed can extend $30 billion to help Bear Stearns address their financial crisis, the federal government should provide at least that much emergency assistance to help families and communities address theirs.

That’s why I’m calling for the creation of a one-time emergency $30 billion fund that would go directly to cities and states to address the housing crisis.

This money could be used to purchase foreclosed or distressed properties, which cities and states could then resell to low-income families or convert into affordable rental housing.

It could be used to help neighborhoods with high foreclosure rates avoid increased crime and blight by investing in everything from police and fire support to graffiti removal and better lighting.

It could also be used by local agencies to provide counseling and refinancing to help families avoid foreclosure in the first place. Governor Rendell has been leading the way with programs like that here in Pennsylvania. The Pennsylvania Homeowners Emergency Mortgage Assistance Program offers small, low-cost loans to families facing foreclosure. It has saved up to 40,000 homes since it started. And this past October, Governor Rendell launched two additional programs to help homeowners refinance and restructure their mortgages.

And we’re seeing results here in Pennsylvania: Since the end of 2006, Pennsylvania’s foreclosure rate has decreased 11 percent. I look forward to working with governors like Governor Rendell and with mayors like Mayor Nutter, who is already providing such outstanding leadership here in Philadelphia, to replicate this kind of success across America. The fourth and final part of my plan involves passing new legislation to clarify legal liability for mortgage companies that act to help more borrowers stay in their homes.

Right now, many mortgage companies are reluctant to help families restructure their mortgages because they’re afraid of being sued by the investment banks, the private equity firms and others who actually own the mortgage papers. Because remember, all of these mortgages were bundled up in these huge packages and sold around the world. So you can’t just go down to see your mortgage broker or your bank or your other lender to work out a deal because they no longer own the paper. This is the case even though writing down the value of a mortgage is often more profitable than foreclosing - both for mortgage companies and for most of those who own the mortgages.

That’s why I will be proposing legislation when Congress returns to provide mortgage companies with protection against the threat of such lawsuits. I know this kind of policy isn’t particularly glamorous and it probably won’t make headlines. But it will make a critical difference in helping families save their homes and getting our economy back on track.

Now, some may claim that the plan I’ve outlined today is a "bailout." They’ll argue that it’s not government’s role to help. Well, that is the same kind of tired rhetoric we’ve been hearing for years now. And I think the American people know better. We’ve had enough of that old ideology. We’re ready for solutions here and now.

And to those who object to our government helping middle class families and low income families devastated by the housing crisis, I say this: We’ve given Bear Stearns a $30 billion lifeline, we’ve given their creditors, their lenders their customers and those associated with them the same lifeline. We are now lending billions of dollars a day to help Wall Street banks that aren’t regulated, that are not held accountable. How can you tell a family about to lose their home that there’s nothing we can do to help them? How can you tell them that if they had failed spectacularly we would’ve helped them but because they are failing quietly, desperately, we are turning our backs? How can you tell them that there is nothing we can do to rebuild the American Dream?

I have been across our country for years. I know how much a home means to all of us.

I remember like it was yesterday when Bill bought our first home. It was back in 1975, and we were living in Arkansas and teaching at the university there in the law school. We weren’t yet married - though not for lack of asking on Bill’s part. And one day, we drove by this tiny red brick house with a "For Sale" sign in front. All I said was I thought it was a sweet-looking house and never thought about it again.

Several weeks later, Bill said to me, "Do you remember that house you liked? I had never been inside, I had never been outside looking inside, I had just driven by. I said, "What house that I liked?" He said, "You know, that red brick house on California Drive. Well, I bought it, so now you’d better marry me, because I can’t live in it by myself."

It wasn’t exactly a mansion. The kitchen needed a lot of work. But I did say yes. And that fall, we were married in the living room of that house, surrounded by our closest friends and family.

That first home meant the world to us. It was where we started our life together, celebrated birthdays, anniversaries and holidays with our friends. And families across America feel the same way; whether it is your first house or your tenth house. It is part of who we are as Americans to look at that home ownership as such an important part of the American Dream.

Today, we face unprecedented economic challenges. But we also have within our reach unprecedented economic opportunities. We’ve got clean energy opportunities that we are not exploiting. Utilities are changing the way they do business, focusing on efficiency, not just producing energy. Renewables like wind and solar are the most exciting prospects for American manufacturing in decades.

I’ve even proposed that we establish a "Carbon Reduction Mortgage Association" or a "Connie Mae" - an idea that Vice President Gore first came up with. We’d direct Fannie Mae and Freddie Mac to provide loans to help people build more and retrofit more energy efficient homes. We’d save money over the long run. We’d create millions of "green collar" jobs.

We’ve got infrastructure opportunities to rebuild our crumbling roads, bridges and highways, like I-95 right here in Philadelphia. Opportunities to revolutionize our public transportation systems; cut down on traffic and pollution. We can do so much that will really build the strong economy we need in the 21st century. But we won’t do it by just waiting and watching and losing the opportunity to act. We’ve got so many great ideas that will give us the tools we need for the 21st century.

Now, turning the economy around won’t be easy, but we are gathered in the very city where our founders put to paper the words that have guided our nation - and inspired the world - for more than two-hundred years. Each generation of Americans has faced threats to our ideals. Each generation has met them. We have fought wars, overcome a recession, weathered all kinds of problems, lived through the Great Depression; we’ve had market crises of all kinds.

Through it all, as President Franklin Roosevelt once said, "We have always held to the hope, the belief, the conviction that there is a better life, a better world, beyond the horizon." But we have to translate that hope into reality. We have to translate that conviction into solutions, and if we do, we will meet the current challenges with confidence and optimism. We will rebuild our economy - stronger, more vibrant, more resilient than ever before. It is a question of leadership. I hope we don’t have to wait until the next president is sworn in, but that we will come together and exercise that leadership in both the public and the private sector as soon as possible. That’s why I’ve set forth this plan and hope that the administration will begin to act with the urgency that the crisis before us demands.

Thank you all very much.

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