My fellow Americans, Social Security is one of the bedrock programs that Democrats have always fought for. In a deep recession, protecting Social Security is more important than ever. Two-thirds of seniors depend on Social Security for more than half their income.And
Thanks to the banking collapse produced under my predecessor's administration, older Americans have lost a lot the equity in their homes, much of their savings, and retirement plans such as 401k's. But Social Security is the one part of retirement income that your government guarantees because you have prepaid it with your taxes all of your working life.
Now, with Americans reeling from the costs of recession, many Republicans are calling for a human sacrifice. They want to raise the retirement age, or privatize Social Security, or otherwise cut benefits.
Some leading Republican congressmen who will assume leadership positions if the Republicans take control of Congress are on record favoring Social Security cuts. Some Republican candidates even say Social Security is unconstitutional.
Even in my own party, a few people think Social Security needs to be cut in order to demonstrate that Washington is serious about reducing the federal deficit. Yes, the deficit needs to be brought under control - but Social Security is in surplus for the next 27 years!
We can reduce the deficit without balancing the budget on the backs of seniors. I am happy to have this argument with Republicans and with the few Democrats who would tamper with Social Security out of sincere but misguided concern for fiscal balance.
So as long as I am president, there will be no cuts, no privatization, and no raising of the retirement age. Social Security will be there not only for today's retirees, but for their children and grandchildren. If we want to put Social Security in the black forever, the best way to do it is to put Americans back to work and raise their wages, since Social Security is financed by payroll taxes.
Whatever your partisan preference, I hope you will vote on November 2. And before you vote, you might want to ask your favorite candidate whether he or she has taken the pledge that I have taken--never to support cuts in Social Security.
Friends, I have had it with the big banks. When the whole banking system was about to collapse in 2008 and take the economy down with it, I reluctantly supported relief to the banks. The banks have now paid back nearly all the money under the so-called TARP program. They are profitable again.
I coupled that relief with a call for stringent reform of banking practices, so that no bank would ever again be "too big to fail." Congress, in passing the Dodd-Frank Act last July, provided most of what I requested, including the power to shut down and reorganize large financial institutions that pose systemic risks.
But now we learn that the banks that created the monster of sub-prime loans were not just taking advantage of borrowers with deceptive terms, and of innocent investors who bought bonds backed by sub-prime loans. The banks also put the whole system on automatic pilot, and hired people to sign false affidavits that the mortgages were properly documented.
A great many of the mortgages, and the bonds backed by the mortgages, turn out to have false documentation. In plain English, that means houses can't be sold, because it's not clear who owns them. And if a property has been foreclosed, the bank can't take it back.
This is a needless catastrophe for homeowners, for the banking system, and for pension funds or mutual funds that bought these bonds. The bonds, backed by dubious loans, were already worth less than their face value because of the low quality of the underlying mortgages. Now, many of them may be worth nothing.
All of this was the result of greed, pure and simple. Banks were making so much money, so fast, that they couldn't even slow down long enough to properly document the mortgage loans.
Their greed has undercut one of the most fundamental pillars of our economic system, ownership of private property -- the ability to know for certain when you own something, and to be confident that when you buy something as important as your house, that the person who is selling it actually owns it. The bankers created a doomsday machine.
The people who created this legal mess on top of an economic mess have been lobbying my administration to come up with some kind of quick fix, so that all of these improper mortgages will somehow be okay. And I have told them that there will be no quick fixes at the expense of the tens of millions of ordinary homeowners who have been the victims of these scams. The fact that they were perpetrated by some of the biggest banks in our country makes them all the more shameful.
So today, I am instructing Treasury Secretary Timothy Geithner, as authorized by the Dodd-Frank Act, to call an emergency meeting of the newly created Financial Stability Oversight Council that he chairs. I have asked him to declare that a systemic emergency exists, and to come back with a three-part program.
Part one will investigate just how many of the nation's mortgages and bonds backed by the mortgages are not legally valid. We will devise a way of turning these into proper loans, but only as part of a broader program of relief to homeowners.
Part two will provide a more effective system of refinancing mortgages than the present HAMP program, so that people who took out mortgage loans in good faith and then found themselves under water, can keep their homes. This is not a handout, this is justice. Ordinary people will get no more than bankers got -- and no less.
Part three will determine which banks are insolvent as a result of this latest banking mess. Those banks will be restructured, under the new authority of the Dodd-Frank Act, and will be returned to sound operation so that they can serve the credit needs of Americans. No taxpayer money will be required.
My friends, banks are here to serve us, not to take advantage of us. I will not let the short-sightedness of a few people on Wall Street take down the economy for the second time in three years.