BILL MOYERS: Welcome to the Journal.

Some good news first. This week, the House of Representatives joined the Senate and agreed to set up an independent commission like the one you've heard proposed on this program. Ten citizens, outside experts, will be armed with the power of subpoena to call witnesses and dig deep into who and what brought on the great financial collapse.

We already know some of the answers with the release this week of an eye popping report from the non-partisan Center for Public Integrity, Who's Behind the Financial Meltdown?

The report found that the top 25 lenders of subprime mortgages — those risky assets that triggered the global economic meltdown — spent almost $370 million dollars over the last decade lobbying in Washington to weaken regulation of their behavior. Most of those 25 lenders are now out of business or have been sold to avoid bankruptcy, even as some of the nation's largest banks that owned or financed them — Citigroup, Goldman Sachs, Wells Fargo, JP Morgan Chase and Bank of America — are being bailed out by your taxpayer dollars. The Center for Public Integrity says, "The banks...were not victims of an unforeseen financial collapse, as they have sometimes portrayed themselves, but enablers..."

Last week, Illinois Senator Dick Durbin, himself an admitted beneficiary of the finance industry's deep pockets, had enough. This is what he told a radio station back home:

SENATOR DICK DURBIN (D-Ill.): The banks — hard to believe in a time when we're facing a banking crisis —

RADIO HOST: Right.

SENATOR DICK DURBIN (D-Ill.): — that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.

BILL MOYERS: Why was the Senate Majority Whip so upset? Because his Senate colleagues were about to vote down his amendment, to a bill passed this week. Durbin wanted to allow bankruptcy judges to help desperate homeowners renegotiate their mortgage payments.

SENATE PRESIDENT: The amendment is withdrawn.

BILL MOYERS: The Senate voted no, 51 to 45, and they did so despite the fact that there have been 800,000 new foreclosures in the first three months of this year alone.

As the bill was about to pass without his proposal, we went down to Washington for a post-mortem with Senator Durbin.

Senator, thank you for doing this.

SENATOR DICK DURBIN (D-Ill.): Thanks, Bill.

BILL MOYERS: So what did you mean precisely when you said, "Frankly, this place is owned by the banks."

SENATOR DICK DURBIN (D-Ill.): Well, I think what I saw was the frustration, that here we are in a recession, brought on by these financial institutions, some very bad decisions that they'd made causing great pain and suffering for a lot of workers and businesses and homeowners across America. And yet, when you sit down and talk about some fundamental reform of these financial institutions, so that people have a fighting chance when it comes to their credit cards, so that folks facing mortgage foreclosure have a final chance to maybe save their homes, that basically the banks are going to have the last word. It's counterintuitive. The people who brought this crisis to us are the ones that are dictating policy.

I saw it when I called this amendment, an amendment which would have changed the bankruptcy code, would have allowed those facing foreclosure one last change to renegotiate their mortgage on their home and to stay in their home, under extraordinary, limited circumstances.

But the banking industry, the associations and groups, fought me all the way. And it was clear to me that even though the mortgage foreclosure crisis is getting progressively worse in this country, and is at the heart, I think, of our economic weakness, that the banks were unwilling to step up and really participate in finding a solution.

BILL MOYERS: When you say they fought you, help us understand what actually happens. What do they do?

SENATOR DICK DURBIN (D-Ill.): Some won't even sit at the table. The American Bankers Association walked away. The Community Bankers walked away. Some credit unions would take no part in this conversation. They wouldn't even discuss the possibility of what we could do to deal with this mortgage foreclosure crisis.

Others participated initially, and when the time came, turned and walked away as well. I was left standing, having basically accepted many of their changes. Meanwhile, they were working feverishly in the halls of the Senate, going office to office, trying to convince people to vote against Durbin's bill. And I knew that I had an uphill battle. They're pretty convincing. They're pretty powerful.

And I have to say that the group I was trying to help, the people facing mortgage foreclosure, don't have that kind of political clout. By and large, these are people who are on the skids. They're running into trouble and voting is perhaps, you know, a sacrifice for some of them. Being involved in lobbying is beyond anything that they'd ever done or could consider doing. So I really was trying to speak for some of those people against some pretty powerful political forces.

SENATOR DICK DURBIN ON THE SENATE FLOOR: Why is it in this country, in America, that we can find hundreds of billions of taxpayers' dollars from hard-working people all over the United States to come to the rescue of bad banking decisions, rotten investments, mortgages that were fraudulent on their face, but can't summon the political will to do something about 8 million families in America who are going to face foreclosure? That is where we are.

BILL MOYERS: What would your provision have done for those people?

SENATOR DICK DURBIN (D-Ill.): If you're facing foreclosure and at least 60 days delinquent in your mortgage payments, you would have to present to your mortgage institution all of your documents to apply for a new mortgage. They would look through your income statements and your net worth and decide if you could qualify for a mortgage at a lower interest rate or a principal that brings it down to fair market value. If they didn't offer you a mortgage, you could raise it in bankruptcy court. Just as people can do now, legally, when it comes to a vacation home, a farm or a ranch.

SENATOR DICK DURBIN ON THE SENATE FLOOR: The law prohibits the bankruptcy court from rewriting the terms of the mortgage of a person's home. Why? Why does that make any sense? If the bankruptcy court can rewrite the mortgage on your vacation condos, your farm, or your ranch, why can't they do it for your home? That is what this bill does.

BILL MOYERS: What you just acknowledged is that there is a two-tier standard here. What did the lobbyists say, when you said to them, "Look, rich people can get this provision. They can get their mortgages renegotiated, but ordinary people can't." What did they say to you?

SENATOR DICK DURBIN (D-Ill.): Well, they argue about the sanctity of the contract, Bill.

BILL MOYERS: Contract with —

SENATOR DICK DURBIN (D-Ill.): With the original mortgage, and I have to tell you that it is a little hard to swallow, when we're dealing with a banking industry that has entered into so many bad contracts, creating these rotten portfolios of mortgage securities. And then in desperation, turn to the taxpayers at large, who had to come in and bail them out with hundreds of billions of dollars. Their holy contracts that exploded in their faces really weren't that holy, when it came down to it. They were ready to take taxpayers' money to stay in business. But I offered this same amendment a year ago. At the time, the projection was two million homes in foreclosure in America. Moody's now projects eight million. That's one out of every six home mortgages in foreclosure. That means that there'll hardly be a block untouched in America, without a foreclosed home, which will affect the other people around them, and the value of their property.

BILL MOYERS: What was the role of the mortgage industry, in this fight?

SENATOR DICK DURBIN (D-Ill.): They were against me all the way. The mortgage bankers led the fight against it. They organized the major banking associations. And they just wouldn't participate, with very few exceptions, in even discussing the problem. I think they believe that ultimately, they will make more money if they force this to an extreme and the government has to step in. But when I think of what they will leave in their wake, with all of these people and their foreclosed homes, all of these empty homes that become eyesores in neighborhoods, and the declining real estate values of America, it's a heavy price to pay.

SENATOR DICK DURBIN ON THE SENATE FLOOR: The key number to remember is 1.7 million families. 1.7 million. That is the number of families we will either give a chance to save their homes or allow them to be thrown out in the street, depending on how the vote turns out.

BILL MOYERS: You sounded very exasperated.

SENATOR DICK DURBIN (D-Ill.): I was. I worked on this for two years. And I've tried everything I can. I've appealed to bankers that I always believed were, you know, good corporate citizens, who believe they have an obligation beyond the bottom line to our country. And I couldn't even engage them in this conversation. It isn't as if they're solving the problem on their own. Precious few of these mortgages facing foreclosure are really being renegotiated. But ultimately they wouldn't even step up.

SENATE PRESIDENT: On this vote the yeas are 45. The nays are 51. The amendment is withdrawn.

BILL MOYERS: You lost 12 of your own Democrats.

SENATOR DICK DURBIN: I did.

BILL MOYERS: They voted against you with 39 Republicans. Where did they go? Why? Do you think it was the power of the banks?

SENATOR DICK DURBIN (D-Ill.): I don't know, and I think it will come out why the party position was taken by the Republicans, why not a single Republican would even consider this bill.

BILL MOYERS: What's your theory?

SENATOR DICK DURBIN (D-Ill.): Well, I think there's more to it. There was an agenda at work here, and I don't know all the details of it. There are many more issues coming before us. I don't know what was decided or agreed upon between the banking industry and the Republican caucus, but the fact is, as you said, a dozen of my Democratic colleagues voted against this.

BILL MOYERS: Have you talked to those 12?

SENATOR DICK DURBIN (D-Ill.): Some of them. I've gone to —

BILL MOYERS: What's the consensus of their opposition to you?

SENATOR DICK DURBIN (D-Ill.): Well, some of them frankly agree with the banks. I'll be very honest with you. They have a position that they think the banks are right, and that we should keep our nose out of it. Others don't see the mortgage foreclosure crisis in their communities and states as much. Some don't want to give this last break to somebody facing foreclosure, thinking some of these people got into this mess on their own and they shouldn't be rescued. But there are a variety of reasons.

BILL MOYERS: Have you given up the fight for this session?

SENATOR DICK DURBIN (D-Ill.): I'm not going to give it up. The sad reality is that next year, if it takes that long to get back to it, we'll be facing the same or even more mortgage foreclosures. And I think people will come to understand that this isn't just a small problem, it's a large problem to deal with. We're worried so much about the safety and soundness of financial institutions. We ought to be worried about the safety and soundness of homeowners and working people across this country.

BILL MOYERS: Charles Munger — do you know him?

SENATOR DICK DURBIN (D-Ill.): Yes, I do.

BILL MOYERS: He's the vice-chair of Warren Buffett's company, Berkshire Hathaway, which is, by the way, a large private shareholder in Goldman Sachs and Wells Fargo. Let me read you what he said the other day. Quote, "We need to remove from the investment banking and the commercial banking industries a lot of the practices and prerogatives that they have so lovingly possessed. If they're too big to fail, they're too big to be allowed to be as gamey and venal as they have been and as stupid as they have been." Not my words, not your words. These are the words of a very important, significant, influential private investor, saying that the people who beat you are gamey, venal and stupid.

SENATOR DICK DURBIN (D-Ill.): I'm not going to go that far.

BILL MOYERS: I know.

SENATOR DICK DURBIN (D-Ill.): Though I have a high regard for Charlie Munger and Warren Buffett, who have really, I think, had a better vision about the future of the economy of this country than most people who are successful in business. But I think he points to something that is obvious. And that is that there are some leaders in this industry who really don't accept a corporate responsibility for the good of this nation.

Harold Meyerson has an article in the Washington Post about the hedge funds, coming into the bankruptcy court, and complaining about the Chrysler loan, in bankruptcy. And their argument is, rather than the possibility that Chrysler might survive, they would rather see it liquidated, so they make more money. Liquidation, of course, costs tens of thousands of jobs at Chrysler and many other suppliers and material men. It also means that thousands of retirees might lose their health care benefits, and ultimately, that the government won't recover the loan it has made to Chrysler Corporation. And you have to ask yourself. At the bottom line here, how could these hedge funds stand up and say, "This is better for our country." It isn't. With all of the people who would suffer as a result of it.

BILL MOYERS: There's also a story in the New York Times about how private equity firms want to be able to control banks. Now they can invest in banks as minority stockholders, but they can't control them. The Fed doesn't believe that's a good idea. But they're spending huge sums of money, hiring an all-star cast of lobbyists, advisors and lawyers in Washington, to reverse the Fed's policy.

SENATOR DICK DURBIN (D-Ill.): That troubles me, because I think it's a step in the wrong direction. If we think too big to fail is a problem, then we're inviting much larger institutions with more political clout and more economic clout, and I don't think that's healthy. I don't really think that moves in the right direction. If you want to get to the heart of this, it's the way we finance our campaigns for the United States Senate and the House of Representatives. It's time for us to move to public financing, for the good of the country. I have a bill which I introduced with Arlen Specter, and we believe that this is the best way to change the way we finance campaigns.

BILL MOYERS: What would that bill do?

SENATOR DICK DURBIN (D-Ill.): Well, it would basically say, if you can raise small contributions in an amount to show you're a viable candidate in the state, you would qualify for federal funds. And those federal funds would provide you with an adequate campaign, not one that goes on for years, but an adequate campaign to bring your message to the voters. And it's voluntary. I think that is a good move for our democracy, and it's one which we ought to acknowledge is at the heart of many of the issues we face.

BILL MOYERS: But you know that the traditional argument against that, from many people, is that that's welfare for politicians.

SENATOR DICK DURBIN (D-Ill.): And I would say to those people, and incidentally states as disparate as Maine and Arizona have had public referenda and passed public financing, I would say to people, it's a small investment in financing campaigns, so you know where candidates stand, and not giving away the store when it comes to critical issues and special interests.

BILL MOYERS: Are you proposing doing away with private money?

SENATOR DICK DURBIN (D-Ill.): Well, it wouldn't be done away with. It's still a voluntary system.

BILL MOYERS: If you were running, you could choose to take public funding —

SENATOR DICK DURBIN (D-Ill.): You could choose.

BILL MOYERS: — and forego private funding?

SENATOR DICK DURBIN (D-Ill.): That's right. And if you took the public funding, you would have to demonstrate with small contributions that you have a base of support, so you are a viable candidate. But it's within the grasp of the average person, to become a candidate and be able to turn to public financing.

BILL MOYERS: I have to ask you this, because you're such a good friend of the president. You've known him for a long time in Illinois politics. You admire him very much. How do you expect to prevail on your proposal for campaign financing reform when he opted out of the public funding last year in his campaign?

SENATOR DICK DURBIN (D-Ill.): It's a good question, a valid question. And it's interesting.

BILL MOYERS: Give me a good answer.

SENATOR DICK DURBIN (D-Ill.): Well, I'm going to try my best. And I think that Barack Obama redefined campaign financing. I mean, in terms of democratizing the base of contributors. He used the Internet and computers and emails in a way no one had ever seen. And if you look at his base of contributors, it is a widespread base of small contributors. There are larger contributors, don't get me wrong. But he, at least —

BILL MOYERS: A lot from the financial industry.

SENATOR DICK DURBIN (D-Ill.): It's true. And it's virtually true in all incumbent races. Perhaps even my own, if you take a look at those who've contributed to me in the past. But he did take it from a different perspective. He really tried to prove that he could create a donor base that was much different than people had seen, and that more average people would get involved in helping him than in any other previous campaign.

BILL MOYERS: But given the fact that there's so much private money out there that wants to influence campaigns and influence those of you in office, why would any candidate choose public funding instead of this other route that's been so profitable and lucrative for them?

SENATOR DICK DURBIN (D-Ill.): Well, there's several reasons. One, getting on the phone, calling strangers, begging for money is a grind. And most political candidates don't like it at all. You know, you notice when you walk down the street in your hometown, people tend to go to the other side of the street when you're up for an election. They're afraid you're going to ask them for money!

And so I think there's this personal thing, that many people would like to be relieved of the burden. And secondly, I think in their heart of hearts, most of the people elected to Congress know that this isn't a healthy or sustainable system, where we allow people to put more and more money into it. There's no doubt at the end of the day that you feel some obligation.

My friend Paul Simon used to say, "You get in late at night in your hotel room. There are ten telephone messages. You're only going to make one of them, 'cause you're so darn tired, and you look through the list and there's somebody who had a fundraising event for you. Now which one are you going to call?" Paul would say. And we all know the answer. You're grateful to somebody who helped you. But unfortunately, that takes its toll, in terms of your integrity.

BILL MOYERS: Congress really does very little for consumers, when you add up the whole score. And there are far more consumers than there are big banks. And yet when push comes to shove, the organized big banks win against the majority of people who are on the other side of the issue. What do you say to people about how you keep faith in the democratic process when money trumps policy and buys the government out from under ordinary people?

SENATOR DICK DURBIN (D-Ill.): This isn't a new story. This is a story that's been repeated over the years. The politically articulate prevail, many times, over the public majority sentiment. And this is a good example of it, whether we're talking about credit card reform or some recourse for those facing mortgage foreclosure. Most people understand we ought to be helping out those families and working people who are struggling to get by.

BILL MOYERS: I like your term "politically articulate," but in fact, isn't it the deep pockets that ultimately win? It's not the most articulate and the most eloquent people up on the Hill who win, it's the people who have the support of those institutions, organizations, lobbyists with deep pocket.

SENATOR DICK DURBIN (D-Ill.): Maybe the better term was financially articulate, because it's true that if you have more money to put into the process, it's more likely you'll be heard. But I wouldn't give up. I really, honestly believe in the bottom line here. I think that if you have the right cause, organize people and give them the chance to do the right thing, ultimately you can prevail.

BILL MOYERS: Senator Durbin, thank you very much for this time.

SENATOR DICK DURBIN (D-Ill.): Thanks Bill.