[Congressional Record Volume 155, Number 60 (Thursday, April 23, 2009)]
[Senate]
[Pages S4604-S4641]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               FRAUD ENFORCEMENT AND RECOVERY ACT OF 2009

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will resume consideration of S. 386, which the clerk will 
report.
  The legislative clerk read as follows:

       A bill (S. 386) to improve enforcement of mortgage fraud, 
     securities fraud, financial institution fraud, and other 
     frauds related to federal assistance and relief programs, for 
     the recovery of funds lost to these frauds, and for other 
     purposes.

  The Senate resumed consideration of the bill.
  Pending:

       Reid amendment No. 984, to increase funding for certain HUD 
     programs to assist individuals to better withstand the 
     current mortgage crisis.
       Inhofe amendment No. 996 (to amendment No. 984), to amend 
     title 4, United States Code, to declare English as the 
     national language of the Government of the United States.
       Vitter amendment No. 991, to authorize and remove 
     impediments to the repayment of funds received under the 
     Troubled Asset Relief Program.
       Boxer amendment No. 1000, to authorize monies for the 
     special inspector general for the Troubled Asset Relief 
     Program to audit and investigate recipients of nonrecourse 
     Federal loans under the Public Private Investment Program and 
     the Term Asset Loan Facility.
       Kyl amendment No. 986, to limit the amount that may be 
     deducted from proceeds due to the United States under the 
     False Claims Act for purposes of compensating private 
     intervenors to the greater of $50,000,000 or 300 percent of 
     the expenses and cost of the intervenor.
       Coburn amendment No. 982, to authorize the use of TARP 
     funds to cover the costs of the bill.

  The ACTING PRESIDENT pro tempore. The Senator from Vermont.
  Mr. LEAHY. Madam President, what is the parliamentary situation?
  The ACTING PRESIDENT pro tempore. The Senate is considering S. 386, 
to which six amendments are pending.
  Mr. LEAHY. I thank the Chair.
  Madam President, yesterday, when we were finally allowed to proceed 
to the Fraud Enforcement and Recovery Act, we began making real 
progress. Ten amendments were offered during the course of the day, 
four amendments were adopted, and six remain pending. I believe, had we 
not stopped voting at 5 o'clock, we could have finished the bill and 
passed it last night. As things stand, we hope to dispose of the six 
remaining amendments through the course of this morning. We should 
complete Senate consideration of the bill without further delay.
  I should note that the number of Senators who have cosponsored this 
bill continue to grow--now at 17 Senators. Most of the Senators who 
offered amendments yesterday praised the underlying bill. I think we 
have only one pending amendment that regards the underlying bill; only 
one that actually directly relates to it. Senator Grassley will speak 
to that amendment. Most of the amendments that have been offered, 
almost all the remaining amendments pending, aren't within the 
jurisdiction of the Judiciary Committee, they are within the 
jurisdiction of the Banking Committee, and I look forward to the 
leadership of that committee--the committee of jurisdiction--with 
respect to guidance on those amendments.
  In my view, it would have been better if Senators had withheld their 
amendments and waited to offer them on the housing and banking 
legislation that is going to be considered next week by the Senate. 
Then you would have at least had a bill that was relevant to the 
amendments. But, of course, every Senator can do whatever he or she 
wants to. Now, the banking/housing amendments that have been added to 
this Judiciary bill will complicate passage and enactment of what 
everyone agrees is needed--the fraud enforcement legislation. I think 
that is unfortunate.
  Among the examples are amendments affecting the use of TARP funds.

[[Page S4605]]

Modifying the Troubled Asset Relief Program is a complicated matter. I 
wish it were not complicating this bill. I have no problem with such 
amendments being on a bill that actually relates to TARP, but this one 
does not. Indeed, in the 6 weeks, the month and a half since the fraud 
enforcement bill was reported by the Judiciary Committee, my staff and 
I reached out to Senators and no one raised these TARP issues. Had 
they, we would have engaged with Chairman Dodd and Senator Shelby and 
tried to work them out as best we could in the proper setting.

  The Obama administration has reformed the TARP process. It is doing 
its best to get a handle on the use of these funds. I intend to look to 
their views and to those of Chairman Dodd, but I believe complicating 
passage of this fraud enforcement bill with those issues is not 
helpful. Nonetheless, we will do what we have to in order to complete 
this process.
  The Obama administration's Statement of Administration Policy 
expresses their strong support for enactment of the underlying fraud 
enforcement bill. They note:

       Its provisions would provide Federal investigators and 
     prosecutors with significant new criminal and civil tools and 
     resources that would assist in holding accountable those who 
     committed financial fraud.

  To give an idea, the Justice Department, the FBI, the Secret Service, 
the Special Inspector General for the TARP, law enforcement officers, 
good government advocates--all support the underlying bill. The New 
York Times wrote last weekend:

       Senators should not be asking if the expenditure on fraud 
     enforcement called for in this bill is affordable, but 
     whether it is enough.

  Fraud has damaged our economy. It has wrecked the lives and life 
savings of thousands of hardworking Americans. That is why this bill 
should not be complicated with a lot of extraneous material that is not 
in the jurisdiction of this bill. We have people around this country 
facing economic crises. They are preyed upon by some of these mortgage 
fraud groups. They promise to help them out of any kind of a mortgage 
difficulty they have and then they steal their retirement accounts. 
They steal the money they may have saved for their children to go to 
college. They steal the equity in their homes. Then they disappear, so 
people are left with no homes, no equity, no retirement accounts. If 
they saved money for their children to go to college, there is no money 
there, and the people who have committed the fraud get away.
  On those occasions when sometimes they are chased down, they may 
actually face a fine. But if they have stolen $200 million and get a 
$10 million fine--big deal. It is the cost of doing business. But if we 
have very tough legislation that allows the Justice Department and 
others to go in right at the get-go, to be able to go in and go after 
these people and make it very clear: If you are involved in this kind 
of fraud, if you are involved in this kind of theft, you are not going 
to get a fine, you are going to go to prison, then they are going to 
pay attention.
  I can tell you from my own experience as a prosecutor, I know fines 
in this kind of fraud situation do not serve as much of a deterrent. 
But if we are able to send in the police to arrest these people, and 
they know they are going to spend years behind bars, then they start 
paying attention. That is the only thing that really does it, and that 
is the only thing that is going to protect these Americans, American 
taxpayers, honest, hardworking men and women--the only thing that is 
going to protect them from losing everything they have in a downturn in 
the economy.
  We should pass this bill without further delay. We should move to the 
task of helping law enforcement find and hold accountable those who 
engage in such fraudulent conduct. This should be fairly easy. We can 
pass this bill and say: We are against crime, we are against fraud, we 
want the good guys to win, we want the bad guys to go to jail. It is as 
simple as that. That is why there are Republicans and Democrats who 
support this--across the political spectrum.
  Strengthening fraud enforcement is a key priority for President 
Obama. During the campaign the President promised to ``crack down on 
mortgage fraud professionals found guilty of fraud by increasing 
enforcement and creating new criminal penalties.''
  The President made good in his promise in his budget, calling on FBI 
agents ``to investigate mortgage fraud and white collar crime,'' and 
more Federal prosecutors and civil attorneys ``to protect investors, 
the market, and the Federal Government's investment of resources in the 
financial crisis, and the American public.''
  As taxpayers, we all have a stake in this. If these people are able 
to get away with their fraud, if they are able to get away with 
siphoning off this money, we taxpayers pay the bill in the long run. 
Those who are hit with the fraud pay far more than that. They may pay 
with their life savings, with their homes, with everything they have 
ever worked for.
  This bipartisan Fraud Enforcement and Recovery Act is a chance to 
authorize the necessary additional resources to detect, fight, and 
deter fraud that robs the American people and the American taxpayers of 
their funds. Investing resources in detecting and deterring fraud 
yields dividends for the American people. That is what this bill would 
do, and we should pass it without further delay.
  I want my colleagues to know, at some point, if people are not here 
to offer amendments, we will call up and vote on the amendments that 
are pending and then go to final passage. I know the Democratic and 
Republican leaders talked about a budget matter that has to come up 
that will probably take us into the evening. I am trying to save the 
time of all Senators, so I urge Senators to come because at some point 
everything that is pending is going to be called up and is going to be 
voted on up or down. I would at least like to have the Senators on the 
floor who are sponsoring them. Then we will go to final passage.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. THUNE. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                           Amendment No. 1002

  Mr. THUNE. Madam President, I ask unanimous consent that amendment 
No. 1002 to the bill be brought up and made pending.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from South Dakota [Mr. Thune] proposes an 
     amendment numbered 1002.

  Mr. THUNE. I ask unanimous consent that the reading of the amendment 
be dispensed with.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The amendment is as follows:

 (Purpose: To require the Secretary of the Treasury to use any amounts 
  repaid by a financial institution that is a recipient of assistance 
      under the Troubled Assets Relief Program for debt reduction)

       At the end of the bill, add the following:

                 TITLE II--DEBT REDUCTION PRIORITY ACT

     SEC. 21. SHORT TITLE.

       This title may be cited as the ``Debt Reduction Priority 
     Act''.

     SEC. 22. FINDINGS.

       Congress finds the following:
       (1) On October 7, 2008, Congress established the Troubled 
     Assets Relief Program (TARP) as part of the Emergency 
     Economic Stabilization Act (Public 110-343; 122 Stat. 3765) 
     and allocated $700,000,000,000 for the purchase of toxic 
     assets from banks with the goal of restoring liquidity to the 
     financial sector and restarting the flow of credit in our 
     markets.
       (2) The Department of Treasury, without consultation with 
     Congress, changed the purpose of TARP and began injecting 
     capital into financial institutions through a program called 
     the Capital Purchase Program (CPP) rather than purchasing 
     toxic assets.
       (3) Lending by financial institutions was not noticeably 
     increased with the implementation of the CPP and the 
     expenditure of $250,000,000,000 of TARP funds, despite the 
     goal of the program.
       (4) The recipients of amounts under the CPP are now faced 
     with additional restrictions related to accepting those 
     funds.
       (5) A number of community banks and large financial 
     institutions have expressed their desire to return their CPP 
     funds to the

[[Page S4606]]

     Department of Treasury and the Department has begun the 
     process of accepting receipt of such funds.
       (6) The Department of the Treasury should not unilaterally 
     determine how these returned funds are spent in the future 
     and the Congress should play a role in any determination of 
     future spending of funds returned through the TARP.

     SEC. 23. DEBT REDUCTION.

       (a) In General.--Title I of the Emergency Economic 
     Stabilization Act of 2008 (12 U.S.C. 5211 et seq.) is amended 
     by adding at the end the following:

     ``SEC. 137. DEBT REDUCTION.

       ``Not later than 30 days after the date of enactment of 
     this section, the Secretary of the Treasury shall deposit any 
     amounts received by the Secretary for repayment of financial 
     assistance or for payment of any interest on the receipt of 
     such financial assistance by an entity that has received 
     financial assistance under the TARP or any program enacted by 
     the Secretary under the authorities granted to the Secretary 
     under this Act, including the Capital Purchase Program, in 
     the Public Debt Reduction Payment Account established under 
     section 3114 of title 31, United States Code.''.

     SEC. 24. ESTABLISHMENT OF PUBLIC DEBT REDUCTION PAYMENT 
                   ACCOUNT.

       (a) In General.--Subchapter I of chapter 31 of title 31, 
     United States Code, is amended by adding at the end the 
     following new section:

     ``Sec. 3114. Public Debt Reduction Payment Account

       ``(a) There is established in the Treasury of the United 
     States an account to be known as the Public Debt Reduction 
     Payment Account (hereinafter in this section referred to as 
     the `account').
       ``(b) The Secretary of the Treasury shall use amounts in 
     the account to pay at maturity, or to redeem or buy before 
     maturity, any obligation of the Government held by the public 
     and included in the public debt. Any obligation which is 
     paid, redeemed, or bought with amounts from the account shall 
     be canceled and retired and may not be reissued. Amounts 
     deposited in the account are appropriated and may only be 
     expended to carry out this section.
       ``(c) There shall be deposited in the account any amounts 
     which are received by the Secretary of the Treasury pursuant 
     to section 137 of the Emergency Economic Stabilization Act of 
     2008. The funds deposited to this account shall remain 
     available until expended.
       ``(d) The Secretary of the Treasury and the Director of the 
     Office of Management and Budget shall each take such actions 
     as may be necessary to promptly carry out this section in 
     accordance with sound debt management policies.
       ``(e) Reducing the debt pursuant to this section shall not 
     interfere with the debt management policies or goals of the 
     Secretary of the Treasury.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     31 of title 31, United States Code, is amended by inserting 
     after the item relating to section 3113 the following:

``3114. Public debt reduction payment account''.

     SEC. 25. REDUCTION OF STATUTORY LIMIT ON THE PUBLIC DEBT.

       Section 3101(b) of title 31, United States Code, is amended 
     by inserting ``minus the aggregate amounts deposited into the 
     Public Debt Reduction Payment Account pursuant to section 
     3114(c)'' before ``, outstanding at one time''.

     SEC. 26. OFF-BUDGET STATUS OF PUBLIC DEBT REDUCTION PAYMENT 
                   ACCOUNT.

       Notwithstanding any other provision of law, the receipts 
     and disbursements of the Public Debt Reduction Payment 
     Account established by section 3114 of title 31, United 
     States Code, shall not be counted as new budget authority, 
     outlays, receipts, or deficit or surplus for purposes of--
       (1) the budget of the United States Government as submitted 
     by the President,
       (2) the congressional budget, or
       (3) the Balanced Budget and Emergency Deficit Control Act 
     of 1985.

     SEC. 27. REMOVING PUBLIC DEBT REDUCTION PAYMENT ACCOUNT FROM 
                   BUDGET PRONOUNCEMENTS.

       (a) In General.--Any official statement issued by the 
     Office of Management and Budget, the Congressional Budget 
     Office, or any other agency or instrumentality of the Federal 
     Government of surplus or deficit totals of the budget of the 
     United States Government as submitted by the President or of 
     the surplus or deficit totals of the congressional budget, 
     and any description of, or reference to, such totals in any 
     official publication or material issued by either of such 
     Offices or any other such agency or instrumentality, shall 
     exclude the outlays and receipts of the Public Debt Reduction 
     Payment Account established by section 3114 of title 31, 
     United States Code.
       (b) Separate Public Debt Reduction Payment Account Budget 
     Documents.--The excluded outlays and receipts of the Public 
     Debt Reduction Payment Account established by section 3114 of 
     title 31, United States Code, shall be submitted in separate 
     budget documents.

  Mr. THUNE. Madam President, on October 7, 2008, Congress passed the 
Troubled Asset Relief Program as part of the Emergency Economic 
Stabilization Act--or TARP--and allocated $700 billion for the purchase 
of toxic assets from banks with the goal of restoring liquidity to the 
financial sector and restarting the flow of credit in our markets.
  The Department of Treasury, without consultation from Congress, 
changed the purpose of the TARP and began injecting capital into 
financial institutions through a program called the Capital Purchase 
Program rather than purchasing toxic assets.
  Financial lending was not increased with the implementation of CPP, 
and the expenditure of $218 billion of TARP funds disputes the goal of 
the program. Those receiving funding through the CPP are now faced with 
additional restrictions related to accepting that funding.
  A number of community banks and large financial institutions have 
expressed their desire to return their CPP funds to the Department of 
Treasury, and Treasury has begun the process of accepting receipt of 
those funds. However, because of the financial stress test Treasury is 
currently conducting, it is possible that Treasury will restrict banks 
from returning funds they received from the CPP.
  In his testimony before the TARP Congressional Oversight Panel on 
April 21, 2009, earlier this week, Secretary Geithner stated that 
Treasury estimates $134.6 billion of TARP funds are still available. 
What is important about that figure is he includes $25 billion which 
they expect to receive back from banks under CPP. Geithner also stated 
that he believed $25 billion is a conservative number, and private 
analysts predict more will be returned.
  Section 120 of the Emergency Stabilization Act terminated the 
authority for TARP funds on December 31, 2009, and the Secretary can 
request an extension to the deadline not later than 2 years after 
enactment. Keep in mind that this restriction only applies to 
Treasury's issuance of new loans and does not cover the reuse of 
previously issued assistance that was returned to the Treasury.
  Essentially, to summarize what my amendment does, it requires 
Treasury to use any of the funds that are recovered through TARP to 
reduce the national debt. Basically, this amendment prevents the 
Treasury from reallocating money for other purposes. The amendment 
establishes the public debt reduction payment account and requires 
Treasury to deposit any amounts received from repayment of financial 
assistance through TARP into this account. The Secretary of the 
Treasury must use the money in the public debt reduction payment 
account to pay, redeem, or buy any Government obligation included in 
the public debt. The obligations paid, redeemed, or bought are canceled 
and cannot be reissued. In addition, the statutory debt limit is 
automatically reduced by any amount equal to funds that are deposited 
in this account.
  I think the amendment is very straightforward, and it really is 
directed at ensuring that the taxpayer dollars that were allocated for 
the TARP program, which, as I said before, was about $700 billion last 
fall, much of which has been expended but much of which now is in the 
process of being repaid, assuming, again, the mechanism is put in place 
to allow the Treasury to take receipt of funds that banks wish to 
repay, TARP funds which they wish to repay--with that money coming into 
the Treasury--and as I said before, Secretary Geithner earlier this 
week indicated that it would probably be about $25 billion, at least 
that we know of now, and there are predictions that it could be much 
more, that money comes back into the Treasury and could be recycled, 
reused--what we want to do and what my amendment does is it ensures 
that those TARP funds that are repaid by banks actually go to reduce 
the public debt.
  We know we have incurred an enormous amount of debt. In fact, the 
inspector general, Neil Barofsky, stated in his quarterly report to 
Congress that 12 separate programs are being funded under TARP, 
involving up to $3 trillion of Government and public funds. Amazingly, 
that is equivalent to the size of the entire Federal budget. This is 
certainly not what I believe Congress intended or was told, for that 
matter, the funding would be used for. So Congress needs to have a role 
in this. If the administration wants additional authority under TARP, 
they should come here. Congress retains, under the Constitution, the 
power of the purse.

[[Page S4607]]

  What this amendment simply does is directs those funds that come back 
in as a result of repayments by banks of TARP funds into the Federal 
Treasury, that those funds go toward reducing the Federal debt, which, 
as we all know, based on the budget that was passed a couple of weeks 
ago, is going to double in 5 years and triple in 10, at a rate of $1 
trillion a year. The average deficit over the next 10 years, by the end 
of the 10-year period, will amount to $17 trillion. The very least we 
can do for the taxpayers of this country is ensure that TARP funds that 
are repaid by banks, the taxpayer dollars that were extended to help 
recapitalize the banks, when those are no longer necessary and banks 
give that money back to the Treasury, Treasury receives that, that 
those funds not be recycled, reused, go to some discretionary program 
to fund other programs of Government, but that they be used to reduce 
the Federal debt. I believe the taxpayers deserve that. This amendment, 
No. 1002, would do that. So I would hope my colleagues will support it 
and, in my view, make it very clear that tax dollars expended under 
TARP, when repaid, are going to go to debt reduction and not be used 
for some other Federal Government program.
  That is what the amendment does. I would urge my colleagues to 
support it.
  I yield the remainder of my time.
  The ACTING PRESIDENT pro tempore. The Senator from Vermont.
  Mr. LEAHY. Madam President, I thank my friend from South Dakota for 
his courtesy in talking to me first about the amendment. As I pointed 
out to him, these are matters before the Banking Committee. The 
Judiciary Committee has really got nothing to do with it, the same as 
many of these. I will wait for Senator Dodd and Senator Shelby to 
respond; I will not.
  I am going to make a unanimous consent request. I have notified both 
sides of this. There is a Boxer-Snowe amendment No. 1000. I ask 
unanimous consent that at 10:50--I realize it is going to be objected 
to, but I am trying to save both Republicans and Democrats from being 
here until 2 o'clock tomorrow morning because of the bill that comes up 
after this. I ask unanimous consent--and if this is objected to, I will 
repeat the request later on--that at 10:50 the pending business be set 
aside, the Boxer-Snowe amendment No. 1000 be brought up, there be 8 
minutes of debate evenly divided before a vote, and that it then be in 
order to go to a rollcall vote on the amendment.
  The ACTING PRESIDENT pro tempore. Is there objection?
  Mr. DeMINT. I object.
  The ACTING PRESIDENT pro tempore. Objection is heard.
  Mr. LEAHY. I have been advised that there would be an objection 
because they have not heard from the Banking Committee, from Senator 
Dodd and Senator Shelby. I would urge them to come to the floor so we 
can move forward, as most of the amendments pending or about to be 
pending have absolutely nothing to do with the jurisdiction of the 
Judiciary Committee, have nothing to do with the jurisdiction of the 
bill on the floor, have everything to do with a bill that is coming up 
next week from the Banking Committee. So I would urge the Banking 
Committee to come to the floor and speak to the amendments that are all 
within the jurisdiction of their committee.
  I mention this because if we don't, the other alternative is to 
accept everything and go immediately to final passage. I don't think 
that would be responsible because then the fraud bill that virtually 
everybody in this body, Republicans and Democrats, supports is going to 
die because it won't go past the other body. I realize every Senator 
has a right to offer any amendment he or she wants, but at some point 
we have to be realistic. If we are against the people who are 
committing fraud on the American taxpayers, something for which all of 
us have made speeches that we are in favor of stopping them--newspapers 
from the right to the left have editorialized in favor of stopping 
them--let's be honest and actually pass a bill that does it. The 
message amendments should wait until an appropriate bill that has 
something to do with them.
  I am also trying to help Senators. We are going to complete this bill 
before we go to budget matters. We can complete it easily by noon. As 
Senators know, I have supported Republican amendments that came up 
yesterday. They have all been accepted, including an amendment by 
Senator Grassley and myself. But we want to complete this legislation. 
I am perfectly willing to stay here all night long to finish this and 
the budget. But every hour we take on this is an hour longer on the 
budget. It is somewhat frustrating that Senators who have a concern 
can't find time to show up on the floor. Senators from both sides of 
the aisle don't have time to show up on the floor on a bill which we 
were notified 3 weeks ago was going to be on the floor at this time. I 
urge them to do so. Because as soon as these amendments are disposed of 
one way or the other, we will go to final passage.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from South Dakota.
  Mr. THUNE. I appreciate the observations of the Senator from Vermont. 
It is a bill that is broadly supported. I understand the objection he 
will raise with respect to his committee's jurisdiction and what the 
bill covers.
  With regard to my amendment, there is a connection between the 
underlying bill and what we are trying to accomplish. I previously 
referenced the inspector general's report about 12 separate programs 
being funded under TARP that involve up to $3 trillion in government 
and public funds. Bear in mind, this report spans 247 pages. In that 
report, it says the very character of the bailout program makes it 
``inherently vulnerable to fraud, waste, and abuse, including 
significant issues related to conflicts of interest facing fund 
managers, collusion between participants, and vulnerabilities to money 
laundering.''
  I believe this amendment is related to the underlying bill which 
deals with fraud recovery. The inspector general's report bears that 
out.
  Mr. LEAHY. Madam President, while the Senator from South Dakota is in 
the Chamber, if I may ask him a question, we also have amendment No. 
982 offered by Senator Coburn which allows the unused TARP funds to pay 
for the Fraud Enforcement and Recovery Act. I ask the Senator if the 
Coburn amendment and his amendment are mutually exclusive?
  Mr. THUNE. In response, Madam President, to the Senator from Vermont, 
my amendment would prevent funds from being reused, recycled, that were 
directed to debt reduction. I guess my short answer, without having 
reviewed the Coburn amendment carefully, would be, I suspect, that they 
are probably mutually exclusive.
  Mr. LEAHY. I thank the Senator. I have read it carefully, and that 
was my conclusion. This is a matter more in line with the Banking 
Committee, and I will let them speak to it. This is unprecedented, that 
we have amendments on bills, whether this one or others, that are 
mutually exclusive. I did note that. I thank my friend from South 
Dakota for his comments.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from South Carolina.


                           Amendment No. 994

  Mr. DeMINT. I ask unanimous consent to set aside the pending 
amendment and call up amendment No. 994.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The clerk will report.
  The bill clerk read as follows:

       The Senator from South Carolina [Mr. DeMint] proposes an 
     amendment numbered 994.

  Mr. DeMINT. I ask unanimous consent that reading of the amendment be 
dispensed with.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The amendment is as follows:

 (Purpose: To prohibit the use of Troubled Asset Relief Program funds 
       for the purchase of common stock, and for other purposes)

       At the appropriate place, insert the following:

     SEC. __. LIMITATION ON USE OF TARP FUNDS.

       Notwithstanding any other provision of law, on and after 
     April 22, 2009, no funds made available to carry out the 
     Troubled Asset Relief Program may be used for the acquisition 
     of ownership of the common stock of any financial institution 
     assisted under title I of the Emergency Economic 
     Stabilization Act of 2008, either directly or through a 
     conversion of preferred stock or future direct capital 
     purchases.


[[Page S4608]]


  Mr. DeMINT. Madam President, our economy has shed 3.3 million jobs in 
the last 5 months. The Dow Jones is down 25 percent since September. 
When the bank bailout or TARP was conceived, it was conceived, 
ironically, to save the market. We had been told by both President Bush 
and President Obama that we needed this massive spending in order to 
get the financial markets working again and the economy moving. It has 
been 6 months since Congress gave away $700 billion to the Bush 
administration with essentially no strings attached. The Obama 
administration has, unfortunately, continued conducting massive and 
risky experiments in central planning since taking control of the TARP 
in January. We need to remember that we have yet to use this money the 
way it was promised.
  We were told, when this money was requested during the last months of 
the Bush administration, that if we didn't have all this money to buy 
the toxic assets, the world financial market would collapse. I am 
afraid we were not told the truth. Clearly, the world financial market 
did not collapse, although it continues to have trouble. But we did not 
buy up any of the toxic assets, and the world financial market didn't 
collapse. The Bush administration--and now the Obama administration--
set about figuring out different ways to use the money rather than 
admitting the ideas they had were not right.
  Sixteen of the 19 banks that received the largest amounts of this 
TARP money are loaning less now than they did when the money was 
provided. We received a report this week that the design of the TARP 
was ripe for corruption, waste, and fraud. There are already a number 
of cases in the media that this is happening. Yet we continue to toy 
with this money in ways that are unprecedented. Now the Obama 
administration has announced President Obama is going to use the money 
in a totally different way. We need to look at what they are proposing.
  What our economy needs now more than anything else is certainty, 
certainty that the Government will not undo contracts retroactively, 
which we are talking about doing here, certainty that spending will be 
brought under control to avoid future tax increases and runaway 
inflation, and certainty that failure will not be rewarded by a 
government bailout. Of course, there has been anything but certainty 
from our Government in the last several months. Government intervention 
has become the norm rather than the exception.
  Now we understand the Treasury Department has concocted a new scheme 
to convert these loans, which are preferred stock in certain banks, 
into common equity in order to increase those banks' capital. This is 
only a paper change. We move it from a debt to an asset, and we say we 
have done something. The problem is, when the Government has common 
stock in banks, it owns banks. It would likely have positions on the 
board. The taxpayer, who is making this money available, is at risk. If 
a bank goes under, the common stock is gone. So we are taking what was 
some security for taxpayers and shifting it to another place. We are 
crossing a dangerous line where the Government owns and controls banks 
and insurance companies, auto companies, a line we have never crossed 
before as a country, a country based on free markets, not central 
planning by government.
  The American people are starting to send us a signal that they are 
concerned, alarmed by the amount of spending, all these bailouts, the 
rewarding of failure, the debt we are creating. We saw about a million 
Americans last week in numerous tea parties across the country take to 
the streets, hold up their signs, express to their elected officials 
that we need to stop this out-of-control spending and waste going on in 
Washington. Loaning banks money temporarily is one thing. It is 
something I oppose because I have seen government operate long enough 
to know that it can't do it effectively. It can't do it without waste 
and fraud and corruption.
  Our own Treasury Department has now told us that. We can't put this 
much money out there without bad things happening. We need to let the 
market work. If we have banks that are too sick to succeed, then we 
need to allow them to fail while we protect the depositors in that 
bank.
  The amendment I offer focuses attention on the idea of government 
owning banks. It is pretty simple. It would prohibit the Government 
from converting TARP loans to common stock. We have heard of other 
amendments that would allow banks to give this money back and allow the 
money to go to paying down debt. This is not a slush fund that we 
created for politicians to play with, to scheme in different ways on 
how we could come up with new ways to spend money we don't have. It is 
all borrowed money. If it is not needed the way it was intended, it 
needs to come back to the taxpayer rather than what is happening now. 
The idea that we are going to have the Federal Government actually own 
stock in banks, insurance companies, and other private companies is an 
idea we need to stay away from.
  I hope all of my colleagues will support this amendment that simply 
prohibits our Government from converting what was supposed to be loans, 
what was promised to be loans, what was promised to be used to buy bad 
assets so banks could loan again, it would prohibit this money from 
being used for common stock and ownership in the banking system.
  I thank the Chair for the time and encourage my colleagues to support 
the amendment.
  I yield the floor and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. COBURN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Dodd). Without objection, it is so 
ordered.


                           Amendment No. 983

  Mr. COBURN. Mr. President, I ask unanimous consent that the pending 
amendment be set aside and that amendment No. 983 be called up.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The clerk will report.
  The bill clerk read as follows:

       The Senator from Oklahoma [Mr. Coburn] proposes an 
     amendment numbered 983.

  Mr. COBURN. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

   (Purpose: To require the Inspector General of the Federal Housing 
 Finance Agency to investigate and report on the activities of Fannie 
 Mae and Freddie Mac that may have contributed to the current mortgage 
                                crisis)

       At the appropriate place, insert the following:

     SEC. ____. IG REPORT ON ACTIVITIES OF FANNIE MAE AND FREDDIE 
                   MAC.

       Not later than 18 months after the date of enactment of 
     this Act, the Inspector General of the Federal Housing 
     Finance Agency shall submit a report to the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives on the following:
       (1) When did the Federal National Mortgage Association (in 
     this section referred to as ``Fannie Mae'') and the Federal 
     Home Loan Mortgage Corporation (in this section referred to 
     as ``Freddie Mac'') begin buying large quantities of subprime 
     and Alt-A mortgages? In what years did Fannie Mae and Freddie 
     Mac purchase the largest number of subprime and Alt-A 
     mortgages?
       (2) To what extent were the purchase of subprime and Alt-A 
     mortgages by Fannie Mae and Freddie Mac induced by 
     Congressional action or Executive Order?
       (3) To what extent were the purchase of large quantities of 
     subprime and Alt-A mortgages by Fannie Mae and Freddie Mac 
     induced by the Department of Housing and Urban Development 
     affordable housing regulations issued in 1995?
       (4) What actions by Fannie Mae and Freddie Mac contributed 
     to the overvaluation of mortgage-backed securities?
       (5) What political contributions were made by Fannie Mae 
     and Freddie Mac on behalf of a political candidate or to a 
     separate segregated legal fund described in section 
     316(b)(2)(c) of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441b(b)(2)(c)) between 1990 and 2008?
       (6) What lobbying expenditures, as such term is defined in 
     section 4911(c)(1) of the Internal Revenue Code of 1986, were 
     made by Fannie Mae and Freddie Mac between 1990 and 2008?
       (7) What contributions were made by Fannie Mae and Freddie 
     Mac to any organization described under section 501(c) of the

[[Page S4609]]

     Internal Revenue Code of 1986 between 1990 and 2008?

  Mr. COBURN. Mr. President, I appreciate the chairman giving me this 
time to offer this amendment. We have adopted an Isakson amendment. We 
have a McCain-Dorgan amendment. This is a similar amendment, but I 
think it gets to the root of the problem. It does not cost very much, 
and it actually will tell us something we need to know.
  The underlying assumption with the bill is that fraud is the primary, 
if not the sole, cause of this crisis. That may be true. We do not know 
that. But what we do not know is how much we as Members of Congress 
played and the extent to which we played a role in helping create this 
crisis. This is a fairly straightforward amendment that asks the IG to 
come give us information so we get the answers to the question about 
our own role in the evolution of the problems we find today.
  What we do know is the GSEs undertook an unprecedented assumption of 
subprime and all-day loans, and those need to be investigated--the 
extent of them, the amount. We also know they invested more than $1 
trillion in those loans. But what we do not know is the volume, the 
timing. What we do not know is the impact of the significant amount of 
lobbying by these GSEs and what effect that had on policies and 
procedures both within the administration and the Congress.
  For example, when did Freddie and Fannie begin to purchase large 
quantities of subprime and all-day loans? In what years were those 
types of purchases the highest? To what extent were these purchases 
induced by congressional action or executive order? To what extent were 
those purchases induced by the Department of Housing and Urban 
Development affordable housing regulations issued in 1995? What actions 
by Fannie and Freddie contributed to the overvaluation of mortgage-
backed securities?
  The amendment also looks to the possibility that congressional action 
could have contributed to the risky changes in behavior of Fannie and 
Freddie. What we know is, between the 2000 and 2008 election cycles, 
GSEs and their employees contributed more than $14.6 million to the 
funds of both Senators and representatives. We also know Fannie spent 
$79.5 million in that period and Freddie spent $94.9 million in that 
period on lobbying Congress. Mr. President, $170 million was spent 
lobbying Congress making them the 20th and 13th largest lobbying 
spenders in the country.
  This amendment will assure and ensure that some of the toughest 
questions are asked regarding the GSEs'--Fannie Mae's and Freddie 
Mac's--special relationships with Congress and whether any conflict 
created by those relationships influenced the GSEs' behavior, 
especially to the taxpayers' detriment.
  It requires the inspector general to study what political 
contributions were made, what lobbying expenditures were made, what 
contributions were made to any other lobbying organization.
  It is a compromise step. It is something we already have the people 
in place for. It is something they have the access to the numbers for. 
We ought to be able to get that.
  We have a mess. Usually, as a physician when I have a mess, I start 
thinking back: What did I do before? And what caused part of the mess? 
Where was I wrong in my diagnosis of the signs, symptoms, and history? 
And then what do I do about it?
  If we do not look through the IG at these things, then it is highly 
unlikely--no matter how many commissions we put together because 
commissions are going to ask for this anyway--but we are going to ask 
for it as a special report from the IG under this amendment.
  There are a lot of additional considerations, and I will not take 
time on the floor at this time to do that. But if you want to have a 
transparent Congress, this is the first question we have to ask: How 
much were we involved? How effective were the lobbying efforts to 
change things that were detrimental? Maybe they were positive. But the 
fact is, we ought to know those things.
  The idea is we will be transparent with the American people, both in 
terms of the lobbying efforts, the contributions they made, and the 
timing--not just for Congress but also the executive branch; where we 
look at the actions of both of those--so the American people can see 
the culpability. Where is it? I happen to believe it is right here in 
this body, us. We allowed this to happen. I think the onus of the blame 
needs to be here rather than pointing at other people.
  That is not to distract from the idea that we ought to go after 
fraud. But the biggest fraud is to deny the fact that we had some 
culpability, and this amendment is designed to measure how much 
culpability we had by using the IG, the inspector general, to tell us 
this very specific information.
  With that, I yield the floor.
  Madam President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. LEAHY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. LEAHY. Madam President, I was distracted in another conversation. 
Senator Coburn left the floor. I wished to speak to him about his 
amendment because it appears to have already been covered in the 
Isakson-Conrad amendment. I would like to ask if he also feels that 
way. I would hope he might come back to the floor so we could discuss 
that.
  I also wish to notify the other side I am about to renew my unanimous 
consent request for a vote on the Boxer amendment. I will not until 
they have time to talk to the Republican side. There is no Republican 
on the floor right now. But in a few minutes, I will renew my request 
for a rollcall vote on that amendment.
  In the meantime, Madam President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. KYL. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                 Amendments Nos. 986, 987, 988, and 989

  Mr. KYL. Madam President, I have an amendment pending--I believe the 
number is amendment No. 989--and I wish to speak to that amendment and 
three other amendments which differ only in the amount of a cap on 
recoveries. The amendments pending are amendments Nos. 989, 988, and 
987. Madam President, 986 is the pending amendment. So we will get this 
straightened out.
  Let me speak to the issue first generally, and then I will engage my 
colleague in a couple of unanimous consent requests that may resolve 
the issue. If not, then we can vote on the final one.
  The point of these amendments is to limit the amount that can be 
deducted from the money that is due to the Government under the False 
Claims Act as compensation for what are called private realtors. A 
private realtor is a whistleblower or an investigator who goes to court 
with evidence that the Government has been defrauded and is entitled to 
money under the False Claims Act. In order to encourage these private 
parties to come forward, the False Claims Act not only entitles these 
private realtors to recover from the defendant their costs and expenses 
for investigating and pressing the claims but also allows the private 
realtor to receive a portion of the proceeds due to the United States.
  I think we would all agree it is right and proper that the private 
realtors be compensated for exposing incidents for which the Federal 
Government has been defrauded. Such actions have saved the Government 
billions of dollars over the years.
  Unfortunately, the formula for compensating private realtors uses a 
percentage range to award a portion of the Government's recovery to the 
realtor. The law allows the private realtor to collect up to 30 percent 
of the proceeds that are due to the Government.
  Now, when this formula was first set back in 1986, I don't think any 
of us contemplated that the massive billion-dollar recoveries we have 
seen today would allow this kind of recovery to the private parties as 
well. So although

[[Page S4610]]

I think we all agree whistleblowers deserve to be compensated when they 
save the Government money, I would also think we could agree there has 
to be some limit; that they don't deserve to be grossly 
overcompensated, especially when that compensation comes at the expense 
of the Federal Treasury.
  Let me note a few cases. I will put this entire statement in the 
Record which has a lot of other cases as well, but my colleagues will 
get the idea from just a few that I will mention.
  Private realtors shared $95 million as their share of a $559 million 
civil settlement paid to the United States by TAP Pharmaceutical 
Products. Private realtors shared $78 million as their share of a $438 
million Federal settlement paid to the United States by Eli Lilly. A 
private realtor will receive $47.8 million as his share of a recently 
announced $325 million settlement paid to the Government by Northrop. 
Another will share $46.4 million as their share of a $375 million 
settlement paid to the United States by Cephelon. There are several 
more of these cases, all in the $30-, $40-, $50 million range, for 
payments that have been made to the Government as a result of this law.
  The point is, when they are sharing in that much of the proceeds, 
they are denying the taxpayers the benefit of the False Claims Act 
which was, of course, intended to benefit the Treasury and not to 
significantly benefit these private realtors.
  So, again, it is fair to generously compensate them when they help 
expose malfeasance that has cost the Federal Government money. We want 
them to receive an incentive to blow the whistle on fraud or 
corruption. However, the amounts I have described--$95 million in just 
one case, for example--are wildly in excess of what is necessary to 
spur such whistleblowing. These amounts all come at the expense of the 
Treasury.
  Let me indicate the kind of savings the Government could achieve 
under this amendment.
  The first request I will make today would cap the private realtor 
recovery at either $5 million or 300 percent of the expenses and costs 
in investigating and proving fraud against the Government. In other 
words, it is sort of a triple damages: for the amount of money they put 
into it, there is, in effect, a 400-percent recovery; they get 100 
percent of their expenses, plus another 300 percent above that. It 
seems to me this provides more than adequate incentive for the 
whistleblowers who become aware of fraud and therefore expose it.
  In the eight cases I have described in my statement, five of which I 
mentioned, private realtors received more than $427 million at the 
expense of the Government. When just one case awards the private 
realtors $95 million, the numbers add up pretty quickly. So under this 
request I will make in just a moment, these same private realtors would 
still have received a grand total of at least $40 million from the 
Government. Under my amendment, the Government would have been able to 
keep an additional $387 million. So think about it. This amendment 
would have saved the Government $387 million.
  So let me conclude at this point. I have been advised there are very 
few law firms--but some law firms--that specialize in these cases. 
Obviously, they are fighting the amendment because quite a little 
cottage industry has grown. But I would note to my colleagues if my 
recommendation is not accepted--if my colleagues conclude that $5 
million is not enough for the Government to pay a whistleblower--then 
what I would suggest is we make that amount higher, and I will offer 
subsequent requests to support a higher amount.
  I wish to note as well there will inevitably be new cases in which 
outsized awards are paid at the expense of the Government's recovery. 
For example, just last week, a False Claims Act suit against Quest 
Diagnostics resulted in a $302 million recovery for the Federal 
Government, but out of that amount, the Government was forced to pay 
$45 million to the private realtor. Had my amendment been law, the 
private realtor would still have received at least $5 million for 
exposing the fraud, but the Treasury would have received, and therefore 
saved, an additional $40 million.
  So let me ask, rather than having a vote on each of these four 
amendments--and I have discussed this with the chairman of the 
Judiciary Committee and we have had a genial discussion; and I suspect 
I know, at least the first couple of times, the fate of my unanimous 
consent requests. Nonetheless, amendment No. 989 would provide a $5 
million cap.
  I would therefore ask unanimous consent that amendment No. 989 be 
considered and that the Senate be on record as supporting amendment No. 
989 with the $5 million cap.
  The ACTING PRESIDENT pro tempore. Is there objection?
  Mr. LEAHY. Madam President, I will object, and I will just take a 
moment to explain.
  First off, I would note, as he typically does, the Senator from 
Arizona came and talked to me before and was very straightforward with 
what he was going to do.
  This talks about recoveries available under the False Claims Act. I 
think the Senate expert on the False Claims Act is Senator Grassley, a 
senior member of the Senate Judiciary Committee. Senator Grassley 
opposes this, as do I. I know there are going to be other amounts the 
distinguished Republican leader is going to bring up, but my reason in 
opposing them--and he has explained each one of them to me ahead of 
time, so there is no surprise--but I will oppose them because I believe 
without whistleblowers, a lot of these billions of dollars in fraud 
that have been found wouldn't have been found. Without the 
whistleblowers, the Government--the American taxpayers--wouldn't 
recover so much.
  The False Claims Act--and, again, Senator Grassley and others were 
the leaders in putting that together--has brought back more than $22 
billion into the U.S. Treasury.
  Now, it has a balanced approach in providing incentives for said 
whistleblowers. They share in such recoveries if it is warranted and if 
it is approved by the judge. A judge has to approve it. It has worked 
out very well. Rather than there being an arbitrary cap, I would rather 
leave it to the judge to make the determination. Simply saying, well, 
we will limit it to three times the cost, then I worry about seeing a 
padding of expenses. I think it is very well balanced the way it is, 
including having a judge make the final decision.

  I think one of the things we all agree upon--I am sure the Senator 
from Arizona and I agree--is that we have to find fraud, we have to 
root it out, and we have to bring those who commit fraud to justice. 
What I am thinking about, as Senator Grassley has pointed out in the 
past, as have I, we have to give an incentive to the whistleblowers to 
bring the case. After all, we have seen all too often a whistleblower 
will alert us to the fraud, and the first thing that happens is they 
lose their job. They often risk retaliation. In fact, if they are 
turning in their coworkers or their supervisors and bringing out the 
fraud, this could be life-altering. It could actually change their 
professional career, often for the worse. They are looked at as the bad 
guys, but they are not the bad guys; they are the good guys. We ought 
to reward them.
  I will vote against it in this case. I object to considering it. I 
know the Senator from Arizona is going to have further amendments, but 
I just want him to know--and I want my colleagues to know what I have 
told him privately. I commend him for--as we have always done in cases 
we have had--talking to me ahead of time, as I have with him when I 
have had amendments or matters that may involve him.
  So I yield the floor.
  The PRESIDING OFFICER (Mr. Kaufman). The request has been made. Is 
there objection?
  Mr. LEAHY. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. KYL. Mr. President, I appreciate the points made by the chairman 
of the Judiciary Committee. There does need to be a reward, and there 
is some subjective judgment in what kind of a cap is appropriate for 
the reasons that he pointed out. As a result, reasonable people could 
differ as to whether a $5 million cap would be too much.
  For that reason, I indicated if the chairman thought it was too much, 
I would suggest doubling the amount to a $10 million cap which might be 
appropriate. That is actually encompassed in amendment No. 988.

[[Page S4611]]

  So at this time I ask unanimous consent that amendment No. 988 be 
considered pending and be adopted by unanimous consent, setting a $10 
million cap on these recoveries.
  The PRESIDING OFFICER. Is there objection?
  Mr. LEAHY. Mr. President, as I indicated to my friend earlier, I 
would object to that, and I do object.
  The PRESIDING OFFICER. Objection is heard.
  The minority whip.
  Mr. KYL. Mr. President, as I said, I think it is going to be a little 
harder to object to a $20 million cap, but at this time let me ask--
again, this is subjective. How much of a reward is enough to cause 
people to come forward? Given that we have this cottage industry of 
firms that has found they can make a lot of money on these cases, it 
seems to me there is adequate reward for whistleblowers who usually--
and I am sure the chairman would agree--usually come forward simply 
because they see something that is wrong and they have the moral 
courage to come forward and say: We don't think this practice is right. 
And they usually don't do it for the financial reward. The law firms 
that are involved do very well out of this.
  So my last unanimous consent request would be to consider amendment 
No. 987 as pending, which would set a $20 million cap on these awards.
  The PRESIDING OFFICER. Is there objection?
  Mr. LEAHY. Mr. President, reserving the right to object, I hate to 
try to fix something that I don't think is broken. The False Claims Act 
has worked very well for the U.S. taxpayers. It has worked well. I know 
the Senator from Iowa worked so hard in putting this together in the 
first place. It has brought more than $22 billion back into the 
Treasury. The awards to whistleblowers have to be approved by a judge. 
I don't want to fix something that is not broken, so, therefore, I will 
object, and I do object.
  The PRESIDING OFFICER. Objection is heard.
  The minority whip.
  Mr. KYL. Mr. President, finally, amendment No. 986, which is pending, 
sets a $50 million cap.
  I certainly agree with the chairman that you don't want to fix 
something that is not broken. I submit that back in 1986, a long time 
ago, these multibillion-dollar awards were not contemplated, and times 
have changed. In the 20 or 30 years' passage of time, we have seen this 
cottage industry of litigation grow, when the kinds of awards that can 
be recovered--for example, a $97 million award--are simply beyond the 
pale. They were not contemplated. So it is broken to the extent that we 
have no upper limit in a case such as that.


                           Amendment No. 986

  Therefore, I call up amendment 986, which is pending, and I request 
the yeas and nays on that amendment. If the chairman wishes to respond, 
I will withhold calling for the vote until he has responded.
  The PRESIDING OFFICER. Does the Senator ask for the regular order on 
his amendment?
  Mr. KYL. That is correct, yes.
  The PRESIDING OFFICER. The amendment is now pending.
  Mr. LEAHY. Mr. President, I know the distinguished Senator from Iowa 
wishes to speak on this amendment, and we will soon have a rollcall 
vote. I ask the Senator from Arizona and the Senator from Iowa if we 
could withhold for 2 minutes in order for the Senator from Wisconsin to 
speak on an amendment of his, and then we will go back to the amendment 
of the Senator from Arizona.
  Mr. KYL. Yes.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The Senator from Wisconsin is recognized.


                           Amendment No. 990

  Mr. KOHL. Mr. President, I call up my amendment No. 990.
  The PRESIDING OFFICER. Without objection, the pending amendment is 
laid aside.
  The clerk will report.
  The bill clerk read as follows:

       The Senator from Wisconsin [Mr. Kohl] proposes an amendment 
     numbered 990.

  Mr. KOHL. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To protect older Americans from misleading and fraudulent 
 marketing practices, with the goal of increasing retirement security)

       At the appropriate place, insert the following:

     SEC. __. GRANTS TO STATES FOR ENHANCED PROTECTION OF SENIORS 
                   FROM BEING MISLEAD BY FALSE DESIGNATIONS.

       (a) Findings.--Congress finds that--
       (1) many seniors are targeted by salespersons and advisers 
     using misleading certifications and professional 
     designations;
       (2) many certifications and professional designations used 
     by salespersons and advisers represent limited training or 
     expertise, and may in fact be of no value with respect to 
     advising seniors on financial and estate planning matters, 
     and far too often, such designations are obtained simply by 
     attending a weekend seminar and passing an open book, 
     multiple choice test;
       (3) many seniors have lost their life savings because 
     salespersons and advisers holding a misleading designation 
     have steered them toward products that were unsuitable for 
     them, given their retirement needs and life expectancies;
       (4) seniors have a right to clearly know whether they are 
     working with a qualified adviser who understands the products 
     and is working in their best interest or a self-interested 
     salesperson or adviser advocating particular products; and
       (5) many existing State laws and enforcement measures 
     addressing the use of certifications, professional 
     designations, and suitability standards in selling financial 
     products to seniors are inadequate to protect senior 
     investors from salespersons and advisers using such 
     designations.
       (b) Definitions.--As used in this section--
       (1) the term ``misleading designation''--
       (A) means the use of a purported certification, 
     professional designation, or other credential, that indicates 
     or implies that a salesperson or adviser has special 
     certification or training in advising or servicing seniors; 
     and
       (B) does not include any legitimate certification, 
     professional designation, license, or other credential, if--
       (i) it has been offered by an academic institution having 
     regional accreditation; or
       (ii) it meets the standards for certifications, licenses, 
     and professional designations outlined by the North American 
     Securities Administrators Association (in this section 
     referred to as the ``NASAA'') Model Rule on the Use of 
     Senior-Specific Certifications and Professional Designations, 
     or it was issued by or obtained from any State;
       (2) the term ``financial product'' means securities, 
     insurance products (including insurance products which pay a 
     return, whether fixed or variable), and bank and loan 
     products;
       (3) the term ``misleading or fraudulent marketing'' means 
     the use of a misleading designation in selling or advising a 
     senior in the sale of a financial product;
       (4) the term ``senior'' means any individual who has 
     attained the age of 62 or older; and
       (5) the term ``State'' means each of the 50 States, the 
     District of Columbia, and the unincorporated territories of 
     Puerto Rico and the U.S. Virgin Islands.
       (c) Grant Program.--The Attorney General of the United 
     States (in this section referred to as the ``Attorney 
     General'')--
       (1) shall establish a program in accordance with this 
     section to provide grants to States--
       (A) to investigate and prosecute misleading and fraudulent 
     marketing practices; or
       (B) to develop educational materials and training aimed at 
     reducing misleading and fraudulent marketing of financial 
     products toward seniors; and
       (2) may establish such performance objectives, reporting 
     requirements, and application procedures for States and State 
     agencies receiving grants under this section as the Attorney 
     General determines are necessary to carry out and assess the 
     effectiveness of the program under this section.
       (d) Use of Grant Amounts.--A grant under this section may 
     be used (including through subgrants) by the State or the 
     appropriate State agency designated by the State--
       (1) to fund additional staff to identify, investigate, and 
     prosecute cases involving misleading or fraudulent marketing 
     of financial products to seniors;
       (2) to fund technology, equipment, and training for 
     regulators, prosecutors, and law enforcement in order to 
     identify salespersons and advisers who target seniors through 
     the use of misleading designations;
       (3) to fund technology, equipment, and training for 
     prosecutors to increase the successful prosecution of those 
     targeting seniors with the use of misleading designations;
       (4) to provide educational materials and training to 
     regulators on the appropriateness of the use of designations 
     by salespersons and advisers of financial products;
       (5) to provide educational materials and training to 
     seniors to increase their awareness and understanding of 
     designations;
       (6) to develop comprehensive plans to combat misleading or 
     fraudulent marketing of financial products to seniors; and
       (7) to enhance provisions of State law that could offer 
     additional protection for seniors

[[Page S4612]]

     against misleading or fraudulent marketing of financial 
     products.
       (e) Grant Requirements.--
       (1) Maximum.--The amount of a grant under this section may 
     not exceed $500,000 per fiscal year per State, if all 
     requirements of paragraphs (2), (3), (4), and (5) are met. 
     Such amount shall be limited to $100,000 per fiscal year per 
     State in any case in which the State meets the requirements 
     of--
       (A) paragraphs (2) and (3), but not each of paragraphs (4) 
     and (5); or
       (B) paragraphs (4) and (5), but not each of paragraphs (2) 
     and (3).
       (2) Standard designation rules for securities.--A State 
     shall have adopted rules on the appropriate use of 
     designations in the offer or sale of securities or investment 
     advice, which shall, to the extent practicable, conform to 
     the minimum requirements of the NASAA Model Rule on the Use 
     of Senior-Specific Certifications and Professional 
     Designations, as in effect on the date of enactment of this 
     Act, or any successor thereto, as determined by the Attorney 
     General.
       (3) Suitability rules for securities.--A State shall have 
     adopted standard rules on the suitability requirements in the 
     sale of securities, which shall, to the extent practicable, 
     conform to the minimum requirements on suitability imposed by 
     self-regulatory organization rules under the securities laws 
     (as defined in section 3 of the Securities Exchange Act of 
     1934), as determined by the Attorney General.
       (4) Standard designation rules for insurance products.--A 
     State shall have adopted standard rules on the appropriate 
     use of designations in the sale of insurance products, which 
     shall, to the extent practicable, conform to the minimum 
     requirements of the National Association of Insurance 
     Commissioners Model Regulation on the Use of Senior-Specific 
     Certifications and Professional Designations in the Sale of 
     Life Insurance and Annuities, as in effect on the date of 
     enactment of this Act, or any successor thereto, as 
     determined by the Attorney General.
       (5) Suitability rules for insurance products.--A State 
     shall have adopted suitability standards for the sale of 
     annuity products, under which, at a minimum (as determined by 
     the Attorney General)--
       (A) insurers shall be responsible and liable for ensuring 
     that sales of their annuity products meet their suitability 
     requirements;
       (B) insurers shall have an obligation to ensure that the 
     prospective senior purchaser has sufficient information for 
     making an informed decision about a purchase of an annuity 
     product;
       (C) the prospective senior purchaser shall be informed of 
     the total fees, costs, and commissions associated with 
     establishing the annuity transaction, as well as the total 
     fees, costs, commissions, and penalties associated with the 
     termination of the transaction or agreement; and
       (D) insurers and their agents are prohibited from 
     recommending the sale of an annuity product to a senior, if 
     the agent fails to obtain sufficient information in order to 
     satisfy the insurer and the agent that the transaction is 
     suitable for the senior.
       (f) Application.--To be eligible for a grant under this 
     section, the State or appropriate State agency shall submit 
     to the Attorney General a proposal to use the grant money to 
     protect seniors from misleading or fraudulent marketing 
     techniques in the offer and sale of financial products, which 
     application shall--
       (1) identify the scope of the problem;
       (2) describe how the proposed program will help to protect 
     seniors from misleading or fraudulent marketing in the sale 
     of financial products, including, at a minimum--
       (A) by proactively identifying senior victims of misleading 
     and fraudulent marketing in the offer and sale of financial 
     products;
       (B) how the proposed program can assist in the 
     investigation and prosecution of those using misleading or 
     fraudulent marketing in the offer and sale of financial 
     products to seniors; and
       (C) how the proposed program can help discourage and reduce 
     future cases of misleading or fraudulent marketing in the 
     offer and sale of financial products to seniors; and
       (3) describe how the proposed program is to be integrated 
     with other existing State efforts.
       (g) Length of Participation.--A State receiving a grant 
     under this section shall be provided assistance funds for a 
     period of 3 years, after which the State may reapply for 
     additional funding.
       (h) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $8,000,000 for 
     each of the fiscal years 2010 through 2014.

  Mr. KOHL. Mr. President, I speak today in support of an amendment 
that would protect older Americans from unscrupulous financial 
advisers.
  In these tough economic times, seniors are discovering that their 
life savings have lost so much value they may not be able to fund their 
retirement. Desperate for advice, they look toward investment advisers 
for strategies to ride out this economic storm. Unfortunately, we have 
learned that some are placing their trust in so-called ``senior 
investment advisers,'' who in many cases are one step above scam 
artists. These individuals often have limited or no education or 
training though they claim titles with legitimate-sounding names.
  We know that an attorney must go to school for 3 years and pass a 
State bar exam. A CPA must have a college degree, an additional year of 
study, and must pass a national exam. Neither can offer their 
professional services without those credentials. Seniors should be able 
to trust the people who invest their money. They should not be worried 
that the title after their adviser's name is scarcely more than a 
marketing ploy.
  This amendment would create a new grant program to assist States in 
their efforts to protect seniors from misleading financial adviser 
designations by encouraging them to adopt provisions outlined in the 
North American Securities Administrators Association's and the National 
Association of Insurance Commissioners' model rules on the use of 
senior designations.
  I strongly encourage my colleagues to cosponsor this amendment.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Mr. President, the first point I wish to make is that 
with the false claims provisions in the Leahy-Grassley bill, which 
deals with other provisions as well, but the False Claims Act is 
essential to accomplishing the overall purposes of the bill, along with 
other tools to do it--to get rid of fraud. We are trying to just, in 
this bill, in a very rifle shot way, correct some court opinions that 
have been detrimental and weaken the False Claims Act. That is all we 
are trying to accomplish in this bill that deals with bigger things as 
well.
  What Senator Kyl is bringing up is a legitimate subject of discussion 
because it has been brought up at other times since passage of the 
False Claims Act 22 years ago. I don't say it is not legitimate to 
discuss it. But there is broader false claims legislation in the 
Judiciary, and it ought to be discussed at a time when we have hearings 
on this subject. There have been no hearings on this.
  These amendments should be reviewed by the full committee under the 
regular order process. That is the first point I wish to make to 
Senator Kyl about why not to consider this amendment right now.
  The second one is the point he made on how big of an award is big 
enough to incentivize people to turn in fraud.
  Mr. LEAHY. Will the Senator yield for a unanimous consent request?
  Mr. GRASSLEY. Yes.
  Mr. LEAHY. Mr. President, I ask unanimous consent that the vote on 
the Kyl amendment, now pending, occur at 11:45 but that there be 2 
minutes equally divided immediately preceding the vote. First, I make 
that request.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. LEAHY. Mr. President, I ask for the yeas and nays on the 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The yeas and nays were ordered.
  Mr. LEAHY. Mr. President, I also ask unanimous consent that there not 
be any amendments to that amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Mr. President, the second point I wish to make before I 
get to my formal remarks is on the question the Senator from Arizona 
raised about how big of an incentive is enough to get reported. That is 
a legitimate question.
  Here is my experience with 22 years of the False Claims Act, dealing 
with whistleblowers, Government agencies listening to whistleblowers or 
not, the Justice Department taking a case or not taking a case, or 
whether the whistleblower initiates the case on their own. What I have 
found is that the False Claims Act does not come up early in anybody's 
thought process--about initiating a thought process that there might be 
fraud out there and somebody ought to be investigating and get to the 
bottom of it. Usually,

[[Page S4613]]

the whistleblower has ample evidence of that or they wouldn't be doing 
it in the first place. They jeopardize their profession and their job 
in Government. That isn't right, but whistleblowers who want to do the 
patriotic thing actually jeopardize their professional future. What I 
have found is they don't even know about the False Claims Act or about 
getting a percentage of it. They don't even know about whistleblower 
protection laws. They want to do the patriotic thing. They want to 
report fraud.
  So to talk about the award being the incentive to come forward, I 
don't want to say that in some cases that may not be the case, but in 
most cases these are patriotic people knowing about the fraudulent use 
of taxpayer money, they think it is wrong and ought to stop, and they 
think it ought to stop within the agency. They don't get anywhere with 
the agency, so they come to other people, and eventually along the 
line, probably, somebody says: You need to take this to court, and you 
can get something out of this if you win and if you have a case. 
Probably the majority of them don't win. So they get nothing out of it. 
But they are trying to be patriotic citizens.
  I think that bringing up the issue of how much of an award is big 
enough to get this information out should not even be a part of the 
debate. It is still something because we are talking about taxpayer 
money and what is an incentive to do this, but it ought to be discussed 
in a thoughtful way, not on an amendment to a bill that is trying to 
correct a few bad court decisions to get the False Claims Act back to 
its original purpose.
  I thank the Senator from Vermont for letting me cooperate with him on 
this issue. The Senator from Vermont also recognizes that the False 
Claims Act is a very useful tool against fraud, which is the overall 
purpose of the rest of Senator Leahy's and my bill.
  The other thing you have to remember is that this has brought in $22 
billion. Senator Leahy made that very clear. There are so many court 
cases I can tell you about where the Government, through the Justice 
Department, came in and tried to belittle the whistleblower, the 
claimant, to reduce, or even eliminate, any access to an award; how 
many times judges have had to berate people in the Justice Department. 
I am not talking about Presidents Obama, Bush, Reagan, Bush 1, or 
Clinton; I am talking about several of them where you wouldn't even 
have a case--in other words, saying to the prosecutor and the Justice 
Department: Do you realize you would not even have had a case without 
this patriotic whistleblower coming forward?
  More recently, there has been a case where the Justice Department 
asked not to proceed forward. The judge stepped in and said: We are 
going to go forward; there is something wrong here, and we are going to 
get to the bottom of it.
  So we have $22 billion back because of patriotic Americans. Do you 
know what. Just because the False Claims Act has been out there, it has 
been a preventive to fraud, like all the other tools Senator Leahy has 
in this bill that will not only help with prosecution, but the 
possibility of prosecution is going to be a preventive factor.
  So I feel strongly that if the issue of an award limit comes up, it 
ought to be discussed thoroughly and thoughtfully in a tool--the False 
Claims Act--which has proven its worth by $22 billion and a lot of 
unknown preventable fraud out there. We ought to think through it 
thoughtfully.
  I want this amendment defeated. The False Claims Act is the No. 1 
tool for recovering taxpayer dollars lost to waste, fraud, and abuse. 
Whistleblowers who bring fraud cases on behalf of the Government, known 
as qui tam relators, often risk everything to uncover truth.
  Currently, the False Claims Act provides a reward to whistleblowers 
who come forward with good-faith allegations of fraud, waste, or abuse 
of Government dollars.
  They are allowed to file a lawsuit on behalf of the Federal 
Government, and the case remains under judicial seal in Federal court. 
The Justice Department then decides to join a case or not join a case. 
If the Justice Department joins a case and the case is successful, a 
whistleblower can recover 15 to 25 percent of the funds recovered. If 
the Justice Department does not join--then it is going to be a much 
more difficult process for the whistleblower and his or her counsel--
the whistleblower can go forward with the case and if they are 
successful, they can recover more, somewhere between 25 and 30 percent, 
depending upon the judge.
  While some are arguing that this represents a windfall for 
whistleblowers, the statistics paint a different picture.
  In fact, in cases where the Department of Justice joins the 
whistleblower, the average share for the whistleblower is not 25 
percent or 30 percent, it is 16 percent. Compare that 16 percent with 
the percentage it takes to administer Government generally, throughout 
Government--about 12 percent. Do you, Mr. President, think there are 
enough people in the Justice Department, enough FBI people to know 
where all the skeletons are buried, where all the frauds are being 
committed? No. This average award is not too far out of line with the 
average administrative costs of Government.
  There have been 6,197 qui tam complaints filed since 1986 which have 
resulted in $13.7 billion in recoveries to the Federal Government. That 
averages about $2.2 million recovered for complaint filed.
  In these 6,197 cases, the Government has paid qui tam whistleblowers 
$2.2 billion in awards. That means the average share award for a qui 
tam whistleblower is about $350,000. This is hardly a windfall that one 
would seek, particularly if one is ruining their professional career by 
being a whistleblower, coming forth to do what is patriotic, to do what 
is right. It is, in fact, an incentive that helps fuel complaints 
coming in.
  However, if we start adding new caps to the already existing 
whistleblower caps, we could reduce the incentive for whistleblowers to 
proceed through the cases--or coming forward in the first place--that 
would help us then recover billions of dollars.
  I wish to share the story of Tina Gonter who was a qui tam 
whistleblower who testified before the Judiciary Committee last year. 
Ms. Gonter worked closely with the Government and went undercover at 
the company for months collecting documents and evidence of a fraud 
against the Navy. She even wore a wire for the Federal agents of the 
Defense Department.
  Ultimately, a couple of individuals went to jail as a result of Ms. 
Gonter's work. But the Government refused to sue the contractor for 
fraud. Believe that, the Government refused to sue with obvious 
evidence. Ms. Gonter filed a false claims case against the company, and 
it was not joined by our own Justice Department. The judge in that case 
even scolded the Justice Department and the Navy for not joining the 
case.
  Ultimately, Ms. Gonter prevailed, and the contractor paid over $13 
million to the Federal Government. Ms. Gonter received a share of that 
money, but had she not brought this case, the Justice Department and 
the Defense Department would have been satisfied with simply putting 
two people in jail and allowing the contractor to walk away with the 
money it received for providing fraudulent product to the Navy. And it 
is not just a case of fraudulent product to the Navy. It is a serious 
safety matter for the people in the military who put their lives on the 
line in the defense of our freedom.
  That is only one example out of 6,197 that the False Claims Act 
provides power to get fraudulent activity under control. It is a check 
on the power of the Government bureaucracy to look the other way--that 
is what the Justice Department did in this case--and pretend that fraud 
did not happen on their watch. However, it is fueled by courageous 
whistleblowers, such as Tina Gonter, and without sufficient financial 
incentives to come forward and fight these cases for 5 to 10 years they 
can take in court, we may lose this valuable tool against fraud.
  It is about recovering money, taxpayers' money. I find it ironic--I 
hope people are listening now because there is a conflict here between 
maybe people on my side of the aisle who think this is a good idea--I 
find it very ironic that those outside groups supporting this amendment 
were in staunch opposition to the idea of the Senate imposing any caps 
on executive compensation at companies receiving bailout funds. Now 
instead, they want to cap

[[Page S4614]]

the recovery of good-faith whistleblowers to come forward with claims 
of fraud at companies that are ripping off American taxpayers.
  The False Claims Act works and will continue to work if we do not cut 
the incentives for relators to go to court. The law already has a cap 
for whistleblower recoveries. I urge my colleagues to oppose this 
amendment which is based on a couple of extreme examples from outlier 
cases that are not the norm.
  We have $22 billion coming in under this act. Early on, we fought the 
defense industry to get this bill passed, and the defense industry 
tried to gut it after it was passed. When they could not because they 
did not have the proper prestige, they came to the American hospital 
industry to fight a front for them. That did not happen. I don't know 
exactly what groups are out there now backing all this. But when are 
you ever going to realize that in this country, the taxpayers deserve 
some respect? And if there is fraud in your industry, it is no holds 
barred on the recovery and the preventing of fraud.
  I yield the floor.
  Mr. LEAHY. Mr. President, I understand the senior Senator from New 
York has an amendment. While the senior Senator from Iowa is on the 
floor, I ask unanimous consent that it be in order for the Senator from 
New York to bring up his amendment--that the pending amendment be set 
aside for 5 minutes--speak on it, and if there are no objections to it, 
it then be accepted, and we go back to the Kyl amendment so as not to 
interfere with the unanimous consent agreement to have a vote on the 
Kyl amendment at 11:45 a.m. I make that request.
  The PRESIDING OFFICER. Is there objection?
  Mr. ENSIGN. Reserving the right to object, will the Senator repeat 
the unanimous consent request?
  Mr. LEAHY. If I can get the attention of the senior Republican, my 
request is that the Senator from New York be allowed to bring up his 
amendment for 5 minutes, and at the conclusion of the 5 minutes, unless 
more time is requested by unanimous consent, that the matter, if it can 
be disposed of, be disposed of, but in any event, at the end of that 
time, we go back to the Kyl amendment on which there is a unanimous 
consent agreement for a rollcall vote at a quarter of 12.
  Mr. ENSIGN. Mr. President, can I modify the request that I be 
recognized to call up an amendment, not to have action on it, call up 
an amendment, spend 5 minutes on it following the Senator from New York 
to get my amendment pending?
  Mr. LEAHY. I so modify it. That would still leave the amount of time 
Senator Kyl has requested prior to a vote on his amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.

  The Senator from New York.


                           Amendment No. 1006

  Mr. SCHUMER. Mr. President, I thank you for recognizing me. I thank 
our chairman of the Judiciary Committee, Senator Leahy, and one of our 
senior Republican Members, Senator Grassley, for not only managing this 
bill but for introducing it. I am a cosponsor of the underlying bill, 
the Fraud Enforcement and Recovery Act, because it provides much needed 
tools to go after fraudsters, crooks, and thieves, and other common 
criminals who have taken advantage of a bad economy to rob unsuspecting 
Americans of their savings.
  I thank Senators Leahy, Grassley, Kaufman, and Specter, and all the 
other cosponsors of the bill for their hard work and making sure we 
finally do something about financial crime.
  From the beginning, however, I have been of the view that there was 
one major omission--a glaring omission--from this bill. The bill would 
authorize $165 million a year for the Department of Justice, including 
$75 million more for FBI agents, as well as money for prosecutors and 
fraud lawyers.
  That is all to the good. It would also provide $30 million to the 
Postal Inspection Service, $30 million to the IG of the Department of 
HUD, $20 million for the Secret Service, all to investigate financial 
and mortgage fraud. But if one reads the list, one thing is missing, 
and that is the Securities and Exchange Commission.
  Thanks to the hard work of many, including my cosponsor of this 
amendment, Senator Shelby, and Senator Grassley, the lead Republican 
sponsor of the bill, we have come up with a compromise provision. 
Initially, on the amendment we were going to offer, Senator Grassley 
raised some very valid points, and we have been working in the last 2 
days to come to an agreement, and I am proud to say we have.
  This amendment provides $20 million for SEC enforcement. It would 
also give an additional $1 million to the SEC's Office of Inspector 
General. I am pleased to have played a role in putting together this 
package which will ultimately benefit the American public through safer 
markets and better policing of our financial system.
  The authorization to the SEC is necessary for fighting exactly the 
kind of fraud that is covered by this bill. Leaving the SEC out of this 
bill is a little like fighting a war without the marines. The SEC is 
often the first line of enforcement before the criminal authorities get 
involved.
  The SEC staffing decreased by 10 percent from 2005 to 2007. The 
agency has only begun to recover from these decreases. It is 
understaffed by more than 115 employees.
  Shockingly, the SEC's technology budget, the budget that determines 
the agency's ability to analyze what went wrong in the markets and who 
caused it, is still only 50 percent of what it was in 2005.
  We need to pass this bill now, and we need to adopt this amendment 
now. Literally, every day there is a new story about a new fraud that 
robbed guileless consumers of millions, sometimes billions, of dollars. 
Our authorizations for prosecutions after the S&L crisis, which I 
played a role in when I was in the House of Representatives, resulted 
from around 600 convictions and $130 million in ordered restitution 
between 1991 and 1995.
  So far, even while the FBI is working on 2,000 mortgage fraud cases 
and while the SEC has opened more than three dozen investigations into 
subprime-backed securities, we have not provided law enforcement with 
the additional funds to put the bad guys before the courts and in jail, 
even though white-collar enforcement by the Federal Government has been 
dangerously depleted.
  I want to point perhaps to one of the most high profile fraud cases 
in the history of our country--a case that was not brought soon 
enough--to explain why the SEC needs help, even though it also deserves 
criticism and even outrage for their previous actions. This is, of 
course, the case of Bernard Madoff and the tens of billions of dollars 
he stole from sophisticated and unsophisticated investors alike.
  We don't know all the facts yet, but all signs point to some kind of 
dereliction of duty at the SEC. When we find out what went so horribly 
wrong, we will figure out how to fix it. But this much we know: The SEC 
receives hundreds of thousands of tips a year about investment fraud. 
We don't know why the SEC didn't catch on to the complaints of at least 
one brave whistleblower, Harry Markopolos, and none of us here would 
ever excuse it. We can acknowledge, though, that the SEC does not have 
sufficient technical and human resources to assess sophisticated 
trading patterns, complex financial instruments, and risk factors in 
the marketplace. When a complaint comes in, even a detailed complaint, 
such as the one received from Mr. Markopolos, they did not effectively 
triage it.

  The SEC's budget has barely kept up with inflation and cost of living 
adjustments. It is not clear whether budget cuts caused them to let 
Madoff fall through the cracks, but certainly budget increases wisely 
spent--and I have faith that the new Chair will certainly do that--will 
help prevent future Madoffs from happening.
  One of the things the SEC wants to do with the money we provide here 
is to hire people with specialized industry skills, develop systems for 
nationwide data centers----
  The PRESIDING OFFICER. The Senator has used 5 minutes.
  Mr. SCHUMER. I ask unanimous consent for 2 more minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SCHUMER. One of the things the SEC wants to do with this money is 
to hire people with specialized industry skills, develop systems for 
nationwide

[[Page S4615]]

data searches based on tips and complaints, and include their risk 
modeling involving market data and intelligence.
  It is incredible the chief regulator of the most sophisticated 
economy in the world does not have this capability. Let's help get the 
right cops on Wall Street and then get them the resources they need to 
fight crime. Everyone has to do more with less these days, but I am not 
in favor of less resulting in letting bad guys go free.
  I thank my colleague, Senator Grassley. As I said, the compromise we 
have come up with I think is fair because it both beefs up the SEC and 
deals with Senator Grassley's concerns related to the inspector 
general. I hope that at some point--we are still awaiting a letter from 
the SEC--we can ask unanimous consent to move this amendment forward. 
It has bipartisan support.
  With that, Mr. President, I yield the floor.
  Mr. KAUFMAN. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from New York [Mr. Schumer], for himself, Mr. 
     Shelby, Mr. Dodd, Mrs. Feinstein, and Mr. Graham, proposes an 
     amendment numbered 1006.

  Mr. SCHUMER. I ask unanimous consent that the amendment be considered 
as read.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

     (Purpose: To provide additional funding to the SEC to use in 
                        enforcement proceedings)

       At the appropriate place in section 3, insert the 
     following:
       (--) Additional Appropriations for the Securities and 
     Exchange Commission.--
       (1) In general.--There is authorized to be appropriated to 
     the Securities and Exchange Commission, $20,000,000 for each 
     of the fiscal years 2010 and 2011 for investigations and 
     enforcement proceedings involving financial institutions, 
     including financial institutions to which this Act and 
     amendments made by this Act apply.
       (2) Inspector general.--There is authorized to be 
     appropriated to the Securities and Exchange Commission, 
     $1,000,000 for each of the fiscal years 2010 and 2011 for the 
     salaries and expenses of the Office of the Inspector General 
     of the Securities and Exchange Commission.

  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Mr. President, are we now back on the Kyl amendment?
  The PRESIDING OFFICER. We are, but the Senator from Nevada is to be 
recognized.
  Mr. LEAHY. Before that happens, I thank the Senator from New York and 
the Senator from Iowa. They have been meeting with me and my staff for 
weeks on this amendment. I am glad they were able to reach agreement on 
the amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. ENSIGN. Mr. President, I ask unanimous consent that the pending 
amendment be set aside, I call for regular order with regard to the 
Boxer amendment, and that I be allowed to call up a second-degree 
amendment, No. 1003.
  Mr. LEAHY. Wait a minute. Reserving the right to object, would the 
Senator repeat that? That is not my understanding of what he was to do. 
Would the Senator repeat the unanimous consent request?
  Mr. ENSIGN. For the Chamber's edification, I have an amendment filed 
as a first-degree and I also have a second-degree. I was going to call 
up the second-degree amendment.
  Mr. LEAHY. That was not my understanding of what the Senator was 
asking, so I would object.


                           Amendment No. 1004

  Mr. ENSIGN. Mr. President, I ask unanimous consent that the pending 
amendment be set aside and I call up amendment No. 1004, which is the 
first-degree amendment.
  Mr. LEAHY. Reserving the right to object, and I shall not object, it 
is my understanding that we now have about 7 minutes or 8 minutes. Then 
we will go off this and go back to the Kyl amendment. I want to protect 
the Senator from Arizona on his amendment. Even though it is one I 
disagree with, I want to protect his right to have that.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Ensign] proposes an amendment 
     numbered 1004.

  Mr. ENSIGN. Mr. President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To impose certain requirements on public-private investment 
                 fund programs, and for other purposes)

       At the end of the bill, add the following:

     SEC. 5. PUBLIC-PRIVATE INVESTMENT PROGRAM.

       (a) In General.--Any program established by the Secretary 
     of the Treasury or the Board of Directors of the Federal 
     Deposit Insurance Corporation that does any of the following 
     shall meet the requirements of subsection (b):
       (1) Creates a public-private investment fund.
       (2) Makes available any funds from the Troubled Asset 
     Relief Program established under title I of the Emergency 
     Economic Stabilization Act of 2008 (12 U.S.C. 5211 et seq.) 
     or the Federal Deposit Insurance Corporation for--
       (A) a public-private investment fund; or
       (B) a loan to a private investor to fund the purchase of a 
     mortgage-backed security or an asset-backed security.
       (3) Employs or contracts with a private sector partner to 
     manage assets for a public-private investment program.
       (4) Guarantees any debt or asset for purposes of a public-
     private investment program.
       (b) Requirements.--Any program described in subsection (a) 
     shall--
       (1) impose strict conflict of interest rules on managers of 
     public-private investment funds that--
       (A) specifically describe the extent, if any, to which such 
     managers may--
       (i) invest the assets of a public-private investment fund 
     in assets that are held or managed by such managers or the 
     clients of such managers; and
       (ii) conduct transactions involving a public-private 
     investment fund and an entity in which such manager or a 
     client of such manager has invested;
       (B) take into consideration that there is a trade off 
     between hiring a manager with significant experience as an 
     asset manager that has complex conflicts of interest, and 
     hiring a manager with less expertise that has no conflicts of 
     interest; and
       (C) acknowledge that the types of entities that are 
     permitted to make investment decisions for a public-private 
     investment fund may need to be limited to mitigate conflicts 
     of interest;
       (2) require the disclosure of information regarding 
     participation in and management of public-private investment 
     funds, including any transaction undertaken in a public-
     private investment fund;
       (3) require each public-private investment fund to make a 
     certified report to the Secretary of the Treasury that 
     describes each transaction of such fund and the current value 
     of any assets held by such fund, which report shall be 
     publicly disclosed by the Secretary of the Treasury;
       (4) require each manager of a public-private investment 
     fund to report to the Secretary of the Treasury any holding 
     or transaction by such manager or a client of such manager in 
     the same type of asset that is held by the public-private 
     investment fund;
       (5) allow the Special Inspector General of the Troubled 
     Asset Relief Program, access to all books and records of a 
     public-private investment fund;
       (6) require each manager of a public-private investment 
     fund to retain all books, documents, and records relating to 
     such public-private investment fund, including electronic 
     messages;
       (7) allow the Special Inspector General of the Troubled 
     Asset Relief Program, the Secretary of the Treasury, and any 
     other Federal agency with oversight responsibilities access 
     to--
       (A) the books, documents, records, and employees of each 
     manager of a public-private investment fund; and
       (B) the books, documents, and records of each private 
     investor in a public-private investment fund that relate to 
     the public-private investment fund;
       (8) require each manager of a public-private investment 
     fund to give such public-private investment fund terms that 
     are at least as favorable as those given to any other person 
     for whom such manager manages a fund;
       (9) require each manager of a public-private investment 
     fund to acknowledge a fiduciary duty to the public and 
     private investors in such fund;
       (10) require each manager of a public-private investment 
     fund to develop a robust ethics policy that includes methods 
     to ensure compliance with such policy;
       (11) require stringent investor screening procedures for 
     public-private investment funds that include know your 
     customer requirements at least as rigorous as those of a 
     commercial bank or retail brokerage operation;
       (12) require each manager of a public-private investment 
     fund to identify for the Secretary of the Treasury each 
     beneficial owner of a private interest in such fund; and
       (13) require the Secretary of the Treasury to ensure that 
     all investors in a public-private investment fund are 
     legitimate.
       (c) Report.--Not later than 45 days after the date of the 
     establishment of a program

[[Page S4616]]

     described in subsection (a), the Special Inspector General of 
     the Troubled Asset Relief Program shall submit to Congress a 
     report on the implementation of this section.
       (d) Definition.--In this section, the term ``public-private 
     investment fund'' means a financial vehicle that is--
       (1) established by the Federal Government to purchase pools 
     of loans, securities, or assets from a financial institution 
     described in section 101(a)(1) of the Emergency Economic 
     Stabilization Act of 2008 (12 U.S.C. 5211(a)(1)); and
       (2) funded by a combination of cash or equity from private 
     investors and funds provided by the Secretary of the 
     Treasury, the Federal Deposit Insurance Corporation, or the 
     Board of Governors of the Federal Reserve System.

  Mr. ENSIGN. Mr. President, taxpayers and politicians alike have been 
too long in the dark about how the Treasury has been implementing this 
so-called TARP program--or as most people in the country know it, the 
bank bailout program. The President has proposed and Treasury Secretary 
Geithner has proposed a new toxic asset plan that could put hundreds of 
billions of dollars of the taxpayers' money at risk, so we need to do 
this right.
  The special inspector general for TARP has stated that this new toxic 
asset buy-back program--called the Public-Private Investment Program--
is ``inherently vulnerable to fraud, waste, and abuse.'' The special 
IG's report outlined a number of good recommendations that are 
necessary to protect the taxpayers and to ensure the integrity of this 
new program.
  My amendment would simply require that the Treasury Department 
implement the recommendations from this special inspector general 
before allocating money under this new program known as the Public-
Private Investment Program.
  These requirements include, very simply, No. 1, imposing strict 
conflict of interest rules to prevent PPIP fund managers from 
inappropriately using the program to benefit themselves or their 
clients. Common sense. Makes sense. No. 2, mandate complete 
transparency of this program, including public disclosure of all 
transactions and the current valuation of all assets. And No. 3, 
requiring that the fund managers who manage this program have stringent 
investor screening procedures, at least as rigorous as typical know-
your-customer procedures found at commercial banks or retail brokerage 
firms to ensure investors are legitimate.
  Let's put these safeguards in place. These are common sense. We are 
all talking about a bill in front of us that eliminates fraud and 
abuse. Well, there is no bigger program that we have right now than the 
TARP program. We need to eliminate fraud and abuse. And when the 
special inspector general has said this new program is ripe with fraud 
and abuse, we ought to protect the taxpayers.
  I urge my colleagues to adopt this amendment so that the Treasury 
Department fulfills President Obama's promise of bringing in 
transparency and open government. That is what he promised upon coming 
in. This particular amendment will help ensure that the American people 
have transparency and that their interests are protected, especially 
their dollars are protected with this new program that literally could 
run into the hundreds of billions of dollars.
  With that, Mr. President, I yield the floor, and I urge all of my 
colleagues to support this amendment. Hopefully, we won't get blocked 
on having a vote on this amendment.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Mr. President, I assume the Banking Committee will talk 
about the amendment of the Senator from Nevada.
  If I could have the attention of the Senator from Nevada, if his 
staff would allow me to have the attention of the Senator from Nevada 
for a moment, I realize we are merely constitutional impediments to the 
staff. I hate to interfere.
  Again, this is one of a series of amendments that is not at all 
within the jurisdiction of the Judiciary Committee. I find it an 
interesting amendment, but it is within the jurisdiction of the Banking 
Committee. I was hoping, since there is going to be a banking bill next 
week, that some of these banking amendments would actually go on the 
Banking bill and have Judiciary amendments on the Judiciary bill. And I 
would assume that the discussion will be carried out by Senators Dodd 
and Shelby of the Banking Committee, in that there is no relationship 
at all to the Judiciary Committee bill.
  I would add to that, of course, that the Senator from Nevada has an 
absolute right to bring up anything. Someone can bring up something on 
agriculture and price supports, I suppose. But I wish we could keep it 
to Judiciary matters.
  Mr. President, am I correct we are now back on the Kyl amendment?
  The PRESIDING OFFICER. The Senate is on the Kyl amendment.
  Mr. LEAHY. I thank the Chair, and I suggest the absence of a quorum.
  Mr. ENSIGN addressed the Chair.
  Mr. LEAHY. I withhold that request for the Senator from Nevada.


                           Amendment No. 1000

  Mr. ENSIGN. Mr. President, I call for regular order on the Boxer 
amendment.
  The PRESIDING OFFICER. The amendment is pending.
  The Senator from Vermont.
  Mr. LEAHY. Mr. President, I thought the Kyl amendment was pending by 
unanimous consent.
  The PRESIDING OFFICER. The Kyl amendment was pending, but the Senator 
has called for regular order.
  Mr. ENSIGN. Mr. President, do I have the floor?
  The PRESIDING OFFICER. The Senator from Nevada.


                Amendment No. 1003 to Amendment No. 1000

  Mr. ENSIGN. Mr. President, I call up as my second-degree amendment 
No. 1003.
  Mr. LEAHY. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The Senator from Nevada has the floor.
  Mr. ENSIGN. I call up amendment No. 1003.
  Mr. LEAHY. Mr. President, I suggest the absence of a quorum. Will the 
Senator give up the floor?
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Ensign] proposes an amendment 
     numbered 1003 to amendment No. 1000.

  The amendment is as follows:

 (Purpose: To impose certain requirements on public-private investment 
                 fund programs, and for other purposes)

       After page 2, line 20, add the following:
       (f) Public-Private Investment Program.--
       (1) In general.--Any program established by the Secretary 
     of the Treasury or the Board of Directors of the Federal 
     Deposit Insurance Corporation that does any of the following 
     shall meet the requirements of paragraph (2):
       (A) Creates a public-private investment fund.
       (B) Makes available any funds from the Troubled Asset 
     Relief Program established under title I of the Emergency 
     Economic Stabilization Act of 2008 (12 U.S.C. 5211 et seq.) 
     or the Federal Deposit Insurance Corporation for--
       (i) a public-private investment fund; or
       (ii) a loan to a private investor to fund the purchase of a 
     mortgage-backed security or an asset-backed security.
       (C) Employs or contracts with a private sector partner to 
     manage assets for a public-private investment program.
       (D) Guarantees any debt or asset for purposes of a public-
     private investment program.
       (2) Requirements.--Any program described in paragraph (1) 
     shall--
       (A) impose strict conflict of interest rules on managers of 
     public-private investment funds that--
       (i) specifically describe the extent, if any, to which such 
     managers may--

       (I) invest the assets of a public-private investment fund 
     in assets that are held or managed by such managers or the 
     clients of such managers; and
       (II) conduct transactions involving a public-private 
     investment fund and an entity in which such manager or a 
     client of such manager has invested;

       (ii) take into consideration that there is a trade off 
     between hiring a manager with significant experience as an 
     asset manager that has complex conflicts of interest, and 
     hiring a manager with less expertise that has no conflicts of 
     interest; and
       (iii) acknowledge that the types of entities that are 
     permitted to make investment decisions for a public-private 
     investment fund may need to be limited to mitigate conflicts 
     of interest;
       (B) require the disclosure of information regarding 
     participation in and management of public-private investment 
     funds, including any transaction undertaken in a public-
     private investment fund;
       (C) require each public-private investment fund to make a 
     certified report to the Secretary of the Treasury that 
     describes each transaction of such fund and the current value 
     of any assets held by such fund, which report shall be 
     publicly disclosed by the Secretary of the Treasury

[[Page S4617]]

       (D) require each manager of a public-private investment 
     fund to report to the Secretary of the Treasury any holding 
     or transaction by such manager or a client of such manager in 
     the same type of asset that is held by the public-private 
     investment fund;
       (E) allow the Special Inspector General of the Troubled 
     Asset Relief Program, access to all books and records of a 
     public-private investment fund;
       (F) require each manager of a public-private investment 
     fund to retain all books, documents, and records relating to 
     such public-private investment fund, including electronic 
     messages;
       (G) allow the Special Inspector General of the Troubled 
     Asset Relief Program, the Secretary of the Treasury, and any 
     other Federal agency with oversight responsibilities access 
     to--
       (i) the books, documents, records, and employees of each 
     manager of a public-private investment fund; and
       (ii) the books, documents, and records of each private 
     investor in a public-private investment fund that relate to 
     the public-private investment fund;
       (H) require each manager of a public-private investment 
     fund to give such public-private investment fund terms that 
     are at least as favorable as those given to any other person 
     for whom such manager manages a fund;
       (I) require each manager of a public-private investment 
     fund to acknowledge a fiduciary duty to the public and 
     private investors in such fund;
       (J) require each manager of a public-private investment 
     fund to develop a robust ethics policy that includes methods 
     to ensure compliance with such policy;
       (K) require stringent investor screening procedures for 
     public-private investment funds that include know your 
     customer requirements at least as rigorous as those of a 
     commercial bank or retail brokerage operation;
       (L) require each manager of a public-private investment 
     fund to identify for the Secretary of the Treasury each 
     beneficial owner of a private interest in such fund; and
       (M) require the Secretary of the Treasury to ensure that 
     all investors in a public-private investment fund are 
     legitimate.
       (3) Report.--Not later than 45 days after the date of the 
     establishment of a program described in paragraph (1), the 
     Special Inspector General of the Troubled Asset Relief 
     Program shall submit to Congress a report on the 
     implementation of this section.
       (4) Definition.--In this subsection, the term ``public-
     private investment fund'' means a financial vehicle that is--
       (A) established by the Federal Government to purchase pools 
     of loans, securities, or assets from a financial institution 
     described in section 101(a)(1) of the Emergency Economic 
     Stabilization Act of 2008 (12 U.S.C. 5211(a)(1)); and
       (B) funded by a combination of cash or equity from private 
     investors and funds provided by the Secretary of the 
     Treasury, the Federal Deposit Insurance Corporation, or the 
     Board of Governors of the Federal Reserve System.

  Mr. LEAHY. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. LEAHY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 986

  Mr. LEAHY. Mr. President, I understand that the Senator from Arizona 
and I have 2 minutes equally divided between us before the vote?
  The PRESIDING OFFICER. That is correct.
  Mr. LEAHY. I know Senator Kyl is on the way. I will say what I said 
before, when he was standing on the floor. I, along with Senator 
Grassley, strongly oppose his amendment because the False Claims Act is 
so well put together, has a balanced approach of providing incentives 
for whistleblowers, and has recovered more than $22 billion for the 
Treasury. That is why Senator Grassley and I oppose the amendment by 
the Senator from Arizona. Awards to whistleblowers have to be approved 
by judges, so there is a mechanism to handle excessive awards.
  When we have something like the False Claims Act that is working as 
well as it is--as I said, it is one of the few things that has made 
money for the Federal Government. So far it has made $22 billion for 
the U.S. taxpayers. I hate to interfere with something that is working.
  My time is up. The Senator from Arizona is on the Senate floor.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. KYL. Mr. President, the purpose of this amendment is to provide a 
limitation of $50 million for the recovery of the whistleblowers who 
bring actions that result in recovery for the Government of money that 
otherwise would have been lost due to fraud. There needs to be a 
reward, and most of these whistleblowers, frankly, are not looking for 
money. But it seems to me, from 1986 when we did this, we never 
contemplated these multibillion-dollar settlements or awards, and to 
provide up to 30 percent of that to the people who bring the action is 
too much. We could save the Federal Government a lot of money if we put 
in a modest limitation. I would argue a $50 million award per case is a 
pretty liberal award. My amendment would cap the award at $50 million, 
and I ask my colleagues to support the amendment.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent for 15 seconds.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Mr. President, I would like to point out, as I did in 
my debate, that we have a much larger False Claims Act bill pending in 
the Judiciary Committee. I think what the Senator from Arizona brought 
up is a legitimate subject for discussion, but it ought to be discussed 
in the wider global issue of the False Claims Act and not in a fraud 
bill where we are just trying to make some very short changes in the 
False Claims Act.
  I ask my colleagues to vote against the Kyl amendment.
  The PRESIDING OFFICER. The question is on agreeing to the amendment. 
The yeas and nays have been previously ordered. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Illinois (Mr. Durbin), the 
Senator from Massachusetts (Mr. Kennedy), the Senator from New Jersey 
(Mr. Lautenberg), the Senator from Connecticut (Mr. Lieberman), and the 
Senator from West Virginia (Mr. Rockefeller) are necessarily absent.
  Mr. KYL. The following Senators are necessarily absent: the Senator 
from Tennessee (Mr. Alexander) and the Senator from Kansas (Mr. 
Roberts).
  Further, if present and voting, the Senator from Tennessee (Mr. 
Alexander) would have voted: ``yea.''
  The PRESIDING OFFICER (Mrs. Hagan). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 31, nays 61, as follows:

                      [Rollcall Vote No. 162 Leg.]

                                YEAS--31

     Barrasso
     Bennett
     Bingaman
     Bond
     Brownback
     Bunning
     Burr
     Chambliss
     Coburn
     Cochran
     Corker
     Cornyn
     DeMint
     Ensign
     Enzi
     Gregg
     Hatch
     Hutchison
     Inhofe
     Isakson
     Kyl
     Lugar
     McCain
     McConnell
     Murkowski
     Sessions
     Shelby
     Specter
     Thune
     Vitter
     Wicker

                                NAYS--61

     Akaka
     Baucus
     Bayh
     Begich
     Bennet
     Boxer
     Brown
     Burris
     Byrd
     Cantwell
     Cardin
     Carper
     Casey
     Collins
     Conrad
     Crapo
     Dodd
     Dorgan
     Feingold
     Feinstein
     Gillibrand
     Graham
     Grassley
     Hagan
     Harkin
     Inouye
     Johanns
     Johnson
     Kaufman
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Leahy
     Levin
     Lincoln
     Martinez
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Risch
     Sanders
     Schumer
     Shaheen
     Snowe
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Voinovich
     Warner
     Webb
     Whitehouse
     Wyden

                             NOT VOTING--7

     Alexander
     Durbin
     Kennedy
     Lautenberg
     Lieberman
     Roberts
     Rockefeller
  The amendment was rejected.
  Mr. LEAHY. I move to reconsider the vote and to lay that motion on 
the table.
  The motion to lay on the table was agreed to.


                            vote explanation

  Mr. DURBIN. Mr. President, on vote No. 162, I was unavoidably 
detained due to my representation of the Senate at the annual Day of 
Remembrance Ceremony.
  Had I been present for the vote, I would have voted ``nay'' on Kyl 
amendment No. 986 to the Fraud Enforcement and Recovery Act of 2009.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DORGAN. Will the Senator yield?

[[Page S4618]]

  Mr. DODD. I will.
  Mr. DORGAN. I ask unanimous consent to be recognized following the 
remarks of the Senator from Connecticut.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LEAHY. Madam President, if the Senator will yield for a moment, 
this bill would have been easily finished last night, but I understand, 
under the Senate schedule, we were unable to continue at that time. I 
hope we will finish soon so that we don't have to spend a great deal 
more time. We have had a large number of amendments that are basically 
Banking Committee amendments, and other committees, not the Judiciary 
Committee. We should come back to realizing that this is a Judiciary 
bill. Every one of us says we are against those who are stealing life 
savings and money set aside for kids' colleges and stealing people's 
homes. We all say we would love to put them in jail. We will not do it 
until we get the bill through.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. HATCH. Madam President, if the Senator will yield for a unanimous 
consent request.
  Mr. DODD. I will.
  Mr. HATCH. I ask unanimous consent that I be permitted to call up an 
amendment following the remarks of Senators Dodd and Dorgan.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Madam President, the Fraud Enforcement and Recovery Act of 
2009 comes out of the Judiciary Committee. Senators Leahy and Grassley 
and their colleagues have worked hard to put together a strong 
bipartisan bill to deal with fraud. In fact, I am told that for every 
dollar we invest in this effort, there is roughly $15 that would accrue 
to the benefit of American taxpayers. I commend them for their efforts 
on this important piece of legislation.
  However, this Judiciary Committee bill is sort of turning into a 
Banking Committee bill as most of the amendments being offered are 
within the jurisdiction of the Banking Committee. I understand the 
appetite of my colleagues to address some of these questions. Some of 
them are very good ideas, ones that I will mention in a moment and that 
I can support. Others are very complicated and have are technical 
issues, but they also could do great damage to the effort we are all 
principally engaged in and desirous of achieving, and that is to 
restore confidence and optimism in order to get our economic system 
back on its feet.
  I thought it might be valuable, as chairman of the Banking Committee, 
to run through the amendments that affect the jurisdiction of the 
Banking Committee and to share some of my observations on ones I would 
be willing to support, which means we could possibly have voice votes 
on them and accept them as part of this bill, and others which are of 
concern to me and which I would oppose for reasons I will briefly 
explain.
  On a positive note, Senator Coburn has offered amendment No. 983. 
This amendment would require the examination of what happened with the 
GSEs, Fannie Mae, Freddie Mac, the Federal Home Loan Banks.
  Yesterday, we adopted a proposal, offered by Senators Isakson, 
Conrad, and myself, to establish a commission to examine thoroughly how 
we got into the situation we find ourselves in. There has been a debate 
about whether we ought to do that with an outside commission or within 
the Congress. There is a legitimate debate about that. My colleague 
from North Dakota proposed a select committee, which was adopted last 
evening. Whether we adopt the select committee approach or an outside 
commission, in either case, the GSEs would be a part of that 
examination.
  I make the case that the amendment of the Senator from Oklahoma may 
be duplicative or unnecessary. But rather than have an extended debate 
about that, I recommend we accept the amendment. The issues surrounding 
the GSEs are clearly going to be a part of the look-back. So rather 
than have extended debate about that, let's just accept the amendment 
and move on. Then the commission or the select committee can make those 
specific determinations. I urge that a voice vote be acceptable on that 
issue.
  Senator Kohl has offered amendment No. 990. That amendment is 
designed to offer additional protections to older Americans from 
misleading and fraudulent marketing practices within the financial 
area. I commend my colleague for his amendment. We all know elderly 
Americans are some of the most--if not the most--vulnerable to the 
marketing scams that go on, either through direct mail operations or 
telemarketing operations. People who are alone and vulnerable in many 
ways are incredibly susceptible to some egregious marketing techniques. 
The Senator has offered an amendment that would provide additional 
security for those in retirement, and we can all applaud him for that 
effort. The amendment has been endorsed by the North American 
Securities Administrators, financial planners, the Consumer Federation 
of America, and many others. I commend Senator Kohl for that amendment 
and again urge my colleagues to accept it, if that is acceptable to the 
Senator from Wisconsin.
  Senator Schumer has offered amendment No. 1006 which would add $20 
million of authorization to the Securities and Exchange Commission in 
funding for 2010 and 2011. All of us can appreciate the need for 
additional support for the Enforcement Division. Americans are 
painfully aware of the Madoff scandal as well as the Stanford Ponzi 
schemes. We have had these agencies before our Banking Committee with 
hearings on how that happened, whether or not people were doing their 
jobs. Senator Schumer has suggested we provide additional resources.
  Earlier this year, I requested, along with members of my committee, a 
billion dollars a year for the SEC in 2010, a level which we still will 
not reach with this additional $20 million. Many of us agree that the 
Securities and Exchange Commission has to have the tools and the staff 
to do the job. There are an awful lot of scams going on. We don't want 
to hear about Americans being victimized by them any longer. While 
there is no guarantee that with additional resources and personnel we 
will stop all of them, we certainly know that with additional resources 
and tools, we can minimize the problems that emerged with the Madoff 
and Stanford scandals. Senator Schumer has offered a very good 
amendment, and I urge that it be accepted.
  Those three amendments are ones we can accept, and hopefully we will 
in order to assist our colleague from Vermont and others in moving this 
bill along.
  Let me mention a couple of amendments with which I have some 
difficulty.
  First, the Coburn amendment No. 982. This amendment would authorize 
the use of TARP funds to cover the cost of this bill. I have many 
problems with this amendment. First, there is a point of order against 
this amendment. But aside from the point of order, the purpose of TARP, 
which Congress passed last year, was to provide assistance to unlock 
our frozen financial markets in order to provide credit for small 
businesses; to purchase securities backed by loans from small 
businesses; to provide capital to banks so they can continue to make 
loans, although not many of them are doing so, but that was the idea 
behind the program; and to fund the Making Home Affordable Programs, 
which modifies mortgage loans, either reducing principal or interest, 
so that we can mitigate the 10,000 people a day who are entering into 
foreclosure and for whom modifying those loans is critically important. 
If we start going around and deciding we will use TARP funds for every 
idea and every bill that comes to the floor we will deprive the 
Treasury and others of the tools necessary to get our economy moving 
again. If we start spreading TARP resources in areas that have little 
or nothing to do with the underlying economic crisis we will be taking 
a step in the wrong direction. I urge my colleagues to vote against 
amendment No. 982 for those reasons. If we start down this path, it 
will be more and more difficult to get our economy back on its feet 
again. I know that many of my colleagues disagreed with the TARP, but 
that is what Congress adopted. There were those who objected to using 
TARP money for the auto industry and believed that was wrong. There may 
be other areas where some have disagreed with the use of

[[Page S4619]]

TARP funds. But to have it become a funding mechanism for every bill 
that comes along would undermine the very purpose of those programs.
  The next two amendments I urge my colleagues to pay attention to and 
I believe are matters of concern are the amendments from our colleague 
from Louisiana, Senator Vitter, No. 991, and Senator DeMint from South 
Carolina, amendment No. 994. Let me explain both of the amendments and 
why I have concerns about each of them.
  The Vitter amendment has to do with the issue of warrants. It is a 
complicated subject matter, but let me briefly explain it. What would 
be the effect of this amendment? This amendment is basically a favor to 
banks and minimizes help for taxpayers. That is what it comes down to. 
This amendment would take away the discretion of regulators and the 
Treasury to impose additional capital requirements or any other 
requirements on a TARP recipient that could benefit taxpayers or 
protect the financial system. Under this amendment, the financial 
institutions would have the discretion to act on their own in areas 
where they currently can not. It is quite clear that when they receive, 
in many cases, billions of dollars in taxpayer money to shore up their 
position, to salvage these institutions, that to then turn around and 
allow them unilaterally to make decisions which could harm the taxpayer 
and cause even further delay of financial system recovery is exactly 
the wrong direction in which we ought to be going.
  The amendment would allow the TARP recipient, rather than Treasury, 
to determine when its warrants would be repurchased. The amendment 
would not permit Treasury's discretion to determine when warrants may 
be executed and would allow the recipient to indefinitely defer 
exercise of the warrants. In addition, it could harm the taxpayers by 
eliminating the requirement that Treasury pay market price for these 
warrants.
  So under this amendment, we are reducing the power of the regulators 
at the very critical moment we want them to exercise that influence 
rather than allow the recipients themselves to allow what is in their 
best interest. They are the ones who have received billions of taxpayer 
money. It seems to me having a leash on all that and allowing the best 
decision to be made on behalf of the overall economy is what we ought 
to be doing.
  The amendment would empower the banks, which may act in their 
individual interests--and I understand that--but having received so 
much taxpayer money, it seems to me we ought to make sure we are not 
going to allow that unilateral self-interest to trump the interests of 
the larger concern; and that is the American taxpayer and the overall 
restoration of our economic well-being.
  So I say respectfully to my colleague, and a member of our committee, 
Senator Vitter, this amendment, I think no matter how good his 
intentions, may actually do a lot more damage and harm if it were to be 
adopted at this critical moment when we see that glimmer of light that 
our economy is beginning to show some signs of recovery. This amendment 
could set us back at the very moment we may be heading in the right 
direction.
  The last amendment I will address at this moment is one offered by 
our colleague from South Carolina, Senator DeMint. I am not in any way 
disparaging the intentions of my colleagues here. I have great respect 
for all whom I serve with, and their intentions, I am sure, are 
motivated by their own framework of how they see these issues. But this 
amendment concerns me as well in a similar vein. It is a different 
subject matter, but a similar approach.
  Here is what I mean by that. The DeMint amendment also allows a lot 
of discretion to be left in the hands of the financial institutions, 
the institutions which have received, of course, tremendous support 
from the American taxpayer. This amendment would deprive the Treasury 
of the ability to convert preferred stock to common stock. That 
conversion could allow banks to basically shore up their balance 
sheets. That is what some are considering to do. This would limit their 
ability to do that. It would say you could not do that. You could not 
have that kind of conversion.
  If we limit that ability to make that kind of a discretionary 
decision, then this could mean that more small business lending would 
be curtailed, more mortgage lending would be curtailed, more lending 
for commercial real estate, all of which may be absolutely critical in 
the coming weeks.
  Preferred stock does not increase bank capital in a similar manner as 
common shares do. The Senator's amendment could lead to the very real 
consequence that lending is constricted significantly more than we see 
currently. That would mean more businesses closing for lack of capital, 
which means more job losses across our country. It means more 
foreclosures of homes. Madam President, as I mentioned earlier, 10,000 
homes a day is a staggering number already. I cannot imagine watching 
that number increase further. Yet the adoption of that amendment could 
achieve that result. It could also mean foreclosed homes staying on the 
market longer, another result that we do not want to see.
  In short, the amendment means a lot more economic hardship. Some TARP 
recipients may not be able to pay a dividend in connection with 
preferred shares. It would be counterproductive to deprive the Treasury 
of their discretion to convert its preferred shares to common shares 
under those circumstances. At a very time you want to shore up balance 
sheets by allowing for that conversion, this amendment would prohibit 
that conversion. It seems to me to constrict that kind of action is 
exactly the wrong direction to be going in at this very moment. The 
Government's upside potential could be much greater with common shares 
in some instances, and to deny the ability of our Treasury and others 
to make that kind of conversion I think could be harmful.
  Allowing conversion from preferred shares to common shares would 
permit the Treasury to provide additional flexibility and assistance to 
financial institutions and, maybe most importantly, would limit the use 
of additional taxpayer funds. Let me emphasize that point. I think we 
are all painfully aware that with about $100 billion left of TARP 
funds, if you restrict the ability to move from preferred shares to 
common shares, you increase the likelihood of having to come back here. 
I do not know of a single Member of this body who welcomes coming back 
here seeking additional TARP funds. That may very well occur, but it 
will occur a lot more rapidly if you adopt the DeMint amendment.
  So while, again, I respect my colleague from South Carolina, a member 
of our committee--and I do not question at all his motivations in all 
of this--I say in this case as well, as with the Vitter amendment, you 
are restricting the ability of the people we have charged with managing 
this. If we end up having Congress--535 Members of Congress--deciding 
on a daily basis how to micromanage this program, and with all due 
respect to my colleagues, this is above our pay grade in many ways. We 
in Congress do a lot of things well. Micromanaging this program, such 
as these two amendments suggest, I think sends us in the wrong 
direction.
  Again, I urge my colleagues on both sides of the aisle to please look 
at these two amendments and understand the potential danger were they 
to be adopted. It would certainly curtail our ability, in my view, to 
engage in exactly the activities that need to be at the top of our 
agenda: loosening up that credit market; getting a hold of the 
foreclosure issue, and trying to go in the opposite direction of where 
it is going today; making it possible for small businesses to get back 
on their feet; and allowing banks to start lending again in this 
country. If you adopt these two amendments you achieve the opposite 
result.
  So I urge, on both the Vitter amendment and the DeMint amendment, 
they be rejected. And for the reasons I offered on, the second Coburn 
amendment, that are that we cannot turn the TARP program into a slush 
fund for every program that comes through here, as it was specifically 
designed to deal with the economic crisis, and that ought to be the 
purpose for which these funds are used. I urge my colleagues to reject 
that amendment as well.
  Unfortunately, Senator Leahy, the chairman of the Judiciary 
Committee, has had his bill turn into a Banking Committee bill with all 
of these

[[Page S4620]]

amendments. So I felt obligated in some sense to come over and share 
with my colleagues at least my observations on these amendments: the 
ones I think we can accept--and I applaud my colleagues who have 
offered amendments that I think are significant and can contribute; 
even the first Coburn amendment, which I disagree with because you do 
not need it as a result of the earlier amendments which we adopted 
cover the issues of his amendment. But I think all of us recognize that 
the GSES issues have to be part of that look-back, so I would find it 
difficult to oppose his amendment. Therefore, I urge my colleagues to 
support that amendment, along with the Kohl amendment and the Schumer 
amendment that have been offered.
  With that, I see my colleagues from North Dakota and Utah who are 
anxious to speak. I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Madam President, I thank my colleague from Connecticut. I 
also thank my colleague from Utah for his forbearance so that I might 
make a few comments. I appreciate the courtesy of Senator Hatch.
  Madam President, I ask unanimous consent that my statement be printed 
in the morning business section of today's Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. DORGAN are printed in today's Record under 
``Morning Business.'')


                           Amendment No. 1007

  Mr. HATCH. Madam President, I ask unanimous consent that the pending 
amendment be set aside and I call up amendment No. 1007.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report.
  The legislative clerk read as follows:

       The Senator from Utah [Mr. Hatch] proposes an amendment 
     numbered 1007.

  Mr. HATCH. Madam President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To prohibit the Department of Labor from expending Federal 
      funds to withdraw a rule pertaining to the filing by labor 
   organizations of an annual financial report required by the Labor-
            Management Reporting and Disclosure Act of 1959)

       At the end, insert the following:

     SEC. __. TRANSPARENCY IN ANNUAL FINANCIAL REPORTS.

       (a) Findings.--Congress finds the following:
       (1) The American workers who contribute union dues deserve 
     to have transparency and accountability in the management of 
     their unions.
       (2) Since 2001, investigations of union fraud have resulted 
     in more than 1,000 indictments, 929 convictions, and 
     restitution in excess of $93,000,000.
       (3) A new rule (referred to in this subsection as the 
     ``transparency rule'') to require union management to 
     disclose more information about sales and purchases of 
     assets, and disbursements to officers and employees, among 
     other things, was set to take effect on April 21, 2009, after 
     a previous delay affording reporting entities more time to 
     prepare to comply.
       (4) The Obama Administration has set a goal for itself to 
     be the most open and transparent administration in the 
     history of the Nation.
       (5) On April 21, 2009, the Department of Labor issued--
       (A) a final rule providing for a further delay of the 
     transparency rule; and
       (B) a proposed rule to withdraw the transparency rule.
       (6) The transparency rule would have been a key tool in the 
     battle against fraud, discouraging embezzlement of the money 
     of union members and making money harder to hide, and would 
     have provided great sunlight and transparency to allow 
     members to know how their dues were being spent.
       (7) The Department of Labor's actions are in direct 
     contradiction to everything the Obama Administration purports 
     to stand for.
       (b) Prohibition.--The Secretary of Labor may not expend 
     Federal funds to withdraw the rule issued by the Secretary of 
     Labor entitled ``Labor Organization Annual Financial 
     Reports'', 74 Fed. Reg. 3678 (January 21, 2009).

  Mr. HATCH. Madam President, I rise to propose an amendment that will 
ensure transparency and prevent egregious cases of fraud against 
American workers. My amendment is very simple, and I think it is 
compelling. All it does is prevent the administration from rescinding 
current regulations that require transparency in the way that union 
management chooses to spend the hard-earned dues collected from their 
members. This amendment is specifically directed at preventing the 
weakening of the Department of Labor's Office of Labor-Management 
Standards--or OLMS it is called--which is the sole Federal agency 
tasked with protecting the interests of American workers who pay union 
dues.
  Under current Federal law, the OLMS requires financial reporting that 
ensures the transparency of how labor union management spends labor 
union dues in the area of compensation of labor leaders, the purchasing 
of union assets, and additional information regarding various union 
receipts. This law requires union leaders to disclose how members' 
money is spent and provides protection from fraud, waste, and abuse.
  Public opinion and our Nation's dire economic conditions have driven 
us to require banks, corporations, and even Presidential 
administrations to do business in the light of day--in full 
transparency. Therefore, the same expectation of transparency should 
apply to labor unions. The previous administration took steps to do 
that in 2003 by updating reporting requirements and forms. These 
updates allowed the electronic filing of disclosures on the Internet. 
The Office of Labor-Management Standards--OLMS--was about to implement 
a second update that would require information about compensation to 
union officers. This revision also would have required the disclosure 
of transactions involving union assets.
  Unfortunately, as was reported this year in the April 21 Federal 
Register, the Labor Department and Labor Secretary Hilda Solis have 
delayed the effective date of these revisions. Furthermore, on this 
same date, the Labor Department has published a notice that seeks to 
withdraw the rule entirely. By doing this, Secretary Solis has 
effectively neutralized OLMS in its mission to ensure the transparency 
in the way labor unions spend the hard-earned money of their Members. 
Ironically, this is being done by an administration that has told the 
American public that transparency and change has returned to 
Washington. It would appear to me that the Labor Department did not get 
that memo. I feel confident President Obama would be on my side on 
this, that he would want the transparency. It is in the best interests 
of union workers. It protects them from fraud. It protects their dues 
as they put them in there. Unions can run the unions just as businesses 
run businesses, but they ought to do it honestly. That is why these 
regulations are so important. That is why this amendment is so 
important.
  There should not be any debate as to the effectiveness of the OLMS. 
From 2001 through 2007, OLMS investigations resulted in 1,000 
indictments. The Office of Labor-Management Standards fraud 
investigations between 2001 and 2007 resulted in 1,000 indictments and 
convictions of 929 of those indicted. The funds recovered that were 
illegally taken amounted to $93 million. Think about that: $93 million 
in restitution was paid back to the victims of those crimes. I am sure 
I need not remind any Member of this body that union dues are seldom 
voluntarily given. Men and women who join these unions are often 
compelled to pay as part of their employment agreement. Union funds are 
also comprised of pension funds, which have occasionally been targeted 
by organized crime and used to underwrite mob activities. I know. I was 
a member of the AFL-CIO. I went through a formal apprenticeship. I paid 
dues, and I became a journeyman metal lather, a skilled trade, back in 
those years when I was working in construction.
  Union funds, as I say, are also comprised of pension funds, which 
sometimes are targeted by organized crime and used to underwrite mob 
activities. When I was chairman of the Labor Committee, we did a lot to 
try and overcome these things, but it has never been done better than 
between 2001 and 2007. From October 2000 through May 2007, in the State 
of New York alone, the OLMS conducted 334 audits and obtained 87 
indictments, resulting in 82 convictions. That is a high constriction 
rate, showing this is not some little itty, bitty problem. This, in 
turn, resulted in the recovery and restitution of $39.6 million. In 
Illinois, the OLMS indicted 44 persons in connection with fraudulent 
activity involving union funds, resulting in 42 convictions.

[[Page S4621]]

These are statistics we can all be proud of. OLMS investigations 
produced 1,000 indictments and obtained 929 constrictions--a 92.9-
percent conviction rate.
  We are debating legislation that provides more investigators and 
remedies to prevent fraud and enforce Federal laws. The OLMS enforces 
the Labor Management Reporting Disclosure Act, a bipartisan law with 
roots back to another former Senator who was young, inspiring, and went 
on to become President: John F. Kennedy. It was then-Senator Kennedy 
who inserted into this act the union members' bill of rights. It is the 
union members who are entitled to transparency. The whole world is 
entitled to transparency in these instances as well. It is the mission 
of the OLMS to ensure that union business is conducted in the light of 
day, with its members'--and that is plural--interests at heart.
  It is for this reason that I have risen to propose this amendment and 
I ask my colleagues for their support and I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is not a sufficient second at this time.
  Mr. HATCH. Well, then I will ask for the yeas and nays at the 
appropriate time.
  Mr. REID. Madam President, I ask unanimous consent that the call of 
the quorum be terminated.
  The PRESIDING OFFICER. The Senate is not in a quorum call.
  Mr. HATCH. Madam President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? This time there 
is a sufficient second.
  The yeas and nays are ordered.
  Mr. HATCH. I thank the majority leader for his kindness and, of 
course, we are willing to have this come up whenever the majority 
leader and the minority leader determine.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. SCHUMER. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 1006

  Mr. SCHUMER. I ask unanimous consent that my amendment No. 1006 be 
called up.
  The PRESIDING OFFICER. The amendment is pending.
  Mr. SCHUMER. Madam President, I ask unanimous consent that the 
amendment be passed.
  The PRESIDING OFFICER. Is there any further debate on this issue?
  If not, the question is on agreeing to the amendment.
  The amendment (No. 1006) was agreed to.
  Mr. SCHUMER. Madam President, I wish to note to the body that this is 
the SEC amendment that adds $20 million for new SEC staff and 
investigators and another $1 million for the IG within the SEC. This 
was the one part of this very fine piece of legislation that wasn't 
included. Of course, if you are looking at financial fraud--the kind 
Bernie Madoff and so many others did--beefing up the SEC and making 
sure they are much tougher and more focused, as the technology parts of 
this amendment will allow, is what we need.
  Senator Grassley wanted to make sure the SEC avoided past mistakes 
under its old leadership and made some very useful suggestions. That is 
why the SEC wasn't included originally. We agreed on those. I wish to 
thank him, Senator Leahy, as well as Senator Shelby, who has been my 
cosponsor for passing this legislation.
  I also wish to thank our new chair at the SEC, Chair Schapiro. Mary 
Schapiro is a breath of fresh air within the SEC. She is trying to 
shake it up and focus on the kinds of mistakes we have seen in the past 
where the whistleblower came before the SEC and gave them the goods on 
Madoff and they passed it by. It won't happen again. This amendment 
should help make that happen and strengthen this fine legislation.
  I yield the floor.


                            Executive Power

  Mr. SPECTER. Madam President, I ask unanimous consent to proceed for 
up to 10 minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SPECTER. I have sought recognition to introduce three bills 
relating to limiting Executive power. Because of the past period of 
time since 9/11, we have seen enormous expansion of Executive power. We 
have seen the President, during President George W. Bush's 
administration, use signing statements extensively. We have seen 
President Obama use a signing statement already in his short tenure, 
which, in effect, nullifies what the Congress has done.
  The Constitution is plain that there is a presentment of legislation 
to the President and he either signs it or vetoes it. What we have 
found is that Presidents are now cherry-picking the parts they like and 
the parts they don't like. So I am submitting legislation on 
Presidential signing statements.
  The second issue of concern involves the immunity for the telephone 
companies which would deprive Federal jurisdiction for some 40 cases. I 
believe telephone companies have been good citizens in providing very 
important information. I believe there is a way to maintain the 
jurisdiction of the Federal courts and still not subject the telephone 
companies to litigation or possible damages by having the Government 
substituted as the party defendant. I am introducing legislation on 
that subject.

  Third, I am introducing legislation that would establish a 
requirement that the Supreme Court of the United States take 
jurisdiction on all appeals involving the terrorist surveillance 
program. That program has caused a great deal of controversy because of 
the issue as to whether the President has authority under article II to 
ignore the explicit provisions of the Foreign Intelligence Surveillance 
Act. The terrorist surveillance program, was declared unconstitutional 
by a Federal court in Detroit. An appeal taken to the Sixth Circuit was 
dismissed for reasons of lack of standing. The forceful dissenting 
opinion in that case showed that there was sufficient basis for 
standing--a very flexible judicial doctrine.
  The Supreme Court of the United States denied certiorari, so at this 
point, we don't know whether the President's exercise of authority 
there under article II of the Constitution is correct. Certainly, if 
the President has that constitutional authority, it supercedes the 
statute. But that is a matter which should have been decided a long 
time ago by the Supreme Court, and the Supreme Court has avoided moving 
on that subject.
  Today, I have an article I have offered on executive power. It 
appears today in the New York review of books, where I outline my 
intent to introduce these pieces of legislation. The article comes from 
a longer floor statement I had prepared. It has been reduced somewhat 
in size.
  In the 7\1/2\ years since September 11, the United States has 
witnessed one of the greatest expansions of executive authority in its 
history, in derogation of the constitutionally mandated separation of 
powers. President Obama, as only the third sitting senator to be 
elected president in American history, and the first since John F. 
Kennedy, may be more likely to respect the separation of powers than 
President Bush was. But rather than put my faith in any president to 
restrain the executive branch, I intend to take several concrete steps, 
which I hope the new President will support.
  First, I intend to introduce legislation that will mandate Supreme 
Court review of lower court decisions in suits brought by the ACLU and 
others that challenge the constitutionality of the warrantless 
wiretapping program authorized by President Bush after September 11. 
While the Supreme Court generally exercises discretion as to whether it 
will review a case, there are precedents for Congress to direct Supreme 
Court review on constitutional issues--including the statutes 
forbidding flag burning and requiring Congress to abide by Federal 
employment laws--and I will follow those.
  Second, I will reintroduce legislation to keep the courts open to 
suits filed against several major telephone companies that allegedly 
facilitated the Bush administration's warrantless wiretapping program. 
Although Congress granted immunity to the telephone companies in July 
2008, this

[[Page S4622]]

issue may yet be successfully revisited since the courts have not yet 
ruled on the legality of the immunity provision. My legislation would 
substitute the government as defendant in place of the telephone 
companies. This would allow the cases to go forward, with the 
government footing the bill for any damages awarded.
  Further, I will reintroduce my legislation from 2006 and 2007--the 
Presidential Signing Statements Act--to prohibit courts from relying 
on, or deferring to, Presidential signing statements when determining 
the meaning of any act of Congress. These statements, sometimes issued 
when the President signs a bill into law, have too often been used to 
undermine congressional intent. Earlier versions of my legislation went 
nowhere because of the obvious impossibility of obtaining two-thirds 
majorities in each House to override an expected veto by President 
Bush. Nevertheless, in the new Congress, my legislation has a better 
chance of mustering a majority vote and being signed into law by 
President Obama.
  To understand why these steps are so important, one must appreciate 
an imbalance in our ``checks and balances'' that has become 
increasingly evident in recent years. I witnessed firsthand, during 
many of the battles over administration policy since September 11, how 
difficult it can be for Congress and the courts to rally their members 
against an overzealous executive.


               The Terrorist Surveillance Program--Act I

  As chairman of the Senate Judiciary Committee from 2005 to 2007, I 
led the effort to reauthorize and improve the 2001 USA PATRIOT Act, 
which was originally set to expire at the end of 2005. Indeed, after 
intensive bipartisan negotiations, the Judiciary Committee succeeded--
to the surprise of most observers--in approving a revised bill by 
unanimous vote. The full Senate then approved the bill by unanimous 
consent, but the conference report negotiated with the House of 
Representatives faced stiffer opposition. Nevertheless, after days of 
floor debate, I awoke on December 16, 2005, fully expecting to finish 
Senate action on the long-delayed reauthorization.
  So, I was startled--really shocked--to read the lead story in the New 
York Times that morning, titled ``Bush Lets US Spy on Callers Without 
Courts,'' which revealed that our intelligence agencies had been 
engaged in warrantless wiretapping since shortly after September 11, in 
flat violation of the Foreign Intelligence Surveillance Act--FISA--of 
1978. This is James Risen and Eric Lichtblau, ``Bush Lets U.S. Spy on 
Callers Without Courts,'' the New York Times, December 16, 2005. The 
news caused the Senate to delay passage of the PATRIOT Act 
reauthorization for months. Senator Charles Schumer expressed the 
sentiments of many: ``I went to bed last night unsure of how to vote on 
this legislation. . . . Today's revelation that the Government listened 
in on thousands of phone conversations without getting a warrant is 
shocking and has greatly influenced my vote.'' More importantly, the 
disclosure in the Times launched a fierce debate about the extent of 
Presidential authority in the war on terror that has yet to be fully 
resolved.
  That day, I assured my colleagues the reports would be a ``matter for 
oversight by the Judiciary Committee . . . a very high priority item.'' 
When Congress reconvened in January 2006, I made good on my promise: I 
held multiple hearings into the program the Times revealed, later 
dubbed the Terrorist Surveillance Program. As acknowledged by President 
Bush, this highly classified program launched in the weeks after 
September 11 purported to authorize the National Security Agency to 
intercept phone calls between terror suspects overseas and persons 
inside the United States. Critics like me argued that the President's 
program violated FISA. After all, the law declared the procedures set 
up by FISA to be the ``exclusive means'' by which such surveillance of 
telephone calls and other communications could be conducted. FISA also 
made criminal all domestic electronic surveillance designed to obtain 
foreign intelligence ``except as authorized by statute.'' Although the 
law defined limited exceptions in emergencies, reports in the press 
made it clear that none of them applied to the warrantless wiretapping 
that was done in the Terrorist Surveillance Program.

  I recognized that, as administration supporters argued, the President 
might have inherent power to disregard FISA and to conduct unfettered 
foreign intelligence surveillance under article II of the Constitution, 
the section that defines his authority as Commander in Chief. I was 
not, however, sympathetic to the administration's further argument that 
Congress had implicitly authorized the President to carry out programs 
such as the Terrorist Surveillance Program when it authorized the use 
of military force against terrorists in September 2001.
  I was also convinced that President Bush's failure to notify Congress 
of the secret program violated provisions of the National Security Act 
of 1947. That statute requires the President to ``ensure that the 
congressional intelligence committees are kept fully and currently 
informed of the intelligence activities of the United States.'' But the 
administration informed only eight legislators of the Terrorist 
Surveillance Program: the chairman and ranking members of the Senate 
and House Intelligence Committees, and the two top leaders in the 
majority and minority of both Houses, leaving out both me and Senator 
Patrick Leahy as chair and ranking member of the Judiciary Committee, 
despite the fact that when FISA was enacted in 1978, it went through 
both the Intelligence and Judiciary Committees. While the law 
explicitly permits notice to this limited ``Gang of 8'' for certain 
covert operations--such as efforts to influence political conditions 
abroad without disclosing the U.S. role--the Terrorist Surveillance 
Program did not fit this exception.
  Indeed, those notified were very uneasy about the arrangement. 
Senator Jay Rockefeller, then ranking member on the Intelligence 
Committee, sent a secret handwritten letter to the Vice President 
saying the administration's surveillance activities ``raised profound 
oversight issues'' on which, owing to the arrangement, Rockefeller 
could not ``consult staff or counsel.'' A sealed copy of the letter had 
to be stored in a classified Senate area for over 2 years until 
knowledge of the Terrorist Surveillance Program became public. Once the 
story broke, Representative Jane Harman, who as ranking member of the 
House Intelligence Committee was another Gang of 8 member, informed 
President Bush that she believed ``the practice of briefing only 
certain Members of the intelligence committees violates the specific 
requirements of the National Security Act of 1947.''
  I raised this issue in a January 24, 2006, letter sent to Attorney 
General Alberto Gonzales in advance of the first Judiciary Committee 
hearing on the Terrorist Surveillance Program. Gonzales replied:

       ``It has for decades been the practice of both Democratic 
     and Republican administrations to inform only the Chair and 
     Ranking Members of the intelligence committees about certain 
     exceptionally sensitive matters.

  The attorney general added that, according to the Congressional 
Research Service, the leaders of the intelligence committees had 
acquiesced in this practice. In my view, Gonzales's argument could 
appeal only to those unacquainted with the ways the executive branch 
has, in practice, dealt with the intelligence committees. 
Administrations of both parties have sometimes told the chair and 
ranking member that they have important information to disclose, but 
insisted that they will reveal this information only to some group 
within the committee and the top congressional leadership, such as the 
``Gang of 8.'' In many cases, the offer is accepted as the only way of 
getting the information--at least in a timely manner.
  To the extent the administration relied on such precedents to justify 
notifying only the ``Gang of 8,'' it should have informed me and 
Senator Leahy as well. Indeed, administration officials briefed both of 
us on the Terrorist Surveillance Program when they later sought 
comprehensive FISA reform. It is quite glaring, then, that they 
neglected to brief us in 2005, even as we were considering 
reauthorization of the PATRIOT Act, which was central to the 
administration's counterterrorism efforts.
  In the spring of 2006, new allegations about the government's 
surveillance

[[Page S4623]]

activities surfaced--not at congressional hearings, but again through 
leaks to the press. On May 11, 2006, USA Today reported that the 
National Security Agency had been ``secretly collecting the phone call 
records of tens of millions of Americans, using data provided by AT&T, 
Verizon and BellSouth.'' This is Leslie Cauley, ``NSA Has Massive 
Database of American's Phone Calls,'' USA Today, June 11, 2006. 
Although the records reportedly included only data like telephone 
numbers, rather than the contents of calls, the revelations stirred new 
controversy.
  One month later, on June 22, the Chicago Sun-Times reported that AT&T 
had changed its privacy policy to make customer data a ``business 
record the company owns,'' one that ``can be disclosed to [the] 
government. . . .'' This is Associated Press, AT&T Says it Can Disclose 
Account Data on Net, TV Clients, Chicago Sun Times, June 22, 2006, at 
25. I was very interested in the legal basis for this assertion of 
ownership and what relationship it had, if any, to the reported 
disclosures of communications data to the government. As luck would 
have it, that very day, the Judiciary Committee's Antitrust 
Subcommittee was holding an unrelated hearing on the proposed merger of 
AT&T and BellSouth, featuring the firms' respective CEOs, Edward 
Whitacre Jr. and Duane Ackerman. I could not let the presence of these 
CEOs pass without confronting them on the surveillance program.

  I asked Mr. Whitacre whether his ``company provide[d] information to 
the Federal Government.'' He kept repeating that they ``follow the 
law''--a comment that I told him was ``contemptuous of this 
committee,'' because I was asking a factual question and he was 
offering a legal conclusion. Mr. Whitacre defended his answer on the 
grounds that he had spoken to a number of attorneys who advised him he 
could say nothing more.
  The episode did not go unnoticed. For example, under the headline 
``Privacy flap engulfs hearing,'' the Atlanta Journal-Constitution 
detailed that ``a Senate hearing Thursday intended to explore the 
consumer impact of a proposed AT&T-BellSouth merger instead turned into 
a contentious face-off over phone privacy.'' (see Marilyn Geewax, AT&T 
Bellsouth Merger; Privacy Flap Engulfs Hearing; Panel Wonders About Use 
of Phone Records, Atlanta Journal-Constitution, June 23, 2006, at 4G.
  In truth, the matter merited its own hearing, but my efforts to hold 
one were thwarted by Vice President Cheney. Soon after the story broke, 
I announced my intention to schedule a hearing with the CEOs of the 
named carriers. I planned to either subpoena the companies or arrange a 
hearing closed to the public, which the telephone companies had agreed 
to attend without receiving a subpoena. Unfortunately, Vice President 
Cheney went behind my back to persuade all of the other Republicans on 
the committee not to support the subpoena and to boycott the session I 
had called to discuss a possible private hearing. In the face of this 
opposition, I had little choice but to agree to a proposal by Senator 
Orrin Hatch for a brief delay to give him an opportunity to solicit the 
administration's views on my bill to permit court oversight of the 
Terrorist Surveillance Program. When I announced this course of action 
at the executive session, a highly contentious debate ensued.
  Senator Leahy, long at odds with the Vice President, opined that 
since we were not going to ``find out independently'' what the 
government sought from the telecoms and instead wait ``for Dick Cheney 
to tell us what we should know'' that we might as well ``just recess 
for the rest of the year.'' On the other hand, Senator Dianne Feinstein 
reported that she would not vote for the subpoenas because the 
``telephone companies who are trying to be a good citizen should not be 
held out to dry.'' As a member of both the Judiciary and Intelligence 
Committees, she added that ``it is very difficult for this committee to 
legislate without knowing the program'' and therefore the Intelligence 
Committee was the appropriate venue for legislation on the matter. 
Senator Dick Durbin, noting the absence of many Republicans, 
complained, ``I thought there would be a conversation about this, but 
apparently there will not be.'' He continued that the ``fortitude and 
strength [I] had shown in this committee, leading up through the month 
of May has ended in a June swoon.''
  When this uncomfortable meeting--and the accompanying slings--
concluded, I drafted what I refer to as a ``lawyer's letter'' to the 
Vice President. I wrote:

       I was surprised, to say the least, that you sought to 
     influence, really determine, the action of the Committee 
     without calling me first, or at least calling me at some 
     point. This was especially perplexing since we both attended 
     the Republican Senators caucus lunch yesterday and I walked 
     directly in front of you on at least two occasions en route 
     from the buffet to my table.

  I concluded with a solemn warning:

       If an accommodation cannot be reached with the 
     administration, the Judiciary Committee will consider 
     confronting the issue with subpoenas and enforcement.

  This spat proved great fodder for the editors. The lurid details were 
splashed across the pages of national newspapers around the country. 
The Los Angeles Times confided that the ``unusually public rupture 
between a senior GOP lawmaker and the White House'' provided ``a rare 
public glimpse of the tactics employed by a vice president who prefers 
to operate behind the scenes.'' It said I ``lashed out'' in a letter in 
an ``unusually harsh attack.'' This is Gregg Miller, Specter Says 
Cheney Tried to Derail Hearings, Los Angeles Times, June 8, 2006, at 
A6. The front page headline of The Hill screamed ``Specter Rebukes 
Cheney,'' and the Washington Post averred that the ``simmering 
tensions'' over the ``administrations tight-lipped position on the 
programs'' had finally ``boiled over.'' see Alexander Bolton, Specter 
Rebukes Cheney, The Hill, June 8, 2006, at 1; Michael A. Fletcher, 
Cheney Plays Down Dispute With Specter, Washington Post, June 9, 2006, 
at A4.
  Someone in Cheney's office must have been up all night, because I had 
my reply by mid-morning the next day. The White House, he said, was 
willing to negotiate in good faith. Extensive discussions culminated 
with a compromise bill and a July 11, 2006, meeting with President Bush 
in the Oval Office. The President agreed to submit the surveillance 
program to judicial review, but was insistent that the Senate not alter 
the agreed-upon terms. Usually, after securing such an agreement, one 
walks out of the Oval Office to the cameras and advertises it, but I 
chose to make the announcement at the committee's next executive 
session on July 13.
  My bill of 2006 to expand and revise FISA gave jurisdiction to the 
Foreign Intelligence Surveillance Court--the Intelligence Court--which 
was set up by the original FISA law to rule on surveillance requests by 
Federal agencies--to review the legality of the Terrorist Surveillance 
Program. Determining the constitutionality of the program would turn 
upon submissions to the Intelligence Court by the attorney general 
about its function and procedures, with particular attention to 
safeguards to ensure that the Terrorist Surveillance Program targeted 
suspected terrorists and not innocent Americans. The bill further 
required the attorney general to inform the House and Senate 
Intelligence Committees of all surveillance programs and created a new 
criminal offense for misuse of intercepted information. In return, the 
government was given additional flexibility with respect to the 
issuance and duration of emergency warrants. And in a nod to the 
administration, the bill also acknowledged that the president, as 
commander in chief, retains certain authority inherent in article II of 
the Constitution, although it left decisions about the scope of that 
authority to the courts.
  Some complained that I had ``sold out'' in making this deal. See, 
e.g., Jonathan Mahler, After the Imperial Presidency, N.Y. Times, 
November 9, 2008, Magazine, at MM42. These critics fail to appreciate 
the disadvantage Congress faces in resisting expansions of executive 
power. The Terrorist Surveillance Program was put into effect when 
President Bush signed a secret order in 2001. He did not need to hold 
any hearings or convince any colleagues. Vice President Cheney could 
rely on the fractious nature of the Senate, and the great influence of 
the executive, to easily kill the prospects for my planned subpoenas of 
the telephone companies. The administration's damage control, like the 
initial action, was

[[Page S4624]]

swift and unilateral. By contrast, on the legislative side, we could 
not begin to act until we established a factual record through a series 
of hearings and secured consensus on a path forward.
  As committee chairman, I was battered by Senators on both sides in my 
efforts for oversight. On the right, there were members who touted 
Article II and party loyalty. They were inclined, at a minimum, to 
accept the strained arguments that the Authorization for Use of 
Military Force had authorized the Terrorist Surveillance Program, and 
that the failure to notify the full intelligence committees did not 
actually violate the National Security Act. On the left, there was 
genuine outrage at some administration tactics, but they were also in 
no hurry for compromise, no matter how favorable the terms. They were 
very cognizant of the fact that the longer they let the friction 
between the branches drag on, the worse it looked for Republicans and 
the better for them and their allies. For example, as the New York Sun 
reported in June 2006, ``[f]ear of government excess in the war on 
terror ha[d] driven membership rolls'' in the ACLU ``to more than 
550,000 from less than 300,000,'' and the group's fundraising had 
``surged.'' See Josh Gerstein, For ACLU's Anthony Romero, These Should 
Be Best Times, New York Sun, June 27, 2006.
  Ultimately, the Judiciary Committee approved my FISA reform bill on 
September 13, 2006, but in contrast to the bipartisan vote on the 
PATRIOT Act reauthorization a year earlier, there was a 10-8 party-line 
vote. A final vote on the Senate floor was never taken, largely because 
the House had settled on a different approach to the Terrorist 
Surveillance Program that did not authorize court review of the 
program. Once again, the inherent constraints on the bicameral 
legislative branch served to benefit the executive, as the President's 
surveillance program continued unabated throughout our internal 
debates.
  The courts fared no better at reining in the Terrorist Surveillance 
Program. In August 2006, Judge Anna Diggs Taylor of the U.S. District 
Court for the Eastern District of Michigan issued an opinion in ACLU v. 
NSA, finding the program unconstitutional. Almost a year later, in July 
2007, the U.S. Court of Appeals for the Sixth Circuit overturned her 
decision. On a 2-1 vote, it declined to rule on the legality of the 
program, finding that the plaintiffs lacked standing to bring the suit. 
The Supreme Court then declined to hear the case, even though the 
doctrine of standing has enough flexibility for the Court to have 
acted. My bill to mandate Supreme Court review of this and other cases 
therefore seems all the more necessary to resolve the question.
  With the Supreme Court abstaining, another lone district judge took a 
stand. In In re National Security Agency Telecommunications Records 
Litigation, Chief Judge Vaughn Walker in the Northern District of 
California considered a case brought by an Islamic charity that claims 
to have been a subject of the surveillance program. In a 56-page 
opinion he wrote:

  Congress appears clearly to have intended to--and did--establish the 
exclusive means for foreign intelligence surveillance activities to be 
conducted. Whatever power the executive may otherwise have had in this 
regard, FISA limits the power of the executive branch to conduct such 
activities.

  As detailed further below, the hurdles faced by the few judges 
willing to examine the Terrorist Surveillance Program, and the snails' 
pace of appellate review, make my bill to mandate Supreme Court review 
of this and other cases all the more necessary to resolve the question.


  Shortcomings of the Legislative and Judicial Branches as Checks on 
                            Executive Power.

  The courts, including the Supreme Court, have admittedly been more 
effective than Congress in restraining executive excesses, but both 
have been too slow. This failure is exemplified by the judicial and 
legislative efforts to address the administration's treatment of 
detainees in the war on terror.
  In Hamdi v. Rumsfeld, decided on June 28, 2004, nearly 3 years after 
September 11, the Supreme Court ruled that a U.S. citizen being held as 
an enemy combatant must be given an opportunity to contest the factual 
basis for his detention before a neutral magistrate. In a stern rebuke 
of executive overreaching, Justice O'Connor's opinion declared, ``We 
have long since made clear that a state of war is not a blank check for 
the president when it comes to the rights of the Nation's citizens.'' 
The same day, the Court held in Rasul v. Bush that detainees at 
Guantanamo Bay were entitled to challenge their detention by filing 
habeas corpus petitions--the time honored legal action used to contest 
the basis for government confinement. Two years later, on June 29, 
2006, the Court announced in Hamdan v. Rumsfeld that the President 
could not conduct military commission trials under procedures that had 
not been authorized by Congress and that failed to satisfy the 
obligations of the Geneva Conventions' Common article III and the 
Uniform Code of Military Justice.
  Instead of fully embracing these decisions, however, Congress 
responded with the Detainee Treatment Act and the Military Commissions 
Act of 2006, both of which eliminated detainees' right to habeas corpus 
review on grounds that foreign terrorist suspects did not have the same 
rights as others in U.S. custody.
  During debate on the Military Commissions Act, I offered an amendment 
that would have guaranteed habeas corpus for detainees. In the face of 
sharp criticism from my own party, I argued that I was not speaking 
``in favor of enemy combatants.'' Rather, I was ``trying to establish . 
. . a course of judicial procedure'' to determine whether the accused 
were in fact enemy combatants. I pointed out that my fight to preserve 
habeas rights was, in essence, a struggle to defend ``the jurisdiction 
of the federal courts to maintain the rule of law.'' I concluded with a 
plea for the Senate not to deny ``the habeas corpus right which would 
take us back some 900 years and deny the fundamental principle of the 
Magna Charta imposed on King John at Runnymede.'' Despite these 
entreaties, my amendment narrowly lost on a 48-51 vote.

  I had lost the battle, but was not prepared to surrender. On January 
18, 2007, Attorney General Gonzales testified before the Judiciary 
Committee and argued that proposals to restore habeas corpus, such as a 
bill Senator Leahy and I had introduced, were ``ill-advised and frankly 
defy common sense.'' I was astounded at his claim that ``there is no 
express grant of habeas in the Constitution.'' I asked him: ``The 
constitution says you can't take it away except in case of rebellion or 
invasion. Doesn't that mean you have the right of habeas corpus unless 
there is an invasion or rebellion?'' He replied, ``The constitution 
does not say every individual in the United States or every citizen is 
hereby granted or assured the right to habeas. . . . It simply says the 
right of habeas corpus shall not be suspended.'' I protested, ``You may 
be treading on your interdiction and violating common sense, Mr. 
Attorney General.''
  This exchange received notice in a number of papers, as my position 
gained momentum. The Detroit Free Press, for example, editorialized:

       The moment when Alberto Gonzales proved he was just wrong 
     for the job of U.S. attorney general came . . . after Sen. 
     Arlen Specter, R-Pa., asked him about the constitutional 
     guarantee of criminal due process, known as habeas corpus.

  See Editorial, Gonzales Twisted Rule of Law Too Well, Detroit Free 
Press, August 28, 2007.
  That September, I made a second attempt to restore habeas corpus 
jurisdiction with an amendment to the Defense Department's 
authorization bill. This time, a majority of Senators voted for it, 
including seven Republicans. Unfortunately, the 56-43 majority was 
insufficient because, in the face of a filibuster threat, Senate 
procedure required sixty votes to pass. Ironically, a procedural tool 
that protects Senate minorities had become a shield for the executive 
branch.
  Thus, yet again, it was left to the Supreme Court to beat back the 
encroachment of executive power, which it finally did on June 12, 2008. 
In Boumediene v. Bush, the Court held that detainees held at Guantanamo 
Bay ``are entitled to the privilege of habeas corpus to challenge the 
legality of their detention.'' Because the Combatant Status Review 
Tribunals established by the Defense Department in 2004, following the 
Hamdi and Rasul decisions, and the limited procedural review permitted 
before the DC Circuit

[[Page S4625]]

failed to constitute an adequate and effective substitute for habeas 
corpus, the Court held that the Military Commissions Act had effected 
``an unconstitutional suspension of the writ.''
  As satisfying as it was to be vindicated, I was frustrated that 
Congress had left the task of reining in the executive to slow-paced 
and incomplete judicial review. While the Boumediene decision ensured 
habeas rights for detainees, it took 7 years; and even then the Court 
almost failed to take on the case. All along, the Court's rulings were 
piecemeal and avoided taking strong stands on controversial 
constitutional questions. The result was a protracted process that 
delayed justice for detainees and left important areas of 
constitutional law murky.
  Indeed, the Supreme Court actually denied Boumediene's initial 
petition for review on April 2, 2007. Then, on June 29, in a highly 
unusual move, the Court reconsidered and agreed to hear the case. The 
justices gave no reason for the reversal, but some speculate that they 
were moved by intervening disclosures concerning the military 
commissions. In particular, a military officer and lawyer who had been 
involved in overseeing the tribunals said that the process was flawed 
and that prosecutors had been pressured to label detainees as enemy 
combatants.
  As much time as it took in these cases, at least the Supreme Court 
eventually ruled on the merits in Boumediene. The same cannot be said 
for Supreme Court review, or even substantive appellate review, of 
President Bush's warrantless wiretapping program. Thus far, only 
individual judges in the district courts of Michigan and California 
have been willing to take a strong stand on the Terrorist Surveillance 
Program.
  Like many in the legislature, it appears the courts are reluctant to 
act. They do not want the responsibility. Only after significant time 
has passed, and it is relatively safe, do they finally consider such 
issues on the merits. I have proposed legislation in the past to 
require expedited review of certain important cases, including the 
challenges by civil liberties organizations and other plaintiffs to the 
Terrorist Surveillance Program, and I will do so again in the new 
Congress.


                           Signing Statements

  Even where Congress manages to negotiate its internal checks and to 
act decisively against expansions of executive power, presidents have 
used signing statements that override the legislative language and defy 
congressional intent.

  There was an explosion in the use of signing statements during the 
Bush administration. The Boston Globe reported in 2006 that President 
Bush ``has used signing statements to claim the authority to disobey 
more than 750 statutes--more laws than all previous presidents 
combined.'' This is Charlie Savage, In Proposed Iran Deal, Bush Might 
Have to Waive Law: '05 Statute Forbids Providing Reactor, Boston Globe, 
June 8, 2006.
  Two prominent examples make the point. As detailed earlier, I 
spearheaded the delicate negotiations on the PATRIOT Act 
Reauthorization which included months of painstaking efforts to balance 
national security and civil liberties, disrupted by the dramatic 
disclosure of the Terrorist Surveillance Program. The final version of 
the bill to reauthorize the PATRIOT Act featured a carefully crafted 
compromise, which was necessary to secure its passage in 2006. Among 
other things, it included several oversight provisions designed to 
ensure that the FBI did not abuse special terrorism-related powers 
permitting it to make secret demands for business records. President 
Bush signed the measure into law, only to enter a signing statement 
insisting that he could withhold from Congress any information required 
by the oversight provisions if he decided that disclosure would 
``impair foreign relations, national security, the deliberative process 
of the executive, or the performance of the executive's constitutional 
duties.''
  The second example arose in 2005. Congress overwhelmingly passed 
Senator John McCain's amendment to ban all U.S. personnel from 
inflicting ``cruel, inhuman or degrading'' treatment on any prisoner 
held by the United States. There was no ambiguity in Congress's intent; 
in fact, the Senate approved the proposal 90-9. However, after signing 
the bill into law, the President quietly issued a signing statement 
asserting that his administration would construe it ``in a manner 
consistent with the constitutional authority of the President to 
supervise the unitary executive branch and as Commander in Chief and 
consistent with the constitutional limitations on the judicial power.''
  Many understood this signing statement to undermine the legislation. 
In a January 4, 2006, article titled ``Bush Could Bypass New Torture 
Ban: Waiver Right Is Reserved,'' the Boston Globe cited an anonymous 
``senior administration official,'' according to whom ``the president 
intended to reserve the right to use harsher methods in special 
situations involving national security.''
  These signing statements are outrageous, intruding on the 
Constitution's delegation of ``all legislative powers'' to Congress, 
but it is even more outrageous that Congress has done nothing to 
protect its constitutional powers. The legislation I introduced in 2006 
would have given Congress standing to challenge the constitutionality 
of these signing statements, but has until now failed to muster the 
veto-proof majority it would surely require. The executive branch 
operates free of such internal dissent. Although John McCain promised 
to drop signing statements altogether, Barack Obama, while deploring 
Bush's practice, said during the campaign that ``no one doubts that it 
is appropriate to use signing statements to protect a president's 
constitutional prerogatives.''
  Here again, the President does not need to convince any colleagues to 
issue a signing statement, he needs only put pen to paper. Indeed, 2 
days after criticizing President Bush's signing statements, President 
Obama issued one of his own regarding the Omnibus Appropriations Act of 
2009. Citing among others his ``commander in chief'' and ``foreign 
affairs'' powers, he refused to be bound by at least 11 specific 
provisions of the bill including one longstanding rider to 
appropriations bills designed to aid congressional oversight. As I told 
the Wall Street Journal, ``We're having a repeat of what Democrats 
bitterly complained about under President Bush,'' and if President 
Obama ``wants to pick a fight, Congress has plenty of authority to 
retaliate.''


               The Terrorist Surveillance Program--Act II

  Many of the issues surrounding the Terrorist Surveillance Program and 
executive authority resurfaced in 2008. FISA reform legislation, which 
began making its way through the Senate in February of last year, 
included a controversial provision giving retroactive immunity to the 
telecommunications companies for their alleged cooperation with the 
Terrorist Surveillance Program.
  Throughout, my chief concern was to keep the way to the courts open 
as a means to check executive excesses. I offered an amendment, both in 
committee and on the floor, to substitute the U.S. Government for the 
telephone companies facing lawsuits related to the Terrorist 
Surveillance Program. Instead of immunity, my amendment would have put 
the government in the place of the companies, so the cases could go 
forward without posing a legal threat to the companies themselves.
  When this proposal was defeated, I proposed yet another amendment, 
which would have required a federal district court to determine that 
the surveillance itself was constitutional before granting immunity. I 
also cosponsored an amendment that would have delayed the retroactive 
immunity for the telephone companies until a mandatory inspector 
general's report on the Terrorist Surveillance Program had been issued.
  I tried to impress upon my colleagues the importance of our actions:

       We are dealing here with a matter that is of historic 
     importance. I believe that years from now, historians will 
     look back on this period from 9/11 to the present as the 
     greatest expansion of Executive authority in history--
     unchecked expansion of authority . . . The Supreme Court of 
     the United States has gone absent without leave on the issue, 
     in my legal opinion. When the Detroit Federal judge found the 
     terrorist surveillance program unconstitutional, it was 
     [reversed] by the Sixth Circuit on a 2-to-1 opinion on 
     grounds of lack of standing. Then the Supreme Court refused 
     to review the case. But

[[Page S4626]]

     the very formidable dissenting opinion laid out all of the 
     grounds where there was ample basis to grant standing. Now we 
     have Chief Judge Walker declaring the act unconstitutional. 
     The Congress ought to let the courts fulfill their 
     constitutional function. . . . Although I am prepared to 
     stomach this bill, if I must, I am not yet ready to concede 
     that the debate is over. Contrary to the conventional wisdom, 
     I don't believe it is too late to make this bill better.

  The date was July 7 and the Senate had just returned from recess, 
which allowed me to close with a flourish:

       Perhaps the Fourth of July holiday will inspire the Senate 
     to exercise its independence from the executive branch now 
     that we have returned to Washington.

  Despite my fight to keep the courts open, in the end all my 
amendments were defeated. Nevertheless, as I said I would, I ultimately 
voted for the FISA reform bill. I chose not to reject the entire 
package--which had the support of nearly seventy senators, including 
both presidential candidates--not only because my classified briefings 
on the surveillance program convinced me of its value, but also because 
of the important oversight provisions it imposed on future surveillance 
programs.
  The FISA reform bill required prior court review of the government's 
procedures for surveillance of foreign targets, except in exigent 
circumstances. It also required that the Intelligence Court determine 
whether procedures for foreign targeting satisfy fourth amendment 
protections against unreasonable searches. In addition, before 
monitoring U.S. citizens outside the country, it required 
individualized court orders based on probable cause. Finally, the bill 
mandated a comprehensive review of the Terrorist Surveillance Program 
by several inspectors general. Indeed, the final bill had many elements 
in common with my earliest efforts to place the Terrorist Surveillance 
Program under FISA--it just took years to get there. And Congress and 
the courts may yet need to correct its flaws.


                         A Plan for the Future

  These experiences have crystallized for me the need for Congress and 
the courts to reassert themselves in our system of checks and balances. 
The bills I have outlined are important steps in that process. Equally 
important is vigorous congressional oversight of the executive branch. 
This oversight must extend well beyond the national security arena, 
especially as we cede more and more authority over our economy to 
government officials.''
  As for curbing executive branch excesses from within, I hope 
President Obama lives up to his campaign promise of change. His recent 
signing statements have not been encouraging. Adding to the feeling of 
deja vu is the Washington Post's report that the new administration has 
reasserted the ``state secrets'' privilege to block lawsuits 
challenging controversial policies like warrantless wiretapping: 
``Obama has not only maintained the Bush administration approach, but 
[in one such case] the dispute has intensified.'' Government lawyers 
are now asserting that the trial court lacks authority to compel 
disclosure of secret documents, and ``warning'' that the government 
might ``spirit away'' the material before the court can release it to 
the litigants. This is Carrie Johnson, ``Handling of `State Secrets' at 
Issue: Like Predecessor, New Justice Dept. Claiming Privilege,'' The 
Washington Post, March 25, 2009. As the article notes, I have 
reintroduced legislation this year with Senators Leahy and Kennedy to 
reform the state secrets privilege. I doubt that the Democratic 
majority, which was so eager to decry expansions of executive authority 
under President Bush, will still be as interested in the problem with a 
Democratic president in office. I will continue the fight whatever 
happens.
  (The further remarks of Mr. Specter pertaining to the introduction of 
S. 875, S. 876 and S. 877 are located in today's Record under 
``Statements on Introduced Bills and Joint Resolutions.'')
  The PRESIDING OFFICER (Mr. Udall of New Mexico). The Senator from 
Oklahoma is recognized.
  Mr. COBURN. Mr. President, I ask unanimous consent that the Senator 
from Arkansas be given 5 minutes as in morning business and then that 
we return to me and go back on the bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Arkansas is recognized.
  Mrs. LINCOLN. Mr. President, I thank the Chair and my friend from 
Oklahoma. I appreciate the collegiality and certainly his friendship.


                              HEALTH CARE

  I rise today like many Arkansans because I am very troubled about the 
rising health care costs and the barriers many Arkansans face accessing 
an affordable and quality health plan. Nearly half a million Arkansans 
are uninsured, including 66,000 Arkansas children. The cost in both 
human and financial terms is felt by everybody. That is why, during 
this work period, I traveled the State on a 2-week tour to ``take the 
pulse'' of Arkansans and of health care in our communities and across 
our State. I met with patients, providers, advocacy groups, and all of 
the other health care professionals in every corner of our State. We 
discussed the challenges we face delivering and accessing quality and 
affordable health care in rural Arkansas. It was a wonderful tour, very 
open. People were frustrated, concerned, and they had good ideas. They 
were very much interested in being able to help us in Washington move 
forward on this issue. I felt as if the will, and certainly the desire, 
was there among Arkansans to fix this problem.
  My first stop was in Clinton, AR, located in Van Buren County, where 
26 percent of the residents there are uninsured, and many are on 
Medicare or Medicaid. A local pharmacist raised concerns with the 
burden of paperwork, regulations, and fees required by CMS for 
pharmacists to supply medical equipment and supplies. A nurse 
practitioner talked about ways to fill gaps in our primary care 
workforce and how it was in areas like that. Others stressed the need 
to address the preventive health needs in our State, such as smoking 
cessation and prevention of obesity and related health conditions.
  Next, I went to Augusta, AR, in our row cropland, and I heard from 
Arkansans who said that high-deductible plans are not meeting their 
needs. As a result, these patients often miss out on very important 
primary and preventive care because they cannot afford their plans' 
expensive copays and deductibles; therefore, they end up being more 
costly to the system without that preventive or primary care because 
they end up in more acute-care situations.
  In Lake Village, AR, on the eastern side of the State, people talked 
about the need to improve dental coverage within Medicare and in 
private insurance. I also heard from veterans who are forced to drive 
long distances to receive care and expressed the real need for more 
rural VA clinics and not only how much better quality of life it would 
provide them but the cost savings it could provide as well to the VA 
and the whole implementation of health care delivery to our veterans.
  Across the State in Nashville, AR, I spoke with a provider about the 
difficulty in recruiting specialists in rural Arkansas. Health 
technologies, such as remote patient monitoring and mobile imaging, may 
help to provide special access to those rural areas, where it may not 
be efficient for each rural community to have a multitude of 
specialists located in their communities. At least they can serve there 
and provide their services with equipment that is much needed.
  My final stop was in Springdale, northwest Arkansas, close to the 
Oklahoma border. I heard from seniors who have had trouble finding a 
provider that will accept Medicare.
  We must build our primary care workforce and address reimbursement 
inequities in these rural areas in order to help Arkansans on Medicare 
gain access to the care they need. We had a long discussion about the 
need for more primary care professionals, physicians, and certainly the 
fact that it is not just the reimbursement, it is also the quality of 
life in these rural areas. Making sure we can grow our own primary care 
physicians in these rural areas does an awful lot in making sure we 
have those providers in the areas who can serve those individuals.
  In all of these places, good Arkansas neighbors working to take care 
of their neighbors were always present, whether it was community health 
centers, which are working desperately hard to use the money from the 
recovery package to increase their ability to cover more of the 
uninsured, or whether it was the nonprofits or religious-based

[[Page S4627]]

clinics that were doing a tremendous job partnering with our hospitals 
to keep people out of the emergency room and getting some of their lab 
work done by the hospitals but still being able to provide care in 
those clinics.
  So all in all, it was a great opportunity for me. I love traveling 
Arkansas anyway, visiting with the great people in our State, but it 
really showed the concerns we talk about here in Washington, and you 
get to see them face to face.
  I think these stories help illustrate how critical it is for 
residents of Arkansas and other rural areas to have easy, affordable 
access to health care. I was grateful to meet with so many Arkansans 
and to be able to share their stories with my colleagues here, and as 
we move forward in this debate, it makes a big difference. My staff was 
there, as always, because there are so many issues. Sometimes people 
don't know where to go. Having our staff be able to talk to them and 
direct them in those ways is very valuable. Remembering the educational 
component in health care and how we make sure information is going to 
be available to people is a critical part of it.
  This week, in the Senate Finance Committee, we launched its first of 
three roundtable discussions in advance of drafting a health care bill. 
I strongly believe Congress must craft health reform legislation that 
lowers costs, improves quality, and provides access to coverage for all 
Americans. I compliment Chairman Baucus and Senator Grassley for the 
great way they have approached this--last year having multiple hearings 
and coming again this year with more hearings and a roundtable 
situation. We had a summit last summer. These things have been very 
beneficial to the debate in a bipartisan way.
  From my seat on the Senate Finance Committee, I will work to ensure 
we have guaranteed coverage for people with preexisting conditions; 
continuity of coverage for people between jobs, which we see oftentimes 
and particularly in this economic setting; maintain affordability for 
people who are privately insured; and have Medicaid eligibility for 
every uninsured American living in poverty.
  Mr. President, one of the things I noticed that was so positive out 
there with Arkansans is that, although they are frustrated and 
concerned about where we are going and what we are going to do, their 
will to do this now is there. The American people feel it is a must-do 
situation for us in this economy for the quality of life we want to 
have. I think that in this body we have an opportunity not only to do 
it but to do it correctly.
  We are very proud of the incredible medical professionals who are in 
this country, folks such as my colleague from Oklahoma, who is 
tremendous in his own profession as a physician. We are proud of that. 
We want to make sure we correct the insufficiencies for those 
individuals and be able to provide the services at a cost people can 
afford and have an accessibility that leaves nobody out, whether you 
live in a major city or in a rural area. I believe this is one of the 
most urgent issues facing our Nation, and it is time for action. We 
need to move forward on health care reform.
  I very much appreciate the opportunity I have had to visit with 
Arkansans. I look forward to working with my colleagues in the Finance 
Committee in a bipartisan way to move the health care reform initiative 
forward, and also with the rest of the Senators here, to come up with a 
proposal the American people will be proud of. They know it won't be a 
work of art, necessarily, but a work in progress as we move ourselves 
from a health care system that has been focused on acute care into 
something that is certainly more focused on chronic conditions, 
multiple chronic conditions, and making sure we make those manageable 
using preventive health care and certainly the primary care that will 
keep us healthier longer.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BROWN. Madam President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. BROWN. Madam President, I ask unanimous consent to speak as in 
morning business.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered. The Senator is recognized.


                              Trade Policy

  Mr. BROWN. Madam President, I have heard lots of discussion in the 
newspapers in the last 48 hours or so, that there is a move afoot to 
begin to continue to bring legislation to the House and Senate floors 
to continue Bush trade policy. There have been statements by some in 
both parties that we might consider passing the trade agreement, the 
so-called free trade agreement with Panama, the free trade agreement 
with Colombia, and the free trade agreement with South Korea.
  I think that is a mistake. When you look at what has happened in 
States such as Ohio, and particularly in a State like that of the 
Presiding Officer--in Buffalo and Rochester and Syracuse and the 
upstate cities in her State, you can see the kind of incredible job 
loss, not only from this most recent recession since October but look 
at the job loss in manufacturing that we have seen through the entire 
Bush years while this Government has moved forward on Bush trade 
policies.
  Look at the original North American Free Trade Agreement negotiated 
by the first President Bush, unfortunately the finishing touches put on 
by President Clinton, and then the Central American Trade Agreement 
passed by the House and Senate in the midpart of this decade, and now 
considering again trade agreements negotiated by Bush trade negotiators 
with Panama, Colombia, and South Korea. Unfortunately what we have seen 
is a huge spike--more than a spike because it is more long term and 
fundamental than that--we see the huge growth in our trade deficit. We 
have today a trade deficit of $2 billion just for today, and $2 billion 
for tomorrow, and $2 billion for Saturday, and $2 billion for Sunday. 
Every day it's a $2 billion trade deficit. George Bush the first said a 
$1 billion surplus or deficit translates into some 13,000 jobs, so a 
trade deficit of $2 billion, according to President Bush the first, 
translates into 26,000 lost jobs; a $2 billion trade surplus would be 
26,000 gained jobs. In this country, we haven't seen a trade surplus 
since 1973. What that says is this trade policy leads to persistent 
trade deficits. This trade policy leads to persistent job loss. And 
this trade policy leads to families who are hurt and communities which 
are destroyed.
  I can take you to lot of places in my State and you can look at the 
havoc wreaked by U.S. trade policy. I do not blame all of manufacture's 
decline, all of job loss, on trade policy, to be sure. But there is no 
question when you have a $2 billion-a-day trade deficit over the course 
of a year, between $700 and $800 billion trade deficit for a year, you 
know that is a problem.
  My point is not to debate trade policy today. It is only to say to 
the administration and my friends on both sides of the aisle and the 
crowd at the end of the hall here in the House of Representatives, we 
should not be bringing up more trade agreements until we look at what 
our trade policy does. I can point not just to job loss; I can also 
point to what happened as an outgrowth of the Permanent Normal Trade 
Relations with China, our trade policy with China, when I believe seven 
people in Toledo, OH, and dozens around the country died from the 
taking of the blood thinner heparin, ingredients of which came from 
China and those ingredients were contaminated. Or you can look at toys. 
In an experiment, a class assignment by Professor Jeff Weidenheimer at 
Ashland University, not far from where I grew up, he sent out first-
year chemistry students to stores to buy toys at Halloween and 
Christmas and Easter and found lead-based paint, which is toxic for 
children, on many of these toys, again coming from China--United States 
corporations outsourcing jobs, then hiring subcontractors in China. So 
we are not just importing goods, we are also importing lead-based 
paint, also importing contaminated ingredients in heparin, also in 
vitamins, in dog food and other products.
  My point is let's do a dispassionate, nonideological, nonpartisan 
study before we do more trade agreements.

[[Page S4628]]

Let's do a nonpartisan, nonideological, unbiased study of how NAFTA has 
worked, how CAFTA has worked, how our relations with China with PNTR 
and currency, how all that has worked before we move ahead.
  In these turbulent economic times, first, we have plenty to do, on 
health care, education, climate change, housing, particularly on the 
banking system, and all of that. We have plenty to do, but that is not 
even the point. The point is before we do more trade agreements, let's 
look at how they worked. Let's look at what has happened, especially 
rather than following the Bush trade agenda which we know simply has 
not served this country well.
  I yield the floor.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mrs. McCASKILL. Madam President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mrs. McCASKILL. Madam President, once upon a time, someone had a good 
idea about trying to open the mortgage market to as many people as 
possible. Between that moment and now, we have seen a giant economic 
crisis that has mushroomed out of control. We have sat around for 
months now trying to figure out how did it happen and why did it 
happen.
  One of the reasons it happened is, using common sense, we said to 
people: You can go make money by talking people into borrowing money, 
and you do not have to worry about whether they pay it back. Let me go 
through that one more time. We said to a market, the mortgage market: 
If you go talk people into borrowing more money than they can afford, 
it does not matter if they can pay it back, you do not need to worry 
about that because you are going to make your money anyway.
  In other words, the people closing their loans had no skin in the 
game. They were not a partner to the risk. So that is how we got people 
qualifying for loans by wearing a special costume and photograph. That 
is how you got these ``liars loans.'' They were called ``liars loans.'' 
Everybody knew people were lying to get these loans, but no one was 
doing anything about it because the people who were making the loans 
were making the money and had no risk.
  You would think with this occurring, we would now be on hyper alert 
for the exact same set of circumstances, but we are not. Because it is 
going on today as we speak. If you turn on any cable channel almost 
anywhere in America, before midnight you are going to see an ad that 
says to seniors: You need to take advantage of a great Government 
program, a Government benefit. You can be paid cash for the value of 
your house without any risk. They are called reverse mortgages.
  It is a type of home loan that converts the value in your home you 
have acquired over a lifetime and converts it to cash. Now, in and of 
itself, this is not a bad concept. People ought to be able to borrow 
against the value of their homes. We do it with home equity loans.
  Here is the problem. We have the people closing these loans who have 
no skin in the game. Guess who is insuring all these loans. We are. The 
taxpayers. There is no risk to those people paying for those ads on 
cable TV, no risk. Reward. No risk. We are taking the risk.
  If, in fact, the housing markets go down and the value of someone's 
property goes down and it is time for that loan, the value of that loan 
to be recovered when the house is sold, if it does not sell for enough 
money, guess who is left holding the bag.
  Hello. Subprime mortgages chapter two. We are back. We have the same 
issue we had with the subprime. Since we began this program in 1990, 
HUD has endorsed and insured 500,000 loans. But, wait, we took the cap 
off it recently. We anticipate that HUD will, in fact, insure 200,000 
of these loans this year alone. We have done 500,000 loans since 1990, 
and we are going to do 200,000 loans this year. We are talking about a 
huge growth in the potential liability to the American taxpayer.
  These are complex and expensive loans. For many elderly, the equity 
they have in their home is it. With the economic circumstances we have 
right now, there is going to be a lot of pressure on the elderly to 
enter into one of these reverse mortgages, maybe to help other family 
members who have lost a job.
  It is important we fix this program. It is embarrassing that we let 
the subprime mess go for as long as we did, without anybody saying: 
Whoa, hold on. It will be doubly embarrassing if we allow this reverse 
mortgage situation to go down the exact same path.
  With these loans, as they increase dramatically in number and value, 
we are also seeing an increase in fraud. The HUD inspector general has 
been working in the reverse mortgage field, and all the other 
inspectors general in our country have done a great job of beginning to 
find problems of a specific nature as it relates to fraud.
  Some of it is where we have inflated appraisals. Some of it is where 
you have shoddy repairs being done, which decrease the value of the 
home, which increase the risk to the taxpayer. Some of it is people 
continuing to collect the proceeds on the home past the time they 
should, past perhaps the death or the moving out of the senior who did 
the loan in the first place.
  Why is the fraud increasing? I have a theory why the fraud is 
increasing. All the bad actors over there in subprime, they are looking 
for a new stream of money so they are all sliding over and saying: Hey, 
let us start making these reverse mortgages to seniors.
  OK. We have to do something about this now. I filed an amendment to 
the legislation that is in front of the Senate that will do some 
important things in terms of fraud prevention and detection and 
enforcement provisions: We are going to require the borrower to certify 
they reside in the property; to report the termination of the residence 
to HUD; require that in the case of a property that is purchased with 
the proceeds of a reverse mortgage, the property is owned and occupied 
for at least 180 days, so we do not have the flipping we have seen in 
the subprime market; require these properties be appraised by certified 
appraisers, HUD-certified appraisers; we have to verify the purchase 
price to ensure the appraised value is not inflated and make sure the 
appraised value is not too high in relation to comparable properties--
you can imagine how important this is right now since our housing 
market values are in such flux--to require the counselors to report 
suspected fraud or abuse to HUD's inspector general and to inform 
prospective borrowers how they can report suspected fraud and consumer 
abuse; require that the lenders and consumers maintain a system to 
ensure compliance; explicitly state that the HUD inspector general has 
the authority to conduct independent audits and inspections of the 
lender.
  Would it not have been nice had we done that back when we started 
having the problems with subprimes? Conduct independent audits and 
inspections of reverse mortgage lenders to make sure they are in 
compliance with the requirements; and to compare the reverse borrower's 
record against the Social Security's death master file for early 
indications for when payouts should end because payouts under these 
reverse mortgages stop at the death of the recipient of the reverse 
mortgage; provide that any limitation on when criminal charges can be 
brought against fraud perpetrators in this area be calculated on when 
we find out about the criminal activity, not when it occurred. Because, 
in many instances, we may not find out about the fraud until the 
elderly person dies, and then they find out that maybe they thought 
they still had value in their home, but they were lied to.
  This is an important one: Provide that advertising for reverse 
mortgages cannot be false or misleading and must present a fair and 
balanced portrayal of the risks and the benefits of the product.
  The fraud is the first step. Going after fraud is the first step, but 
we have to do more. It is very important that we protect our seniors 
from predatory lenders. When you see these ads on TV, it sounds too 
good to be true. ``Government benefit,'' ``No risk.'' But there is a 
huge risk. There is a risk of a senior paying more than they should for 
a product that does not work for them and a very big risk for the 
taxpayers of this country.

[[Page S4629]]

  I look forward to working with the Senate Judiciary and Banking 
Committees as well as HUD and the HUD inspector general and GAO to get 
the things done we must do to clean up this problem. If we do not learn 
from our mistakes, we are doomed to repeat them. I urge all my 
colleagues to become knowledgeable about this reverse mortgage area, 
get word to their constituents to be careful about these reverse 
mortgages. They are very dangerous.
  At the end of the day, if someone is making money off you and they do 
not care whether you can pay it back, it is a dangerous combination.
  The ACTING PRESIDENT pro tempore. The senior Senator from Vermont.
  Mr. LEAHY. Madam President, I wish to thank the Senator from Missouri 
for her statement. I hope people listen to what she had to say because 
it is a warning to many. Again, I would reiterate that one of the 
reasons we are trying to move this fraud bill through, everybody will 
be against fraud and everybody is against crime, but as the Senator 
from Missouri knows so well, you have to have some laws on the book to 
go after fraud and go after crime. I wish to speak further on that, but 
I see my dear friend and distinguished colleague from Vermont on the 
floor.
  I will yield the floor so he can also speak on a matter.
  The ACTING PRESIDENT pro tempore. The junior Senator from Vermont.
  Mr. SANDERS. I thank my colleague from Vermont. I wish to 
congratulate him for bringing forth a very important piece of 
legislation.
  Clearly, if we are going to begin to address the crisis in our 
financial institutions, we need the manpower to go out there and do the 
investigations. We do not have it and this legislation does that.
  I wished to say a few words in the midst of this debate on an issue. 
I am not bringing forth an amendment, but I did wish to say a few words 
on that; that is, in my office--I suspect in every Senate office--we 
are being deluged with e-mails and letters and telephone calls 
expressing outrage at the high interest rates people all across this 
country are being forced to pay by these very same financial 
institutions we are in the process of bailing out.
  What is going on now is that while we spend hundreds of billions of 
dollars bailing out our friends on Wall Street, and while they receive 
zero interest loans from the Fed, what they are saying to the American 
people is: Thanks very much for the bailout. We are going to raise your 
interest rates from 15 to 20, to 25, to 30 percent. Pure and simply, 
that is called usury within Biblical terms. In fact, that is immoral. 
That is the type of action we should be eliminating right now.
  I have introduced legislation which is very similar to the type of 
legislation that regulates credit unions right now. We would have a 
maximum interest rate of 15 percent, with some exceptions going to 18 
percent, so the American people who are now on under great financial 
stress, who are buying groceries with their credit cards, who are 
buying clothes for their kids with credit cards, who are paying for 
college expenses with their credit cards, are not forced to pay 25 or 
30 percent interest rates.
  What I would like to do, rather than relate what I believe, is read a 
few of the e-mails I have received from the constituents. We are 
receiving a lot of them. Let me read one that comes from the northern 
part of our State. It says:

       I, like so many others, am appalled at the hikes in credit 
     card rates. Everywhere in our small town of Montgomery 
     everybody is talking about the latest surge in interest 
     rates. People who are never late in payments have seen their 
     rates climb overnight. I, for one, used to overpay on my 
     payments but can't afford to now. In addition, I am a 
     founding member of a small agricultural co-op and we have a 
     shop and studio. Today we found out that the charge for using 
     credit cards has increased. How are people supposed to buy 
     things when small businesses can't afford to process credit 
     cards and people can't afford the interest rates if they use 
     cards? No one has any money for anything anymore. The 
     outrage, which I am sure doesn't surprise you, is building. 
     Doesn't anyone get it?

  Well, doesn't anyone in the Senate get it? I hope we do.
  Here is another one that comes from the largest city in our State, 
Burlington:

       I signed up with MBNA (at the time) for a credit card with 
     an interest rate of 7.9 for the life of the credit card (as 
     long as I adhered to terms such as paying on time, not going 
     over limit, etc.) I received a notice yesterday that the 
     interest rate is going to 13% on May 1. I called them and 
     they said it had nothing to do with my credit. Bank of 
     America, due to the economic situation, is raising its rates 
     ``for business reasons only.'' One option they gave me is to 
     pay down my balance at 7.9 but not use it on any future 
     purchases. I now appreciate more than ever your fight against 
     this sort of action. Basically they can do whatever they 
     want.

  That is quite right. They can do whatever they want.
  Another one:

       Dear Senator Sanders, we just received a note from Bank of 
     America in which they tell us that they are raising our 
     credit rate: 15.74 percent on new and outstanding purchases . 
     . . using a variable rate formula. I know you have been 
     working on a cap for credit cards and are very concerned 
     about big banks profiting so highly at the expense of 
     consumers.

  Here is another one:

       Senator Sanders, there is a lot of news this week on how 
     the credit card companies are trying to recoup their losses 
     by raising interest rates on our credit cards. That is what 
     my husband and I have just experienced. Two months ago I ran 
     my husband's credit report, and between three credit bureaus 
     we ranked around a 800 credit score. We have never been late 
     on a payment and have been married 41 years.

  Then she talks about the impact these high credit rates are going to 
have on her.
  Another one:

       Dear Bernie, yesterday in the mail I received notification 
     from Bank of America that they were hiking up the interest on 
     my Visa card from 7% to over 12%. This seems arbitrary and in 
     a time when I am extremely worried about my ability to pay my 
     bills because my workload has gone way down. I am furious and 
     scared.

  The bottom line is, I am receiving dozens of e-mails from people in 
my State and from all over the country. They want to see whether the 
Congress has the guts to stand up to the financial institutions which 
have poured $5 billion in lobbying and campaign contributions into 
Washington in the last 10 years.
  What the American people are saying is that 30-percent interest 
rates--arbitrary and huge increases in interest rates for people who 
have always paid their bills on time--is not only unfair, it is 
immoral. People should not have to pay 30 percent to borrow money in 
the United States.
  I hope very much the time will come, sooner rather than later, when 
we will pass a national usury law that will put a cap on interest rates 
for large financial institutions similar to what exists for credit 
unions, which is 15 percent with some exceptions.
  I yield the floor and look forward to working with the senior Senator 
from Vermont in passing this legislation.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. LEAHY. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. LEAHY. Madam President, with the vote and disposition of the Kyl 
amendment today and the Kyl amendment and the Leahy-Grassley amendment 
yesterday, we have basically completed work on the underlying bill. 
Those were the only amendments that affected the underlying bipartisan 
fraud enforcement bill. A number of other amendments have come in, but 
they, of course, have nothing to do with this bill. They are not within 
the jurisdiction of the Judiciary Committee. They are, in large part, 
extraneous to the fraud enforcement bill. Many if not all are within 
the jurisdiction of the Banking Committee. I haven't seen one yet that 
should be in Agriculture, but hope springs eternal. Today, a Senator 
offered an amendment drawn from the HELP Committee jurisdiction. In a 
way, it is a compliment that so few people have suggested changes that 
they wanted to make to the Judiciary Committee bill. I guess Senators 
are anxious in case they are not around here next week when we have a 
Banking bill.
  I would like to conclude consideration of the bill that actually is 
before the Senate. We will soon have a list of

[[Page S4630]]

amendments on which both sides will agree to have votes. I don't think 
any of them really have anything to do with the Judiciary bill, but 
every Senator has a right to offer whatever amendments he or she wants, 
whether germane to the bill or not, and to get a vote on them. If they 
are all going to require rollcall votes, we should be done certainly 
sometime before midnight. Then we can pick up the next piece of 
legislation, which I understand we should have done by Saturday. Of 
course, the only amendments really involving this bill could have been 
done yesterday. We could have finished this bill yesterday.
  I would like to speak briefly about the bipartisan Fraud Enforcement 
and Recovery Act. This bill has received overwhelming support. Almost 
everyone recognizes the importance of strengthening the Federal 
Government's capacity to investigate and prosecute the kinds of 
financial frauds that have undermined our economy. The legislation has 
strong bipartisan support. I applaud Senator Grassley, who is the lead 
cosponsor. He worked with me to write this bill. He has been a leader 
on this issue.
  Senators Specter and Snowe have joined as cosponsors. Many different 
law enforcement and good government organizations are supporting this 
bill as well, including the Fraternal Order of Police, the Federal Law 
Enforcement Officers Association, the National Association of Assistant 
United States Attorneys, the Association of Certified Tax Examiners, 
and Taxpayers Against Fraud.
  Now let me address the authorizations in the bill. I have rarely seen 
such detailed justification with regard to an authorization. I mention 
this because this is not an appropriations bill. It is authorizing 
legislation. It still has to go through the appropriations process. 
Every agency authorized to receive money in the bill has set out in 
detail exactly what it would do with that money if it is authorized and 
appropriated. The detail includes the number of agents, prosecutors, 
and other key personnel who would be hired, and each agency has 
explained why the added resources are needed. Those detailed 
justifications have been shared with anyone interested in reviewing 
them.
  In total, the bill authorizes $245 million a year over the next 2 
years to hire more than 300 Federal agents, more than 200 prosecutors, 
and another 200 forensic analysts and support staff to rebuild our 
Nation's fraud enforcement efforts. We have broken those numbers down 
agency by agency.
  These resources for additional agents, analysts, and prosecutors are 
desperately needed. The number of fraud cases is now skyrocketing, but 
resources were shifted away from fraud investigations after 9/11. 
Today, the ranks of fraud investigators and prosecutors are drastically 
understocked, and thousands of fraud allegations go unexamined each 
month.
  Reports of mortgage fraud are up nearly 50 percent from a year ago 
and have increased tenfold over the past 7 years. In the last 3 years, 
the number of criminal mortgage fraud investigations opened by the 
Federal Bureau of Investigation, FBI, has more than doubled, and the 
FBI anticipates that number may double yet again. Despite this 
increase, the FBI currently has fewer than 250 special agents 
nationwide assigned to financial fraud cases, which is only a quarter 
of the number the Bureau had more than a decade ago at the time of the 
savings and loan crisis. At current levels, the FBI cannot even begin 
to investigate the more than 5000 mortgage fraud allegations the 
Treasury Department refers each month. Other agencies have documented 
similar crises in their ability to keep up with the rising pace of new 
cases.
  We all know that fraud enforcement simply can't be adequately covered 
with funds allocated in the recently passed recovery legislation for 
State and local law enforcement. As someone who pushed strongly for 
recovery legislation that included State and local law enforcement, I 
know the purpose behind those funds and what they are dedicated to. It 
is intended to ensure that State and local law enforcement agencies and 
crime prevention programs could avoid layoffs, make new hires, and 
reinforce their work to prevent the increased crime so often associated 
with economic downturns. In so doing, these funds would reinforce and 
revitalize those neighborhoods that have experienced economic 
development and that could so easily backslide. State and local law 
enforcement fund are urgently needed for those vital purposes. They 
should not be diverted from State and local law enforcement needs to 
fund Federal fraud investigations.

  Moreover, while states have done admirable work cracking down on 
mortgage fraud, the Federal Government must play a substantial role in 
this area. Mortgage fraud schemes and other financial fraud schemes 
often cover many States and jurisdictions, which hampers the ability of 
any State or local investigators and prosecutors to reach them. These 
schemes also are often extremely complex and labor-intensive to 
unravel, requiring the expertise and resources of the Federal 
Government and the mortgage fraud task forces in which Federal and 
State law enforcement officers work closely together. We simply cannot 
ask States to solve this enormous and complex problem on their own. I 
believe that we need to be good law enforcement partners and that the 
Federal Government needs to do its share. To fulfill those 
responsibilities these additional funds need to be authorized.
  I agree that the $10 million in additional funding to the FBI for 
mortgage fraud enforcement in the omnibus appropriations bill is a good 
start, but it is just a small start to what is needed. I wish the 
economic recovery had been able to include an additional $50 million 
for the FBI that the Senate initially was willing to include, but that 
additional funding was stripped away. Unfortunately, to achieve 
bipartisan support and passage of the economic recovery package, those 
funds were eliminated. The funds currently being provided are 
insufficient to tackle the magnitude of this problem. I refer all 
Senators to the testimony before the Judiciary Committee by the 
Director of the FBI and the Deputy Director of the FBI and to the 
detailed justifications the FBI and other law enforcement agencies have 
provided.
  I believe authorizing and funding fraud enforcement will save the 
government money. That is what the Justice Department has found. That 
is what Taxpayers Against Fraud has found. That is what the 
administration indicates in its Statement of Administration Policy in 
strong support of this bill. As the administration says: ``These 
additional resources will provide a return on investment through 
additional fines, penalties, restitution, damages, and forfeitures.'' I 
would add that strong fraud enforcement will also save money by 
deterring fraudulent conduct.
  According to recent data provided by the Justice Department, the 
government recovers on average $32 for every dollar spent on criminal 
fraud litigation. Similarly, the nonpartisan group Taxpayers Against 
Fraud has found that the Government recovers $15 for every dollar spent 
in civil fraud cases. Just last year, the Justice Department recovered 
nearly $2 billion in civil false claims settlements, and, in criminal 
cases, courts ordered nearly $3 billion in restitution and forfeiture. 
Strengthening criminal and civil fraud enforcement is a sound 
investment, and this legislation will not only pay for itself, but 
should bring in money for the Federal Government.
  If fraud goes unprosecuted and unpunished, then victims across 
America lose money. In many cases, American taxpayers take the loss 
directly. For example, in the case of many mortgage frauds, the Federal 
Government has guaranteed the loans, and when the fraud is uncovered, 
American taxpayers, as well as the victim, lose out. More directly, 
with the billions of dollars of Federal funds now going out through the 
recovery legislation, the Troubled Assets Relief Program, and other 
bailout programs, we should all recognize that enforcement will be 
essential to protect those recovery funds from fraud and to recover any 
money that is fraudulently taken. If we do not take action to 
investigate and prosecute this kind of fraud, Americans will lose far 
more money than this bill costs.
  The only organizations that have opposed this legislation are the 
Heritage Foundation and the National Association of Criminal Defense 
Lawyers. They have argued that the legal fixes

[[Page S4631]]

in this bill constitute overreaching by the Federal Government. In 
fact, this bill does not overfederalize or overcriminalize.
  Senator Grassley and I took great care in crafting it to avoid those 
kinds of excesses. The bill creates no new statutes and no new 
sentences. Instead, it focuses on modernizing existing statutes to 
reach unregulated conduct and on addressing flawed court decisions 
interpreting those laws. This is exactly the kind of Federal criminal 
legislation that these critics should appreciate. Rather than 
gratuitously adding new laws or expanding Federal jurisdiction, it acts 
in a targeted way to fill in gaps identified by investigators and 
prosecutors to make it easier for them to reach the conduct most 
relevant to the current financial crisis.
  The bill amends the definition of ``financial institution'' in the 
criminal code in order to extend Federal fraud laws to mortgage lending 
businesses that are not directly regulated or insured by the Federal 
Government. These companies were responsible for nearly half the 
residential mortgage market before the economic collapse, yet they 
remain largely unregulated and outside the scope of traditional Federal 
fraud statutes. This change will finally apply the Federal fraud laws 
to private mortgage businesses like Countrywide Home Loans and GMAC 
Mortgage.
  The bill would also amend the major fraud statute to protect funds 
expended under the Troubled Assets Relief Program and the economic 
stimulus package, including any government purchases of preferred stock 
in financial institutions. The U.S. Government has provided 
extraordinary economic support to our banking system, and we need to 
make sure that none of those funds are subject to fraud or abuse. This 
change will give Federal prosecutors and investigators the explicit 
authority they need to protect taxpayer funds.
  This bill will also strengthen one of the core offenses in so many 
fraud cases--money laundering--which was significantly weakened by a 
recent Supreme Court case. In United States v. Santos, the Supreme 
Court misinterpreted the money laundering statutes, limiting their 
scope to only the ``profits'' of crimes, rather than the ``proceeds'' 
of the offenses. The Court's mistaken decision was contrary to 
congressional intent and will lead to financial criminals escaping 
culpability simply by claiming their illegal scams did not make a 
profit. Indeed, Ponzi schemes like the $65 billion fraud perpetrated by 
Bernard Madoff, which by definition turn no profit, are exempt from 
money laundering charges under this formulation. This erroneous 
decision must be corrected immediately, as dozens of money laundering 
cases have already been dismissed.
  None of these changes constitute overcriminalization. Rather, they 
reach fraudulent conduct at the center of our ongoing economic crisis. 
Americans are rightly demanding accountability for this fraud, and we 
cannot have full accountability without the participation of Federal 
investigators and prosecutors armed with the tools and resources they 
need.
  We can delay no further in taking decisive action to strengthen fraud 
enforcement and doing everything we can to fight the scourge of fraud 
that has contributed to our economic crisis. There is simply no good 
reason for us not to act. The administration ``strongly supports 
enactment'' of this bill. The Justice Department supports it, the FBI 
supports it, the Secret Service supports it, the TARP inspector general 
supports it, the HUD inspector general supports it, Federal and State 
law enforcement officers support it.
  The bottom line, Madam President--before I lose my voice entirely--
is, this legislation is to stop people who have been robbing the 
retirement savings of Americans, who have been robbing their homes from 
under them, who have been robbing the money they have set aside for 
their kids' college education and getting away with it under some of 
the elaborate mortgage fraud schemes. They get away with it because 
there is no real ability to go after them. There is neither the money 
nor the personnel. This legislation gives both money and personnel but 
also gives teeth to the law.
  I have said on this floor several times, if you have somebody who 
sets up a $100 million fraud scheme, they do not care what happens to 
the people in their way. They do not care if they ruin the lives of the 
people they are going after. They do not care if the people lose their 
homes because they figure if they get caught, they might have to give a 
little bit of the money back in a fine or otherwise. They are not 
deterred. They, obviously, do not have a sense of conscience or 
morality. They do not care if people lose their life savings. They do 
not care if people lose their retirement. They do not care if people 
lose their hope for the future. All they want is the money.
  Madam President, I tell you right now, if these same people think 
they are going to go to prison for what they are doing, if they think 
they will spend time behind bars for years and years, then maybe--
maybe--some Americans may be able to keep their homes, some Americans 
may be able to keep their dreams, some Americans may be able to keep 
their retirement, some Americans may be able to keep sending their 
children to college.
  People are now losing that dream. That is why there is strong 
bipartisan support for this bill. That is why I must admit I am 
somewhat frustrated that many have come here to try to bring amendments 
that have absolutely no place in this bill, and, if anything, would 
slow up the ability to protect Americans. But they have the right to do 
this.
  We will soon have a list of amendments, we will set the list in, and 
we will set a time for final passage. And maybe--maybe--within a few 
weeks the President will be able to sign this legislation and people 
will be a lot more protected than they are now.
  Madam President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mrs. BOXER. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                           Amendment No. 1000

  Mrs. BOXER. Madam President, I ask unanimous consent that amendment 
No. 1000 be the pending business so I might modify it.
  The ACTING PRESIDENT pro tempore. Is there an objection?
  Without objection, it is so ordered.


                    Amendment No. 1000, as Modified

  Mrs. BOXER. Madam President, I ask that my amendment be modified with 
the changes that are already at the desk and ask unanimous consent that 
Senators Webb and Wyden be added as cosponsors of the amendment.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The amendment is so modified.
  The amendment, as modified, is as follows:

       On page 20, between lines 11 and 12, insert the following:
       ``(e) Additional Funding for the Special Inspector General 
     for the Troubled Asset Relief Program.--
       ``(1) In general.--Of the amounts of authority made 
     available pursuant to section 115(a) of the Emergency 
     Economic Stabilization Act of 2008 (P.L. 110-343), an 
     additional $15,000,000 shall be made available to the Special 
     Inspector General of the Troubled Asset Relief Program (in 
     this subsection referred to as the Special Inspector 
     General).
       ``(2) Priorities.--In utilizing funds made available under 
     this subsection, the Special Inspector General shall 
     prioritize the performance of audits or investigations of 
     recipients of non-recourse Federal loans made by the 
     Secretary of the Treasury or the Board of Governors of the 
     Federal Reserve System, to the extent that such priority is 
     consistent with other aspects of the mission of the Special 
     Inspector General. Such audits or investigations shall 
     determine the existence of any collusion between the loan 
     recipient and the seller or originator of the asset used as 
     loan collateral, or any other conflict of interest that may 
     have led the loan recipient to deliberately overstate the 
     value of the asset used as loan collateral.''.

  Mrs. BOXER. I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. CONRAD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Udall of Colorado). Without objection, it 
is so ordered.

[[Page S4632]]

  Ms. SNOWE. Mr. President, I rise today to express my strong support 
for the Fraud Enforcement and Recovery Act of 2009 currently before the 
Senate. This legislation, which is long overdue, will take critical 
strides toward enabling the Justice Department and Federal Bureau of 
Investigation to investigate and prosecute the mortgage and securities 
fraud that have played such a large role in bringing our economy to the 
brink of collapse. I would like to commend Senators Leahy, Grassley, 
and Kaufman for introducing this bill that I am proud to cosponsor and 
hope that the Senate will pass it as quickly as possible.
  The fact is that the current recession stands apart from others we 
have experienced since the end of World War II, and not just because it 
is the longest and deepest. Although many downturns are the result of a 
decline in the business cycle, this recession was in significant part 
brought about by two factors that could well have been avoided had 
mortgage brokers and their associates and financiers set aside greed 
and outsized profits in favor of responsible lending, financial 
practices, and sustainable, but nonetheless healthy, rates of return.
  First, during the most recent housing boom, as are all aware, many 
homebuyers were placed into predatory, subprime loans that they could 
not be reasonably expected to repay. Indeed, while unscrupulous 
lenders, including private mortgage brokers and lending businesses that 
were not subject to the type of oversight and regulations that have 
traditionally prevented fraud, profited from a quick short-term fee in 
exchange for underwriting an irresponsible mortgage with little due 
diligence, homebuyers were left with loans that began with low interest 
rates and affordable payment but that morphed into significantly higher 
interest rates and payments. In other cases, the New York Times has 
reported that circles of appraisers delivered inflated appraisals on 
demand, while lawyers paid by the seller, but holding themselves out as 
representing the buyer, and mortgage brokers conspired to persuade 
buyers to take on overpriced and often dilapidated homes. And the scams 
continue to this day. The Times reports that deed thieves are currently 
approaching distressed owners and offering to ameliorate financial 
difficulties by temporarily taking over deeds. Then they refinance and 
flee with the owners' equity in tow.
  The result of the fraudulent loans and scams has been nothing short 
of a disaster that has devastated communities nationwide. RealtyTrac, 
the leading online marketplace for foreclosure properties, in January 
reported that Americans received 3.2 million foreclosure filings on 2.3 
million properties during 2008. That represents a staggering 81-percent 
increase in total properties from 2007 and a 225 percent increase in 
total properties from 2006.
  Unfortunately, mortgage brokers and related parties are not solely to 
blame for the economic calamity that has befallen the nation. Large 
Wall Street investment banks thought they saw a profit opportunity and 
decided to package and sell risky subprime mortgages in largely 
unregulated markets. They believed that they could reduce risk by 
placing mortgage securities into such bundles but were in many cases 
dishonest with themselves and investors about the potential for losses. 
Although paper profits soared so long as housing prices increased, once 
they began to tumble, the value of these securities did as well.
  It is now estimated that in the past year, U.S. banks and financial 
institutions lost more than $500 billion as a result of their 
investments in subprime mortgages. Some of this Nation's most 
recognizable companies, including Bear Stearns and Lehman Brothers have 
been wiped away due to collapse of the mortgage-backed securities 
market, while Fannie Mae and Freddie Mac have been taken over by the 
Federal Government.
  While other financial institutions have not shuttered their doors, 
they have absorbed significant losses. This has caused banks to all but 
cease to lend, which has led to untold difficulties for businesses and 
individuals seeking credit. Consumers could not obtain car and student 
loans, and business owners, and small business owners in particular, 
could not acquire capital to expand operations or, in many cases, make 
payroll. In short, the staggering 5.1 million job losses we have 
witnessed since the onset of the recession in December 2007 are in 
large part attributable to the collapse of housing and financial 
markets.
  To ameliorate the situation, Congress was last October forced to pass 
the $700 billion Emergency Economic Stabilization Act that created the 
Troubled Asset Relief Program, TARP, to rescue financial markets. 
Combined with other actions taken by the Federal Reserve Board, Federal 
Deposit Insurance Corporation, and the Treasury Department, the 
Congressional Oversight Panel on April 7 reported that the total value 
of all direct spending, loans and guarantees provided in conjunction 
with the federal government's financial stability efforts now exceeds 
$4 trillion. In addition to this unprecedented exposure, Congress also 
passed the $787 billion American Recovery and Reinvestment Act in 
February to assist those displaced by the recession and sow the seeds 
for recovery.
  Notably, as Congress passed the $700 billion financial rescue package 
last October, I insisted that our obligation did not stop with the 
enactment of that legislation. Indeed, I called on Congress to demand 
accountability for the massive malfeasance that has been perpetrated on 
the American people and specifically made the point that those 
responsible for our Nation's economic meltdown must be investigated and 
subsequently prosecuted to the fullest extent of the law. Frankly, it 
would be inconceivable to me to devote anything less than 100 percent 
of our resources to investigating those responsible for this crisis.
  It is for these reasons that on February 25, I, joined by Senator 
Whitehouse, introduced the FBI Priorities Act of 2009, S. 481, to 
augment FBI investigations of financial crimes. Turning to specifics, 
this bill authorizes $150 million for each of the fiscal years 2010 
through 2014 to fund approximately 1,000 Federal Bureau of 
Investigation field agents in addition to the number of field agents 
serving on the date of enactment. This extra manpower will help enable 
the FBI to develop and fully investigate, as well as bring responsible 
parties to justice.
  There is simply no question that this additional manpower is an 
absolute necessity to combat fraud given rising caseloads and a wholly 
inadequate level of resources. Consider the following facts: In the 
last 6 years, suspicious activity reports alleging mortgage fraud that 
have been filed with the Treasury Department have increased nearly 
tenfold to 62,000 in 2008. In the last 3 years, the number of criminal 
mortgage fraud investigations opened up by the FBI has more than 
doubled to exceed 1,800 at the end of 2008. Moreover, the FBI 
anticipates a new wave of cases that could double that number yet again 
in coming years. Finally, despite increases in caseloads, the FBI 
currently has fewer than 250 special agents nationwide assigned to 
these financial fraud cases. At current levels, these agents cannot 
individually review, much less thoroughly investigate, the more than 
5,000 fraud allegations received by the Treasury Department each month.
  Although the details of the legislation I have introduced differ from 
those in the measure currently before the Senate, I believe the impact 
on the government's ability to root out and prosecute fraud would be 
similar. In particular, the legislation now under consideration 
authorizes $165 million a year for hiring fraud prosecutors and 
investigators at the Justice Department in 2010 and 2011. This includes 
$75 million in 2010 and $65 million in 2011 for the FBI to hire 190 
additional special agents and more than 200 professional staff and 
forensic analysts to nearly double the size of its mortgage and 
financial fraud program. With this funding, the FBI can expand the 
number of its mortgage fraud task forces nationwide from 26 to more 
than 50.
  Notably, the funding authorized in the bill also includes $50 million 
a year for U.S. Attorneys' Offices to staff those fraud task forces and 
$40 million for the criminal, civil, and tax divisions at the Justice 
Department to provide special litigation and investigative support in 
those efforts. In addition, the bill authorizes $80 million a year for 
2010 and 2011 for investigators and analysts at the U.S. Postal 
Inspection Service, the U.S. Secret Service, and the Department of 
Housing and

[[Page S4633]]

Urban Development's Office of Inspector General to combat fraud in 
Federal assistance programs and financial institutions.
  In addition to adding critical funds necessary to identify and 
prosecute fraud, this legislation makes several vital improvements to 
fraud and money laundering statutes to strengthen prosecutors' ability 
to combat a growing wave of fraud. Specifically, the bill amends the 
definition of ``financial institution'' in the criminal code to extend 
Federal fraud law to mortgage lending businesses that are not directly 
regulated or insured by the Federal Government. Responsible for nearly 
half the residential mortgage market prior to the economic collapse, 
these companies inexplicably remain largely unregulated and outside the 
scope of traditional Federal fraud statutes. This provision would apply 
the Federal fraud laws to private mortgage businesses, just as they 
pertain to federally insured and regulated banks.
  Furthermore, this legislation amends the false statements in mortgage 
applications statute to make it a crime to make a materially false 
statement or to willfully overvalue a property to influence any action 
by a mortgage lending business. Currently, these strictures apply only 
to Federal agencies, banks, and credit associations and do not 
necessarily extend to private mortgage lending businesses. This 
provision would ensure that private mortgage brokers and companies are 
held fully accountable under this Federal fraud provision.
  Finally, I would like to point out that this bill would modify 
Federal law to protect funds expended under TARP and the economic 
stimulus package. Specifically, the legislation would amend the Federal 
major fraud statute to include funds flowing pursuant to TARP and the 
stimulus package. The change will give Federal prosecutors and 
investigators the explicit authority they require to protect taxpayer 
funds, which could not be more critical with $4 trillion at risk as 
part of TARP and related programs and $787 billion at stake as part of 
the stimulus package. It is absolutely vital that every dollar we have 
put at stake go toward economic stabilization and revitalization and 
not to line the pockets of those who seek to defraud taxpayers.
  Mr. FEINGOLD. Mr. President, I will vote for the Fraud Enforcement 
and Recovery Act of 2009, S. 386. This bill improves enforcement and 
recovery mechanisms for mortgage, securities, financial institution and 
other frauds. In the context of today's global financial crisis, it is 
a very important piece of legislation, and I commend its authors.
  The current economic downturn has many causes. But certainly fraud--
in mortgage lending and in the mortgage-backed securities and 
derivatives markets--played a significant role. The Fraud Enforcement 
and Recovery Act of 2009 does a number of things to help deter and 
uncover fraud, and compensate its victims. First, it authorizes 
significant new resources for the FBI, the Department of Justice, the 
Department of Housing and Urban Development, and other agencies to 
investigate and prosecute these kinds of cases.
  In addition, the bill extends Federal fraud laws to the mortgage 
lending business, just as they apply to federally insured banks. 
Similarly, it makes sure that Federal prohibitions against false 
statements apply to statements made to influence mortgage lending 
decisions. Very importantly, because the taxpayers have now put 
extraordinary sums of money into propping up the financial sector, the 
bill makes clear that fraudulent activities in connection with the TARP 
program and the economic stimulus package can be prosecuted. The bill 
also reverses an erroneous Supreme Court interpretation of the Federal 
money laundering statute that was making it impossible to prosecute so-
called Ponzi schemes. These simple and effective clarifications and 
expansions of current law will help protect the American people from 
these very damaging frauds.
  I also strongly support Section 4 of the bill, which amends the False 
Claims Act--FCA. The FCA provisions clarify liability for making false 
or fraudulent claims to the federal government. A few concerns have 
been raised about this part of the legislation, which I would like to 
briefly address here.
  One criticism is aimed at the bill's rejection of an ``intent'' 
requirement under the FCA. The Supreme Court recently held in the 
Allison Engine case that such a requirement exists. The bill simply 
returns the law to its original intent. The judicially manufactured 
requirement that the person making a false claim intend that the 
government itself pay the claim was giving subcontractors a way to 
avoid liability for fraud, which is inconsistent with the purpose of 
the act.
  Another criticism alleges that the addition of a ``materiality'' 
requirement to the FCA is potentially broad and unclear. But 
``material'' is defined in the bill in a way that is consistent with 
Supreme Court and other judicial precedents, so this claim is 
unconvincing.
  The Fraud Enforcement and Recovery Act of 2009 is an important 
accomplishment. Those who perpetrate financial fraud, which is so 
harmful not only to the victims of the fraud but to the economy as a 
whole, must be discovered and prosecuted. This bill makes it easier to 
do that, so I am pleased to support it.


                            vote explanation

  Mr. COBURN. Mr. President, earlier today amendment No. 1006 was 
passed by a voice vote. If there had been a rollcall vote, I would have 
opposed this amendment, as it added more than $40 million to a bill 
that already costs nearly half a billion dollars.
  Mr. CONRAD. Mr. President, before we begin the debate on appointing 
conferees on the budget resolution, will the Parliamentarian inform us 
of the parliamentary status on the floor.
  The PRESIDING OFFICER. The Senate is considering S. 386.


                      Budget Resolution Conference

  Mr. CONRAD. Mr. President, floor staff informs me they are working on 
an agreement that will allow us to go to the consideration of the 
conferees. At this point, we will open the discussion but will not turn 
to it. I will use this time to make my statement so that we are 
efficiently using the time of the Senate.
  I remind my colleagues that some of the key elements in the Senate-
passed budget resolution we will soon be taking to conference. The 
budget needs to be considered in the context of the very tough hand we 
have been dealt. This administration and this Congress have inherited a 
mess of truly staggering proportions. If we start with the deficit 
outlook, we can see that the previous administration inherited 
surpluses that they rapidly turned into record deficits, and then 
record deficits of a proportion that stagger the imagination. I don't 
think anybody could have anticipated we would have deficits approaching 
$2 trillion in a year.
  We also saw in the previous administration a dramatic increase in the 
Federal debt--a more than doubling of the Federal debt in the period 
that the previous administration was responsible for.
  The Obama administration inherited record deficits, a doubling of the 
debt, the worst recession since the Great Depression, financial market 
and housing crises unparalleled since the 1930s, and nearly 4 million 
jobs lost in the last 6 months alone. On top of it all, we have ongoing 
wars in Iraq and Afghanistan.
  I often think what it must be like to be President Obama, who wakes 
up every morning with this heavy responsibility on his shoulders. In 
our caucus today, we had the Chairman of the Federal Reserve Board, 
Chairman Bernanke. I told him that I believe when the history of this 
period is written, he will go down as one of its heroes--somebody who 
helped rescue us from what could have been a financial collapse, not 
only here but around the country.
  In the budget resolution that passed the Senate, which we will be 
taking to conference, we have tried to preserve the major priorities of 
the President: reducing our dependence on foreign energy; a focus on 
excellence in education; fundamental health care reform, because that 
is the 800-pound gorilla that can swamp the fiscal boat of the country; 
middle-class tax cuts; and cutting the deficit in half over the term of 
the budget.
  The budget we produced reduced the deficit by more than half over the 
next 5 years. We have reduced the deficit by two-thirds. I am proud of 
that fact. We reached 3 percent of GDP a little less

[[Page S4634]]

than that--which all of the economists say is essential to stabilizing 
the debt.
  At the same time, we have adhered to the President's intentions to 
make certain strategic investments--one of the most important in 
energy--to reduce our dependence on foreign energy, because that is an 
imperative for this country, a strategic imperative, a financial 
imperative, and a national security imperative.
  The budget resolution that went through the Senate reduces our 
dependence on foreign energy, creates green jobs, preserves the 
environment, and helps with high home energy costs. It does it in the 
following ways: one, a reserve fund to accommodate legislation to 
invest in clean energy and address global climate change; second, 
providing the President's level of discretionary funding for the DOE; 
third, building on the economic recovery package to provide investments 
in renewable energy, efficiency, and conservation, as well as low 
carbon coal technology, and modernizing the electric grid.
  I thank Chairman Leahy once again for his incredible courtesy and 
graciousness in allowing us to interrupt his very important legislation 
so we can go to this matter of naming conferees, because we are under a 
tight deadline there. I thank the chairman of the Judiciary Committee 
for his incredible graciousness.
  We also, in this budget, preserve the President's priority of a focus 
on excellence in education. If we are not the best educated, we are not 
going to be the most powerful country in the world for very long. So we 
adopt the priority of investments in education to generate economic 
growth and jobs, to prepare our workforce to compete in the global 
economy, to make college more affordable, and to improve student 
achievement. We do it, again, in three ways: a higher education reserve 
fund to facilitate the President's student aid increase; by extending 
the simplified college tax credit, providing up to $2,500 a year in tax 
credit--that is a dollar-for-dollar reduction in your tax liability; 
and, finally, by providing the President's requested level of $5,550 
for Pell grants and fully funding his education priorities, such as 
early education.
  When I am asked about the President's budget, I give it very high 
marks because I think it has the priorities exactly right--reducing our 
dependence on foreign energy, excellence in education, and health care 
reform, all in the context of dramatically reducing the deficit. So on 
health care, the budget resolution that previously passed the Senate, 
which we will take to the conference committee, bends the health care 
cost curve, reducing costs long term, improves health care outcomes, 
expands coverage, increases research, and promotes food and drug 
safety. Again, we do it in three different and very specific ways: No. 
1, a reserve fund to accommodate the President's initiative to 
fundamentally reform the health care system. As many have said, we have 
a sickness system, not a wellness system. We have to make a transition. 
We also have a reserve fund to address Medicare physician payments, 
because we know that the doctors across the country who serve Medicare-
eligible patients are due for major deep cuts--cuts of more than 10 
percent. We are not going to let that happen. Third, it continues 
investment in key health care programs, such as the NIH and the FDA.
  Not only have we preserved the President's key investment priorities, 
reducing our dependence on foreign oil, moving toward excellence in 
education, health care reform, but we also preserve his fourth key 
priority of cutting the deficit dramatically. In the budget resolution 
that previously passed the Senate, we reduce the deficit by two-thirds 
by 2014--that is in dollar terms we reduced it by two-thirds. Most 
economists say you ought to evaluate it as a percentage of the gross 
domestic product, that that is the best way to see what you are 
accomplishing. If we look at it in those terms, we are reducing the 
deficit by more than three-quarters, from 12.2 percent of GDP in 2009 
down to less than 3 percent of GDP out in 2014.
  I am especially proud of that trajectory on the deficit, because I 
think it is absolutely critical. I would be the first to say we need to 
do even more in the second 5 years, but this is a 5-year budget. The 
reason it is a 5-year budget is that, of the 34 budgets that Congress 
has done since the Budget Act was instituted, 30 of those 34 times we 
have done a 5-year budget. Why? Because the forecasts beyond 5 years 
are murky, at best, highly unreliable. So we have stuck to a 5-year 
budget, as has traditionally been the case.
  With respect to the revenue side of the equation in this budget, the 
Congressional Budget Office, in looking at what we have done, would 
conclude that as a total, compared to current law, the budget 
resolution that passed the Senate reduces taxes. Let me emphasize that, 
because some want to put all the emphasis on the tax increases in this 
package; but if you take the tax increases and the tax reductions and 
put it all together, and you look at a net result, you find that we are 
cutting taxes over the 5 years by $825 billion. That is because we have 
extended the middle-class tax relief that is from the 2001 and 2003 
acts, the 10-percent bracket, the childcare tax credit, the marriage 
penalty relief, and the education incentives. All of that is in this 
bill.
  We also provide alternative minimum tax reform relief for 3 years to 
prevent 24 million people from being swept up in the alternative 
minimum tax.
  We also have estate tax reform, $3.5 million an individual, $7 
million a couple, indexed for inflation. That means 99.8 percent of 
estates in this country will pay zero; 99.8 percent of estates will pay 
zero.
  We also have business tax provisions and the traditional tax 
extenders, such as the research credit, that are included in this 
budget, for a total of tax relief of $958 billion.
  On the other side of the equation, we have loophole closures, such as 
codifying economic substance and international tax enforcement to go 
after these offshore tax havens, these abusive tax shelters. We raise 
$133 billion for a net tax reduction of $825 billion over the 5 years 
of this budget.
  On the spending side of the house, domestic discretionary spending, 
again as a percentage of the gross domestic product--and the reason, of 
course, economists say that is what you should focus on rather than the 
dollar amounts is that this takes account of inflation. It gives a more 
fair comparison year by year.
  We hear all this talk that this is a big spending budget. No, it is 
not. This budget reduces domestic discretionary spending as a 
percentage of gross domestic product from 4.3 percent in 2010 down to 
3.2 percent in 2014. We are taking domestic discretionary spending down 
to one of its lowest levels in the last 50 years.
  In fact, nondefense discretionary spending increases under this 
budget resolution an average 2.5 percent.
  In addition, we have a series of budget enforcement tools that are in 
this resolution: discretionary caps for 2009 and 2010. Some have said 
we ought to have discretionary caps for 2011 too. Well, why? Well, why? 
We are going to be back here a year from now. We have discretionary 
caps for 2009 and 2010. Why do we need them for 2011, when we are going 
to be right back here, same place, same time 1 year from now?
  We also maintain a strong pay-go rule. We provide a point of order 
against long-term deficit increases; a point of order against short-
term deficit increases; we allow reconciliation for deficit reduction 
only in the resolution out of the Senate; and we provide a point of 
order against mandatory spending on an appropriations bill.
  Let me address, very briefly, this last provision because what we 
found was some of our colleagues have gotten increasingly clever about 
finding new ways to spend money. We found they were increasing 
mandatory spending on appropriations bills. Mandatory spending is 
typically not done on an appropriations bill, as the Chair well knows. 
Appropriations bills are designed to deal with discretionary spending, 
not mandatory spending. Mandatory spending is things such as Social 
Security and Medicare, certain farm supports. Those are mandatory 
spending items. We found some of our colleagues have gotten very clever 
and started to increase mandatory spending on appropriations bills. We 
have created a point of order to try to short circuit that bad 
practice.
  The budget resolution also attempts to address our long-term fiscal 
challenges. Let me be very clear. My colleague will momentarily speak, 
and he

[[Page S4635]]

will be highly critical of the budget resolution for not more fully 
addressing our long-term challenges. It may surprise listeners to hear 
me say that I agree with him. If there is a place this budget can be 
fairly criticized, it is that it does not do enough long term. I think 
we do a pretty good job in the first 5 years. But beyond that--this is 
only a 5-year budget--but beyond that, much more needs to be done.
  The ranking Republican on the Budget Committee, Senator Gregg, and I 
have a proposal that I believe needs to be pursued. It is to have a 
task force given the responsibility to come up with a plan to get us 
back on a sounder, long-term fiscal track and to come to Congress for 
an assured vote if 12 of the 16 members of that group could agree.
  Nonetheless, there are three important elements of this budget 
resolution that deal with our long-term fiscal circumstance. No. 1 is 
the health reform reserve fund. That, after all, is the biggest threat 
to our long-term fiscal security and stability. No. 2 is we have 
program integrity initiatives to crack down on waste, fraud, and abuse. 
We have five in this budget, and they are very important--Medicare, 
Social Security, defense, and others as well. I hope very much that 
these are pursued in the conference committee.
  No. 3 is we have a long-term deficit increase point of order to 
require a 60-vote point of order against moves to increase long-term 
deficits.
  Finally, let me say that on this question of the long term, the 
President has been very clear. At the fiscal responsibility summit on 
February 23, the President said this:

       Now, I want to be very clear. While we are making important 
     progress towards fiscal responsibility this year, in this 
     budget, this is just the beginning. In the coming years, 
     we'll be forced to make more tough choices, and do much more 
     to address our long-term challenges.

  The President got it exactly right with that statement. We are going 
to have to do much more. But this budget is a good and responsible 
beginning.
  Mr. President, with that, I will yield the floor. Let me say, 
momentarily we will have a unanimous consent request before us. I do 
not yet have it in my hands. I will say this before we begin this 
debate. This is an institution with Republicans, Democrats, and 
Independents. On the Budget Committee, we have all three represented.
  I am chairman of the committee representing the Democratic Party. 
Senator Gregg is the ranking Republican. Senator Gregg is someone with 
whom we have strenuous debates and disagreements. You will see that in 
the coming hours. But I wish to make very clear that I have high regard 
for Senator Gregg. He is motivated by patriotism, by love of country, 
and by a fundamental understanding that we are on an unsustainable 
track, that we have to be much more serious about our long-term buildup 
of deficits and debt. He has not just talked about it, he has been 
prepared to act.
  I wish to recognize him for his commitment to something I also 
believe in. I think it is abundantly clear we cannot stay on our 
current course. It is a course that will lead us to a much diminished 
standard of living for the future. While I believe this budget is a 
good beginning, I do not assert that this in any way solves our long-
term problem. It does not. But it is a beginning, an important 
beginning, and we need to do more.
  I also thank Senator Gregg for his unfailing courtesy and 
professionalism, not only in our public debates but in the workings of 
the Budget Committee. He has assembled a first-rate and professional 
staff. We have worked together well to do the business of the committee 
and the business of the country.
  I thank Senator Gregg, once again, for all he has done to allow the 
budget resolution to be fully debated, fully discussed, to have our 
differences aired publicly and privately but also to do it in an air of 
civility and respect, something I certainly feel toward him.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Mr. President, let me begin by saying I think it is 
terribly unsportsmanlike of the chairman of the committee to say such 
nice things about me, to disarm my ability to effectively attack his 
budget, but I wish to join his thoughts because he and his staff are 
very good to work with. He is a professional. They are committed. He 
genuinely believes, as I do, that this country's outyear fiscal 
situation is not a sustainable event. We are trying to work together to 
address that situation. We hope we can gather others to join us in this 
effort.
  I respect he has water to carry around here, and he carries it 
extraordinarily well on behalf of his constituency, which is the 
Democratic caucus and the President of the United States. I 
congratulate him for the exceptional job he does.
  That being said----
  Mr. CONRAD addressed the Chair.
  Mr. GREGG. Is the debate over?
  Mr. CONRAD. Can we end the debate?
  (Laughter.)
  Mr. GREGG. That being said, let's begin where the chairman leaves off 
accurately and correctly in saying that the course we are on is 
unsustainable.
  What does ``unsustainable'' mean? It is one of those terms of art we 
use around here. It means that by the time this budget runs its 
course--not necessarily the chairman's budget but the President's 
budget because the President's budget is a 10-year budget--by the time 
the President's budget runs its course, we will have passed on to our 
children a debt which will have tripled--tripled--a deficit which will 
have averaged every year for the 10 years a trillion dollars or more 
and a national public debt--that is the debt we owe to the Chinese, to 
the Japanese, and to our own people who own a fair portion of our 
debt--a national public debt which will have doubled as a percent of 
our gross national product, going up to 80 percent of our gross 
national product.
  What does all that mean? It means essentially we will have built a 
debt in this Nation which our children will not be able to afford to 
pay down. Just the interest on that debt alone, as we move into the 
later years of this budget, will exceed anything else in the budget as 
a line item on the discretionary side of the ledger. It will exceed, 
for example, all the money we spend, the interest alone will exceed all 
the money we spend on national defense. It will exceed by a factor of 
three or four or maybe even eight accounts such as education, housing, 
veterans affairs, and health. The deficits will have been so large for 
so long that the debt will have grown to a point that there is no 
logical way or fair way that our children and our children's children, 
who will have to pay this debt, will be able to do it in a manner that 
would leave them with a nation that is as strong and as prosperous as 
the Nation that was given us.
  Putting it another way, at the end of this budget, after these 10 
years are over and beginning in about the third and fourth year of this 
budget, the spending will be so out of control at the Federal level, 
the growth of the Government will have occurred at such a rapid rate 
that we will have created a debt structure which will mean that our 
children will have about three choices in their future.
  The first is that there will be a dramatic increase in inflation. We 
will try to pay this debt off with inflated dollars. There is no more 
regressive or harmful tax that a society can put on its people than to 
have uncontrolled inflation or massive inflation. But that is what one 
of the choices is.
  The other choice is that we will raise taxes to a level that they 
will be so high we will essentially tax away the opportunity of our 
children to do things which were considered to be commonplace for our 
generation--buy a home, send their kids to college, invest in a small 
business, take a risk, create a job. All of that will be taxed away 
because the tax rates would have to get up to such a level to pay this 
debt off that we will no longer be able to have that type of 
prosperity. The third course of action, equally untenable, is that the 
dollar gets devalued--which is to some extent an inflationary event--
and people stop buying our debt. They simply say: I don't believe you 
can pay this debt off--you, the people of the United States. You are 
not going to be able to generate enough productivity to do it. That, of 
course, leads to some level of implosion of our economy which I can't 
even calculate or comprehend, but it is much worse than what we even 
confront today.

  So nobody is arguing or debating--at least I am not, though there are 
some

[[Page S4636]]

who are--I am not coming to this floor and saying it is irresponsible 
for this administration, for President Obama to have inserted a large 
amount of Federal spending into the economy this year and next year. We 
recognize that this economy is in stress and that the only source of 
liquidity for our economy is our National Government and that the 
Federal Reserve, for all intents and purposes, has become the lender of 
first resort. But that is a short-run issue.
  The problem with this budget is that the type of spending which has 
to be done now is not curtailed after 2 years. It is not reigned in. It 
is not reduced or even leveled off. It continues up and up in the third 
year, the fourth year, the fifth year, the sixth year of the budget the 
President sent up here. The spending continues to go up on a path that 
is extraordinarily steep, so that the cost of the Government, which 
today and historically has been about 20 percent of GDP, jumps to 21 
percent, 22 percent, 23 percent, and 24 percent. In fact, if you go 
outside the window and you presume these numbers continue to compound, 
you get to a cost of Government that ends up around 28 and 29 percent 
of GDP. You cannot sustain an economy with that type of cost.
  I have a few charts to try to put this in perspective.
  The first chart is on the issue of debt. The budget, as proposed by 
the President--and why do I keep talking about the President's budget 
rather than the chairman's budget? Because the President's Director of 
OMB said they are essentially the same, and they are essentially the 
same. We can get into the differences, but the differences are at the 
margin and they are really not arguable. The biggest difference is that 
the chairman's budget only goes for 5 years, not 10 years. Well, there 
are other big differences, but that leaves off the second 5 years, and 
by leaving off the second 5 years, you don't talk about and you 
essentially hide some of the most dramatic effects of this spending 
binge.
  The President's budget increases taxes by $1.5 trillion, it increases 
discretionary spending by $1.4 trillion, and it increases mandatory 
spending by $1.2 trillion. And this number, this $1.2 trillion, is 
grossly underestimated. What does it do in the area of savings? On the 
mandatory side, it does nothing in the area of savings, absolutely 
nothing. In fact, the few discretionary savings he sent up, which I 
happen to support, were dropped in the chairman's mark, especially in 
the area of agriculture. So as we have said, and some people have heard 
it before--maybe not in this room--it spends too much, it taxes too 
much, and it borrows too much as a budget. What it doesn't do is save 
too much, and that is what gets us into trouble. The practical effect 
of this budget's structure is that it takes Federal debt and doubles it 
in 5 years and triples it in 10 years.
  Try to remember what we are talking about. We are not talking about 
going from $100 to $200 to $300. We are talking about trillions. 
Trillions. I don't know what a trillion dollars is. I can't even 
conceive of it. But that is what we are talking about. We are talking 
about taking the Federal debt from $5.8 trillion up to $17 trillion, or 
thereabouts. To try to put it in perspective, if you take all the 
spending, all the debt run up by all the Presidents since the beginning 
of the country--George Washington through Franklin Pierce through 
George W. Bush--all that debt that has been run up over 230-some-odd 
years by all our Presidents, that debt is doubled by this President 
within 5 years of being in office.
  There is another chart which shows this even better. It is called the 
wall of debt. This chart wasn't invented by me, but whoever invented it 
was a genius, obviously. The wall of debt shows how the Federal deficit 
just goes up and up and up and up. This wall of debt is what our kids 
are going to run into when they try to have a productive lifestyle. It 
is what is going to cost them their ability to be successful.
  By the time we get to the end of this, or even right here in the 
middle somewhere of this budget, the average family in this country is 
going to have $130,000 of new debt for which they are responsible. And 
$130,000 is probably more than the mortgage on the homes of most 
people. The interest cost on that debt, which most Americans, which all 
Americans are going to be responsible for, will be about $6,000. That 
may be more than what most people pay in interest on their homes. But 
that is the debt that is going to be passed on to them by this budget.
  Why does it happen? It happens for one very simple reason. It is 
called spending. The simple fact is that under the President's budget--
and under the budget proposed by the chairman--the spending of the 
Federal Government goes up dramatically, comes back down, and then 
starts back up again. It goes up dramatically, of course, in these 2 
years here, which I said I have reservations about. I especially had 
reservations about the stimulus package, which was a misallocation of 
spending, even though I supported the stimulus effort. Why does it 
start back up again? It starts back up again because this President, in 
a very forthright manner--and I give him credit for this--has said not 
only in his budget but he has said publicly that he genuinely believes 
the way you create prosperity is to significantly increase the size of 
the Federal Government, to take it to the left dramatically. So he 
does. As a result, spending goes up at a rate that is simply not 
affordable for our children.
  Look at this black line here. This is the black line that reflects 
the average spending of the Federal Government between 1958 and 2008. 
Look at how much higher the spending is of this Government under this 
proposed budget. That is a huge gap. When you are talking about an 
economy as large as ours, when you are talking about 2, 3, and 4 
percent--or in this case, 4 or 5 percent--that is where the massive 
deficits come from. That is where the massive increase in debt comes 
from. It is debt that is the issue.
  The chairman used to say: The debt is the threat. He is absolutely 
right, the debt is the threat, but the driver of the threat is 
spending. Unless you are willing to address the issue of spending, you 
are not going to get debt under control because you can't tax people 
enough to cover that. Well, of course you can always inflate the 
economy and try to cover it, but that leads to much more harmful 
events.
  So this is the fundamental difference we have as a party. The 
President has said he wants to spend, he wants to tax, and he wants to 
borrow. And I think it is important to note there is a little subtlety 
here that hasn't been focused on too much, and that is this: When 
President Clinton came into office, he also wanted to spend and tax, 
but he didn't want to borrow. He used his taxes, which he increased--
which I probably opposed--in order to reduce the deficit. This 
President, on the other hand, who is claiming he is going to raise 
taxes on just the wealthy--which is a canard if there ever were a 
canard around here--is using all that revenue not to reduce the deficit 
but to increase spending, and then he spends on top of that. So he is 
using it to grow the size of Government. He is very forthright about 
this. He is going to use those tax revenues to nationalize the health 
care system. That is the way I describe it; he describes it another 
way. He is going to use those revenues to basically create a massive 
expansion of spending in the other accounts of the Federal Government. 
But he is not going to use those revenues to try to reduce the deficit. 
That is the big difference between President Obama and President 
Clinton in the area of fiscal policy. So he doubles and triples the 
debt, and as a result, he leaves to our children a nation which is not 
affordable. So as I said, there is a fundamental difference.
  You know, in the past we would get these budget debates on the floor, 
and they were sort of academic exercises. People would engage in them, 
and they would be very interesting, but I don't think anybody ever saw 
it as the core of the policy of the country. Even though it was 
important, it wasn't the core.

  This debate is about this country's future. This budget is about 
where this country ends up. The pathway that has been laid out in this 
budget is a pathway that leads to a debt which the chairman has openly 
said is not sustainable. If the chairman knows it is not sustainable 
and the President knows it is not sustainable, why haven't they sent a 
budget up here to address that fact? Instead, they have sent a budget 
up here which does nothing about that fact, and, in fact, it does the 
opposite. It increases spending, it

[[Page S4637]]

increases discretionary and mandatory spending, and it saves absolutely 
zero in the area we most need savings, which is the mandatory accounts.
  So the difference is this: The President, as I said, has been 
forthright. His budget--this budget--probably the most significant 
document we have received here in the area of fiscal policy since 
perhaps the time of Lyndon Johnson or before, concludes that the way to 
prosperity is to expand the size of Government in an exponential manner 
by spending on Government programs in hopes that they create some sort 
of economic activity and create prosperity over the long run. Well, we 
believe, as a party, that doesn't work because in this case it is not 
paid for and it creates all this debt which we then pass on to our 
children to pay. We believe the way to prosperity is to have a 
government that is affordable and to pass that affordable government on 
to your children. Equally important is to empower the individual 
citizen and groups of citizens to go out, take a risk, and create a 
job, not to have the Government take from the individual the ability to 
create jobs because it taxes the individual either through inflation or 
through taxes or through a huge debt burden, as is proposed in this 
budget--a huge debt burden that is not sustainable.
  So this is a very significant debate and a very significant decision 
point in our Nation's history because if this budget passes in its 
present form, we are guaranteeing that we will pass on to our children 
a nation whose Government is not sustainable, and therefore we will be 
passing on to our children a nation which is less than what we received 
from our parents. No generation has the right to do that to another 
generation, and that is what this debate is about.
  Mr. President, at this point, I yield to Senator Johanns, who has an 
amendment or who wishes to discuss a motion to instruct.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. JOHANNS. Mr. President, because of the procedure we are following 
at the moment, I can't make this motion right now, but we will offer 
the motion at the appropriate time.
  I rise today to speak about something I am bringing to the Senate. I 
am on the floor today because I think it is unwise and I also think it 
is unfair to the American people to use budget reconciliation to pass 
cap and trade.
  Just to review the history of this, I joined the senior Senator from 
West Virginia and circulated a letter asking the leadership of the 
Budget Committee not to include reconciliation instructions to pass cap 
and trade. I was very happy that a number of my colleagues agreed with 
us. Eight Democrats signed the letter, and 25 Republicans--even some 
who support cap and trade--signed the letter. Notably, the budget 
resolution which we considered on the floor of the Senate did not 
include reconciliation instructions. I commended members of the Budget 
Committee during floor debate for not including instructions for cap 
and trade. I do so again today.

  At the same time, I expressed concern that the real threat, though, 
came from the House in terms of what it had done with its resolution. 
The House budget, I think we all know, included, interestingly enough, 
reconciliation instructions. We all know why they included the 
instructions. The House has no use for them. They are not necessary 
under House rules. Therefore, there is no reason to include them other 
than to attempt to force cap-and-trade provisions into the conference 
report.
  We are nearing that day when a conference report will come to us. 
This would restrict input from the American people, or the Senate body, 
on a policy that would result in massive taxes and fees.
  I thank Members on the other side of the aisle. I think they should 
be commended for what they did next. Understanding that the House was 
trying to slip climate change into law without review, without debate, 
without amendment, without consideration, 26 of my colleagues from the 
other side voted with the Republicans in support of my amendment.
  What was the result? The result was that 67 Senators made it very 
clear just a few days ago that they would not support using budget 
reconciliation to pass cap and trade. This vote, I would offer, showed 
courage and leadership. Probably most importantly, it showed true 
bipartisan spirit.
  Today I am again asking for the support and leadership of my 
colleagues to stand in support of my motion to instruction the budget 
conferees. My motion just says: Don't just drop our amendment when you 
walk into the conference committee meeting.
  It says: Remember, we voted overwhelmingly against shutting off 
debate and using as little as a single legislative day to pass complex 
cap-and-trade legislation.
  It says: Don't forget that cap and trade, if passed, will radically 
change the economic landscape of this great Nation.
  Amendments to such a bill should not be narrowly limited by the rules 
of the budget process, a process that was really built for deficit 
reduction, not greenhouse gas reduction. It asks for leadership from 
our Senate conferees so the American people can witness a full debate 
on this very important issue.
  Where does that leave us today? One might ask the question: Why is 
the motion necessary? With such a strong showing against including 
instructions for cap and trade, isn't that message already clear? The 
message is clear, but I think we have to be vigilant for some simple 
reasons.
  First, we learned over the past several days that budget discussions 
are far from over. Reports indicate that negotiations will continue 
over the next several days, maybe into the next several weeks. Memories 
fade. If we think that budget reconciliation is off the table as time 
wears on, we could be very mistaken.
  Budget Committee leadership from both the House and the Senate has 
specifically noted that debate on the inclusion of reconciliation 
instructions continues to be very intense. In other words, the use of 
budget reconciliation for cap and trade does remain a possibility. Cap 
and trade could be slipped into law if the House instructions, as 
currently written, end up in the conference report.
  For me, today's motion is about being able to say to Nebraskans when 
I return home--to look them in the eye and say: Yes, I read that bill, 
and I carefully considered its impact on you, your families, your 
businesses, and your future. And, yes, I did everything I could to make 
sure people from Nebraska understood well the significant tax burden 
likely to result from the legislation. And, yes, after considering all 
of those things, I stood up and cast a vote, yes or no.
  We need to stand up to those who want to use reconciliation to stop 
transparency and limit debate. I believe both the Chairman of the 
Senate Budget Committee, whom I respect, and the Ranking Member of the 
Senate Budget Committee, whom I respect, are battling mightily to 
ensure that reconciliation instructions are not included. Today, on the 
floor of the Senate, I commend them for that bipartisan effort. But 
they need our help. They need an army of Senators whose primary concern 
is the interest of the American people. A vote in support of this 
motion can do just that. We need this vote. We need to pass this 
motion. We need to insist that the text of the amendment, which 67 
Senators, both Republican and Democrat supported, remains in the 
conference report on the budget.
  I appreciate the opportunity to express this view. I urge my 
colleagues to support this motion. I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. If the Senator will indulge me for about 2 minutes because 
I want to speak quickly on behalf of the amendment of the Senator from 
Nebraska? He has outlined a lot of the substantive reasons it is 
important. It would not be appropriate to do this type of huge policy 
on a 20-hour debate, no-amendment situation, up-or-down vote. But there 
is another issue which goes to the integrity of the Senate and the 
purposes of the Senate.
  Basically, reconciliation is purely a Senate event. The House doesn't 
need reconciliation. The House has a Rules Committee. They can 
determine how long debate is going to be, when there is going to be 
debate, and how many amendments there are going to be.

[[Page S4638]]

  The Senate historically has been the place where people come to talk, 
to discuss, to air out an issue, and then to have amendments on that 
issue. That is the whole function of the Senate in our constitutional 
process. I find it incongruous, to be kind, that the House of 
Representatives would be trying to dictate to the Senate the rules of 
operation of the Senate in a manner--first, it is inappropriate to 
begin with, but they are dictating them in a manner which basically 
goes at the fundamental purpose of the Senate, which is that the Senate 
be the place where debate, discussion, and amendment occurs on policy 
issues of great substance.
  I do not argue that reconciliation is not a useful and appropriate 
tool to be used around here. There are many reconciliation initiatives 
for which I voted. But in the area the Senator has noted, which is a 
massive change in industrial policy, a huge tax on every person who 
turns on a light in every home in America, that should not be done 
under reconciliation. Equally important, the House of Representatives 
should not be explaining to the Senate or telling the Senate what the 
rules of the road are in the Senate. They have enough issues on their 
own over there.
  At this point, I think the Senator from Michigan wanted to be 
recognized. At the completion of the remarks of the Senator from 
Michigan or the chairman's comments, unless the Senator has further 
comments, the next Member to be recognized on our side will be Senator 
Grassley.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. CONRAD. Mr. President, let me indicate with respect to the 
question of reconciliation being used for cap and trade or climate 
change, there is no provision on the House side for that purpose. At 
least that is the stated intention of the Speaker of the House of 
Representatives. And there is no reconciliation instruction in our 
resolution at all for any purpose.
  Let me indicate I happen to agree with the Senator from Nebraska. I 
personally do not believe reconciliation should be used for this 
purpose. I must say, I am very disappointed the Republicans, when they 
were in a position to do so, abused reconciliation. I believe that 
strongly. Reconciliation was designed for one purpose and one purpose 
only, and that was deficit reduction. Our friends on the other side 
used it to dramatically cut taxes and increase the deficit. That was, 
to me, an absolute abuse of reconciliation.
  But two wrongs do not make a right, and I do not believe using 
reconciliation for major substantive legislation that is not 
fundamentally deficit reduction is an appropriate use of 
reconciliation. That is No. 1.
  No. 2, I think people will find that because reconciliation was 
designed for a very specific purpose, that it does not work well for 
the purposes of writing major substantive legislation. I will not go 
into all the technical reasons why that is the case, but it is the 
case. We will get to questions of reconciliation being used for other 
purposes as well.
  I have argued strenuously, publicly and privately, that 
reconciliation ought to be reserved for deficit reduction. But I do 
want to indicate that there is no reconciliation instruction in the 
resolution coming from the Senate; and in the House, the Speaker has 
made clear that reconciliation would not be used for climate change 
legislation or for cap-and-trade legislation.
  Mr. GREGG. Will the Senator yield for a question?
  Mr. CONRAD. I would be happy to yield.
  Mr. GREGG. I totally want to identify my position with the Senator's 
argument as to the purposes of reconciliation and the fact it should 
not be used for major public policy initiatives which require debate 
and hearings in the Senate and an amendment process. Are we to presume, 
therefore, that your logic on cap and trade applies also to major 
health care reform?

  Mr. CONRAD. My logic does, as I have made very clear over and over, 
publicly and privately. But, you know, I don't get to decide. We have 
House conferees, we have other Senate conferees, and, of course, we 
have a White House that has an interest--although they have no formal 
role in the budget process here. They submit a budget, but as the 
ranking member well knows, the budget resolution is entirely a 
congressional document.
  With that said, I do want to indicate that I previously voted for the 
amendment of the Senator. I will vote for it again. But I do want to 
indicate we do not have any reconciliation instruction in our 
resolution, and the House, through its leadership, has made clear they 
do not intend to use a reconciliation instruction for the purpose of 
cap and trade or for the purpose of climate change legislation.
  Mr. GREGG. If the Senator will yield for a further question, I will 
make this a rhetorical question. The Senator is one of the most 
influential Members of the Senate and of the Congress. When he says he 
wants something to happen, especially when it deals with the budget, I 
know it will.
  Mr. CONRAD. I wish that were true. I wish the Senator had been with 
me in the discussions over the last few days, even in our caucus on 
Tuesday.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan is recognized.
  Ms. STABENOW. Mr. President, I, too, rise to speak to a motion to 
instruct conferees. I understand we do not yet have an agreement to be 
able to move forward on that.
  I first want to indicate that I, as well as the chairman of the 
Budget Committee, joined with the Senator from Nebraska in supporting 
his amendment to the budget resolution. But I believe it is not enough 
just to say what we will not do on climate change. It is very important 
to say what we will do. So that is what my motion to instruct does. It 
provides a positive direction for future climate legislation. I thank 
my colleagues, Senators Boxer, Brown, Shaheen, Cardin, and Lieberman 
for cosponsoring this motion to instruct.
  The budget we pass is truly about investing in America's future. With 
all respect to our ranking member, for whom I have great respect and 
fondness, there is a difference in this budget in terms of priorities. 
There is no question about it. There is a big difference in terms of 
what we want to invest in--education, energy independence, health care, 
jobs. I might say coming from Michigan: Jobs, jobs, jobs.
  So there is a difference in direction, in values, and priorities in 
this budget. I believe it is what the American people are asking for. 
Our policy on climate change has to invest in the future just as our 
budget does. If done right, climate change legislation will create new 
jobs, new industries, and it will revitalize and strengthen our 
economy. So I will offer a motion to instruct in response to other 
amendments that say what we cannot do. My motion, on the other hand, is 
what America can do, what we must do.
  My State of Michigan is facing serious challenges right now. We have 
the highest unemployment rate in the country, of 12.6 percent. The 
hardworking people, the families in Michigan and other States that are 
struggling, need us to do a climate change policy right so that it does 
create jobs and transform our economy. Our economy cannot go forward 
with the same old policies dependent on foreign oil and pollution that 
harms our health and our economic interests. Climate policy can and 
must look out for working families and businesses, whether it is a 
farmer, a manufacturer, or a clean tech engineer. That is why the 
motion to instruct that I will be offering refers to a future climate 
policy that is well balanced to address all of these interests, so it 
does create jobs and strengthens manufacturing and breaks America of 
our dangerous addiction to foreign oil. We cannot rely any longer on 
the same old technologies and the same old fuel.

  With new energy solutions come new jobs and new industries. America 
has always led the world in innovation and we can do it again in a 
green energy economy if we do this right. We are in the midst of a 
revolution, an energy revolution. Over 100 years ago, Henry Ford 
revolutionized manufacturing in transportation with the automobile and 
the assembly line. He also revolutionized the way we pay people in this 
country. He gave his workers $5 dollars a day to work on the line when 
it was not necessary to do that, because he wanted to make sure he had 
people who could buy his automobiles.
  Through doing that, that revolutionized people to invest in workers. 
He

[[Page S4639]]

helped create the middle class of this country. In the 1980s we had a 
computer revolution that changed the way we work, the way we 
communicate, the way we learn, the way we live. The energy revolution 
of the 21st century will change our economy, I believe, if done right.
  That is why the right kind of climate policy is so important. The 
motion to instruct that I will be offering will direct the conference 
committee toward a smart climate policy that will protect and 
strengthen manufacturing. First we ensure a level playing field in the 
world economy so climate legislation does not hurt our bottom line. 
This will protect U.S. manufacturers from international competitors 
that do not follow the same important environmental standard our 
companies will have to follow.
  Second, new manufacturing opportunities will arise. I believe that. 
For example, to meet the needs of new clean energy production, we will 
need to produce clean energy technologies on a massive scale. We are 
talking about 8,000 parts in a wind turbine. As I have said to many 
colleagues, we can build every single one of those in Michigan. I know 
I talk a lot about this. I talk a lot about our economy in Michigan. 
But I truly believe if our energy policy can turn Michigan's economy 
around, it will turn America's economy around.
  Recent history has shown what happens when we rely primarily on 
foreign sources of energy. We subject ourselves to less than friendly 
international governments that can leverage unstable supply and higher 
prices against the people we represent. The motion to instruct I will 
offer will guide the conference committees to take steps to further 
reduce our dangerous addiction to foreign oil.
  Furthermore, our domestic energy needs also increase over time, and 
all sources of clean energy should be part of the portfolio. 
Diversification of our energy supply is key for security, stability, 
and opportunity. This is a national and international problem and we 
must solve this together.
  My motion directs the conferees to ensure that all regions contribute 
equitably and help each other as America transitions to a clean energy 
future. I also believe a successful climate policy has to include all 
our economic stakeholders. Agriculture and forestry can make 
significant contributions to greenhouse gas reduction, perhaps as much 
as 20 percent, with the right incentives. My motion to instruct 
provides clear and certain opportunities for landowners so they can 
achieve emission reductions and benefit from doing so.
  Finally, this motion to instruct puts us on the road to a balanced 
climate policy. With policies that meet these objectives, we can ensure 
the American public that greater economic opportunity lies ahead, and 
we can do this while meeting the ambitious emission reduction targets 
set by President Obama.
  Instead of arguing about what we cannot do, I urge my colleagues to 
embrace what we can do. That is what this motion to instruct relates 
to--creating jobs, protecting our environment, energy independence. 
This is what our future is about.
  In addition to speaking about the motion to instruct, I would take a 
moment to say, on the broader budget resolution, this resolution again 
is different. It is about jobs, it is about energy independence, health 
care, education, tax cuts, yes, for the middle class who have been 
overlooked for too long, as well as focusing on cutting the deficit in 
half during the life of this budget resolution.
  We know this deficit has been run up. When I came into the Senate in 
2001, we were debating what to do about a $5.7 trillion surplus over 10 
years, and colleagues were willing to make decisions, our colleagues on 
other side of the aisle, were willing to go into deficits for the war 
in Iraq, go into deficits for tax cuts for a few, go into deficits for 
a different set of policies.
  It is true, this budget resolution reflects what I believe is a 
different set of priorities that are the priorities of the American 
people. I am very proud of and grateful to our chairman, the Senator 
from North Dakota, for his leadership, and I appreciate the ranking 
member as well for his graciousness, even though we have different 
views. I very much appreciate the way he and the chairman conduct the 
committee. But I am proud to say this is different. The American people 
want a different set of priorities, and that is what this budget 
resolution provides.
  The PRESIDING OFFICER (Mrs. Shaheen). The Senator from North Dakota.
  Mr. CONRAD. Madam President, at this moment, I ask unanimous consent 
that next Senator Grassley be accorded 14 minutes; that Senator Boxer 
follow him for 10 minutes.
  How much time would Senator Wyden request ?
  Mr. WYDEN. Could I have 10 as well?
  Mr. CONRAD. And 10 minutes to Senator Wyden.
  Mr. GREGG. Is this all coming off of your time?
  I will be yielding my time on this side.
  Mr. CONRAD. I would always be happy to give Senator Grassley time off 
mine.
  Mr. GRASSLEY. I will take it off your time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Iowa is recognized.
  Mr. GRASSLEY. Pretty soon we are going to have a motion dealing with 
small business. I want to address that issue now so that I get it 
addressed properly as a senior member of the Senate Finance Committee.
  Everyone in this body knows that small businesses are an extremely 
important and dynamic part of the U.S. economy. I wish to say, and I 
often do, that small business is the employment machine of our economy.
  President Obama agrees with that. Small businesses have generated 70 
percent of the net increase in jobs in the United States over a long 
period of time. Three weeks ago, we debated this issue during the 
budget resolution debate. During the debate, the Senate spoke on this 
point, because Senator Cornyn had a small business tax relief 
amendment. That amendment passed by an overwhelming vote of 82 to 16.
  America's small businesses have been suffering during this recession. 
If you go back to your States frequently, as I do, you will hear about 
it from your small businesses very directly. A few weeks ago, Senator 
Landrieu and Senator Snowe held a hearing on the crunch hitting small 
business. They found that big banks have been cranking down lending to 
small businesses. At a time we are putting more money into big banks, 
why? I do not know that we got an explanation. I have been trying to 
get an answer out of Treasury on whether banks receiving the bailout 
money have been similarly squeezing out small business customers. I am 
still waiting for an answer from our Treasury Department.
  A very good source of answer, though, as we turn elsewhere, an answer 
about the environment of small business, is found in the monthly 
surveys of small businesses conducted by the National Federation of 
Independent Business. We all know about the NFIB, the largest small 
business organization. NFIB has been conducting these surveys now for 
35 years.
  The membership of that organization includes hundreds of thousands of 
small businesses all across America. You can find the survey on NFIB's 
Web site www.nfib.org. I wish to encourage every Member to check out 
this month's survey, because I am going to be referring to it with 
charts I have with me.
  The survey shows some extremely disturbing trends on credit 
availability. Small businesses depend on credit. Small businesses are 
getting squeezed very hard. That chart is up now. As you can see, the 
chart shows the availability of loans has fallen off the cliff as late 
as 2007 and gets worse as you get into 2009.
  You see on the right side of the chart the sharp downturn evidencing 
the lack of ability of small businesses to get loans. This credit 
crunch as well as other factors has contributed to the near record low 
in the NFIB's index of small business optimism. I wish to have you view 
this, something like we regularly view, the University of Michigan's 
monthly index on consumer confidence.
  The NFIB takes surveys regularly. This chart shows small business 
owners turning extremely pessimistic in the last couple of years. You 
can see how that has ``downturned'' very rapidly at the right end of 
the chart. What you see here is the attitude of decisionmakers in small 
business of America,

[[Page S4640]]

the people who create the jobs. Those are the decisionmakers for the 
businesses that President Obama and we in the Congress agree are most 
likely to grow or contract jobs.
  The pessimism evidenced by the chart is at its second lowest point in 
the 35-year survey. This data should concern every policymaker in this 
body. As bad as the two sets of charts are, I have a worse picture.
  This chart shows the net increase or decrease in small business 
hiring plans. The survey asks the small business owner simply whether 
he or she plans to expand, on the one hand, or contract, on the other 
hand, employment over the next 3 months.
  As you can see even more dramatically, look at the right-hand side of 
the chart here. If I said on those others to the left hand, in each 
case I was talking about the right. I do know the difference between 
the left and right hand. But as you can see even more dramatically on 
the other two charts, this chart shows small business activity 
contracting tremendously.
  Small business hiring plans are at their most negative level in the 
entire 35-year history of this survey, again, the right side of the 
chart. Let me repeat, because it is so important, this goes back to 
1974, those surveys. Since NFIB started doing them, the likelihood of 
small business owners adding workers has never been worse.
  With this pessimism, we should not be surprised then that job losses 
for small businesses have been growing dramatically. The national 
employment report recently released by Automatic Data Processing shows 
742,000 nonfarm private sector jobs were lost from February to March 
2009. Of those 742,000 lost jobs, 614,000 or 83 percent, were from 
small business.
  The President's recent efforts to increase lending to the small 
business sector are commendable. The centerpiece of his small business 
plan will allow the Federal Government to spend up to $25 billion to 
purchase the small business loans that are now hindering community 
banks and other lenders.
  Unfortunately, that is only a drop in the bucket.
  Remember that small business accounts for about half of the private 
sector. Moreover, the positives that will come to small businesses from 
this relatively small package of loans--which will ultimately and 
obviously have to be paid back--will be heavily outweighed by the 
negative impact of the President's proposed tax increases. Helping 
small businesses get loans just to take that money back in the form of 
tax hikes is not helping the economy or small businesses.
  The President's budget proposes to raise the top two marginal rates 
from 33 percent and 35 percent to 40 percent and 41 percent 
respectively, when PEP and Pease are fully reinstated. President 
Obama's marginal rate increase would mean an approximately 20 percent 
marginal tax rate increase on small business owners in the top two 
brackets.
  Many of my friends on the other side will say that while they agree 
that successful small businesses are vital to the success of the U.S. 
economy, the marginal tax increases for the top two brackets will not 
have a significant negative impact on small businesses. I take 
exception to that argument. They used Tax Policy Center data, and I 
want to show why that should not be allowed.
  Proponents of these tax increases seek to minimize their impact by 
referring to Tax Policy Center data that indicate about 2 percent of 
small business filers pay taxes in the top two brackets. In testimony 
before the Senate Finance Committee, the liberal think tank, Center on 
Budget Policy and Priorities, also used that figure. Moreover, 
Secretary Geithner has testified using that figure. They argue that a 
minimal amount of small business activity is affected.
  However, there are two faulty assumptions to this small business 
filer argument.
  The first faulty assumption is that the percentage of small business 
filers is static. In fact, small businesses move in and out of gain and 
loss status depending on the nature of the business and the business 
cycle. The nonpartisan Joint Committee on Taxation has indicated that, 
for 2011, approximately 3 percent of small business filers will be hit 
by these proposed higher rates. These statistics compare to a 2007 
Treasury which showed 7 percent of flow-through business owners paying 
the top rate. In the latest analysis, when the impact of the 
alternative minimum tax is fully included, that percentage may drop 
some.
  The second faulty assumption is that the level of small business 
activity, including employment, is proportionate to the filer 
percentage. This is where the argument is hogwash.
  According to NFIB survey data, 50 percent of owners of small 
businesses that employ 20-249 workers would fall in the top two 
brackets. You can see it right here on this chart. It shows what I am 
talking about. According to the Small Business Administration, about 
two-thirds of the Nation's small business workers are employed by small 
businesses with 20 to 500 employees.
  Do we really want to raise taxes on these small businesses that 
create new jobs and employ two-thirds of all small business workers? Of 
course, we don't. But that is exactly what the majority is going to do 
if they follow the President's lead.
  With these small businesses already suffering from the credit crunch, 
do we really think it's wise to hit them with the double-whammy of a 20 
percent increase in their marginal tax rates?
  Newly developed data from the Joint Committee on Taxation 
demonstrates that 55 percent of the tax from the higher rates will be 
borne by small business owners with income over $250,000. This is a 
conservative number, because it doesn't include flow-through business 
owners making between $200,000 and $250,000 that will also be hit with 
the budget's proposed tax hikes.
  If the proponents of the marginal rate increase on small business 
owners agree that a 20 percent tax increase for half of the small 
businesses that employee two-thirds of all small business workers is 
not wise, then they should either oppose these tax increases, or 
present data that show a different result for this group of people.
  As we prepare for the conference on the budget resolution, the 
President and the congressional Democratic leadership have an 
opportunity to change course. They have an opportunity to revisit the 
tax heavy, spending heavy, and debt heavy budget they have passed 2 
weeks ago. Both budgets would perpetuate the double whammy of 
constricted credit on the one hand and high taxes on the other, 
directed at America's job creation engine--small business.
  In the coming days, we Republicans will try to persuade our 
Democratic friends who have all the controls of fiscal policy to change 
course for the benefit of small business that we all agree ought to be 
our first concern. One way they can change course is to focus, like a 
laser beam, on jump-starting the Nation's job engine--small business 
America. We need an upturn in the small business optimism index that is 
contrary to what this chart shows. We need to reverse the direction of 
this sharply downward sloping arrow. If we ignore this negative 
environment, we are just kidding ourselves. We need to change course 
and reverse this even more sharply downward sloping hiring plan arrow.
  That is where the President and Congress agree we need to get more 
job growth. As we take the final steps on the budget, let's match that 
budget with this reality
  I yield the floor.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. BOXER. Madam President, I listened to Senator Grassley's 
remarks, and I have been in conference with folks who have read this 
budget line by line. It is important for me to say something as someone 
who represents the largest State in the Union. As I look at this budget 
and it is how one looks at it--I see it as a boon to small business. I 
don't see one specific tax increase aimed at small business. Yes, if an 
individual is over $250,000 a year, for all of us in that category, the 
tax breaks will expire. But to say that all small businesses are hit 
hard is an argument that doesn't hold up, in my eyes. I have great 
respect for my friend, and I know he has analyzed it another way. But 
when I look at the priorities of the new President and of this 
Democratic Congress, what do I see?
  Here are the priorities. Investment in energy, that is going to be 
great for

[[Page S4641]]

small business. Talk to my venture capitalists. They are ready, 
willing, and able to make huge commitments to alternative forms of 
energy. Investment in education, that is also going to be good for 
people who work in the education field. And health care, we know that 
as we have more insurance out there available for people, there will be 
many jobs created and many small businesses created around the delivery 
of health care.
  I guess the way one looks at this budget depends on their point of 
view. Clearly, I believed our President, when he said he had those 
priorities. I view this budget overall as being a boon to small 
business and being a boon to the American people as we move forward 
with investments that will create many jobs.
  The reason I wanted this time in particular was to kind of reargue an 
old argument we already had once before and that has come before us. 
Senator Johanns wants to have another vote to say we won't use the 
reconciliation process which, for people who don't know what that 
means, we won't use a process that we only need a majority to win. We 
are going to use the 60-vote requirement to write and pass global 
warming legislation.
  I know this is going to pass because it passed before. I think most 
Members believe if we can get 60 votes for climate change legislation, 
fine. But I have to say again, after reviewing the number of times the 
Republican Party has used reconciliation since 1980, it has been 13 
times out of the 19 times that reconciliation has been used. I would 
say to people who might be listening to this, to try to keep it as 
simple as possible: Reconciliation is used when there is a way to 
reduce the deficit. That is when it is used. You want to reduce the 
deficit so you say: Therefore, if you are reducing the deficit, we will 
do it with just a majority vote instead of a supermajority vote. That 
is the thinking behind it.
  A cap-and-trade program, which many of us support in order to combat 
global warming, will give us the ability to reduce the deficit. We know 
that because that is what we were told last year as we worked on the 
Boxer-Lieberman-Warner bill. Much of the funds went back to consumers 
to help them pay energy costs. But there was a segment of funds that 
went straight into deficit reduction. But, no, my Republican friends 
don't want to look at that. Even though they used this 13 times, they 
want to prohibit the use of reconciliation for global warming 
legislation.
  As I look back on the number of times Republicans have used 
reconciliation, in my view, it didn't make life any better for the 
American people. This is what they used it for. They used it to cut 
health program block grants to our States. They used it to cut 
Medicaid. They used it to cut food stamps. They used it to cut dairy 
price supports. They used it to cut energy assistance. They used it to 
cut education grants. They used it to cut impact aid and title I 
compensatory education programs for disadvantaged children. They used 
it to cut student loans. They used it to cut the Social Security 
minimum benefit. Our friends on the other side were very happy to use 
the reconciliation process, which only required 51 votes, to hurt the 
American people. That is what I think those cuts did. But when it comes 
to helping the American people by stepping up to the plate and 
addressing global warming and, in the course of doing so, creating 
millions of new jobs, no, they want to have a supermajority.
  Senator Johanns showed us he can get the votes to pass that. I know 
he will. That is why I am so grateful to Senator Stabenow, who has 
said: OK, you want to say we won't use reconciliation. She is saying: 
We will, in fact, keep the reserve fund in there for global warming so 
we can move it forward. This reserve fund will allow us to invest in 
new jobs that will come about by investments in clean energy 
technologies which will make us a healthier economy, energy 
independent, and it will make us more secure because we will have to 
import less foreign oil. We are going to see increases in energy 
efficiency which will yield amazing benefits. That will help us in the 
long run reduce energy costs. We are going to use these funds to 
protect consumers. This is what the Stabenow-Boxer-Brown-Lieberman-
Cardin amendment is saying. We want to keep that reserve fund in the 
budget so we can move forward with climate change legislation.
  I am looking forward to this moment. This is long overdue. We have 
lost 8 years. But the kind of approach we need is the kind of approach 
Senator Stabenow is envisioning. We cannot afford to wait. Scientists 
are telling us we are going to face rising sea levels, droughts, 
floods, the loss of species, spreading diseases. Our own health 
officials in the last administration and this one have told us we have 
to act. The Environmental Protection Agency has proposed an 
endangerment finding.
  We are being told that our people are in danger if we do not enact 
global warming legislation. It is spelled out.
  Severe illnesses are going to crop up as a result of organisms that 
will now be living in warmer waters.
  To quote the EPA--and they talk about the heat waves and the 
mortality rate and the wildfires and the drought and the flooding--this 
is what they say. I will close with this quote. They say: Global 
warming left unchecked is a serious harm to our people. It is not a 
close case, they say. The greenhouse gases that are responsible for 
global warming endanger public health and welfare within the meaning of 
the Clean Air Act.
  Madam President, I ask unanimous consent to have printed in the 
Record the EPA's Proposed Endangerment Finding.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  EPA's Proposed Endangerment Finding

       The effects of climate change observed to date and 
     projected to occur in the future--including but not limited 
     to the increased likelihood of more frequent and intense heat 
     waves, more wildfires, degraded air quality, more heavy 
     downpours and flooding, increased drought, greater sea level 
     rise, more intense storms, harm to water resources, harm to 
     agriculture, and harm to wildlife and ecosystems--are effects 
     on public health and welfare within the meaning of the Clean 
     Air Act.
       This is not a close case in which the magnitude of the harm 
     is small and the probability great, or the magnitude large 
     and the probability small. In both magnitude and probability, 
     climate change is an enormous problem. The greenhouse gases 
     that are responsible for it endanger public health and 
     welfare within the meaning of the Clean Air Act.
       Severe heat waves are projected to intensify in magnitude 
     and duration over the portions of the U.S. where these events 
     already occur, with likely increases in mortality and 
     morbidity. The populations most sensitive to hot temperatures 
     are older adults, the chronically sick, the very young, city-
     dwellers, those taking medications . . ., the mentally ill, 
     those lacking access to air conditioning, those working or 
     playing outdoors, and the socially isolated.

  Mrs. BOXER. I say to my friends and my colleagues who are listening 
to this debate, vote for the Stabenow motion to instruct. It is an 
important motion. It will keep the reserve fund and will allow us to 
move forward and attack this serious problem of global warming that has 
gone unaddressed for too long.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The majority leader is recognized.

                          ____________________