[Congressional Record Volume 156, Number 55 (Monday, April 19, 2010)]
[Senate]
[Pages S2405-S2408]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                            Financial Reform

  Mr. CORKER. Mr. President, I thank my friend from North Dakota, 
because I, too, for what it is worth, have been very distressed about 
the conversations around financial reform. I don't think either side of 
the aisle deserves a badge of honor as it relates to the way this has 
been discussed. I agree with him that this is something way beyond 
using poll-tested language and should, in fact, be dealt with in a 
serious manner. So although I didn't hear all the Senator's comments, I 
agree with him that we ought to deal with this in a serious way.
  Mr. President, you and I have had a number of conversations over the 
last weekend regarding financial reform. We have had a lot of 
conversations over the last year regarding financial reform. As I have 
watched the public discussions over the last several days, I have been 
greatly distressed. As a matter of fact, I spoke this morning to a 
large number of businessmen in Nashville, TN, and, candidly, became so 
angry thinking about the way this debate has evolved that I had to 
think about coming here today and controlling that and using that in a 
productive way.
  I have noticed throughout the day that maybe the rhetoric has changed 
a little, and I know that my friend and colleague from Virginia and my 
friend and colleague from Connecticut had a press conference earlier 
today to talk about some of the issues that are being talked about 
rhetorically. Let's face it, what is happening right now--and it is 
unfortunate for the American people--is that both sides of the aisle 
are trying to herd up folks with language that in many ways I don't 
think does justice to this issue, which is very important, is very 
difficult, and something that is very much needed in our country.
  There has been a lot of discussion about this funding mechanism--this 
$50 billion bailout fund, if you will. Those are someone else's words, 
by the way, not mine. The American people are probably tuning in, and 
in some cases they are wondering how we are jumping into the middle of 
this on the Senate floor without a lot of free dialogue.
  The fact is, we have a financial reg bill that I hope comes before us 
soon that will deal with orderly liquidation so that when a large 
institution fails, it actually fails. I think that is what the American 
people would like to see happen. So there has to be a mechanism in 
place.
  If a firm is systematically important to our country, there needs to 
be the tools in place to make sure it actually goes out of business. I 
don't think people in Tennessee like seeing that when a community bank 
fails it actually goes out of business, but when a large Wall Street 
firm fails we prop it up.
  I wish the Senator from Virginia, who happens to be presiding, were 
on the floor so we could have a colloquy on this because the fact is, 
this is something that needs to be dealt with in legislation. We need 
to know we have a process where we deal with derivatives and we don't 
have a lot of people building up a lot of bad money, instead of doing 
it on a daily basis and they end up in a situation where there are huge 
obligations. We need to deal with some of the issues of consumer 
protection.
  So, Mr. President, there has been a lot of discussion about how we 
create something called debtor-in-possession financing, so that when 
the FDIC comes in and seizes one of these large firms that fails, it 
has the money to keep the lights on and to make payroll and those kinds 
of things while it is selling off the assets of the firm.
  The fund that has been discussed in this bill--and that is going to 
be changed, I know, and I am fine with that and think that is perfectly 
good--but this fund that has been set up is anything but a bailout. It 
has been set up in essence to provide upfront funding by the industry 
so that when these companies are seized, there is money available to 
make payroll and to wind it down while the pieces are being sold off.
  Now, a lot of people have said this is a Republican idea. There is no 
question this is something that Sheila Bair has proposed. The FDIC 
wants to see a prefund. The Treasury would like to see a postfund; they 
would like to see it come after the fact.
  At this point I want to digress for one second and say I hope the 
reason that Treasury wants a postfund is not because, in lieu of having 
a prefund of $50 billion from these large institutions, they want to 
see a bank taxed. As a matter of fact, I am going to be surprised if 
after Republicans argue against a prefund and it is changed, and the 
administration comes back and Chairman Dodd comes back and we end up 
with postfunding--both of which do the same thing, I might add, and 
both of them work--but it will be interesting to see whether that 
argument basically leads to Treasury then having the ability to come 
back and do a bank tax. I think at the end of the day that is something 
they have been wanting to achieve.
  So it is interesting how this debate is evolving. But let me go back 
to this prefund. At the end of the day, I think what all of us would 
like to see happen is to see these institutions go out of business. So 
do we put the money upfront to take them out of business or do we put 
it up on the back end where, in essence, what is happening is we are 
borrowing money from the taxpayers?
  Would we rather the industry put up the money so the taxpayers are 
not at risk or would we rather that not happen and during a downtime, 
when it is procyclical, we actually get the firms to put up the money 
after the fact?
  I think both of those, by the way, are nice arguments to have, and I 
think they should have been debated in the committee, and we can debate 
it on the Senate floor. But at the end of the day, to make the total 
debate about whether it is pre or post--neither of which are central to 
the argument because both work--it really doesn't matter. Either way we 
have to have some moneys available as working capital to shut down a 
firm. We can borrow it from the taxpayers, although I don't know if the 
taxpayers would like that very much. We can do it after the fact, as I 
have said, or we can put it in upfront by the industry. Either way it 
is going to be paid back by industry.

  I will say that in the Dodd bill today there is postfunding; that if 
there are any shortfalls the industry will pay that back. So, again, it 
is kind of a debate that ends up being silly. The fact is, I know it is 
going to be changed. The essence of the bill, though, is the fact that 
we want to make sure these firms unwind and they go out of business.
  Let me just talk about some of the arguments that are being made: 
Prefunding of resolution creates a system where certain participants 
are effectively designated as a protected class as a result of them 
paying into the fund.
  I think that is ludicrous. That is a ludicrous argument. Now, what we 
could do, if it would make everybody happy, is instead of getting large 
firms to pay, we could get community banks to pay too. I don't think 
there would be many people who would be interested in that, but if we 
want to get everybody in the country and get the community banks in 
Tennessee--I am not interested in that, and I don't think the Senator 
from Virginia is interested in that--but if we want to do that, we can 
ensure nobody is part of the protected class. So I find that to be a 
ludicrous argument.
  There is another argument: This allows such firms competitive funding 
advantage over smaller institutions such as community banks.
  So, in other words, if we are saying these large firms, if they fail, 
are going to go out of business, and it is going to be more painful 
than bankruptcy, that somehow they are protected or have a competitive 
advantage, I find that to be kind of ludicrous, and I hope that 
argument is not used again. It probably will be, but I hope it would 
not.
  Here is one I read recently: The fund is a signal to credit markets 
that the U.S. Government stands ready to prop up, bail out, and 
insulate large financial firms. Now that is an interesting one. The 
fact is, we are talking about orderly liquidation.
  The existence of the fund allows managers of large financial 
institutions to conduct riskier practices, therefore counterparties 
will not feel obliged to perform due diligence because, in the event of 
stress, there is such a financial slush fund available to bail out 
unsecured and short-term creditors.
  You have to be kidding me. That is absolutely the opposite of what is 
intended.

[[Page S2406]]

  Now, let me say this before somebody tunes out. I think this bill has 
problems, and I think there are issues that need to be resolved around 
orderly liquidation. The Senator from Virginia and I both know what 
they are, and there are some flexibilities that have been granted to 
the FDIC, to the Federal Reserve, and others that need to be tightened. 
There are some words that instead of saying ``shall'' say ``may.'' That 
is a very important word when you are telling an agency what they have 
to do or what they ``may'' do. So there is much in this bill that needs 
to be fixed.
  I want to say that as the Dodd bill sits today, I could not vote for 
it. I absolutely cannot support the bill. But what concerns me is the 
rhetoric that is being used to talk about something that is very 
important to our country, and it is being used on both sides, I might 
add.
  On one side they are saying the Republicans want to protect Wall 
Street firms. Well, I can tell you this: I think there are very few 
Republicans who do not want to see financial regulation take place. I 
think there are very few Republicans who don't want to see it done the 
right way. Candidly, I think most Republicans and Democrats are 
listening to community bankers. They are not listening to Wall Street. 
That would be my guess.
  So that rhetoric, to me, is off base. The rhetoric on my side of the 
aisle saying this orderly liquidation title basically keeps ``too big 
to fail'' in place, the central pieces of it, is not true. Are there 
some things around the edges that need to be fixed? Yes. My sense is, 
as I have said on the Senate floor, we can fix those in about 5 minutes 
if we just sit down and do it. I do not understand why the rhetoric has 
gotten to where it is. I would like to see us pass a bill that makes 
sense.

  The kind of thing we should be talking about is not the fact that 
this is a bailout fund. By the way, whether it is ``pre'' or ``post,'' 
that debate doesn't matter to me. The fact is, we have to have some 
debtor-in-possession financing available to wind these firms down, sell 
off the assets, make sure the stockholders are absolute toast, make 
sure unsecured creditors are toast, make sure it is so painful that 
nobody ever wants to go through this. We absolutely need to do that. 
The American people need to know we in Congress are not going to prop 
up a failed institution, that they are going to live the same life in 
capitalism that everybody else has to live. People in Tennessee, when 
they fail, they fail.
  The kind of thing we ought to be talking about and have been talking 
about and I think can solve is that I think we ought to have more 
judicial involvement in the process. We ought to improve the bankruptcy 
process so that these large institutions have a more viable route 
through bankruptcy.
  I think we ought to deal with the disparate treatment of similarly 
situated creditors. The fact is, the way the ``post'' funding in this 
bill is now set up, we do not. If a creditor receives more money than 
they should, that money is not recouped. We know how to fix that. I 
know the Senator from Virginia and I both know how to fix that.
  Those are the kinds of things we need to be talking about.
  Creditor prioritization--there is no question that right now in the 
bill, certain creditors can be treated differently by the FDIC than 
others.
  We need to be looking at bankruptcy stacks so that people understand 
how much they are going to be paid back, and they are going to be in 
the same order they anticipate being in.
  We need to be tightening the definition of a financial firm. Right 
now in the bill, the way it reads, an auto company could end up being 
part of this. Right now, it is not tight enough. An auto company may be 
a stretch, but something other than a financial firm could be dealt 
with, the way the language is now reading. And certainly for sure 
Fannie and Freddie need to be treated the same as any other financial 
firm.
  We need to have a solvency test to make sure regulators--that does 
not allow regulators the flexibility to protect firms in crisis.
  We need to make sure there is a duration. In other words, if the FDIC 
comes in and has to take over, after due process--three keys being 
turned--take over one of these firms that has posed systemic risk, we 
need to know there is an end date. I know the Senator from Virginia and 
I absolutely agree that conservatorship should not be on the table. 
This is only a receivership and those firms should go out of business, 
and that, no doubt, should be language added. It is not in there right 
now.
  There are a number of things like this. I could go on and on. I am 
probably boring much of the watching audience, if there is any, with 
some of these technical issues, but those are the kinds of things we in 
this body ought to be talking about. They are important. They matter. 
But to use up time with rhetoric that, in essence, is used to sort of 
brand something in a way that really isn't the way it is, to me, is not 
productive. I did not come here to do that.
  Again, I think both sides of the aisle tried to cast the characters 
in certain ways. It is this herd process that happens around here. 
Everybody wants to get everybody on the same team. What we do is we use 
rhetoric that charges people up and gets everybody on the same team. I 
do not like that process. I do not want to be a part of that process.
  I have joined with other Republicans to try to make sure this bill 
gets in the middle of the road. I have done that on the basis that both 
sides are going to deal in good faith.
  I know the Senator from Virginia knows we went through a process with 
this bill where we voted it out of committee in 21 minutes--a 1,336-
page bill we voted out of committee in 21 minutes with no amendments. 
The stated goal was to make sure that both sides did not harden against 
each other and that we could negotiate a bill before it came to the 
floor--came to the floor--we would negotiate a bipartisan bill. That is 
why it was stated that we did that. How can responsible Senators, 23 
Senators, all of whom have problems with this bill--how can you vote 
something out of committee in 21 minutes with no amendments unless you 
know that a negotiation process is going to take place afterward to 
create a bipartisan bill? Nobody in their right mind would have agreed 
to do that.
  What I would say to my friends on the other side of the aisle and 
what I would say to the folks at the other end of Pennsylvania Avenue, 
who seem to be turning up the rhetoric--I take it as a commitment from 
my friends on the other side of the aisle that we are going to 
negotiate a bipartisan bill and we are going to do it in good faith. 
But I also expect the same on my side of the aisle, that we are going 
to negotiate in good faith to get a bill and that before it comes to 
the floor the major template pieces will be worked out, the issues 
around consumers, the issues around orderly liquidation, and the issues 
around consumer protection.
  As I have mentioned, there are a number of issues we need to debate 
here on the floor that, to me, are outside the realm of the template 
itself. I hope this body--I know the Senator from Virginia and I have 
worked together a great deal. I know we both came from a world that was 
different from this. I have become greatly distressed. I get distressed 
at both sides of the aisle when we have an important issue such as this 
and we turn it into sound bites.
  I hope, again, over the next several days--this bill has been through 
so many iterations. Everybody who has worked on it understands what is 
in it. Everybody understands what the points are on which we disagree. 
As a matter of fact, if we do not end up with a bipartisan bill, it is 
not going to be over philosophical issues, it is going to be over the 
fact that the two sides just decided they didn't want to do it. It is 
going to be over the fact that it takes both sides.
  The fact is, the White House can make an issue out of this. I know 
things are not going particularly well in the polling areas. I know my 
friend from North Dakota talked about polling data and testing things 
and all that. I realize things are not going particularly well. Maybe 
this financial reform bill can be something that changes that. Maybe if 
you push the bill as far to the left as you can and you dare 
Republicans to vote against it, maybe that is a good thing. That is not 
what I came here to do. I do not think that is what the Senator from 
Virginia came here to do. I know that

[[Page S2407]]

if Republicans brand this bill as prolonging too big to fail--that is 
what we are doing--then we might be able to keep the bill from passing 
that way too.
  I hope all of us will sit down and do what we came here to do, and 
that is to create good policy for the American people.
  I am very distressed about where we are today. What I hope is 
happening is that this is just a bunch of buzz and that our committee 
staffs and the chairman and ranking member are actually sitting down, 
having serious discussions, and that very soon we are going to come 
forth with a bill that is bipartisan, where we can debate it on the 
edges and end up passing legislation that stands the test of time.
  I hope that bill will deal with the very core issues that got us into 
this crisis. And we can castigate all kinds of people. There is enough 
blame to go around. You almost couldn't find a regulator, a credit 
rating agency, a firm, management that was not in some way involved in 
helping create this crisis. There is a lot of blame to go around. But I 
hope the bill, at the end of the day, will also address, as I have 
stated every time I have come to the floor on this bill, the whole 
issue of underwriting; the fact that at the end of the day, at the 
bottom of this, whether you read what happened supposedly with Goldman 
on Friday, you read about these synthetic CDOs where they were not even 
really underwriting mortgages there--in reality, they were just doing 
something that reflected what certain mortgages would do--at the end of 
the day, it still was about the fact that in this country, we wrote a 
bunch of mortgages that couldn't be paid back. You can talk about this 
all you want, but the underwriting, the bad loans that were written, at 
the end of the day, are what created much of this crisis. Candidly, I 
don't think much of this bill addresses that. I hope we will address 
that more fully before this bill comes to the floor.
  With that, I think I have taken up my allotted time. I thank the 
Members of this body for their patience. I hope we will do the work 
that needs to be done here. As I mentioned, at this point I don't think 
either side of the aisle deserves a badge of honor, but I hope over the 
next several days that will change. I hope our rhetoric will be 
tempered. I hope our discussions will center around those things that 
really matter and will not be used to basically get people in the 
public off on rabbit trails or try to herd our teams together.
  Mr. President, I look forward to working with you as we try to 
complete this bill.
  I yield the floor.
  Mr. BAUCUS. Mr. President, I would like to return to the nomination 
of Dr. Lael Brainard.
  Today, at long last, the Senate is considering the nomination of Dr. 
Lael Brainard to be Under Secretary of Treasury for International 
Affairs.
  President Obama nominated Dr. Brainard more than a year ago, in March 
of 2009. After an extensive vetting process, the Finance Committee held 
a hearing on her nomination in November of last year. And the Finance 
Committee favorably reported her nomination with a bipartisan majority 
in December of last year.
  The path to her Senate confirmation has been neither short nor easy. 
But throughout this process, Dr. Brainard has demonstrated persistence 
and determination.
  These vital qualities supported her well as a nominee. And these 
qualities will support her well as she assumes her responsibilities as 
Under Secretary of Treasury.
  The world economy is emerging from a deep economic recession. America 
must lead the way to recovery. And we must do so by creating jobs, 
reducing unemployment, and encouraging smart, balanced growth here at 
home.
  But the health of the global economy does not rest on our shoulders 
alone. In fact, the recent financial crisis has demonstrated how 
interconnected our world is.
  The world's many national economies have the potential to rise 
together. And they have the potential to fall together, as well.
  To ensure a stable, prosperous economic future, countries must work 
together to support balanced economic growth. No country can rely 
solely on export-driven growth, just as no country can rely solely on 
its domestic consumption.
  But this economic rebalancing will not happen overnight. The global 
economic downturn has been powerful because of its persistence. And we 
must be just as persistent and determined in our efforts to overcome 
the effects of this crisis.
  As Under Secretary of Treasury for International Affairs, Dr. 
Brainard will lead our bilateral and multilateral efforts on these 
issues. She will work with key trading partners such as China and the 
European Union. And she must help to guide our country from an economic 
recovery to economic growth.
  Dr. Brainard has demonstrated that she has the knowledge, skills, and 
abilities to confront the tasks that lie ahead. She is brilliant and 
hard-working.
  She has shown the tenacity and doggedness necessary to be successful 
as Under Secretary for International Affairs. And she has revealed that 
she has the persistence and determination to address the vital issues 
facing America and the global economy today.
  I might add, I worked with Dr. Brainard during the Clinton 
administration. A very key question is, What would the U.S. economic 
relation be with China? Up to that point, America had annual extensions 
of MFN for China. They were contentious. They caused more problems than 
they solved, and I spent some time with the President and others in the 
Clinton White House and then later worked with Dr. Brainard as we moved 
away from these annual extensions of MFN and more toward PNTR with 
China.
  It was a hallmark change in United States-China economic relations. I 
think this worked out very well for our country's best interests. I 
must say it has also helped China. We pursued that objective, in part, 
because that meant China could then be a member of the WTO, and once 
China became a member of the WTO--that is, the World Trade 
Organization--that would help China live up to world standards that 
other countries were living up to under WTO.
  Again, Dr. Brainard, throughout this confirmation process, has shown 
her dedication to serving the Treasury Department, the President, and 
the American people. I am confident--and I am confident because she has 
had deep experience and she is very talented; she is very good--I am 
confident she is up to the task for which she has been nominated.
  I urge the Senate to approve her nomination.
  I now ask unanimous consent that the assistant majority leader, the 
Senator from Illinois, be recognized to speak on whatever topic he 
chooses.
  The PRESIDING OFFICER (Mr. Kaufman). Without objection, it is so 
ordered.
  The Senator from Illinois.
  Mr. DURBIN. I ask unanimous consent to speak for 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. I thank the chairman of the Finance Committee.
  This is the Executive Calendar. It contains the names of the 
nominations the President of the United States has sent to the Senate 
for confirmation. It is an orderly process, a historic process. It has 
happened thousands and thousands of times. Very few times do we have a 
lot of controversy associated with these names. If there is a 
controversy, ultimately there is a vote--a debate, and then a vote.
  But now there is a new approach being used by the minority side. That 
approach is to basically use one of three options: stall, stop, and 
kill. What they are trying to do, for the 104 nominations sent by 
President Obama, is to hold them on the calendar as long as possible so 
it is difficult for him to organize his administration and move 
forward.
  There are some key positions. The one the Senator from Montana spoke 
of is the nominee for Under Secretary of the Treasury for International 
Affairs. We are concerned about the state of the American economy, our 
competition in the world, how we stack up against countries such as 
China.
  There is an allegation, which I think is valid, that the Chinese are 
manipulating their currency so they continue to take jobs away from the 
United States. It gives them too big a competitive advantage. Here is 
the Under

[[Page S2408]]

Secretary for International Affairs who would be tasked with looking 
into that issue to try to help American businesses, small and large, 
and to save American jobs and this nomination now sits on the calendar 
with 103 others.
  What you find is that of those 104 nominations, most of them went 
through the committees on their way to the Senate floor with unanimous 
votes or overwhelming majority votes. There is no controversy 
associated with it.
  Mr. DORGAN. Would the Senator yield for a question?
  Mr. DURBIN. I would be happy to yield.
  Mr. DORGAN. Mr. President, I wonder if the Senator from Illinois 
knows who has a hold on that nomination.
  Mr. DURBIN. I do not know. Does the Senator know?
  Mr. DORGAN. No, I do not. The reason I asked the question is these 
holds are, in some cases, anonymous. I spoke earlier today about a hold 
on a promotion for one of the generals in the Army to be a major 
general that has now been held up for nearly 6 or 7 months by Senator 
Vitter.
  I use his name because I told him I was going to because he is 
demanding of this general something the general cannot do. I mean, that 
is an example. We happen to know where that hold is from.
  But of these other 100-plus nominations, they sit here, day after 
day, month after month, and someone has put a hold on them for some 
reason. If I might mention one other, the woman who was to head the 
GSA, that was vacant for nearly a year because of a hold of one 
Senator, and when we finally got around to voting for her, it was 94 to 
zero.
  The Senator who held her up for a year even voted for her. That is 
the kind of game that is being played. It is unfair.
  Mr. DURBIN. I agree with the Senator from North Dakota. I would say 
to those Senators who have holds on nominees: Come to the floor and 
explain to the American people why you believe these people should not 
be serving in our government. If you think there is something wrong 
with them, if you think they are unqualified or there is some issue 
involving their character or integrity, do you not owe it to these 
nominees to step forward and say so?
  I have held some nominees in the past but was open and public about 
it for a specific purpose. Recently, under the Bush administration, I 
was looking for a report from the Department of Justice. The report was 
sent. The hold was lifted as quickly as it was sent. Those things I 
understand.
  But to hold these people indefinitely in anonymous holds, secret 
holds, and never state the reason why is fundamentally unfair. It is 
unfair to the nominee who has gone through this process of FBI checks, 
background checks, poring through income tax returns, questions about 
their personal and private lives most Americans would not want to face.
  They finally get through the nomination process, the President sends 
their name, and now they are being held up on the calendar 
indefinitely, 104 different people. I think we owe it to them, we owe 
it to the President and to the country to do this in an honest, orderly 
way.
  During the course of this week, Members of the Senate are going to 
come to the floor and ask to move these nominees forward. I hope those 
on the other side who have the courage to hold them will have the 
courage to stand and explain why. That, I think, is critical.