[Congressional Record Volume 156, Number 58 (Thursday, April 22, 2010)]
[Senate]
[Pages S2537-S2538]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FINANCIAL REGULATORY REFORM
Ms. CANTWELL. Madam President, this speech is not meant to target or
malign anyone. It is simply to talk about the responsibilities we have
as Members of Congress to our constituents.
Our country has been rocked by a financial crisis of epic
proportions, one that will have Americans paying for generations to
come. It has shaken the public's faith not only in Wall Street but in
this institution, the Congress.
Whether it is Enron or Amaranth or Bernie Madoff or the Wall Street
bailout, the American people are asking themselves a fundamental
question: Can I even trust those guys in Washington to look out for me
when it comes to the special interests creating rules of the game that
tilt the board in their favor?
Some people listening today may be smiling and thinking: Senator,
that is one of the oldest questions and most frequently asked in
Washington, DC: Whose side are you on? But never has this question of
``whose side are you on'' had such dramatic consequences for the
economic lives of millions of Americans. Over 2 million people have
lost their homes, many going into bankruptcy, 7.3 million jobs have
been lost, and our government has put something like $24 trillion on
the line to help Wall Street in this meltdown--something taxpayers will
be paying for decades, to say nothing of the kids who will not go to
college because college tuition went up 32 percent or workers whose
401s have been wiped out, making it almost impossible to retire.
The American people have been let down by those involved in
government oversight who have feigned: Oh, this stuff is too complex
for us to understand. We better listen to those outside interests. They
understand this better than I do.
It takes a mighty man, who was in control of our financial markets
for nearly two decades, like Fed Chairman Alan Greenspan to admit his
philosophy was wrong. But it took even more dogged oversight by the
likes of Henry Waxman to take a subject that some people think is too
complex to understand and boil it down to a simple yes-or-no question.
Congressman Waxman to Mr. Greenspan:
Mr. Greenspan, the premise that you could trust markets to
regulate themselves, were you wrong?
Mr. Greenspan, in response:
Yes.
Mr. Waxman to Mr. Greenspan:
Mr. Greenspan, you found that your view . . . your ideology
was not right.
Mr. Greenspan, in response:
Precisely.
This debate we are about to have on financial reform, in my mind, is
really about the backbone of Congress. The central issue before us
today is whether Congress is going to continue to trust Wall Street and
those who represent them because there is too much complexity for
Congress to understand. Really? Is it any more complicated than
national security or the Medicare GPCI reimbursement formulas or our
Tax Code in general? Really? Is it too complicated?
P.J. O'Rourke, at a recent dinner honoring journalists, said:
It's a fundamental principle of the rule of law, a
fundamental principle of economics, and a fundamental
principle of politics. . . . that beyond a certain point,
complexity is fraud.
I agree with him. How is it that average Americans know that a back-
alley craps game with fixed dice is a no-win situation, yet a dark
market with fixed financial instruments is allowed to carry on for more
than a decade under the mischaracterized title of ``free market''?
The issue is, we were told over the last 10 years by the Bush
economic working group--and, for that matter, the Clinton economic
working group and now even some members of the Obama economic working
group--that these issues are too complex to understand. Really? Is that
what happened when Bernie Madoff literally made off with millions of
investors' life savings in a Ponzi scheme? It was not complex. And
regulators were either afraid, lazy, or paid off when they failed to
ask a simple question: Let me see your books. When we deregulated
energy markets and Enron had at least one manipulation scheme for every
day of the week--Death Star, Get Shorty, Ricochet, Fat Boy, just to
name a few--these issues were not complex; it was simply shorting
supply to drive up the price.
No, the issue is not complexity. It is about the central issue of
markets. They have to have transparency and oversight to operate
effectively. Never more have the American people been counting on their
Members of Congress to act like David against the big Goliath, Wall
Street interests.
We have been repeatedly warned about derivatives. The Long-Term
Capital Management crisis almost took down the world economy in 1998
because it started using complex mathematical formulas to do
derivatives.
Then-Chairman Brooksley Born of the Commodity Futures Trading
Commission proposed regulating derivatives. That was her agency's
primary role. Not only was she told by the President's working group
she could not, they helped mastermind a strategy with Congress to stop
her. So instead of regulating derivatives, Congress passed a law making
sure the oversight agency could not regulate them. And just for extra
measure, we also prohibited State attorneys general from regulating
them as well.
Well, why, if you were on Wall Street, would you ever worry about
what exotic financial tools you were cooking up if you knew there was
no oversight? Let me say that there are people on Wall Street who
operate ethically, without fraud, without manipulation, and provide an
essential tool to our economy and functioning markets. But when you
take away the accountability of Wall Street, something happens to the
accounting on Wall Street.
We have had many votes here in the last 10 years to regulate and have
oversight of the derivatives market and bring them out of the dark, and
those efforts have primarily failed because the so-called smartest guys
in the room stopped us. Did it really take another near 1933 Depression
to remind us of our fundamental role? I ask my colleagues to check
their previous votes on derivatives and tell me whether they still want
to vote the same way.
My constituents have been so disgusted by our lack of holding Wall
Street accountable, they have said: If
[[Page S2538]]
you can't beat them, then at least break them up. So I will be offering
an amendment to return us to Glass-Steagall, the law of the land
previous to 2000, to help protect consumers for decades. And I will be
offering an amendment to strengthen our antimanipulation laws to make
sure that if manipulation happens in the future, there will be a price
to be paid.
I will also say that my constituents want us to get this right and
get capital flowing to small business. While Treasury turned the keys
over to Wall Street to bail them out, small business is still being
strangled by the lack of access to capital.
As one quote says:
This then is more than the tale of one company's fall from
grace. It is at its base the story of a wrenching period of
economic and political tumult as revealed through a single
corporate scandal. It is a portrait of America in upheaval at
the turn of the century, torn between the worship of fast
money and its zeal for truth, between greed and high
mindedness, between Wall Street and Main Street. Ultimately
it is a story of untold damage wreaked by a nation's folly--a
folly that in time we are all but certain to see again.
I wish that quote was about our current crisis that started in 2008,
but it is not. That quote is from a book called ``Conspiracy of Fools''
by Kurt Eichenwald that was written in 2005. He warned us that what was
happening was just a tremor leading up to a massive earthquake that was
about to happen. We did not listen. Are we listening now?
I am going to be working with my colleagues to offer several
amendments on the floor to strengthen this legislation, to make it the
strongest legislation possible, to be accountable to my constituents,
and to make sure we are putting derivatives back into the clear light
of day.
Madam President, I yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
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