[Congressional Record Volume 156, Number 58 (Thursday, April 22, 2010)]
[Senate]
[Pages S2545-S2546]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      FINANCIAL REGULATORY REFORM

  Mr. BOND. Madam President, after the actions of some bad apples on 
Wall Street wreaked havoc on Main Street, America, there is no doubt we 
need financial reform to prevent another credit crisis.
  It is disappointing that bipartisan consensus on a financial reform 
package was not reached in committee and instead the majority chose a 
go-it-alone approach. I hope this is a process Democrats truly want to 
be bipartisan because my constituents have some good ideas about how to 
enact real reform that will not stifle economic growth and activities.
  I have told my good friend Senator Dodd and others that I want to 
work with them to ensure the concerns I have heard from Missourians--a 
thousand miles away from Wall Street--are addressed as the process 
moves forward. I have heard from Missourians who want to end too big to 
fail, and I have heard from Missourians who want to stop taxpayer-
funded bailouts and Missourians who are fearful of empowering 
government bureaucrats with the power to pick winners and losers. I 
have also heard from folks in Missouri who are key to job creation. 
They have well-founded concerns about some of the bill's unintended 
consequences.
  This is a bill that could alter significantly the way Americans do 
business with the financial services industry, whether it be in the 
form of a home or auto loan, financing for college, credit for family 
farms, or much needed financing for small business. In the heartland, 
where I am from, we understand Wall Street provides critical financing, 
but we want to make sure they do it the right way.
  A bipartisan and responsible bill should ensure that the failures 
that led to our financial collapse are properly addressed and that 
taxpayers never again are left footing the bill for the egregious 
mistakes of a few bad actors. It is time to stop taking a piecemeal and 
ad hoc approach to addressing the financial crisis. Burying our 
collective heads in the sand to avoid what needs to be done and simply 
hoping things will get better by throwing more money at these failed 
institutions and just believing they will get better on their own is 
unrealistic.
  Americans are rightfully angry and frustrated about the trillions of 
dollars the government has committed to rescuing the financial 
industry, when so many of them are still struggling to find jobs, pay 
bills, and get the loans they need for cars, home, college, or to farm. 
They believe--and rightly so--that it is fundamentally unfair for the 
bad actors who caused the financial crisis to get bailed out while many 
of them lost their jobs and their savings as a direct result of the 
irresponsibility of others.
  We need a clear path to unwinding and ending these institutions that 
are too large and that pose systemic risk to the financial health of 
our market without doing so at the expense of the American taxpayer. No 
institution should ever again be considered too big to fail.
  Today, I remind my colleagues that the government played a role in 
contributing to our financial and economic crisis. Government policies 
and actions to promote home ownership to buyers who could not afford to 
buy were irresponsible. That is why I am shocked that this bill does 
nothing to reform Fannie Mae and Freddie Mac, the government-sponsored 
enterprises that contributed to the financial meltdown by buying high-
risk loans made to people who could not afford them. These 
irresponsible actions left the Federal Government with the risk and the 
American taxpayer with the bill to bail them out.
  In addition to the cost to taxpayers, these irresponsible actions 
turned the American dream into the American nightmare for too many 
families who faced foreclosure and devastated entire neighborhoods and 
communities as property values diminished. Additionally, government 
failure to adequately regulate the financial system--specifically, the 
Securities and Exchange Commission and other regulators--allowed these 
institutions to take on too much risk, which was a major factor in the 
credit collapse. Collectively, these policies and actions have brought 
us to the economic crisis which has touched every American's life.
  The current proposal ignores Fannie and Freddie, which were 
significant contributors to the crisis. That is a big mistake.
  We need to be sure the proposals address the needs of Main Street 
America. Leaving them out would be another mistake.
  Rather than focusing on the concerns of Wall Street, I have spent my 
time focusing on the concerns shared with me by my constituents back in 
Missouri. Missourians expect real reform but demand that Congress 
prevent an overreach of government that stifles businesses and kills 
jobs.
  One specific area of concern is the creation of the so-called 
Consumer Financial Protection Bureau, the CFPB. This new, massive 
government bureaucracy has unprecedented authority and enforcement 
powers to impose duplicative and costly mandates on any entities that 
extend credit. We are not talking about just big Wall Street banks but 
also the community banker, the local dentist, farm lender, or auto 
dealer. As a result, there will be no choice but to pass these added 
costs on to consumers--the very people this bill was designed to 
protect.
  The only way to ensure the CFPB does not unintentionally hurt well-
performing institutions that issue credit

[[Page S2546]]

is to narrow the scope and authority with clear language outlining 
exactly whom this new regulator will regulate. Surely my colleagues 
would not want to vote for a bill that creates a new government 
bureaucracy without knowing exactly what the bureaucracy is empowered 
to do.
  Instead of unlimited authority, this new regulator should focus on 
the shadow banking entities that operate outside of the regulatory 
framework and prey on vulnerable people. We have all heard horror 
stories from our constituents about the bad operators pushing no-money-
down or no-doc home mortgages and the reverse mortgage scam artists who 
sell too-good-to-be-true financing.
  There must be appropriate oversight of this regulator. The last thing 
we need is a new government bureaucracy that, under the guise of 
consumer protection, is really just pushing one party's political 
agenda. The current business climate is overwhelmed with uncertainty, 
and we need to ensure this bureau does not create additional 
uncertainty for any investor or business that operates in this country. 
The prudential regulators should have a final say on anything that 
would put the safety and soundness of institutions and the credit of 
borrowers at risk.
  Next, Missourians refuse to be on the line for another bank bailout. 
I share their frustration over the concept of an institution being 
considered too big to fail. We must put an end to too big to fail. We 
need a mechanism in place that allows for immediate liquidation of 
failing financial firms.
  In my recent conversation with Larry Summers, I expressed this 
concern, and he agreed that the administration wants euthanasia for 
failed companies, not resurrection. The government should not be in the 
business of creating zombies.
  The era of bailouts must be over. Any mechanism of resolution must be 
fair and evenhanded. Missourians will not accept government bureaucrats 
picking winners and losers in creditor repayment.
  In addition, the $592 trillion over-the-counter derivative market 
needs stronger rules of transparency. Some of the derivatives traded in 
this market played a significant role in the recent credit crisis 
through products such as credit default swaps. These and other 
transactions--which I call video game transactions, where there is no 
substance involved and they are making bets on the financial system--
should have been cracked down on by the Securities and Exchange 
Commission.
  However, there is an important distinction to be made here. Not all 
derivative contracts pose systemic risk. As a matter of fact, 
commercial contracts initiated, for example, by energy companies, 
utilities, and the agricultural industry are used to manage risks 
associated with daily operation, from cost fluctuations in materials 
and commodities to foreign currency used in international business. 
These end users, as they are called, do so in order to plan for future 
pricing so they can provide the least expensive good or service to 
their consumers as possible. Costly margin requirements for these end 
users will be directly passed on to families. This will increase the 
cost for Americans to turn on their lights and put food on their 
tables.

  My hope is that the ultimate Senate bill, like the House-passed bill, 
will ultimately address this concern with a strong exemption for end 
users from the clearing and margin requirements. These end users are 
not major swap participants and should not be treated as such.
  Finally, the Federal Reserve Bank's current structure for regulatory 
oversight ensures that responsibilities and power are shared across the 
country, not just in Washington and on Wall Street. Regional reserve 
banks give all regions in the country a voice in banking, credit 
policy, and monetary concerns, which gives a complete picture to the 
Board of Governors as they decide on Federal monetary policy. This 
system was established over 100 years ago and should be maintained in 
order to protect the concerns of small and medium-sized banks. 
Financial crises can and do occur within small but interconnected 
banks, which is why the Federal Reserve needs to continue to take the 
economic temperature of the entire country, not just of those on Wall 
Street.
  As hard-working Americans and small businesses struggle to emerge 
from this meltdown and drive our economy through the recovery process, 
it is the responsibility of the Federal Government to ensure we have a 
robust regulatory system. It is critical that our regulatory system be 
modern, responsive, and empowered with appropriate authority, while 
allowing for business prosperity as we prevent future crises.
  In Missouri, I have been working to build an agricultural biotech 
corridor. This has the potential to foster a whole new interest, 
providing great jobs in advanced agricultural research and biotech. It 
is the best stimulus to create high-paying, skilled jobs that rural 
Missouri and rural America need.
  However, today I read in the Wall Street Journal a very disturbing 
report that this bill would possibly kill small business startups by 
delaying and limiting the availability of private investor seed 
capital. Small startups have been at the forefront, driving job 
creation. In this bill, new requirements by the SEC would insist that 
investors register with the Commission for a 4-month review, meanwhile 
tying up vital venture capital or seed capital dollars. This harmful 
delay for new businesses in need of immediate capital would be 
crippling.
  According to the Wall Street Journal:

       No one believes angel investors pose a systemic risk, so 
     it's hard to understand why these proposals are in the bill. 
     The economy needs more private job creation.

  Incidentally, it would triple the minimum wealth of the seed capital 
investors who could invest in these from $1 million to over $3 million. 
That cuts out three-quarters of the people who might invest in starting 
up these companies. This would be devastating to rural job creation in 
Missouri and across the country.
  Our greatest potential for new jobs depends upon the innovative 
ideas, the entrepreneurship of people who are willing to use their own 
time and ideas but need seed capital to do it. These small companies 
could not wait 120 days, in many instances. They could not find the 
seed capital investors. In other words, in sum, moving from too big to 
fail, this new bill, if enacted with that provision in it, would say to 
these innovators, these entrepreneurs: You are too small to succeed.
  This is not a measure that is going to protect people from Wall 
Street; this is an overreach by the Federal Government which would shut 
down the job creation Main Street needs.
  Neither political party has a monopoly on good ideas. Reforming our 
financial system is too important to be done on a partisan basis. I 
urge my colleagues, and I hope they will consider the ideas I have 
heard from Missourians. We haven't just been listening to Wall Street; 
we have been listening to Main Street. I hope the Presiding Officer and 
all of the Members of this body will listen to what they are saying on 
Main Street about the need for the small companies, whether they be 
startup companies or small banks, to succeed. We need to make sure we 
don't kill the backbone of our American economy.
  Madam President, I thank the Chair. 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.
  Mrs. McCASKILL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Burris). Without objection, it is so 
ordered.

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