[Congressional Record Volume 156, Number 60 (Tuesday, April 27, 2010)]
[Senate]
[Pages S2680-S2682]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 RESTORING AMERICAN FINANCIAL STABILITY ACT OF 2010--MOTION TO PROCEED

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of the motion to proceed to S. 3217, which the 
clerk will report.
  The assistant legislative clerk read as follows:

       Motion to proceed to the consideration of S. 3217, a bill 
     to promote the financial stability of the United States by 
     improving accountability and transparency in the financial 
     system, to end ``too big to fail,'' to protect the American 
     taxpayer by ending bailouts, to protect consumers from 
     abusive financial services practices, and for other purposes.

  The PRESIDING OFFICER. Under the previous order, all time until 12:30 
p.m. and from 2:15 to 4:30 p.m. will be equally divided and controlled 
between the two leaders or their designees.
  The Senator from Pennsylvania is recognized.
  Mr. CASEY. Mr. President, I rise today to talk about the business we 
have in front of us here in the Senate, financial regulatory reform. 
But I did want to note that we meet in an hour of real economic trauma 
for many families across America and across the Commonwealth of 
Pennsylvania.
  I know the Presiding Officer sees this as well in his home State of 
New Mexico. We have lots of people out of work. And although there is 
no question in my mind that our economy has begun to recover, and has 
recovered substantially, we still have a way to go. So even as we 
debate financial reform and the intricacies of that, it is important 
that we remember there are still a lot of people out of work.
  The latest numbers nationally are that 15 million people are without 
work across America, and in Pennsylvania it is 582,000 people. I was 
looking at the numbers for the month of March, region by region in 
Pennsylvania. We have 14 labor markets, the numbers of which are 
charted on a monthly basis. Looking at the areas of the State where it 
is above our unemployment rate, we have several parts of Pennsylvania 
where, if it is not 10 percent, it is very close to that. In Erie, PA, 
up in northwestern Pennsylvania, it is a 10-percentage point 
unemployment. I realize for some States they have been in double-digit 
figures for a while, but for places such as Erie, it is 10 percent.
  The Lehigh Valley, on the eastern side of our State, is getting close 
to 10. It is 9.8. My home area of northeastern Pennsylvania is 9.8. 
Johnstown's numbers, an area in southwestern Pennsylvania, which has 
always had higher numbers of unemployment, are getting close to 10. So 
throughout our State the numbers are very high.
  When people in any State see those high numbers and they see the 
joblessness, they see people who have lost their homes or job or both, 
when they see that people have lost their hopes and dreams in this 
process, when they see all that around them, either in their own lives 
or the lives of their families and neighbors, they look to Washington 
to see what we are doing about it. They want to know: How can you 
respond to that? How can you take action to help us?
  I think we have, in some measure, but this Wall Street reform is 
going to be part of it as well. We passed the Recovery bill, which is 
having an impact. We passed the HIRE Act a couple of months ago, and 
that is having an impact, and will have more of an impact as time goes 
by. So there have been a series of jobs bills that have helped 
substantially, and will continue to help, but one of the most urgent 
priorities and questions most Americans have is, who is going to be on 
our side? Who will fight for us when it comes to whether we will 
empower local communities to create jobs and have some security?
  Will we continue to empower Wall Street and the dealmakers, the scam 
artists who have ripped people off to make a profit? And not just a 
profit, what we used to think of as a lot of money--$1 million. We are 
talking about profits we cannot even begin to comprehend. A very small 
number of Americans, a very small number of institutions, such as these 
megabanks, are getting these profits purely out of greed and purely out 
of a willingness to cast aside people's lives and their futures, 
without worry as to whether the actions they take on Wall Street will

[[Page S2681]]

cause people to lose their jobs. That is what people across the 
country, who are not on Wall Street, are asking us to consider.
  Of course, part of that is happening in this debate. But I think it 
has become more apparent to the American people on this question of 
whose side we are on, that there is one side--this side of the aisle--
that is trying not only to get the policy right and get a bill 
prepared, but that we are trying to move that bill forward. One of the 
ways we move a bill forward is to have a debate. Why shouldn't the 
Senate be having a debate, unless there is a question about whether you 
are on one side or the other?
  I think our friends on the other side of the aisle are going to have 
to ask themselves whether they are on the side of the people; if they 
are on the side of communities and small businesses, who are telling us 
to get something done about these Wall Street problems that have caused 
15 million people to lose their job--and in Pennsylvania we have lost 
582,000, as said I before. People are wondering, whose side are you on? 
If you are not on the side of debate and getting the bill passed, then 
you are on the side of Wall Street. It is very simple. I know some of 
the policy gets complicated, but this isn't complicated at all.
  If you are on the side of the megabanks and Wall Street, here is what 
you are on the side of: You are on the side of continuing what has 
happened for a generation now, with our usual and more familiar banking 
system that has been altered in a way so that it has become almost 
unrecognizable to people who used to walk down the street, 
figuratively, but almost literally, or walk or drive not too very far 
in a community and go to a bank. They knew the institution. They knew 
the people who worked there. They knew who was in charge. They dealt 
with a banker in a very personal way.

  A lot of that is gone. If we do the right thing here, I think we can 
bring some of that sense back. But at a minimum, put the brakes on, put 
rules in place to govern what the scam artists on Wall Street do every 
day of the week to make a profit, to rip people off, and to destroy our 
economy and to cause record-high unemployment.
  In that scenario I talked about before, what we used to have was that 
people knew their bankers. They knew each party was invested in the 
other. The banker wanted to make a good loan, obviously. That was part 
of his or her business. But he or she knew that making that loan had to 
be on good terms, in a way that borrower could pay it back. Obviously, 
the borrower--going to the local bank as a local business, to people 
they knew--was invested in their success as well. The borrower wanted 
the bank to do well. It was part of their community. But now we have a 
system where, if you enter into a mortgage transaction, that flies off 
to Wall Street, and then on Wall Street they slice and dice it so a lot 
of wealthy people make record profits, and they laugh--laugh all the 
way to the bank, not worrying about whose life was destroyed back in 
that community.
  These megabanks have prospered in ways we cannot even begin to 
describe or appreciate. We continue, so to speak back home, grappling 
with the results of that, the aftermath of that: high unemployment--
record-high numbers--and a ballooning deficit. Why are we even having a 
debate--trying to have a debate, I should say, if our friends get to 
the point of allowing us to have a debate--why are we having this 
debate? Because Wall Street put the American people into this position.
  We need to reinvent this megabank model, change it substantially, and 
move it toward a system of smaller banks and more competition. I 
thought that is what our friends were for. I thought they were in favor 
of competition.
  Many people know community bankers. The Independent Community Bankers 
of America say there are almost 8,000 community banks operating across 
the country. Even with this problem we have with megabanks and Wall 
Street, those 8,000 community banks are still 97 percent of our banks. 
That is the good news, that that number is high. These institutions, as 
we know, have boards of directors made up of people in the community, 
as it should be, who are invested in the community and the success of 
those borrowers. They are also institutions that are a lot smaller in 
terms of size. In terms of asset size, 91 percent of community banks 
have assets of less than $1 billion. They are nowhere near a big bank 
and nowhere near, obviously, a megabank.
  The largest of our megabanks is Bank of America, which, by September 
2009--and I am sure the number is much higher today, but as of 
September 2009, it had assets of $2.3 trillion. It is hard to describe 
that. That is most of the Federal budget. We have a Federal budget that 
is several trillion. That is a big share, if you equate it to the 
entire Federal budget--not the full budget but certainly a big share of 
it, $2.3 trillion.
  Consumers do not reap huge benefits from these banks. We know that. 
If anything, they are harmed by the unchecked power of these banks.
  As I said last week, three of our largest megabanks have cut 
participation in a key Small Business Administration lending program by 
between 85 percent and 90 percent from one year to the next. Just at 
the time we have a bad economy--that they caused, in large measure--and 
just at the time we need help for small businesses, these same big 
banks that got the benefit of all of that wealth and all of that scam 
artistry and fraud, in some cases, are not helping us create jobs in 
small business. To say that is perverted and disturbing does not even 
begin to capture the sentiment. But I will not dwell on that.
  Then we get to the question of fees, bank fees. We have heard a lot 
about these. We all have experienced it. Fees for checking accounts and 
other services are lower at community banks than at the megabanks, the 
big institutions. According to research by the Federal Reserve Bank of 
Dallas, in one quarter last year, the four largest megabanks raised 
fees related to deposits by an average of 8 percent. In the same 
period, community banks lowered their fees by an average of 12 percent. 
So in one quarter last year, the four big banks raised their fees by an 
average of 8 percent and the smaller community banks lowered those same 
fees. That is another reason community banks make a lot more sense for 
most Americans.
  The reason for the big difference in fees charged by the smaller 
community banks versus the big mega Wall Street banks is not just that 
they want to try to be consumer or customer friendly, it is because 
there is competition injected into the system of community banks. 
Economist Simon Johnson said:

       With low interest rates, the [big] banks could raise money 
     from depositors virtually for free; they could borrow cheaply 
     from each other; they could borrow cheaply at the Fed's 
     discount window; they could sell bonds at low interest rates 
     because of FDIC debt guarantees; they could swap their asset-
     backed securities for cash with the Fed; they could sell 
     their mortgages to Fannie and Freddie . . . and so on.

  It is like dot, dot, dot. We have heard all about this. They had all 
the opportunities in the world. Their plate was full: I am a big 
megabank, and I need a little extra help here to make some more 
millions for this guy or that guy or to make billions for the bank or 
for individual bankers. I need a little help, so I will go to the Fed 
discount window. That was one option. I just charge a little more over 
here.
  They had all these options to make more money--because of the 
generosity of the Federal Government, by the way, in large measure. The 
Federal Government helps a lot of institutions every day of the week, 
including banks. The same folks who complain about government want 
bankers to get all the help in the world from government.
  The big banks had all these options at their disposal if they got 
into a period where they needed a little extra help. What about the 
borrower who got into a bad mortgage because some local scam artist or 
maybe a scam artist on Wall Street put them into a mortgage they 
couldn't afford? What happens when they can't pay their mortgage? What 
happens when they lose their job and then can't pay the mortgage and 
lose health care? Do they have a menu, a list, a full plate, or a full 
table of options? No. They have very few options. For a lot of 
Americans who lost their job because of Wall Street or who lost their 
house because of what Wall Street was doing or lost their livelihood 
because of some fraud

[[Page S2682]]

on Wall Street or some scam artist on Wall Street, they have very few 
options. But the big banks have lots of options.
  This is not just about what is fair and what is right and making sure 
we have competition in our banking system. It is more than that. It is 
about a gross disparity of power residing on Wall Street and injuring 
the ability of people just to make ends meet, just to have a job, or 
just to be able to borrow money in a way that will allow them to 
purchase a house or do something else in their lives.
  What this means is, despite offering better and cheaper consumer 
products, our community banks at the local level are struggling to get 
by, while their big brothers, their megabank brothers are on Wall 
Street making more money than we can even compute or comprehend. The 
community banks, which used to be the foundation of our system and the 
place where people could go to borrow, are having trouble, are 
struggling to get by.
  One of the ways to confront this is not just to pass a bill that 
sounds good here and there and looks like reform but to have a final 
product after debate. Again, I hope our friends will get to the point 
of debating this bill. It makes sense that if something is very 
important and the American people say do something about it, you ought 
to debate it and pass it--just a little free advice to the other side.
  But we have to do more than just pass something; we have to pass 
something that works. We have to pass something that will be meaningful 
in the lives of real people. If we allow these megabanks to retain 
their power and their influence and their wealth, to the detriment of 
working families, small businesses, and our economy in general--if we 
allow them to have that power, it will be nice to pass a bill, but we 
will not be getting to the root cause or one of the root causes of our 
problem.

  That is why I and Senator Kaufman, Senator Brown, and others are 
supporting the SAFE Banking Act. I thank those two Senators for their 
work on this over a long period of time. This will be an amendment to 
the act we are working on, the Restoring Financial Stability Act of 
2010. This part of it, this will be a new element to it if we can get 
the amendment agreed to--I think we can--to the SAFE Banking Act. This 
is what it will do--basically, four things. I will go through them 
quickly. First of all, impose a 10-percent cap on any bank share of the 
total deposits of government-backed depository institutions, so placing 
a cap on that. Place a 2-percent-of-GDP limit on all nondeposit 
liabilities, so limiting and circumscribing what these megabanks can 
do. Third, place a 3-percent-of-GDP limit on all nondeposit 
liabilities, including any off-balance-sheet provisions as well as any 
systemically significant nonbank financial institution. Fourth, we 
would put into law a 6-percent leverage limit for bank holding 
companies and selected nonbank financial institutions.
  So instead of leaving size limitations in the hands of regulators--
and I know regulators work hard and they always try to do the right 
thing in almost every instance--this amendment would at long last put 
some clearly defined rules in place about the size and the leverage of 
financial institutions. We can't just say: OK, megabank, you can do 
whatever you want, you can get bigger and do whatever you want, and 
after the fact we will have some regulators try to mitigate the damage 
you are causing or try to rein you in a little bit. Sometimes that 
works, but our recent history tells us it is not going to work the way 
it should. So we need some clearly defined rules that apply to these 
megabanks and would only impact a handful of institutions, a very small 
number of institutions--these large megabanks that are at the heart of 
the problem.
  The alternative to placing these limitations on the big banks, on 
their size and the leverage they have, is a continuation of the system 
we have right now, the so-called too-big-to-fail system. So a bank gets 
so big and has so many tentacles out into our economy and across the 
world that we say: Gosh, if they are in trouble, we can't let them go. 
They are too big and have too much of an impact if they fail. We have 
to help them.
  In addition to passing a law that ends bailouts, we also have to end 
this too big to fail. It is kind of a straitjacket our system has been 
in: it does not allow us much freedom, but it gives a soft landing to a 
lot of these megabanks that really should be cut down in size. We know 
we need to change that.
  I commend the efforts to increase the ability of regulators to 
oversee and enforce discipline, but candidly--and I think our history 
shows this--it is not enough. It is not enough to just give regulators 
more power or more resources. We need to pull apart or deconstruct in 
some measure these megabanks because they are too big, too powerful, 
and they have caused too much damage. Having a regulatory system in 
place will not be enough. That is why we need the SAFE Banking Act.
  We also need to take other steps to address this root cause as well 
as other root causes. We know community banks are banks that are better 
for families and for small businesses--the two parts of our society, 
the two parts of our economy, our families and our small businesses. 
They are saying to us: Do something that is real. Do something that not 
only makes sense in terms of policy but will help at the local level in 
terms of improving our economy.
  So more banks mean more competition, and they also mean more 
customer-friendly products. It also means more loans for small 
businesses that get them from community banks and will continue to if 
we do the right thing. It means a retail banking system that more 
closely resembles our Nation's community banks than the Wall Street 
model that has indeed failed us--and that is an understatement--and 
failed us significantly.
  So that is why I encourage my colleagues on both sides of the aisle 
to support the SAFE Act amendment to our financial reform legislation. 
It is about that we took a step that has real meaning and real impact 
on one of the biggest problems we have in America, where you have 
megabanks that are doing quite well, and if we allow them to continue 
to do well, they will have a few individuals in a few institutions 
across America who will benefit from that.
  But most of the rest of us, most people, especially those out of 
work, most small businesses, will not benefit from these megabanks. We 
need to change this, and we need to do it in the course of this debate.
  I would once again say to my colleagues, if we debate it, it will 
tell us very clearly whose side we are on. If you continue to hold up 
debate, I think the American people know whose side you are on. It is 
not their side.
  I ask unanimous consent that any time in quorum calls on the motion 
to proceed to S. 3217 during today's session be divided equally between 
both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CASEY. 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. BROWN of Ohio. Mr. President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                  Unanimous-Consent Agreement--S. 3217

  Mr. BROWN of Ohio. Mr. President, I ask unanimous consent that any 
time spent in quorum calls on the motion to proceed to S. 3217 during 
today's session be divided equally between both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWN of Ohio. I thank the Chair.

                          ____________________