[Congressional Record Volume 156, Number 60 (Tuesday, April 27, 2010)]
[Senate]
[Pages S2682-S2707]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




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

  The PRESIDING OFFICER. The Senator from New Hampshire.

[[Page S2683]]

  Mr. GREGG. Mr. President, I wanted to rise to speak further about 
this financial reform bill. Yesterday, I talked at some length about 
the problems I saw with the bill relative to section 106 in the 
derivatives language. Today, I want to talk about things that are not 
in the bill that should have been in the bill.
  The reason I am rising to talk about this bill, which is a very 
complex bill, and intricate, is because we on our side feel very 
strongly that we should be involved in the negotiations of a better 
bill. We are not asking that there be no bill; just the opposite. We 
are saying there is a lot in this bill that just plain needs to be 
improved.
  For example, in the area of too big to fail, we have to make 
absolutely sure, if a company is large and it gets into trouble and it 
overextends itself, that it fails; that the American taxpayer doesn't 
come in and support that company in the financial sector, or anybody 
else, as a matter of fact, such as the automobile sector. So that 
language in the bill needs to be tightened up. It doesn't accomplish 
that as effectively as we think it should.
  The derivatives language has some serious problems. I talked 
yesterday about one of them, but there are a whole series of problems. 
The purpose of the derivatives part of this bill should be, No. 1, to 
reduce systemic risk and make sure that, prospectively, we do 
everything we can to make these instruments--which are critical to the 
ability of the economy to be liquid and produce credit--are as safe and 
as sound as possible, while at the same time making sure we do not 
overreact and create a situation where this market--which is so crucial 
to manufacturers across this country and especially to Main Street, 
which basically benefits from the credit generated by derivatives--
doesn't artificially contract due to excessive regulation, or that it 
doesn't go overseas. So we lose the fact that we are today at the 
center of capital and credit. We want to be the best place in the world 
to create capital and to create credit, and we should have a bill that 
accomplishes that.
  I have been outlining concerns I have in the derivatives area--
yesterday I talked about section 106--and I could highlight a number of 
other areas. For example, the immediacy with which derivatives are 
pushed from a clearinghouse into an exchange situation, which I don't 
think will work under this bill. I think, basically, it would contract 
the market dramatically.
  But what I want to speak to specifically are the things left out of 
this bill that should be addressed in order to make sure we don't have 
happen again what happened in September of 2008 and on into the rest of 
that year, which was that tremendous trauma that our Nation went 
through and is just now coming out of--and for some people it is still 
a trauma because they don't have a job, which is the worst trauma of 
all for somebody. That trauma was caused by some very distinct and 
specific events that occurred, and a lot of them were the 
responsibility of the Congress.
  If we want to look for who is the cause of the downturn and the 
crisis in the subprime market, we can look at ourselves in the mirror 
and say: We are, to a large degree. Easy money was also a problem. But 
I think right at the center of the problem was the collapse of 
underwriting standards in this country.
  It used to be, up through the 1990s, you couldn't get a loan for much 
more than 85 percent of the value of the home. You had to put some 
money down, and you had to be able to show to the person who was 
lending you the money--the mortgagor--that you could pay the money 
back. Well, we went into this huge expansion in lending which was 
driven in large part by two things: One, the monetary policy of the 
Fed, which basically allowed for easy money to flow out there very 
quickly into the market; and, secondly, the Congress, specifically 
insisting everybody should be able to have a home whether they could 
afford it or not or whether the home was properly valued. Those two 
factors lead to an explosion in home ownership, equally leading to an 
explosion in mortgages which, first, did not meet the value of the 
underlying asset and, in fact, in some instances were actually valued 
at more than the asset even at the time they were issued.
  Almost all these subprime mortgages presumed there would always be an 
appreciation of real estate prices, so they could loan at 100 percent 
and at some point you would be down to 85 percent or 90 percent of the 
value. That didn't happen, of course. The value went down, and so the 
mortgages went underwater in terms of their basic value. Secondly, the 
monies were lent to individuals who, because of the way they structured 
these loans for the first 2 or 3 years, could pay the interest or the 
mortgage payment, but as soon as these loans reset to a realistic 
interest rate, they couldn't pay it. Everybody knew it when they did 
the loan.
  Now, why did people do that? Why was there this collapse in 
underwriting standards? Well, there were a lot of reasons. I happen to 
think probably the primary one was that we separated the owner of the 
loan from the actual loanmaking process. Therefore, the people who were 
originating the loans weren't interested in the underlying security. 
They were not even interested in whether the person could pay it back. 
They were only interested in the fees they were generating. So we had a 
collapse in the underwriting standards. We had an inverted pyramid, 
with this person down here borrowing money from this entity over here 
on a piece of property which wasn't worth the value at which money was 
being borrowed. The person borrowing the money couldn't pay it back, 
but nobody cared because that loan was then taken and sold and 
securitized and subdivided and syndicated and sometimes put into a 
synthetic instrument, or had a synthetic instrument mirroring it. So we 
had this loan down here, and this massive structure from the churning 
of that loan on top of it, and the loan wouldn't support all that 
structure over it. So it all collapsed on us in late 2008.
  This bill, however, doesn't address that issue of underwriting 
standards in any effective way. Senator Isakson and I have spoken about 
this on the Senate floor a number of times, and we are going to offer 
what we hope is a bipartisan proposal. But it will improve the bill 
because it will basically be taking us back to the underwriting 
standards that used to be in place in the 1990s, not only for the 
origination of the loan but also for the securitizer of the loan. This 
is critical. If we are going to fix this problem--and the purpose of 
the bill should be to fix the problem that created the crisis and make 
sure it doesn't occur again--if that is the real goal, then there 
should be underwriting standards.
  The second issue in this bill that is not addressed is Fannie and 
Freddie. These two entities have trillions of dollars of outstanding 
liability, outstanding notes, and it is estimated that the taxpayer has 
a $400 billion to $500 billion--that is $\1/2\ trillion--of liability 
because a lot of these notes aren't ever going to be paid back. Yet 
Fannie and Freddie are still operating almost in a business-as-usual 
mindset, pushing money out the door, buying up bonds and notes and 
mortgages, and doing it almost as if there is no end to the taxpayers' 
pocketbook.
  In fact, we don't even put Fannie and Freddie on the Federal balance 
sheet. We know, since we own 80 percent of those companies that the 
taxpayer is on the hook for this debt--this $400 billion to $500 
billion of debt. This bill acts as if it doesn't even exist, and yet 
that was one of the primary drivers of the economic collapse of 2008, 
from which we are all suffering and have suffered. So this bill should 
have at least an initial step into the arena of how we are going to 
handle this issue of straightening out the GSEs, as they are called.
  The first step is that we ought to bring their liabilities onto our 
books so that the taxpayers aren't being lied to; so that we are 
telling the truth to the American people as to how much it will cost to 
straighten this out and we have started thinking about how we are going 
to straighten it out. Yet this bill doesn't do that. That is a place 
where we, as Republicans--and I think a lot of other people--would like 
to see this bill improved, and that is why we are opposing going 
forward with the bill in its present form until we are allowed to 
participate in the negotiations on improving it. That is what this is 
all about.

  The third issue, of course, is the credit rating agencies. We know 
without

[[Page S2684]]

any question that the credit rating agencies failed miserably, and 
people relied on their information, their credit rating of varied 
securities. That is one of the primary reasons people were willing to 
buy a lot of the instruments that were floating around. They believed, 
generally, when the credit rating agency said it was a triple-A rated 
security, that they had done their due diligence and it was a triple-A 
rated security. It turned out it wasn't, in many instances.
  As a result, it was sloppy underwriting again, by people or financial 
houses that were willing to buy these securitized products, the CDOs 
and various other products. They didn't do the heavy lifting of 
everyone going and looking at the actual assets which were backing up 
these products. They relied on the rating agencies, and the rating 
agencies didn't do their job either.
  So we have this serious issue with rating agencies that needs to be 
addressed. It is not effectively addressed in this bill. But we cannot 
correct the problems which created the 2008 crisis and caused this very 
severe recession and put this country through this tremendous trauma 
unless we address that issue, along with underwriting standards, GSEs, 
and credit rating agencies. So Republicans are saying: Let's look at 
that and try to fix that. That is why we don't want to go forward until 
we are brought to the table and allowed to address that issue.
  Another question: They have filled this bill with all sorts of 
extraneous things that had absolutely nothing to do--absolutely nothing 
to do--with the housing crisis and the economic meltdown that followed. 
A lot of corporate governance rules that have been kicking around this 
city for a long time and that are the agenda of certain groups in this 
city that have a political agenda dealing with wanting to have control 
over corporations--a lot of it influenced by organized labor--have been 
thrown into this bill willy-nilly. They had nothing, and they have 
nothing, to do with the overarching issues that affect protecting the 
market and making and giving us a sound financial system. Yet they are 
in this bill. They shouldn't be in this bill or, if they are going to 
be in the bill, they should be significantly adjusted.
  So these are some of our concerns. People ask: Well, why are the 
Republicans stopping this bill at this point? Because we want a better 
bill, and we have specific proposals for accomplishing that. We want 
language which does accomplish too big to fail and ends that policy. We 
want language which makes the derivative market not only safe and not a 
systemic risk but a sound and strong force for credit in this country. 
We want language which addresses better underwriting standards. We want 
language which addresses the issues of the GSEs. And we want language 
which addresses the failures of the credit rating agencies. We don't 
want a lot of extraneous language which is simply brought along because 
the train was leaving the station and it was thrown on it, and which, 
in many instances, in my mind at least, undermines rather than becomes 
a constructive force for a better financial system in this country.
  So those are our concerns, and that is why we are continuing to 
insist that we be allowed to be at the table to negotiate these very 
critical issues on this very complicated bill.
  I thank the Senator from North Dakota for showing me the courtesy of 
allowing me to go first, and I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I ask unanimous consent to speak as in 
morning business for 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, change is very hard in this country and in 
this Chamber. Change is always hard. I was thinking, as we have been 
blocked from proceeding on the Wall Street reform bill, which is a very 
important issue, about what probably was the case on another big change 
at the turn of the last century, when Upton Sinclair wrote about the 
meatpacking houses in this country.
  He wrote a book called ``The Jungle'' and described his visit to the 
meatpacking houses in Chicago and the unbelievably unsanitary 
conditions in those meatpacking houses--rats all around those 
meatpacking houses. But that was all right because they poisoned the 
rats. They took loaves of bread and soaked them in poison, laid them 
around and then there were dead rats and all the other things that 
existed in those meatpacking houses that went down the same chute, and 
out the back side came meat right to the grocery store and to the 
American people, an unsuspecting public--the most unsanitary conditions 
in the world.
  As a result of publishing the book, ``The Jungle,'' there was a 
public outcry demanding that something be done. The Congress finally, 
at last, at long last, beat back the opposition of a very strong 
meatpacking industry and passed safe food laws, creating the Food and 
Drug Administration. Change is so very hard. But people knew then 
something had to be done about that, and the American people know now 
something has to be done about this.
  It is interesting to hear people come to the floor of the Senate and 
say: Well, we are blocking a motion to proceed to go to a Wall Street 
reform bill because we want to make it better. Does anybody really 
believe that? They want to weaken it. They do not even want it in the 
first place, to the extent they can avoid it. That is why they didn't 
do anything in the committee. There were negotiations for weeks in the 
Banking Committee. I was not there, but I am told by all involved there 
were negotiations for weeks in the Banking Committee. Then they had a 
markup, and the Republicans didn't offer one suggestion.
  If they have a whole backpack full of suggestions on how to improve 
the bill, why was there not one amendment offered in the committee? So 
now we have the spectacle of the desperate need for reforming Wall 
Street finance in this country and the entire Republican caucus in the 
Senate votes no--every single one of them.
  Well, let me describe what we are facing, if I might. This economic 
collapse is not a stranger to most Americans. Somewhere around 15 or 16 
million got out of bed this morning jobless, looking for work and can't 
find work. They understand the cost of this economic collapse.
  Here is what it has cost the taxpayer. By the way, we don't have all 
these numbers. This was from an enterprising reporter at Bloomberg who 
did good work. But the Federal Reserve bailout commitment, $7.8 
trillion; FDIC, $2 trillion; Treasury, $2.7 trillion; HUD, $300 
billion--that is $12.8 trillion, think about that, the amount of money 
lent, spent or committed on behalf of the American taxpayer to try to 
get out of this deep hole.
  Even as we found ourselves in this deep hole--here, by the way, is 
what has happened to the biggest financial institutions in the country. 
Going back 10 years ago, the Congress decided--in my judgment without 
any wisdom at all because I voted against it--to say let's homogenize 
all our big financial institutions. Congress said let's put them all in 
one big basket, investment banks, FDIC-insured banks, real estate, 
securities, throw them all into one big old holding company and things 
will be great. It will allow us to compete with the Europeans and 
others much better.
  They created these giant houses of cards. This is what happened the 
largest financial institutions in the country got bigger and bigger. In 
fact, that is what has happened even during this collapse. Even in the 
greatest recession since the Great Depression they have continued to 
grow.
  Let me again describe some of the origin of this, this cesspool of 
greed that has existed in recent years, resulting in one person--I have 
talked about him in the past--making $3.6 billion in just one year, 
betting against America, selling short.
  By the way, if you are wondering, that is $300 million a month or, if 
this person's spouse asks: How are we doing, sweetheart, he can say we 
made $10 million a day every single day.
  This is on the Internet right now and this is the origin of all this 
greed. It goes up from here, to a security, to a hedge fund, to an 
investment bank, and they are all making obscene profits right on up 
through the collapse. By the way, they are doing it again today. This 
is on the Internet. This is a company called EasyLoanForYou:

       Get the loan you seek fast and hassle-free. Our lenders 
     will approve your loan immediately regardless of your credit 
     score or history.


[[Page S2685]]


  You need a loan? It doesn't matter how bad your credit is. Here is 
one on the Internet. SpeedyBadCreditLoans. It says: Bad credit, no 
problem. No credit, no problem.
  How about bankruptcy? That is not a problem either. Come to us, ``Get 
a guaranteed bad credit personal loan today.''
  Yes, this is on the Internet today. Bad Credit Personal Loans, ``a 
Christian Faith Based Service.''
  Previous bankruptcy? That is all right. No credit, bad credit, recent 
divorce, need more money? No problem.
  This is the origin of what was going on in this country and it is 
still going on. By the way, you don't have to make interest payments or 
principal payments for the first 12 months, we will make them for you, 
and you don't have to document your income to us.
  We wallpapered this country with this sort of nonsense, fundamentally 
ignorant banking practices, and then turned them into securities and 
sold them up, up, up the chain. The fact is, everybody was making big 
fees. The rating companies were with their pom-poms, approving 
everything with AAA. Meanwhile, they were creating an entire house of 
cards. Unbelievable.
  Today, there is a hearing going on and one of the largest investment 
banks is under siege at that hearing because our friend, Senator Carl 
Levin, actually has the goods. He has the memos, the internal memos. He 
subpoenaed them. It shows that investment banking company is making 
record profits now but actually was betting against its customers, was 
actually selling short, betting against the American economy. So the 
question is, When all that was going sour and the American taxpayers 
were told these companies that are doing that are too big to fail, that 
we have a moral hazard here, we have systemic risk with grave 
consequences to this economy and therefore the American taxpayer has to 
be told you bail them out. The Federal Reserve, on behalf of the 
American taxpayer, decides we are going to provide unlimited funding 
and unlimited money and a new loan window for the first time in history 
to investment banks. Then we go to the Fed and say: How much did you 
actually put out there? And they say: You have no business knowing. We 
don't intend to tell you, and we don't intend to tell the American 
people. That is where we find ourselves right now. It is unbelievable.
  There is an old country saying: The water is not going to clear up 
until you get the hogs out of the creek.
  This issue we are trying to get to the floor of the Senate on a 
motion to proceed so we can actually do Wall Street reform is all about 
getting the hogs out of the creek. But we will vote again today at 
4:30--I believe it is 4:30. We voted yesterday. We will vote, I 
suppose, tomorrow. Every single Republican has said we don't intend to 
even allow you to proceed because we want to strengthen the bill. 
Really? When two of the top Republicans go to Wall Street about 19 days 
ago to meet with two dozen Wall Street executives in a closed session 
and then come back and say we are going to stop Wall Street reform 
because we want to strengthen it--I don't think so. It doesn't sound to 
me like that is the case.
  If you want to strengthen it, I say to my colleagues--you say it is 
not strong enough in too big to fail--I am going to be offering an 
amendment on ending too big to fail. But you can't offer an amendment 
unless you get the motion to proceed to get the bill on the floor. But 
I am wondering how many Republican votes I will get for an amendment 
that says if you are too big to fail, if you pose a moral hazard, 
systemic risk with grave consequences to our economy, it seems to me we 
should back you away through divestitures to a point where you are not 
causing that moral hazard, if that is the case.
  Those who say they are trying to strengthen this bill--and I doubt 
it--I wonder if they will join me on that.
  They come to the floor and say: We haven't had a chance to negotiate 
or discuss this, when, in fact, there were negotiations for months in 
the Senate Banking Committee, and before that there were hearings that 
went on for a year in the Senate Banking Committee. When they finally 
got to the point of writing the bill, the Republicans decided we don't 
have one suggestion for an amendment, not one, not any. Now they are 
saying: We are going to take a stand. We are not going to even allow 
the Senate to consider Wall Street reform because we think it needs to 
be improved. Oh, really? I think they think it is too strong. I think 
they have a lot of friends who want them to weaken it. That is my 
belief.
  The question is, Will we be able to see, at some point, perhaps at 
long last, the other side stop making excuses and allow us to begin 
legislating? Is there any American who has suffered the consequences of 
this deep decline in our economy, the deepest decline since the Great 
Depression--is there any American who says: You know what. Hands off 
the big investment banks. Hands off the big finance companies. Yes, we 
know they were trading things we don't understand. They were trading 
things such as credit default swaps that were naked.
  I asked the other day: How did that get naked? A credit default swap 
that is naked means it has no insurable interest in any case on either 
side. It is not investing, it is simply waging. I said before: Why 
pretend? Why not put a keno pit or a craps table in the lobby of those 
institutions because all it is, is making wagers or bets.
  We have a couple of very large communities and many other areas of 
America where you can do that, Las Vegas and Atlantic City. But in the 
last decade, and especially with the growth of these unbelievably 
exotic instruments, we have seen that happening increasingly in the 
lobbies of some of America's biggest financial institutions because 
they have decided, if they bet and lose, at least the record is the 
American taxpayer going to be standing behind them to pick up the tab.
  No more. The legislation brought to us by Senator Dodd and Senator 
Lincoln dealing with financial reform and derivatives is not perfect. 
Senator Dodd is on the floor. He would be the first to say that. But 
none of us can offer any amendments unless we have a motion to proceed 
to get to the bill. I think the work done by Senator Dodd and 
the Banking Committee is work that needs to be commended. It stretches 
my imagination, and I think others', for the excuse for voting against 
the motion to proceed to allow us to get to the floor on this and 
actually have a debate and offer amendments, to allow as an excuse that 
the other side truly wants to strengthen this.

  You know what. We are going to get to the bill at some point, 
somehow, over the opposition of a determined minority that wants to 
protect Wall Street's interests here. Even as we are holding these 
hearings today and discovering some pretty pathetic behavior on behalf 
of some big economic players, we are going to get to this bill. When we 
do, we will see who is on the floor of the Senate on the side of the 
American people. We will see who truly wants Wall Street reform that 
does the right thing.
  There are many things we need to do. Let me just say I mentioned too 
big to fail--I am going to introduce an amendment that bans naked 
credit default swaps that have no insurable interest. Again, that is 
betting, not investing. So there are a lot of things for us to do, but 
we cannot even begin to do that until we get a motion to proceed, and 
we would expect, perhaps even by accident, we would get one vote or 
perhaps two votes on the other side. We will see. Maybe this afternoon 
will be the time.
  The American people deserve much better. As I said when I started, I 
know that change is hard and big change is exceedingly hard. But this 
is a big issue. This isn't some small potatoes. This is trillions and 
trillions of dollars. The American people lost $15 trillion in wealth 
when the economy hit rock bottom. So they require us, they demand of 
this Congress to take action--not to take action just for the sake of 
having done something but to take action for the sake of fixing this, 
to make sure this sort of nonsense and behavior cannot ever happen 
again in a way that threatens this country's economy.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. SANDERS. Mr. President, let me begin by commending my friend from 
North Dakota, expressing my agreement of virtually everything he said. 
I

[[Page S2686]]

also commend Senator Dodd for the very hard work he has done in 
bringing forth a very strong piece of Wall Street reform legislation 
which is long overdue.
  Let me also say that my good friend and neighbor from New Hampshire, 
Senator Gregg, took to the floor yesterday to express his outrage that 
10 Senators on the Budget Committee voted for an amendment I offered--
which lost, by the way, 12 to 10--to begin the process of breaking up 
too-big-to-fail financial institutions that pose a catastrophic risk to 
our economy. Frankly, after listening to Senator Gregg's statement, I 
wonder, with all due sincerity, what planet he is living on. 
Apparently, he has missed the fact that due to the greed, the 
recklessness, and the illegal behavior of Wall Street, the American 
people continue to suffer through the worst economic crisis since the 
Great Depression. The damage done by Wall Street in bringing this 
economy to a grinding halt is incomprehensible--millions of people 
having lost jobs, their homes, their savings, young people trying to go 
out into the job market to begin a career in their lives unable to do 
that because of the greed of Wall Street. The fact that just yesterday 
we could not get one Republican vote to proceed to begin the debate on 
how we finally reform Wall Street is beyond my comprehension. This 
debate needs to be going forward, and we need to pass strong--underline 
``strong''--legislation that makes sure that what happened a year and a 
half ago never, ever happens again.
  I also find it interesting that we have some of our conservative 
Republican Senators, such as Senator Gregg, who day after day tell us 
how much they dislike big government--they don't like Social Security, 
don't like Medicare, don't like big government--but apparently have no 
problem with huge financial institutions which control a very 
significant part of our economy. In the last 15 years, the six largest 
banks in this country have more than tripled in size and now have 
combined assets equal to 63 percent of the gross domestic product. Let 
me say that again. The six largest banks in this country now have 
combined assets equal to 63 percent of this Nation's GDP.
  I ask all my conservative friends who come down saying: Oh, 
government is too big, government is awful, what about banks that have 
trillions of dollars in assets? Why aren't we talking about that 
reality? The truth is that today what we are seeing with these huge 
financial institutions is not only the ongoing problem of what happens 
when they fail and whether the taxpayers will be having to bail them 
out again, but when you have that kind of concentration of ownership, 
you have a very dangerous situation.
  The four largest banks in this country, four banks, issue two-thirds 
of the credit cards. What do we think about that? Everyone in the world 
has a credit card. Four banks issue two-thirds of that.
  How does that tally with the rhetoric I hear from my conservative 
friends about a competitive economy? Competition is what drives prices 
down.
  Well, maybe one of the reasons millions of Americans today are paying 
25 or 30-percent interest rates on their credit cards is you have got 
four banks that issue two-thirds of them.
  The four largest banks in this country provide half of the mortgages 
in America. I think that is a real problem. The four largest banks 
control nearly 40 percent of all bank deposits in this country.
  Over 100 years ago, we had some good Republicans, William Howard Taft 
and Teddy Roosevelt. When they saw the concentration of ownership and 
wealth that existed in their time, they, as good Republicans, said: 
Let's start breaking it up.
  I think what they did over 100 years ago is a lesson we should learn 
today. If a financial institution is too big to fail, that financial 
institution is too big to exist and the time is now to start breaking 
it up.
  This idea of starting to break up large financial institutions is not 
just an idea that Bernie Sanders has, it is not just an idea, an 
amendment offered by Senators Brown of Ohio and Kaufman are going to 
speak to. It is an idea that is spreading all over this country.
  I would point out to you that the presidents of three regional 
Federal Reserve Banks also support the need to start breaking up large 
financial institutions. These are: James Bullard, who is the president 
of the Fed in St. Louis; Thomas Toenig, the president of the Fed in 
Kansas City; and Richard Fisher, the president of the Fed in Dallas, 
TX. They are all in agreement that we have got to start breaking up 
these large financial institutions.
  Senator Dorgan made this point, and I want to make it again; that is, 
that during the bailout, the Fed decided it was going to lend out 
trillions of dollars in zero or almost zero-interest loans. When 
Chairman Bernanke came before the Budget Committee, on which I serve, I 
asked him what I thought was a pretty simple and straightforward 
question: Mr. Chairman, can you tell me and the American people who 
received these loans?
  I mean, we are talking about trillions of dollars in loans. I do not 
think it is too much to ask who received the loans and what the terms 
were of those loans. Well, Mr. Bernanke disagreed. I offered an 
amendment that day that begins to bring transparency to the Fed. That 
amendment is called the Federal Reserve Sunshine Act. I am happy to say 
it has 32 cosponsors. Interestingly enough, 22 of them are Republicans, 
10 are Democrats. They are: Senators Barrasso, Bennett of Utah, Boxer, 
Brownback, Burr, Cardin, Chambliss, Coburn, Cochran, Cornyn, Crapo, 
DeMint, Dorgan, Feingold, Graham, Grassley, Harkin, Hatch, Hutchison, 
Inhofe, Isakson, Landrieu, Leahy, Lincoln, McCain, Murkowski, Risch, 
Thune, Vitter, Webb, Wicker, and Wyden.
  That is quite a cross section of political views in favor of bringing 
transparency to the Fed. What my amendment will do--and we intend to 
bring that amendment to the floor during this debate--is, in fact, it 
would require the Federal Reserve to release all of the details about 
the more than $2 trillion in zero-interest loans the Fed provided to 
large financial institutions. Also it would call for a GAO audit of the 
Fed.
  The bottom line there is it is imperative that the GAO conduct an 
independent and comprehensive audit of the Federal Reserve within 1 
year. That is what our amendment does. It requires the Federal Reserve 
to disclose the names of the financial institutions that received over 
$2 trillion in virtually zero-interest loans since the start of the 
recession.
  This is an amendment that I think millions of people want. What is 
interesting about it is if you talk about bipartisanship or 
tripartisanship, this amendment, both in the House and the Senate, 
brings together some of the more conservative members and some of the 
more progressive members. In the House, this language is supported by 
my former colleague Ron Paul. I am introducing it here in the Senate. 
That, my friends, is a very significant disparity in political views. 
But we do agree that the Fed needs transparency.
  Let me conclude by simply saying this: The time is now for the Senate 
to begin to deal with the greed, the recklessness, and the illegal 
behavior on Wall Street. The American people have demanded action since 
this crisis began, and we owe it to them to deliver. As we proceed with 
Senator Dodd's piece of legislation, which I think has many very 
positive attributes, I think our goal is as we debate it, to make it 
even stronger.
  In that regard, as I mentioned, I will be bringing forward an 
amendment dealing with Fed transparency. I will be bringing forth an 
amendment which will put a cap on the interest rates that banks can 
charge. I think it is not acceptable, not moral, that banks are now 
charging 25, 30-percent interest rates. We are going to have a cap 
similar to what exists for credit unions.
  As I mentioned also, we are going to have legislation, an amendment 
dealing with Fed transparency. So my hope is our Republican friends 
will join us in beginning this debate and, in fact, going forward so 
that finally, finally, we can hold Wall Street accountable and bring 
forth the legislation to make sure that never do we see a repetition of 
the disaster we saw a year and a half ago.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Kansas.

[[Page S2687]]

  Mr. ROBERTS. Mr. President, I understand I have 10 minutes in which 
to make my remarks. Is that correct?
  The PRESIDING OFFICER. The Senator can be recognized for 10 minutes.
  Mr. ROBERTS. I appreciate that.
  Over the past 2 years, Americans have seen an unprecedented 
government reach into the private sector, some of which may be 
necessary. They are angry about it, as they should be.
  For many, the overreach of government began with the bank bailout or 
TARP. The $700 billion TARP that I opposed was passed in the fall of 
2008 when every day we awoke to see a new financial crisis headlining 
the front page.
  TARP was initially intended to purchase troubled assets and get them 
off the books of the troubled banks. Yet, over time, the program 
evolved into a fund--some would call it a slush fund--to include 
bailouts for the auto industry and the housing market. The term 
``bailout'' will never be the same again.
  I think the American people are right to demand that they are never 
again put on the hook to bail out a failed company. They are right to 
demand that those who got us into the financial mess not be allowed to 
do so again. Unfortunately, the financial regulatory reform bill that 
the Senate is set to take up and debate does not achieve these goals.
  I know both sides are now involved in discussions, and the next 48 
hours are going to be absolutely crucial to determine if, in fact, we 
can get a bipartisan bill. But with any business, if it is mismanaged, 
if its leaders make poor decisions, the business should be allowed to 
fail. Success and failure have, until recently, been the cornerstone of 
what has made our economy one of the strongest in the world. The 
bailouts of financial and auto companies have turned that philosophy on 
its head. I think it is a dangerous road to go down. We need to set a 
new course. It is what the American people want.

  This bill does not end bailouts. Instead, it allows some of the 
largest financial institutions to contribute to a bailout fund, to be 
used if a company were again to fail.
  Well, this does nothing to deter companies from taking risks that 
could lead to failure and the need for a future bailout. In fact, it 
sends a signal that the government will bail out institutions, just as 
it bailed out Fannie Mae and Freddie Mac, the two troubled mortgage 
giants that have received $125.9 billion, might as well make it $126 
billion, in direct government funding and now have an unlimited U.S. 
credit line.
  Yet there is no mention, no mention, of Fannie Mae or Freddie Mac in 
this bill. Failure to deal with Fannie Mae and Freddie Mac keeps 
taxpayers on the hook for more bailouts of these entities.
  The bill also allows the FDIC and the Federal Reserve to come to the 
aid of failing financial firms, which means that financial markets will 
be fully aware of the government's authority and inclination to prop up 
large failed financial institutions.
  The very existence of this authority undercuts the claim that the 
government will actually ever wind up with such firms. Those firms, 
along with their creditors and shareholders, will take more risks and, 
yes, put the financial system into even greater danger.
  There has also been much attention paid to the creation of something 
called a Bureau of Consumer Financial Protection, BCFP. I would hate to 
try to pronounce that acronym.
  This sounds like a good idea at first. We all want, everyone in this 
Senate wants, to ensure strong consumer financial protection. That is 
not the issue. Yet, rather than working with regulators to strengthen 
existing consumer protection rules and crack down on unfair deceptive 
and abusive practices, this provision adds another layer of bureaucracy 
and financial regulation that will ultimately be harmful for consumers, 
and I mean all consumers, by raising their costs for financial 
products, and eliminating the types of financial products and services 
that are available to choose from.
  Not only that, this bill increases the regulatory burden for banks, 
including our community banks, that are already subject to 1,700 pages 
of regulations in the consumer area alone. Under this bill, our 
community banks would have to comply with an additional 27 new or 
expanded regulations, including new burdens on small business loans. No 
telling how many pages these new regulations will add or how much they 
will increase the cost of lending to small business. Finally, this bill 
harms the very innovation and entrepreneurship that has made our 
country so successful and created one of the strongest economies in the 
world. It does this by limiting the ability of small startup companies 
to raise seed capital. Currently, angel investors--that is quite a 
name--but angel investors, those higher income individuals who wish to 
invest in a promising startup company, to take the risk, must have a 
net worth of at least $1 million or income of $250,000.
  This bill increases those requirements to $2.3 million and $450,000, 
respectively. Estimates are that this provision, along with a provision 
in the bill that would subject startups and investors to 50 different 
sets of State regulations, would disqualify about 77 percent of current 
investors.
  In 2007, these individuals invested $26 billion in more than 57,000 
ventures across the country. We are talking about companies such as 
Amazon, Google, Facebook. All benefitted from angel investors. Yet this 
bill makes it harder for promising young companies to get the capital 
they need to get started to grow and become successful.
  At a time when the unemployment rate is 9.7 percent, I think the last 
thing Congress should do is to make it more difficult for small 
businesses to start up and be successful. Small businesses are, as the 
President has acknowledged, the leading job creators in the country.
  Everyone--everyone--all of us agree we need better regulation of our 
financial system. However, the financial regulatory reform bill that 
came out of the Banking Committee does not achieve that goal. I dearly 
hope the chairman of the committee and the ranking member can reach 
some accommodation to produce a better product.
  It does not address the problems, as written, that led to the 
financial turmoil but, instead, imposes additional regulatory burdens 
on our community banks and financial institutions that did not 
contribute to that turmoil.
  It does not discourage risk taking by large financial institutions. 
It does nothing--nothing--to address Fannie Mae or Freddie Mac, which 
had a central role in the collapse of the housing markets that helped 
trigger the financial crisis.
  It does not ensure that taxpayers never again have to bail out a 
failed company. However, it does increase the Federal bureaucracy and 
make it more difficult and costly for consumers to obtain credit for 
their families and small businesses.
  This approach will not benefit consumers or community banks or our 
economy. We need to work to improve this bill. It is vital for our 
economy we get it right when addressing financial regulatory reform 
because the consequences will be seen for years--for years--to come.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Gillibrand). The Senator from 
Connecticut.
  Mr. DODD. Madam President, I will take a few minutes, if I can, 
recognize myself for 10 minutes, if I may, and ask the Presiding 
Officer to notify me when that time has expired.
  The PRESIDING OFFICER. The Chair will do so.
  Mr. DODD. Madam President, I have great affection for my friend from 
Nebraska and I appreciate his comments about the bill. He wants to fix 
the bill. That is a noble goal. And the way to fix the bill, of course, 
is to begin debating the bill. So I am delighted to hear he would want 
to fix the bill. The problem I have is I cannot seem to get enough 
people on the other side to get us to the point where we might give 
them an opportunity to do exactly what they claim they want to do.
  Mr. ROBERTS. Madam President, will the chairman yield for a second?
  Mr. DODD. I am happy to yield, just for a second.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. ROBERTS. I am very privileged to represent the State of Kansas.
  Mr. DODD. Kansas. Excuse me. I am sorry.
  Mr. ROBERTS. Nebraska is fine, but they----

[[Page S2688]]

  Mr. DODD. I apologize to my colleague.
  Mr. ROBERTS. I mean, their football teams are a completely 
different----
  Mr. DODD. But in basketball, you do very well, so it is OK.
  Mr. ROBERTS. So it is Kansas.
  Mr. DODD. Kansas, not Nebraska.
  Mr. ROBERTS. I appreciate it.
  Mr. DODD. I thank my friend.
  Anyway, my point is, we want to get to the bill. And whether it is my 
Senator friend from Kansas or Nebraska, we want to get to the bill, if 
we can. That is all this is about now. I am going to talk about the 
bill a bit here in the brief moments I have before we actually get to 
the vote this afternoon on this matter.
  The American public is sitting there in sort of stunned disbelief. 
Here we all acknowledge this huge problem that needs to be addressed 
for the 8.5 million people who have lost their job, the 7 million who 
have lost their homes, their retirement income. We know from all of the 
statistics what this financial crisis has caused.
  Over the last year and a half, we have been busy trying to come up 
with the answers on how to solve this problem in the future. Here we 
are, with about 14 weeks left to go before the close of this Congress, 
with a bill on the floor of the Senate that we put together over many 
weeks and months--on a bipartisan basis, I might add. Here it is, Madam 
President. Now we are being told, despite the fact that 58 of us 
believe we ought to at least begin the debate--I am not asking anyone 
to vote for the bill. I am not asking you to vote for an amendment on 
the bill. All I am asking you is, Can we begin discussing this bill 
here? It is the job of this body to do so.
  So I am delighted to receive all the lectures I have received from 
people from about whether they like the bill or do not like the bill or 
what they want to add to it or subtract from it, and that is all very 
interesting conversation. But the fact is, until we actually move to 
the bill--which will be the matter once again before us this 
afternoon--all that talk is nothing but talk.
  If you have an idea on what you want to change in this bill, tell me 
about it. But, more importantly, let's debate it, discuss it, and then 
vote on whether to add it to this piece of legislation, or to take 
anything out you wish to take out as well. But I cannot even begin that 
process if, in fact, you continue to object to us getting to a debate.
  So that is what this is all about.
  I guess it does not pay to get your hopes up in this town, but I was 
still disappointed yesterday when we ended up coming up short with the 
votes necessary to proceed to the bill.
  To be honest, I am still mystified by the reaction of our colleagues. 
Yes, we have heard all the rhetoric from the minority leadership. We 
have seen the thundering horde of Wall Street lobbyists descending on 
this community, having been paid millions of dollars to do everything 
they can to stop this, including the motion to even proceed to debating 
the bill. They had a victory yesterday. Congratulations to the Wall 
Street lobbyists. You had a great day yesterday. The American people do 
not even have a chance to hear a bill discussed that might avoid the 
kind of catastrophe that has befallen them over this past year and a 
half.
  And, yes, we are all familiar with political considerations that seem 
as inevitable as the sunrise in this community. But still, I cannot 
bring myself to believe that every single member of the minority caucus 
wants to stand with the large Wall Street financial institutions that 
are the major objectors to this bill going forward.
  This morning, as Goldman Sachs executives were testifying--including 
this afternoon--before a Senate committee, we all got another chance to 
understand why they feel so deeply wronged by this legislation.
  As Frank Rich said in the New York Times this weekend--and I quote 
him--

       [S]omething is fundamentally amiss in a financial culture 
     that thrives on ``products'' that create nothing and produce 
     nothing except new ways to make bigger bets and stack the 
     deck in favor of the house.

  Our prosperity in the country was built on the hard work of 
generations of Americans. It was grown in the cornfields of Nebraska 
and Kansas, engineered in the laboratories of Massachusetts, forged in 
the foundries of Chicago, and manufactured, if I may say so, in textile 
plants such as in my home State of Connecticut.
  It is deeply ingrained in the American ethos that, in this land of 
great opportunity, you build wealth by creating something: an idea, a 
product, a service.
  This economic crisis was not caused by the creators, the producers, 
the small businesses, and the working men and women who abide by that 
guiding principle. It was caused by some on Wall Street who wanted to 
get rich without contributing a thing, by executives who simply come up 
with ways to circulate money around in a large circle, taking a piece 
for themselves every time that circle spins.
  Operating in the shadows of our economic structures, in the places 
where regulators were not equipped to do their job, firms such as 
Goldman Sachs found ways to game the financial system, reaping unheard 
of profits and rewarding their executives with huge bonuses.

  Understand exactly what these bankers were doing. They were not just 
trying to predict the future; they were betting on the failure of the 
mortgage market, a failure they themselves were in a position to cause.
  Earlier this month, National Public Radio and the nonprofit 
journalistic organization ProPublica reported on another firm, a hedge 
fund named Magnetar. This hedge fund, according to the report, saw the 
housing market begin to decline in the year 2005, bought up enormous 
amounts of doomed bonds composed of bad mortgages--thus, keeping the 
market artificially inflated--and then made huge bets on the failure of 
the very bonds they had bought, now knowing how worthless they were.
  Thanks to this scheme, the housing bubble grew bigger and collapsed 
harder. Magnetar walked away with billions of dollars in profits. Other 
institutions saw an opportunity to run the same scheme. The American 
people ended up paying the price, of course, as we all painfully are 
aware.
  I am the chairman of the Banking Committee. I believe in the vibrant 
financial sector of our Nation. Small businesses need capital and 
credit. There are many honest people on Wall Street who, I believe, 
have helped others to build wealth in our country. So the problem is 
not that these executives got rich without contributing to America. The 
problem is that these executives got rich betting against America. They 
did it in secret where no one could see what they were doing, let alone 
stop them, until it was too late. They took outrageous risks with money 
that did not belong to them because they could, in their view. By the 
time anyone realized what was going on, they had managed to destroy 
much of the prosperity Americans had built over the course of 
generations.
  Maybe I am naive, but I do not believe any Senator wants to be on 
their side in this debate. And do you know what. I have seen firsthand 
that there are Republicans who deeply want to get to this bill and get 
it done. That is why the legislation we want to bring to the floor 
reflects broad bipartisan agreement. This bill was not written by this 
Senator alone or a handful of Democrats on the committee. This bill was 
written in large part with the cooperation of my colleagues, both 
Democrats and Republicans.
  The bill creates an early warning system so we can see and stop the 
next wave of dangerous financial products and practices before it 
threatens the economic stability of our Nation. It brings derivatives 
out of the shadows and into the sunlight so that Wall Street is held 
accountable for its actions. And finally, it puts a cop on the consumer 
protection beat so Americans can make smart decisions based on full 
information when they are planning for their financial futures and 
those of their families.
  To listen to the minority leader, the main point of contention, over 
the last week or so, the reason he has given for his caucus to try and 
kill this bill as a bloc, is a disagreement over the provisions of our 
bill that end too-big-to-fail bailouts.
  But I have to tell you, I do not believe that is the case. No fair 
reading of this bill allows you to claim with a straight face that it 
perpetuates taxpayer bailouts. It is not true. I have debunked that 
idea before on this floor, and I will do it again.

[[Page S2689]]

  The morning after the minority leader made that claim, McClatchy 
Newspapers wrote:

       McConnell--

  Speaking of the minority leader--

     had accused Dodd of drafting partisan legislation, even 
     though the Banking Committee chairman has worked for roughly 
     half a year with key Senate Republicans and incorporated many 
     of their ideas into his bill. McConnell also said the bill 
     continues controversial bank bailouts, but it doesn't.

  If you do not believe the press reports, here is what our friend, the 
head of the FDIC, Sheila Bair, had to say. She, as I said, is the head 
of that organization, the Federal Deposit Insurance Organization--
former legal counsel to the minority leader Bob Dole, a Republican in 
good standing, I might add, as well. She shuts down, by the way, failed 
banks for a living. She is a Republican. She said:

       The status quo is bailouts. That's what we have now. If you 
     don't do anything, you are going to keep having bailouts.

  Further, talking about our bill, she said:

       It makes [bailouts] impossible, and it should.

  Sheila Bair says:

       We worked really hard to squeeze bailout language out of 
     this bill. The construct is you can't bail out an individual 
     institution--you just can't do it.

  Madam President, I will speak a little bit more. I know my other 
colleagues will want to be heard. I ask unanimous consent for 2 
additional minutes, if I can.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. How in the world the minority leader can come up with that 
argument does not make any sense at all. He quoted, of course, from the 
infamous Frank Luntz memo. The memo, of course, by Frank Luntz was 
written before the bill was written. Frank Luntz's political memo said 
the following:

       The single best way to kill any legislation is to link it 
     to the Big Bank Bailout.

  So he provided political recommendations and strategies even before 
this bill was written. The memo, of course, confirms that because of 
the date of it. So no matter what he wrote, that was going to be their 
political argument here. So the minority leader blindly followed the 
political memo here: Make that argument. Whether it is true is 
irrelevant, just say it often enough. And the old adage goes: If you 
repeat it often enough, people will begin to believe it, despite what 
the facts are. So again, that is the language of others.
  But let me, if I can--because sometimes talking about it is not 
enough--let me quote from sections of the bill.
  Section 204 of the bill says:

       (1) Creditors and shareholders will bear the losses in the 
     financial company;
       (2) Management responsible for the condition of the 
     financial company will not be retained.

  Let me translate: You get fired.

       (3) The Corporation and other appropriate agencies will 
     take all steps necessary and appropriate to assure that all 
     parties, including management and third parties, having 
     responsibility for the condition of the financial company 
     bear losses consistent with their responsibility, including 
     actions for damages, restitution, and recoupment of 
     compensation and other gains not compatible with such 
     responsibility.

  Section 206 of the bill:

       In taking action against this title, the (FDIC) shall 
     determine that such action is necessary for the purposes of 
     the financial stability of the United States, and not for the 
     purposes of preserving the covered financial company; ensure 
     that the shareholders of covered financial company do not 
     receive payment until after all other claims and the Fund are 
     fully paid; ensure that unsecured creditors bear losses in 
     accordance with the priority of claim provisions in section 
     210; ensure that management responsible for the failed 
     condition of the covered financial company is removed--

  Again, fired, if you didn't understand those words--

     and not take an equity interest in or become a shareholder of 
     any covered financial company or any covered subsidiary.

  Lastly:

       Notwithstanding any other provision of law, the 
     Corporation, as receiver for a covered financial company, 
     shall succeed by operation of law to the rights, titles, 
     powers, and privileges described in subparagraph (A), and 
     shall terminate all rights and claims that the stockholders 
     and creditors of the covered financial company may have 
     against the assets of the covered financial company or the 
     Corporation arising out of their status as stockholders or 
     creditors, except for the right to payment, resolution, or 
     other satisfaction of their claims as permitted under this 
     section. The Corporation shall ensure that shareholders and 
     unsecured creditors bear losses consistent with the priority 
     of claims provisions under this section.

  We seem to agree on the problem, and we seem to agree on how to solve 
it. So, again, I quote from the legislation.
  Let's get to this bill. We have written the provisions that stop too 
big to fail forever. There are other very important provisions in this 
bill that deserve consideration.
  Again, I am not asking anyone to vote for the bill at this juncture 
or to vote for the amendments that come up. For the life of me, I don't 
know how we explain to anyone in this country, in light of what we have 
been through, that we can't even begin the debate and the discussion.
  By the way, no two Senators are going to write this bill. There are 
100 of us who serve here, and every single Member of this body has a 
right to offer amendments and be heard. As chairman of the committee, I 
will insist upon that. Every Member who has an idea and has an 
amendment will be heard. But, please, let's get to it.
  With that, I yield the floor and note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. DURBIN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. Madam President, I ask unanimous consent to speak for 8 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. If the Chair will notify me when I have reached 7\1/2\ 
minutes so I may come to a blazing close.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. Madam President, it has been over 2 years since Bear 
Stearns failed. It has been over 18 months since Wall Street collapsed 
and the economy teetered on the brink of depression. It has been almost 
a year since the administration offered a detailed proposal to reform 
Wall Street. It has been 4 months since the House passed its version of 
Wall Street reform. Yet, unfortunately, the minority party, the 
Republicans in the Senate, still want to delay any Wall Street reform. 
They want to put off Wall Street reform for another day.
  Yesterday, the Republicans in the Senate had a chance to vote to end 
their filibuster on Wall Street reform so that we could start to debate 
this issue and consider amendments from both sides of the aisle, almost 
the way we remember learning about the Senate in school: a real place 
where there is a real debate, differences of opinion, votes, winners, 
losers--an amazing concept. We don't see much of it anymore, do we?
  There are a lot of empty chairs here. There is very little actual 
debate leading to a vote. So yesterday we said to the Republicans: 
After all this time since this started, after 2 years since Bear 
Stearns failed and all we have been through, isn't it about time for us 
to roll up our sleeves and get down to work? Shouldn't we bring some 
reform and transparency to Wall Street so we don't have to go through 
this ever again? Wall Street got away with murder and the taxpayers 
ended up holding the bag, remember?
  The previous administration asked us to send almost $800 billion to 
Wall Street to save the institutions that made some of the greediest, 
stupidest decisions in the history of American business. I was in those 
meetings. I can remember sobering moments--I will bet the chairman of 
the Banking Committee can remember them as well--when the Treasury 
Secretary, Mr. Paulson, and the Chairman of the Federal Reserve, Mr. 
Bernanke, looked us in the eye and said: If we don't put $85 billion in 
AIG today, it will fail and the American economy will fail with it. It 
takes your breath away. We do a lot of important things here but 
nothing like that. Then, it wasn't 2 weeks later that they came back 
and said: It is not enough. We need up to $800 billion to buy toxic 
assets with something called TARP.
  Well, let me tell my colleagues, I am a liberal arts lawyer. I have 
spent a lifetime in politics. I can't really start

[[Page S2690]]

quibbling and arguing about puts and calls and derivatives and CDOs and 
all the rest of it. At some point, you take the word of the people who 
are in charge, and I voted for it. The alternative was unthinkable.
  So where are we today? Sadly, some of those same firms we rescued 
with taxpayers' dollars sent us a thank-you card which had a postscript 
that said: Incidentally, we have just declared that we are going to 
give one another $10 million bonuses for our wisdom. How do you buy 
that? How do you sell it to the American people?
  So we have come here with the leadership of Senator Dodd on the 
Banking Committee and Senator Lincoln on the Agriculture Committee, 
which has a piece of this, and said: We are going to change this story. 
We are going to have more accountability, we are going to have more 
transparency, and, frankly, we are going to put a cop on the beat when 
it comes to Wall Street. We are going to make sure they don't get 
involved in this mess again.
  I don't often come to the floor to plug a book, but I am going to: 
Michael Lewis, ``The Big Short.'' I recommend it if you can stand it. 
He tells the inside story of what happened on Wall Street. These so-
called great, wise men didn't know what they were doing other than 
making a lot more money every single day. They were building this house 
of cards, and eventually it fell. He tells the story about the folks 
who profited when it fell. They were completely out of favor for years. 
People said: Shorting the housing market? Are you crazy? There is no 
way to go but up when it comes to housing. Well, they made a lot of 
money, shorting the market, and the folks who came up with these crazy 
vehicles to package all these mortgages left us and America holding the 
bag.
  This recession we are in took $16 trillion to $17 trillion out of the 
American economy. I don't need to tell anybody about it. If you look at 
your savings account before and after, you know what I am talking 
about--savings, retirement, the business down the street that closed, 
the neighbor who lost his job. You know the story, as we all do. It 
took $16 trillion to $17 trillion. That is more than the total value of 
all of the goods and services produced in the United States of America 
in any year--the total value--yanked out of the economy because of the 
stupidity of these folks.

  Now we come before the Senate and say: Do you want to risk going 
through that again? Shouldn't we learn something in the process here 
that avoids that problem? The Republicans yesterday said: No, thanks. 
We don't care to vote on this.
  Well, in an hour they are going to have another chance. I hope they 
have come to their senses. I hope the people they represent have led 
them to their senses. We have given them ample opportunity, and will, 
to offer their amendments. Let's hear their ideas. I am going to be 
open to them. I certainly don't want to water down this bill. I think 
it is a good bill. I want to try to make it stronger. If they want to 
water it down, we will have a vote, debate and vote, almost like the 
U.S. Senate. It will be amazing.
  There is a second provision in here for consumer financial 
protection. Right now, strung out across our government are all of 
these agencies that are supposed to be watching out for us. We have 
agencies that make sure the toaster you bought over the weekend doesn't 
explode, catch fire, and burn down your house. We expect that, don't 
we? That is the Consumer Product Safety Commission. But we don't have 
an agency that makes sure the mortgage you signed doesn't explode and 
you lose your house. That is what happened: stuck in mortgage 
provisions.
  Have you ever been through a real estate closing? There is a stack of 
pages turned at the corner; sign as fast as you can; at the end of 15 
or 20 minutes, you have writer's cramp; a check; a key to the house, 
and you are out the door. Oh, you didn't check that line, the middle of 
the page, the 35th document that you signed? It had a prepayment 
penalty in there for your mortgage. Prepayment penalty, so what? Well, 
it just says that when the interest rate goes up, you can't refinance 
it. Oh, I didn't know that. Of course you didn't. Lawyers don't catch 
those things.
  So we want to create the strongest consumer financial protection law 
in the history of the United States not to create a massive agency--it 
won't be--but to empower consumers so that when you sit down at that 
closing or you decide to take out a credit card or a student loan or an 
auto loan, you know what you are getting into. The basics are in front 
of you in plain English. Wall Street hates this idea like the Devil 
hates holy water. The notion that there would be some agency there 
looking over their shoulder sends fear into their hearts. I think it is 
a good idea. If someone wants to come here and debate it, I am ready, 
but I think we ought to have a debate. What are the Republicans afraid 
of?
  The PRESIDING OFFICER. The Senator has consumed 7\1/2\ minutes.
  Mr. DURBIN. Let me go to my blazing close.
  Let me just say that at the end of the day--currently, lobbyists are 
being paid $120,000 a day by Wall Street to stop this bill. So far, 
they have Republicans on their side and they have been successful. In 
an hour, I hope that all changes. Let them join us in a bipartisan 
effort to make this economy stronger, make the rules work for average 
people, and to put some protection in there for the consumers of 
America.
  I yield the floor.
  Mr. DODD. Madam President, I am told there are others who want to be 
heard, so I would at this juncture note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DODD. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. I see my friend and colleague from Oregon. I will yield 10 
minutes to the Senator from Oregon.
  The PRESIDING OFFICER. The Senator from Oregon is recognized.
  Mr. MERKLEY. Madam President, I thank the chairman of the Banking 
Committee for the time to address an issue that I think is essential in 
this bill and for all of the good work he has done to bring this reform 
bill to the floor of the Senate.
  It is time that we have an open debate on the floor of the Senate 
about provisions that affect the financial foundations of our entire 
economy. I know the chairman has been working hard. We held the vote 
yesterday to try to proceed with an open debate. We will hold another 
vote today and one tomorrow to say let's have this conversation about 
reforming Wall Street.
  Today, I wish to address a particular point, which is limiting the 
ability of high-risk investments to blow up our economy.
  My colleague and friend, Senator Levin, did a monumental service to 
this institution today by holding a hearing with the executives of the 
large investment firm Goldman Sachs, discussing practices that misled 
clients and bundled huge risks into our financial system.
  The SEC currently has an investigation underway. The courts will 
determine the merit of that case. But today I want to address what the 
SEC could not charge Goldman Sachs with: they could not charge them 
with the clear conflict of interest for holding a financial stake in a 
position completely opposite to the very security that they themselves 
put together and were selling to their clients. The reason the SEC 
could not address this issue is because there is currently no law that 
says such a conflict of interest is unacceptable.
  This gets to the heart of what is wrong on Wall Street today. The 
executives at Goldman Sachs are insisting up and down that they were 
not making high-risk bets themselves; instead, they were only ``market 
makers'' underwriting these deals. Well, no matter how often someone 
repeats something, that doesn't make it so. As others have said, facts 
are stubborn.
  Goldman was holding positions for its own benefit--large positions. 
They were betting the market would go one way or another. But that is 
not making a market, where you bring buyers and sellers together; that 
is proprietary trading, plain and simple.
  Proprietary trading, or high-risk investing, cost investment firms 
and commercial banks billions of dollars in losses because they bet big 
on housing securities, and the bets went bad.

[[Page S2691]]

Those losses were eventually covered, in large part, by the taxpayers 
through TARP. This isn't a side issue to the financial meltdown; it is 
a core issue. That is why we need to begin debate on Wall Street reform 
right now. We cannot let Goldman and other firms continue to pretend 
they weren't placing high-risk bets. We cannot let financial firms 
continue to get away with selling bad products to unsuspecting clients 
while betting against those products.
  This issue goes to the heart of the integrity of the system, and 
integrity is essential for folks who have capital and want to put that 
capital at risk. They need to know they have a fair market into which 
they can invest that capital. This goes right to the core of the role 
of Wall Street in aggregating capital and allocating that capital to 
the places where it would have the highest return.
  The bill before us is a very good bill. I think we can make it even 
stronger by including an amendment that Senator Levin and I have 
sponsored on high-risk investments and conflicts of interest. But to 
consider that amendment, we have to begin the debate; and that debate 
should begin now.
  Let's not let lobbyists confuse the issue. They will try to argue 
that high-stakes investing was not implicated in this crisis, or that 
the sky will fall if we move high-risk investing outside of the banking 
system--I am talking about those banks that take insured deposits and 
make loans--but that is not the case.
  I wish to read from a letter sent to me and Senator Carl Levin by 
John Reed. John Reed is former chairman and CEO of Citigroup. He speaks 
to those false arguments. This is what he wrote:

       I write to support your efforts to rein in the high risk 
     activities that helped cause the collapse of the world's 
     financial system. The recent financial crisis demonstrated 
     all too clearly the twenty year deregulatory experiment in 
     combining critical commercial banking with equally critical, 
     but riskier investment banking, failed.
       In 2007 and 2008, losses from risky proprietary trades in 
     the major financial firms quickly decimated the availability 
     of credit and seriously damaged the economy far beyond the 
     concrete canyons where those bets were made.
       When a firm is focused on market gain through proprietary 
     trading, it too often will employ every available device to 
     achieve those gains--including taking advantage of clients 
     and putting the firm at risk. As recent cases in the media 
     demonstrate, risk management and conflicts of interest 
     systems do not alone accomplish those goals.

  John Reed, the former chairman and CEO of Citigroup, concludes with 
this:

       I strongly support your efforts to put the provisions that 
     Chairman Paul Volcker has advocated firmly into law. I 
     believe that the PROP Trading Act (S. 3098) and your proposed 
     Floor amendment based on that does that. The legislation 
     provides reasonable exceptions for client-oriented services 
     while including the necessary safeguards to protect against 
     the dangers of high-risk assets and high-risk trading 
     strategies. Putting these restrictions firmly into law will 
     be good for our economy and good for our financial services 
     industry--even though they may now argue to the contrary. 
     Refocusing our financial firms on client services will help 
     them restore the global leadership position that has been 
     seriously undermined by the recent crisis.
       Certainly, we need many other important reforms, including 
     creating a strong consumer protection agency, imposing the 
     duty of care to customers on financial providers, and 
     reestablishing a well-regulated market for derivatives. But a 
     strong Volcker Rule is one of the most important provisions 
     to prevent ``too big to fail'' financial institutions, stop 
     conflicts of interest, and support credit in our economy.

  Madam President, I ask unanimous consent that the entire letter from 
John Reed be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                   April 23, 2010.
     Hon. Jeff Merkley and Hon. Carl Levin,
     U.S. Senate,
     Washington, DC.
       Dear Senators Merkley and Levin: I write to support your 
     efforts to rein in the high risk activities that helped cause 
     the collapse of the world's financial system. The recent 
     financial crisis demonstrated all too clearly the twenty year 
     deregulatory experiment in combining critical commercial 
     banking with equally critical, but riskier investment 
     banking, failed.
       In 2007 and 2008, losses from risky proprietary trades in 
     the major financial firms quickly decimated the availability 
     of credit and seriously damaged the economy far beyond the 
     concrete canyons where those bets were made.
       When a firm is focused on market gain through proprietary 
     trading, it too often will employ every available device to 
     achieve those gains--including taking advantage of clients 
     and putting the fine at risk. As recent cases in the media 
     demonstrate, risk management and conflicts of interest 
     systems do not alone accomplish those goals.
       In fact, the incentives of management and traders at 
     today's massive, publicly traded banks are geared towards 
     short term profits--both the firm's and their own--and not 
     towards the long-term well-being of their employer or their 
     clients. Boards of directors have obligations to maximize 
     shareholder value, and no matter how much they and management 
     attest to the contrary, they too naturally focus on short 
     term performance. As one competitor's risky trading boosts 
     its earnings and relative short term performance, others will 
     be pressured--by the markets, and their own economic self-
     interest--to follow suit.
       Without strong rules on risk, leverage, and conflicts of 
     interest, we will see another race to the bottom, as traders, 
     management, directors, and even shareholders will seek to 
     attain the supersized rewards made possible by high risk 
     investments. The incentives need to be more properly 
     aligned--which can only best occur if proprietary trading is 
     out of the banks, and restricted at the systemically critical 
     non-banks.
       I strongly support your efforts to put the provisions that 
     Chairman Paul Volcker has advocated firmly into law. I 
     believe that the PROP Trading Act (S. 3098) and your proposed 
     Floor amendment based on that does so. The legislation 
     provides reasonable exceptions for client-oriented services 
     while including the necessary safeguards to protect against 
     the dangers of high-risk assets and high-risk trading 
     strategies. Putting these restrictions firmly into law will 
     be good for our economy and good for our financial services 
     industry--even though they may now argue to the contrary. 
     Refocusing our financial firms on client services will help 
     them restore the global leadership position that has been 
     seriously undermined by the recent crisis.
       Certainty, we need many other important reforms, including 
     creating a strong consumer protection agency, imposing the 
     duty of care to customers on financial providers, and 
     reestablishing a well-regulated market for derivatives. But a 
     strong Volcker Rule is one of the most important provisions 
     to prevent ``too big to fail'' financial institutions, stop 
     conflicts of interest, and support credit in our economy.
       I congratulate your efforts and urge others to join you.
           Sincerely,
                                                     John S. Reed.

  Mr. MERKLEY. Madam President, it is very helpful to have a former CEO 
of a company such as Citigroup weigh in on the challenges before us. 
John Reed, as former chairman and CEO of Citigroup, is in a position to 
reflect on the deregulation and the combination of the roles of lending 
banks and investment houses and how it contributed to creating the 
economic catastrophe that became the great recession.
  I speak now to my colleagues to say that we need your help in 
creating a firewall between highly risky proprietary investments and 
the basic lending functions of banks. It is like storing fireworks in 
your living room. Fireworks are wonderful, and there is no problem with 
utilizing them on the Fourth of July or New Years. But you don't store 
them in your living room where they might end up burning down your 
house.
  Second, we need clear conflict of interest rules that make sure that 
the investment houses maintain integrity with their customers, so that 
if they are promoting a security to their customers, they are not doing 
so while separately and secretly betting against it. These reforms are 
important. They are an important part of the financial rules of the 
road that will be healthy for Wall Street and for the foundation of our 
economy.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Madam President, I yield 5 minutes to our colleague from 
Washington.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Mrs. MURRAY. Madam President, yesterday afternoon, we attempted to 
bring a bill to the floor that finally holds Wall Street accountable. 
It is a bill that includes the strongest protection for consumers that 
has ever been enacted. It is an end to taxpayer bailouts, and it gives 
tools to individuals, the resources they need to make smart financial 
decisions. It is a bill that ends Wall Street's ``anything goes'' rules 
that have meant everybody else pays.
  Unfortunately, the ``no'' vote from the other side yesterday told us 
they

[[Page S2692]]

don't want strong new protections that can't be ignored. It appears 
they don't want to hold Wall Street accountable for years of 
irresponsibility and taxpayer-funded bailouts. Instead of fundamentally 
changing the financial rules of the road, the other side wants to build 
a speed bump and pass a bill that neither reforms Wall Street nor 
protects Main Street.
  I fear that the obstruction and unwillingness to allow us to bring a 
bill to the floor is simply their push to get a watered-down bill that 
big banks can simply step aside from and ignore. It has been 
rubberstamped by Wall Street lobbyists and special interests. This is 
just an effort to figure out how they can preserve the status quo and 
talk their way out of change.
  I fear the delay is about allowing special interests in Washington 
and bankers on Wall Street and big money donors to write a compromise 
bill. I worry that just about everybody has been invited to the table 
to write that bill--except the American people. That is because the 
vast majority of Americans want to see the strong Wall Street reforms 
we have put forward pass.
  In fact, just yesterday, the Washington Post released a poll that 
shows 63 percent of Americans want to see stronger regulations of Wall 
Street enacted. But do you know what. There is still a widely held view 
on Wall Street--as yesterday's vote shows--with many in this Chamber 
that the voices of the people can be drowned out by big money and 
twisting words about the truth about what is in this bill. Wall Street 
thinks they can get away with highway robbery because, unfortunately, 
they have. They think they can pull a fast one on Main Street. I am 
here to tell you they cannot. They are flatout wrong. I know because I 
got my values from Main Street. I grew up in Bothell, a small town of 
1,000 people. The values we learned on Main Street are good ones that 
are also good for your business and for your customers.
  We learned that an honest business is a successful one. We learned 
that our customers are not prey and businesses not predators. We 
learned that personal responsibility means owning up to mistakes and 
making them right.
  We believe these values are strong throughout our country today. 
Those values exist in such small towns as the one I grew up in and big 
cities in every State. Everyone who voted against moving forward with 
this bill yesterday is going to hear from people who hold those values 
today. I am sure they will tell you in no uncertain terms that it is 
time to pass a bill with strong reforms for a system that is out of 
control. It is time to protect our consumers, time to end bailouts, and 
time to restore personal responsibility and bring back accountability.
  I am very hopeful in the coming few days all of those who voted no 
will move forward and listen to the hard-working men and women in this 
country so we can put forward a strong reform bill on Wall Street and 
protect the American people and the millions of people who have lost 
their jobs and their security and homes in the last few years from ever 
having this happen again.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Let me thank my colleague from the State of Washington. I 
appreciate very much her comments and her leadership.
  I see my friend, Senator Brownback, as well. Madam President, I ask 
unanimous consent that the last 7\1/2\ minutes be reserved for myself 
before the vote. Is that the correct time; 7 or 7\1/2\ minutes? 7\1/2\ 
minutes.
  The PRESIDING OFFICER. Without objection.
  The Senator from Kansas.
  Mr. BROWNBACK. Madam President, may I inquire how much time remains 
on our side on the debate?
  The PRESIDING OFFICER. Thirty-five minutes.
  Mr. BROWNBACK. I thank the Chair, and I yield myself such time as I 
may consume.
  I thank my colleague from Connecticut, whom I think the world of. He 
is a wonderful family man, whom I saw out walking this morning. He is a 
great human being, a great Senator, and of great lineage. I am sorry to 
see Senator Dodd leaving.
  I have one particular area of this bill about which I wish to raise a 
point. Auto dealers are in town today. We have a series of auto dealers 
from across the country who are here and they are deeply concerned 
about the consumer financial products piece of this particular 
legislation. They are concerned because it is going to hit them. I 
would point out to my colleagues about this that I have purchased a 
car--I presume everyone in this body has purchased a car--and probably 
a number of us on credit, although maybe not everybody. But nearly 
everyone has gone into a dealership and bought a new or used car and 
asked for financing on that new or used car and have gotten it from the 
local dealership. Ninety-four percent of those cars that are financed 
that way, that paper is actually from some relationship the dealership 
has upstream. It is from a bank, a major consumer auto lending entity 
or from somebody else who does the financing. The local dealership just 
has the paper there, and they are the ones that originate it. They sell 
the car and arrange for somebody else to do the financing. They don't 
do it--or 94 percent don't do that. Six percent of car dealerships do 
their own local financing.
  I have an amendment that I will put forward, if we get a chance--or I 
would prefer this actually be built into the base bill--where the local 
auto dealership that doesn't loan their own money isn't required to 
comply with the consumer financial products requirement of this bill. 
It will add another level of regulation onto auto dealers that are 
already struggling to try to get cars to market so people can purchase 
and they can provide financing for individuals.
  If we add another level of regulation, it will just mean more cost, 
and they are already regulated. This product would be regulated 
upstream already. The financial institutions that are writing the note 
and the paper are already regulated under this bill. Why would we do 
the double regulation in the bill on top of the local regulation they 
already have?
  That is why the auto dealers are here in town today, saying they 
didn't cause the financial crisis, they are not banks, and they do not 
think they ought to be a part of this. They are quintessential Main 
Street auto dealers. They are part of the Main Street fabric. We have 
lost a lot of auto dealers across the country during this financial 
downturn. We spent $3 billion trying to support the auto industry and 
now we have this heavy-handed regulation that will cost auto sales. It 
doesn't seem to make sense that we would penalize Main Street for Wall 
Street's problems. They are small businesses, the auto dealers are, in 
cities and towns throughout the country. We should be talking about how 
we can support them and extend credit in the marketplace rather than 
regulate and tamping down on their business.
  My amendment is simple. It keeps these new banking regulations from 
touching auto dealers that do not loan their own money. That is all it 
does. If they loan their own money, they are subject to it. If they do 
not loan their own money, if some other major bank, financial house or 
institution does it, that financial house or bank or institution is 
subject to the regulation. But the auto dealer that is simply there 
trying to get a car sold and providing this instrument that comes from 
somebody else, they are not regulated, so they do not have the extra 
cost. So it is not double regulation from the same bill.
  If an auto dealer does lend that money, as I mentioned, they will be 
regulated. This amendment applies only to auto dealers that facilitate 
loans from larger financial companies. Why should we have to amend 
this? If I am hearing anything across my State--and I am traveling a 
lot across Kansas--people are fed up with heavy-handed, big government. 
They have had it up to their necks and beyond with heavy-handed, big 
government. Why would we do this on top of everything else?
  These auto dealers are the retail outlets. They are the storefronts 
that process the paperwork for various well-known brands with large 
finance arms. Under my amendment, these finance arms would still be 
regulated, but the dealers that process the paperwork wouldn't. But it 
is still regulated upstream. The auto dealerships themselves have been 
crippled from sales

[[Page S2693]]

this last year, crippled from the financial crisis we hit. We have been 
trying to help and support them. This is a break in the cardinal rule 
that if you want less of something, tax and regulate it. That is what 
this bill will do. We will have less auto dealerships if you are going 
to tax and regulate them. It doesn't make any sense.
  Under my amendment, auto dealers would still be regulated by the FTC 
and various State laws, so consumers would still have protection to 
ensure that truth in lending still applies. So if you are concerned 
about auto dealers and what they are doing, the writing and the paper 
retailwise, they remain regulated by the FTC and various State laws and 
consumer protection laws that are currently in place. I think those are 
things that should remain in place, and they do remain in place. We 
don't need another level on top of that. Why do we need to create a 
duplicative regulation for auto dealers, where we regulate each dollar 
of each auto loan twice? This is what frustrates people so much.
  I have people raise the concern about what happens outside military 
bases and auto loans outside military bases. We have several major 
military bases in the State of Kansas. We are very proud of our 
military bases and our military. They are saying: OK. We want to get at 
auto loans and dealers there. Well, they are regulated. They are 
currently regulated. They are currently regulated under the FTC and 
various State laws.
  If somebody is concerned about a small auto dealer that sits right 
outside a military base and tries to get financing for military members 
and they do not like what the financing is, that is currently 
regulated. It is already in many States, where a State's attorney 
general can go at these right now. They know where they are located. It 
is not as if they are hiding and moving around. They are located right 
outside military bases. If you want to hit them and regulate them, go 
to the State attorney general, go to the State consumer products 
agency, go to the State consumer finance agencies and have them address 
it. Why on Earth, with the big financial problem we have had that was 
created by Wall Street and international traders, would you want to 
hammer the local auto dealers?

  As I put this amendment forward, it was interesting to me that we had 
a number of groups say people who sell recreational vehicles are also 
interested in being brought into this amendment and being excluded or 
motorcycle financers or any number of groups because they are seeing 
the same problem. They are small businesspeople. They are going to be 
regulated by this enormous Federal entity that was targeted at Wall 
Street and, instead, as small businesses in their local communities, 
they are going to get hit. They are going to take the hammer, and they 
are not set up to handle it. They do not have huge staffs in these 
areas. They have small staffs to take care of this, and now we are 
going to put a big regulatory entity on top of them when it is already 
regulated upstream.
  This makes no sense, and it will do no good. It will cost a lot more, 
it will make financing less available to individuals, and it will hurt 
these businesses. It will hurt car sales, it will hurt motorcycle 
sales, and it will hurt the economy for no good reason. I ask my 
colleagues to focus in on what is happening in this area of the 
consumer products and their financing. Do we want to hit auto dealers? 
I don't think so. I don't think that was the target of this bill. It 
certainly wasn't the cause of the financial crisis we had.
  Why would we have to hit them? We don't. Listen to your local auto 
dealers. They are here in town today. Hear their story about what is 
taking place. Let's help the auto dealers, as we have been trying to 
do, and let's not hurt them with a heavyhanded regulation.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. Madam President, let me begin, first of all, by 
complimenting my colleague from Kansas, who has been indefatigable in 
the argument and the cause that he was espousing just now. He has 
talked to all of us about this problem, and he has made it very clear 
this shouldn't be an intention within this legislation. We shouldn't be 
trying to expand the reach of a bill--that was supposed to deal with 
Wall Street--all the way to our local car dealers on Main Street. I 
appreciate the fact that sometimes legislation sweeps with too broad a 
brush, but this is something we can fix and we need to fix it.
  In fact, it is not just the auto dealers. The National Federation of 
Independent Businesses, which bills itself as the voice of small 
business, and frequently does represent small business causes, has 
written a letter to us, on April 26, describing this unduly large reach 
of the legislation before us.
  Madam President, I ask unanimous consent to have printed in the 
Record at the conclusion of my remarks the letter I have just referred 
to.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. KYL. Madam President, another word about what is said in this 
letter. They point out the fact that the consumer protection part of 
the legislation goes far beyond protecting consumers from Wall Street. 
It essentially goes to anybody who lends money on an installment basis 
where you have more than four installment payments. Let me quote from 
the letter.

       NFIB is concerned about the overly broad reach of the new 
     Consumer Financial Protection Bureau. Providing consumers 
     with clear and accurate financial information is an important 
     goal, but because of the reach of the Bureau's authority many 
     small businesses will find themselves subject to its 
     regulations. In addition to the many new and duplicative 
     regulatory burdens placed on community banks, the Bureau is 
     charged with regulating any retailer or merchant that 
     finances a purchase subject to a financing charge or written 
     payment plan with more than four payments. Many small 
     business retailers and merchants--such as medical 
     professionals, hardware, electronics, and jewelry stores--
     struggling through the current economic climate would be 
     subject to these new regulations.
       These small businesses had nothing to do with the Wall 
     Street meltdown and should not be faced with onerous new and 
     duplicative regulations because of a problem that they did 
     not cause.

  The first concern I have with this legislation is this overbreadth in 
the consumer protections. Wall Street can take care of itself. It's 
fine to provide protections against Wall Street, but surely we can 
reach an agreement that we don't intend this legislation to reach into 
Main Street, to the extent it does. I would urge my colleagues to 
listen to the concerns expressed by the NFIB and let's try to deal with 
those concerns in a way that would enable us to be more supportive of 
the legislation.
  The second point I would like to make has to do with the so-called 
too big to fail or taxpayer bailouts. There are different ways of 
talking about this. I find it interesting that some of my colleagues 
have apparently a great reverence for a pollster and wordsmith by the 
name of Frank Luntz. Frank Luntz is a person whom I know, and he is 
very good with words. He is a good pollster and so on. At one time, he 
apparently wrote a memo that suggested that one way to attack a bill 
such as the bill that is before us--I think my colleague, the chairman 
of the committee, has noted this memo was written by Luntz before there 
even was a bill--was to use bailout language. I haven't seen the memo, 
but I understand that is what it said.
  No. 2, Republicans have used this bailout language; therefore, No. 3, 
we are blindly following Luntz. Well, if I suggested that to my 
professor in philosophy 101, I would get flunked out of the course for 
the basic failure in logic. This is a logic fallacy--something followed 
something else; therefore, it was because of it. The law that is the 
famous saying--post hoc ergo propter hoc--obviously, a fallacy.
  So I defend those of my colleagues who have used language that may be 
somewhat similar to Luntz on the basis that just because they used the 
language didn't mean that Luntz caused them to use it. It may be Luntz 
figured out the same thing the rest of us figured out--this bill does 
not end taxpayer bailouts. That is the problem. Taxpayers are still on 
the hook.
  I can understand the sensitivity of those who helped to write the 
bill who are subject to the criticism in this language. But the 
solution to it is obvious: Get the taxpayers out of this so they are no 
longer on the hook for any bailouts and then the argument will not last 
anymore, whether Luntz likes it or not. That could be done through a

[[Page S2694]]

process of negotiation. The bill was supposed to stop additional 
taxpayer liability. Let's make sure it does.
  In this regard, I have to object a little to some of the pejorative 
language used by some Democratic Senators.
  We have rhetoric about Republicans' motives. I am not going to 
suggest which Senators are talking about it, but one of them spoke 
specifically with respect to the Republican leader by name.
  When you are questioning the motives of someone, suggesting the only 
reason they did it is because they read somebody's memo or because some 
lobbyist from Wall Street has been visiting them or suggesting it was 
because of campaign contributions, that gets very close to a violation 
of Senate rules. Senators can take responsible positions on bills 
irrespective of what a lobbyist might have said or somebody might have 
written in a memorandum.
  I would like to have an honest debate about the bill rather than 
suggesting the motivations of Senators with respect to the positions 
they have taken.
  One of my colleagues--in fact, it was the Senator from Illinois--
asked the question, with regard to the vote we are about to take here, 
What are Republicans afraid of? In effect, are we afraid of going to 
the bill and then having votes on amendments? Let me answer that 
question very specifically.
  One thing at least I am concerned about is that we will not get to 
have votes on amendments. We were promised, in the health care debate, 
this 2,400- or 2,700-page bill, that we would get lots of amendments to 
try to deal with the concerns we had. I believe it was seven--after 
seven amendments, once the leader got his 60 votes, there were no more 
votes. There was no more amendment process. There was no more debate. 
At that point, cloture was filed, the vote was taken, and he had his 60 
votes. End of discussion.
  There is nothing to suggest that if we go to this bill, we are going 
to have a fair amendment process. If that were made very clear by the 
majority leader, by the distinguished chairman of the committee, and 
Republicans had some sense that we would fare better than we did during 
the health care debate, then that would be one thing. But with the 
experience of the health care debate behind us, I think you can 
understand why we would be a little bit wary of ``just trust us, go to 
the bill, and we will let you have all the amendments you want to try 
to fix the bill.'' That is the first point.
  Let me get back just a little bit to this issue about the bailout 
because I made an assertion and I need to back it up.
  I really don't think any of us want to continue to have taxpayers on 
the hook. But this is complicated, and it may well be that the 
continuing authority, for example, of the FDIC that is specifically 
written into the legislation, while not intended to result in taxpayers 
being on the hook, it nevertheless does.
  Let me refer to a couple of articles. One is by a visiting professor, 
a Georgetown University business school professor, Phillip Swagel. The 
head of the article is ``Yes, It's a Bailout Bill.'' He says:

       . . . [T]he discretion given to the government in the 
     Senate proposal opens the door to undesirable actions such as 
     allowing the administration to write checks to favored 
     parties. This concern is not theoretical: such mischief took 
     place in the bankruptcies of Chrysler and General Motors, as 
     the two auto companies were used as conduits to transfer 
     billions of dollars from TARP to the president's political 
     supporters.

  He is talking there about labor unions.

       A better approach would be a resolution regime centered on 
     bankruptcy.

  There is a lot of debate about exactly how to do this liquidation 
process, unwinding process, quasi-bankruptcy process, and so on. There 
are a lot of good arguments. It is difficult to do, and I appreciate 
that the chairman of the Banking Committee has had to deal with a lot 
of different ideas from different Senators about how to do it, as well 
as a lot of columnists, and so on.
  But it is a fact that under the existing legislation, there is still 
liability for taxpayers here that concerns some of us. We would like to 
see a genuine discussion about taking that out. If it is a concern of 
all of us and we all agree that should not be, let's have a little good 
faith here and get it out before we come to the floor and have to try 
an amendment where there are 41 Republicans, 59 people who organize 
with Democrats, and we are not at all assured of being able to get it 
out of the bill.
  Here is another article. It is in the National Review Online, April 
26. The article is entitled ``The Case Against the Dodd Bill.'' They 
make several points in here, but one of them is this resolution 
authority.

       But the resolution authority designed by the Dodd bill 
     might actually create more moral hazard than it would 
     eliminate, because it would give the FDIC too much 
     flexibility in how it resolves a failed firm.

  It goes on to say:

       As structured, this authority would allow the Government to 
     bail out nonbank creditors, and worse, to play favorites 
     among them, just as we saw when the Obama administration 
     gift-wrapped large stakes in the automakers for its union 
     allies at the expense of secured creditors.

  My point here is simply that there are a lot of people who have 
looked at this and have come to the conclusion, as I have, that the 
bill is not tightly enough written; that, as written, it has too much 
in it that would allow various Federal entities, including the FDIC, 
pretty unlimited authority to use taxpayer money to resolve or 
liquidate or deal with companies that are deemed necessary to deal 
with. I won't say ``too big to fail'' because allegedly we are 
eliminating that.
  Surely we can get together and try to resolve this issue in a way 
that leaves no doubt that the ultimate conclusion is there is no more 
taxpayer liability. I think we would all like to see that. It is a 
legitimate debate to have, and I don't think we should criticize those 
of us who are raising these questions as somehow doing so because some 
lobbyist told us to. I don't care about the lobbyist or Wall Street 
here. What I care about is my constituent taxpayers being on the hook 
for a bailout of one of these entities or the creditors of these 
entities or the shareholders of these entities.
  This is the final point I wish to make. This is like the Sherlock 
Holmes story of the dog that didn't bark. There is something missing 
from this legislation. If you look through the entire bill--and 
probably the biggest reason for the failure of our financial system was 
the fact that Fannie Mae and Freddie Mac were allowed to go whole hog, 
take on a bunch of bad loans, and end up with an implicit guarantee 
that ultimately became an explicit guarantee by the taxpayers of 
America. You won't find any resolution of that problem in this bill.
  Why is it that, when everybody knows this problem began with a lot of 
loans being made to people who could not afford them--those loans then 
being acquired by Fannie and Freddie and then sold off in fancy, 
esoteric instruments on the market here--why is it that there is 
nothing in here about the risk of Fannie and Freddie and the risk they 
still pose? It is way north, apparently, of $400 billion--I have heard 
in the trillions of dollars--and this would be a taxpayer liability. If 
that is the case, shouldn't we be focusing reform on the entities that 
actually created the problem, Fannie Mae and Freddie Mac? Why isn't 
that being done?
  The former chairman of the Banking Committee has explained. The 
Senator from Alabama, when he was chairman of the committee, tried to 
get more regulatory authority over Fannie and Freddie. Members of the 
then-minority, now-majority party stopped him and said: No, we don't 
need any more regulatory authority. I especially remember a quote from 
the chairman of the House banking committee that was especially 
colorful in this regard, that he thought we could give them a little 
bit more latitude here, that he didn't think any more regulation was 
necessary.
  So the question is, If we knew there was a big problem a-brewing 
here, we didn't do anything about it at the time and after the fact 
discovered, of course, that is exactly what the problem was, why 
wouldn't we want to make sure that it will never happen again and that 
we somehow resolve the problem?
  One of the answers given is that it is an awfully big problem to try 
to tackle. This is an awfully big bill. If we can reach into Main 
Street, to your local car dealer or dentist because your kid's 
orthodontia takes more than 4 months to pay on installments, surely we 
can

[[Page S2695]]

deal with Fannie and Freddie, the biggest culprits of all in this deal. 
Why aren't Fannie and Freddie dealt with here? Let's not think we will 
do that next time. I think it is pretty clear that whatever we do here, 
we are probably going to be stuck with for a long time, and the failure 
to deal with this is a glaring omission in the legislation.
  Nor do I think that if we grant the motion to proceed to the bill and 
one of us offers an amendment to cover Fannie and Freddie, that it 
would fare too well in this body. I will not specifically ask the 
chairman of the committee or anybody else whether they would support 
such an amendment, but the reality is that it is unlikely this body 
would actually regulate Fannie and Freddie. That is a reason why some 
of us oppose the legislation.
  Unless there is some ability to negotiate something in advance of the 
bill actually coming to the floor, with very little likelihood that it 
would be done on the floor, it seems to me that this is another reason 
why those of us who have opposed cloture have every basis for coming 
here and saying that until we get some satisfaction, some suggestion 
that this problem is going to be dealt with, why would we want to 
proceed to legislation which obviously isn't even going to fix the 
biggest part of the problem that was created in the first place? That 
is a third reason why I think at least up to now Republicans have said 
we are not prepared to go to this legislation.

                               Exhibit 1

                                               National Federation


                                      of Independent Business,

                                   Washington, DC, April 26, 2010.
       Dear Senator:  On behalf of the National Federation of 
     Independent Business (NFIB), the nation's leading small 
     business advocacy organization, we urge the Senate to vote 
     against cloture on the motion to proceed to S. 3217, the 
     Restoring American Financial Stability Act of 2010. The 
     current bill is too far reaching and imposes major new costs 
     on small businesses.
       After the near collapse of many financial firms and the 
     impact this had on the overall economy, small business 
     recognizes the need to ensure that our laws address the 
     problems that can arise from such excess and to protect the 
     broader economy from the failures of one sector. But these 
     changes to financial services industry should be focused on 
     the specific problems caused by Wall Street and the lessons 
     learned from these events. New laws that target industries 
     and businesses on Main Street that did not create the problem 
     would not solve the problems and potentially creates new 
     ones.
       NFIB is concerned about the overly broad reach of the new 
     Consumer Financial Protection Bureau. Providing consumers 
     with clear and accurate financial information is an important 
     goal, but because of the reach of the Bureau's authority many 
     small businesses will find themselves subject to its 
     regulations. In addition to the many new and duplicative 
     regulatory burdens placed on community banks, the Bureau is 
     charged with regulating any retailer or merchant that 
     finances a purchase subject to a financing charge or a 
     written payment plan with more than four payments. Many small 
     business retailers and merchants--such as medical 
     professionals, hardware, electronics, and jewelry stores--
     struggling through the current economic climate would be 
     subject to these new regulations.
       These small businesses had nothing to do with the Wall 
     Street meltdown and should not be faced with onerous new and 
     duplicative regulations because of a problem they did not 
     cause. Further, as the most recent NFIB Small Business 
     Economic Trends (SBET) survey shows, small businesses 
     continue to struggle with lost sales and such regulations 
     could make these problems worse--stifling any potential small 
     business recovery. Placing more restrictions on the ability 
     to attract and keep customers to small businesses will 
     inhibit a strong recovery.
       NFIB also has concerns with a provision in the bill that 
     reduces the pool of angel investors that can provide start-up 
     capital or invest in a small business. The provision sets 
     higher wage and asset minimum requirements on angel 
     investors, thus eliminating many highly qualified angel 
     investors from providing needed financing. This provision 
     would hamper the entrepreneurial opportunities for angel 
     investment opportunities for many small and start-up 
     businesses, thus adding another road block to finding 
     alternative capital financing when bank lending and other 
     sources of financing remains hard to get in this economy.
       Small business still has not recovered from the economic 
     downturn and has paid the price for the bad decisions and 
     subsequent bailout of many large financial institutions. 
     Addressing problems in the financial services sector makes 
     sense, but such regulations should not overreach to include 
     small business or leave small business owners paying for the 
     excess of companies deemed too big to fail.
       Thank you for taking into consideration our concerns, and 
     we ask the Senate to oppose the motion to proceed to the 
     current bill.
           Sincerely,

                                                Susan Eckerly,

                                            Senior Vice President,
                                                    Public Policy.

  Mr. KYL. Mr. President, might I inquire how much is remaining on our 
side?
  The PRESIDING OFFICER (Mr. Burris). There is 10\1/2\ minutes 
remaining.
  Mr. KYL. There is 10\1/2\ minutes on our side? I will yield to the 
chairman of the committee for a moment.
  Mr. DODD. I thank the Senator from Arizona. My intention was--let me 
say a couple of things.
  Mr. KYL. What I might do is yield the floor and reserve the remainder 
of the Republican time. In that way, if one of my colleagues comes and 
I have to leave, that time will be remaining.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. DODD. I have reserved the last 7\1/2\ minutes. I think otherwise 
we might run out of time, I say to my friend from Arizona. I will just 
take 1 minute, if I may.
  I want to tell him and say this to him. I have been here 30 years. I 
have chaired bills on the floor. I never chaired a committee before 36 
months ago when I became chairman of the Banking Committee under our 
system. But I want to say this to my friend from Arizona and I want him 
to convey this to his colleagues through this vehicle: I would never 
deprive another Senator of the opportunity to offer amendments on the 
floor. I revere this body. I began my service in this body sitting on 
those steps over there as a page. And how the Senate works is because 
we all participate in the debate.
  I know there are those who have this concern and fear. Obviously, you 
do not have unlimited debate forever. But the point is, amendments 
ought to be offered. I have colleagues on my side, politically, of the 
aisle who want to make this bill stronger, in their views. I know there 
are people who think I have gone too far with the bill and want to 
water it down a bit. That debate can only occur if we are on the bill. 
But I want my colleague to know, as one of the leaders of the minority, 
that I would never deprive another colleague of the opportunity to be 
heard, offer their amendment and their thoughts in that process.
  Secondly, on the too big to fail, this goes back and forth. Senator 
Shelby and I have worked on this. I see the possibility that--if there 
are some workability amendments that tighten that up, I am all for 
that. Senator Boxer of California has an amendment that would say that 
nothing in this bill can ever allow taxpayer money to be used. I am for 
that amendment. I don't know how many different ways we can say it. I 
think all of us agree we don't want to see our country go through that 
again. So the only limitations here are, do we think we are finding 
additional language here that will satisfy us that we have done the job 
we think we have intended to do? Senator Shelby and I talked about how 
to do this. Again, if that is the holdup, that should not hold us up 
because we are both committed to that.
  Thirdly, I want to say that there is a document circulating with some 
ideas of a Republican alternative that includes getting into the 
government-sponsored enterprises. I say to my friend, it is a huge 
issue, the GSEs. It is not just Fannie and Freddie; there are others. 
It needs a lot of work.
  But this proposal I have read--and it is not legislative language--a 
lot of it, I don't have any problem whatsoever. I am not sure who the 
author of this is, but it has been circulated. Again, I am not 
endorsing everything here because it is just a concept, but if that is 
an amendment, the better part of what I have seen, about 90 percent of 
what I have seen here, I have no problem with at all. That can be an 
amendment included as part of our bill. But, again, I have to get to 
it. The difficult problem I have is everybody is coming with things 
they would like to add to or subtract from the bill, but, as my 
colleague knows, having been a leader around here for a long time, you 
have to get to the product. That is my frustration here.
  Lastly, I am not going to bore him with too much detail here, but in 
section 1027--and I won't read all of it--the last lines on 
limitations, because of

[[Page S2696]]

the concerns people have about dentists or other people being drawn 
into our consumer protection section say:

       Notwithstanding subparagraph (B), the Bureau may not 
     exercise any rulemaking, supervisory, enforcement, or other 
     authority under this title with respect to a merchant, 
     retailer, or seller of nonfinancial goods or services that is 
     not engaged significantly in offering or providing consumer 
     financial products or services.

  And, again, to insulate against the very worry you would have, and 
others have talked about, the NFNIB, someone who has four installment 
payments--it may be your local grocer, people who show up and buy food 
and do not pay for it, but usually at the end of the month or the end 
of 6 months, you have to be in the business of financial services or 
products to be affected by the legislation.
  Now, again, I know there are Members who have problems with that part 
of the bill. People on my side who want to strengthen it think I have 
not gone far enough on the bill. One of the difficult jobs is trying to 
reconcile differences that exist. But I cannot even begin to do so if 
we cannot even talk about it.
  So that is my frustration as the chairman of a committee, trying to 
get us to a point where all of us want to be, I am sure. We do not want 
to leave here having said we did not really deal with this problem that 
everyone in the country--I know, Arizona, what you have been through in 
your housing issues is staggering. Florida, California, Arizona, I 
think Nevada probably rank in the most difficult States where housing 
prices have declined and foreclosures have occurred.
  I know my friend from Arizona feels as strongly about this as I do. 
But I assure him, I will not deprive anybody of an amendment to be 
offered at all in the process. Secondly, we will try the workability 
issues on too big to fail and, again, language we have worked on on the 
consumer protection, and we think we took care of those dentists and 
others who were worried about it.
  But, again, others may have amendments and ideas. I will have to 
consider them on the Senate floor, and all of us will have to vote on 
them. But I appreciate him giving me a little time to express my 
thought.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. If I may respond very briefly, I appreciate the Senator's 
comments. I am sure the chairman would acknowledge the basis for some 
Republican concerns about the ability to offer, not an unlimited number 
of amendments for the purpose of filibustering the bill, but, rather, 
enough to try to solve what are perceived to be the problems of the 
bill.
  Part of the problem is a lack of trust. There are some on the 
Democratic side who have said they believe the intent of the Republican 
leadership, or Republicans, is to filibuster this bill so there would 
be no bill. It is hard to prove a negative, but I do not know how many 
times Leader McConnell and I or Ranking Member Shelby have said that is 
not our intention. Everybody acknowledges that there is work to be done 
in the regulatory regimes that govern the trade in these very esoteric 
instruments, the derivatives and others, and regulating financial 
institutions and dealing with the problem when some of them become 
financially troubled. Everybody acknowledges the need to do that.
  I firmly believe at the end of the day there will be legislation 
passed that deals with that. I do not think there is anything the 
minority could do, even if it wanted to, to stop legislation from 
ultimately passing. So to those colleagues on the other side who 
believe it is the Republicans' intent to stop the legislation, to have 
no legislation, all I can say is, yet one more time, that is not true.
  I do not know of a single Republican who believes that, of a single 
Republican who does not want to see legislation. Nor do I believe this 
is analogous to health care in that there was a strictly partisan 
approach taken there. The lines were drawn, and we do not have to 
debate how we got there. The reality was, at the end of the day, 
Republicans were trying to do everything we could to stop the 
legislation, and the majority did everything within its power to 
ultimately get it passed.
  That is not the same situation I see with this bill because, first of 
all, I think Members are a little closer than was the case on health 
care. Secondly, there has been at least a negotiating process between 
the chairman and the ranking member and others that has suggested ways 
to at least approach some of these problems.
  Republicans are suffering under no illusions that with a 59-to-41 
Senate lineup we should get 100 percent of the way or even 60 or 50 
percent of the way. Senator Shelby has made it clear he understands he 
needs to compromise because the majority has more votes than the 
minority does, but to try to get at least a proportional or 
representative sample of Republican ideas in here.
  Moreover, as my colleagues' conversations just revealed, there is a 
lot of overlap in intent. I do not think we intend the bill to reach 
into Main Street to the degree that some of us are concerned it still 
does. I do not think there is the intention to see taxpayers still on 
the hook to the extent some of us think the bill still does. And to the 
extent the chairman of the committee says there have to be ways to 
ensure that does not happen, and we can do that, I accept what he says 
in good faith. I also accept in good faith his view that amendments, 
within reason, should not be limited.
  Again, there is no intent on the Republican side to filibuster the 
bill to prevent a vote from ever occurring. I do not think we would 
have that ability even if we wanted to do that. So we have to get over 
this problem of trust. Another way to do that is to lead by beginning 
to make a difference in the way that the--not the legislation is 
discussed, but the Senators are discussed, the motivations for 
different Senators.
  It would be easy to come to the floor and talk about motivations. It 
would also be wrong. I think the leaders in the debate, starting with 
the leadership and then the chairman and ranking of the committee and 
on down, perhaps have had some responsibility to take the lead in 
making sure in the discussions on the merits of the bill--when I raise 
a particular issue, as the chairman just did, to say: Well, let me go 
to the language and see if I think we do have it already covered, 
rather than: I know why you are saying that, Senator from Arizona. You 
have some ill motive. The Senator would not say that. So perhaps we can 
begin to reach a better sense of trust where we can begin to work 
through these things in a much more constructive way by taking the 
leadership and getting a more civil conversation.
  When I say that, I point to nobody in particular as in violation but 
rather point to myself and the other leadership as the place to start 
with setting that tone. All of these things could begin to build the 
trust that might enable us to begin to engage each other.
  The PRESIDING OFFICER. The minority's time has expired.
  Mr. KYL. How time flies when you are having fun.
  And to conclude a process that will be constructive and helpful to 
the American people.
  Mr. DODD. Mr. President, let me thank the distinguished Republican 
leader for his comments. Part of what he just said is worthy of note. 
This institution suffers. We operate on unanimous consent. That is the 
way it works. And inherent in unanimous consent is trust. It is the 
only way this institution has ever operated.
  There has been, I think we would all have to acknowledge, a breakdown 
for a lot of different reasons. We have to get back to it. This is an 
opportunity to do that.
  Senator Shelby and I have a very good working relationship. We trust 
each other. We talk to each other. We spent an hour together. We are 
meeting again at 5:00, after this vote today, to talk about one way or 
the other where the bill is. There has to be a return to that comity 
and understanding, while we have differences of opinion.
  If the American people believe we cannot trust each other, when I say 
I will--I was asked at our conference lunch, again, the very question 
that my colleague from Arizona raised: Will I be allowed to offer an 
amendment, Senator Dodd? Absolutely, you will.
  So it is a concern I know that everybody has about whether they can 
be heard on these matters. I would never,

[[Page S2697]]

as a person who reveres this institution, want to deprive anybody of an 
opportunity to be heard on a matter as important as this.
  We have amendments I know are offered. I heard them--the cosponsors--
one Senator today listed the cosponsors of an amendment he wants to 
offer. There are more Republicans than Democrats on the amendment 
dealing with the Federal Reserve System. I have some concerns about 
that amendment. But the fact is, it has bipartisan support for an 
amendment they want to offer. There are a lot of these ideas. I know 
within the Republican circle there are divisions as well as to what 
ought to be in this bill. We have them on our side as well. It is not 
as if there is some bright line here, and there is one solid thought 
process over here, and an alternative one over here. We have about as 
many different views on this bill as there may be Members in this body.

  But all I ask for is to get to this bill. Let's get to this debate. 
Again, the leader got up and said this was a partisan bill. I have 
worked very hard to avoid that. Back in November when I introduced the 
bill, there were objections on the minority side as well as on the 
majority side. We put it aside. We have spent from November up until 
just a few days ago trying to put a product together that would reflect 
all of this different thinking. It is a vastly different bill from the 
one I introduced in November. I know it is not yet to everyone's 
satisfaction, but we need to debate this bill, in my view.
  It will take a long time. This is not going to be a short debate. I 
know that. But we need to allocate the time talking about what is in 
the bill or not in the bill rather than questioning each other's 
motives as to why we are not on the bill, it seems to me.
  So my plea is, again, as Senator Shelby has said, I think we are 
about 80 percent in agreement. I believe that to be the case. If we are 
80 percent in agreement, that ought to be enough of a basis upon which 
to move forward. If we were all in disagreement about everything, well, 
I might still believe we ought to debate it. So, again, I see my 
colleague--I realize he has to go, and we are going to vote in a couple 
of minutes. But I thank him for spending the time with me and to hear 
me out on these points. I am grateful to him for that.
  Mr. President, those are sort of the points that I intended to make 
in these closing minutes of this discussion, once again. We had it 
yesterday, and here we are again this afternoon. With all of the things 
that people are going through in the country, it seems to me, again, 
this bill, which has been the product of a year and a half of work--
this was not drafted over a weekend or some short period of time trying 
to reflect the interests of my colleagues--is deserving of our 
consideration.
  I am not asking to vote for this with this next vote. No one will be 
asked to vote for this. No one will be asked to vote for any of the 
various amendments I am sure will be offered, and I will welcome, as 
part of this debate, and that Senator Shelby and I as managers of the 
bill will consider them.
  All we are being asked to do, in the next 7 minutes or less, is to 
give this product a chance to be discussed. This product reflects a 
year and a half of effort to answer the question: What went wrong that 
caused our economy and our Nation to go through the worst economic 
crisis since the early part of the last century? That is a legitimate 
question being asked. What are the gaps? What steps are we taking to 
fill in those gaps? Are there cops on the beat to protect us? Do they 
have the authority and the resources to do the job? Is there an early 
warning system? These are all issues upon which I suspect, based on my 
conversations over a year and a half--or more than that now--on which 
we have a lot of agreement.
  I do not know of anyone in this Chamber who wants to support a bill 
that does not end too big to fail. If they exist, I have not heard 
their voices. I do not think there is anyone here who does not believe 
we should not have an early warning system so we can identify problems 
before they become the large ones that cost us as much as it has over 
the last year and a half.
  I think all of us--I have heard my colleagues say they are for a 
consumer protection agency. I believe them. We have a consumer 
protection agency in this bill. There is a debate about how much 
authority we want to give them, the interface, the interaction with 
prudential regulators. Those are all arguments within the context of 
whether we ought to have a consumer protection agency.
  There is not a position over here that I know of--maybe some have 
it--that they are just flatout against a consumer protection agency. 
Senator Shelby has told me, and others on the Banking Committee: We are 
for a consumer protection agency. They have differences about what 
ought to happen within that. That is the purpose for having the debate. 
We are told again, we heard it a moment ago: We ought to have the 
bright sunshine on derivatives, these exotic instruments that were 
used, went from $91 billion in 1998, to close to $600 trillion--that is 
with a T--11 years later.
  That shadow economy contributed significantly to what we went 
through. Based on what I have heard, everyone thinks we ought to do 
something about that and not leave the situation as it is today, as it 
was 18 months ago, because nothing has changed since then, putting our 
Nation at risk once again. So we agree on that as well.
  Let's have transparency. Let's have accountability. There are 
differences; I would be naive and foolish to suggest otherwise. But 
everyone seems to agree we ought to do something about it. So if we 
look at the major thrust of our bill--end too big to fail; set up an 
early warning system to avoid the problems we saw in the past; deal 
with these exotic instruments out there and have some agency that at 
long last might keep an eye out for the average citizen in this 
country, that watches their credit cards, their mortgages, and so many 
other financial activities they engaged in that became deceptive and 
fraudulent, that they suffered terribly.
  So we all agree on the basic goals outlined in this bill. Differences 
exist, at least in one or two of the years. Too big to fail, I do not 
think there is any real disagreement. I do not think there is any 
disagreement on the early warning system, as I have heard the debate. 
The differences exist in what happens inside the consumer protection 
agency and what happens in the area of the shadow economy and dealing 
with the derivatives and other items, but not whether we want to do 
something.
  So that is what we ought to be doing.
  The PRESIDING OFFICER. The majority's time has expired.
  Mr. DODD. I ask unanimous consent for 30 additional seconds.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. We have spent the last day debating whether we ought to 
have this. Let's vote to invoke cloture and begin the long debate we 
need to have. I urge my colleagues to do so.
  The PRESIDING OFFICER. Under the previous order, the motion to 
proceed to the motion to reconsider the motion on the motion to invoke 
cloture on the motion to proceed to S. 3217 is agreed to, the motion to 
reconsider is agreed to.
  The question is on agreeing to the motion to invoke cloture on the 
motion to proceed to S. 3217 upon reconsideration.
  The yeas and nays are ordered under the rule.
  The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DURBIN. I announce that the Senator from Indiana (Mr. Bayh) is 
necessarily absent.
  Mr. KYL. The following Senator is necessarily absent: the Senator 
from Utah (Mr. Bennett).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 57, nays 41, as follows:

                      [Rollcall Vote No. 126 Leg.]

                                YEAS--57

     Akaka
     Baucus
     Begich
     Bennet
     Bingaman
     Boxer
     Brown (OH)
     Burris
     Byrd
     Cantwell
     Cardin
     Carper
     Casey
     Conrad
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Franken
     Gillibrand
     Hagan
     Harkin
     Inouye
     Johnson
     Kaufman
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (FL)
     Pryor

[[Page S2698]]


     Reed
     Reid
     Rockefeller
     Sanders
     Schumer
     Shaheen
     Specter
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--41

     Alexander
     Barrasso
     Bond
     Brown (MA)
     Brownback
     Bunning
     Burr
     Chambliss
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     DeMint
     Ensign
     Enzi
     Graham
     Grassley
     Gregg
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johanns
     Kyl
     LeMieux
     Lugar
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Risch
     Roberts
     Sessions
     Shelby
     Snowe
     Thune
     Vitter
     Voinovich
     Wicker

                             NOT VOTING--2

     Bayh
     Bennett
  The PRESIDING OFFICER. On this vote, the yeas are 57, the nays are 
41. Three-fifths of the Senators duly chosen and sworn not having voted 
in the affirmative, the motion is not agreed to upon reconsideration.
  The Senator from California.
  Mrs. FEINSTEIN. Mr. President, is it appropriate for me to speak on 
the bill for a few minutes, please.
  The PRESIDING OFFICER. The motion to proceed is pending.
  Mrs. FEINSTEIN. Thank you very much.
  Mr. President, on a big bill, I find this a very puzzling situation 
where for the second time the other side of the aisle has essentially 
said, We won't let you go to a vote on a motion to proceed to debate 
until there is agreement on the bill. How can there be agreement on the 
bill if there isn't debate and if the majority at least isn't allowed 
to present its position? I find on a bill of this size and the 
complexity of the bill, to refuse to go to a debate on the bill to be 
an amazing thing. I hope the other side of the aisle will begin to see 
that and relent.
  I had a chance today to listen to some of the questions being asked 
in the Permanent Subcommittee on Investigations of Goldman Sachs, and 
if anything should show the need for this bill, it is what is going on 
in a Subcommittee of this body. Yet, out here, we cannot even begin the 
debate on the bill. We cannot hear from the chairman of the committee. 
We cannot hear from the ranking member. We cannot understand both 
points of view. We are prevented essentially from debating one of the 
most important bills this Congress will pass.
  I wanted to come to the floor today to say that, as well as to speak 
in support of the derivatives position put forward on Monday by 
Chairman Lincoln and Chairman Dodd as part of the financial and 
commodities market reform package.
  I think it is fair to say I have long advocated for more aggressive 
regulation of derivatives which, in the main, are very complex 
financial instruments exempted from Federal oversight through loopholes 
in the Commodities Futures Modernization Act of 2000. In other words, 
prior to the year 2000, we could regulate these. After the year 2000, 
they floated free, nontransparent, no audit trail, no antifraud, no 
antimanipulation oversight whatsoever. The Dodd-Lincoln bill is the 
most aggressive and comprehensive proposal to regulate the out-of-
control derivatives market that has been offered yet in this Congress, 
and I strongly support it.
  The Dodd-Lincoln bill will require robust Federal oversight. It will 
establish transparency. It will reduce systemic risk. I believe this 
bill is the best chance to tackle these unregulated markets that were 
responsible for bringing down Enron, AIG, Lehman Brothers, with 
terrible repercussions for the American economy and millions of hard-
working families. This bill will also rein in reckless traders who lack 
a moral compass.
  Today there is nothing more important than restoring faith in the 
American economy, and we cannot do it without this bill. To do that, we 
have to restore America's faith in our ability to take strong 
corrective action against the bad actors who perpetrated this crisis. 
Yes, this is our moment to act, yet we cannot. The other side of the 
aisle will not let it happen.
  Derivatives were exempted, as I said, from regulation in the 
Commodities Futures Modernization Act of 2000. That law created massive 
regulatory loopholes such as the Enron loophole which prohibited the 
Commodity Futures Trading Commission from overseeing electronic 
exchanges; the London loophole, which allowed for unregulated trading 
of U.S. commodities on overseas exchanges, and the swaps loophole, 
which allowed for unregulated bilateral trades through brokers, swap 
dealers, and direct party-to-party negotiations. Together, these 
loopholes have been responsible for some of our Nation's worst economic 
crises. They must be closed.

  I first became aware of the problem of unregulated derivatives during 
the Western energy crisis. The years were 2000 and 2001, when Enron 
traders fleeced Californians for approximately $40 billion in 
artificially inflated electricity and natural gas prices.
  Without Federal oversight rules in place, it took us some time to 
realize what was going on in California, and then when we did, the 
party in power would not believe us. We learned the hard way the 
dangers of having no paper trail, no one to raise the alarm, no cop on 
the beat to enforce penalties.
  Some experts told us this was just supply and demand. I even remember 
going to the White House and hearing these exact words. We didn't know 
that traders were in it just for greed.
  That is why I will never forget the day Senator Cantwell, another 
long-time champion for derivatives reform, handed me a copy of the 
taped conversations between Enron traders. These tapes from Enron's 
west coast trading desk demonstrated beyond a reasonable doubt that 
energy traders would do anything to make a buck.
  When a forest fire shut down a major transmission line into 
California, cutting power supplies and raising prices, Enron energy 
traders celebrated. Here is the quote:

       Burn, baby, burn. That's a beautiful thing.

  That is what a trader sang about the massive fire, which threatened 
homes and lives.
  The tapes also confirmed that in secret deals with power producers, 
traders deliberately drove up prices by ordering powerplants shut down.
  When California regulators tried to get money back from Enron, their 
traders joked this way:

       They're . . . taking all the money back from you guys? All 
     the money you guys stole from those poor grandmothers in 
     California.

  That was the mentality. Another trader responded:

       Yeah, Grandma Millie, man.

  This was an eye-opening experience, to say the least.
  In 2002, 2003, and 2004, I offered four separate amendments to 
restore regulation to derivatives markets, and each time the 
President's working group on financial markets advocated against the 
amendments, and they went down.
  Our Nation's financial experts argued that private parties would 
protect the public interest by looking out for their own interests, and 
Congress trusted our experts.
  But the experts were wrong. They ignored the growing risk these 
products posed to our financial system.
  In 2007, finally, the Senate took action to close the Enron loophole 
when it approved bipartisan legislation that I authored with Senator 
Snowe and others. That legislation brought regulatory oversight to 
electronic commodity exchanges such as the IntercontinentalExchange, 
and it established antifraud and antimanipulation standards for our 
Nation's electronic energy futures markets. But then they went offshore 
and traded on the London exchange to avoid the law. We learned that 
soon there were other loopholes that remained open.
  Beyond the reach of Federal oversight the derivatives market swelled 
to the size of $600 trillion. There were no rules to prevent systemic 
failure, fraud, or manipulation. No one ensured that these products 
served any commercial function beyond gambling, and no one worked to 
make sure traders understood the products they traded.
  It turns out traders often use the stockholder value of major 
financial institutions to gamble in markets they did not understand--
with bets large enough to put the entire financial system at risk.
  They bet on oil. They bet on natural gas. And with the creation of 
the credit default swap, they began to bet on each other's demise.
  New exotic financial products were dreamed up, such as the recent one 
to trade movie box office futures, which was proposed by Cantor 
Exchange this

[[Page S2699]]

year. What public benefit is served by trading box office futures? All 
it does is create a huge problem for the motion picture industry.
  In 2008, AIG and Lehman collapsed under the weight of unregulated 
financial derivatives. But this time it was not only Western energy 
consumers who suffered. The unregulated derivatives market brought our 
entire economy to its knees.
  That is why it is so vital that we learn from this experience and 
implement the derivatives reform proposals that have been put forward 
by Senators Lincoln and Dodd.
  Let me take a few moments to describe some of the bill's key 
positions.
  It will require every trade to be reported in real time to the 
Commodity Futures Trading Commission, so regulators will know for the 
first time what is actually going on in these markets. They will be 
transparent; they won't be dark markets. Everyone will know.
  It will require standardized high-volume trades to be cleared through 
a regulated clearinghouse. This will ensure that everyone in the system 
gets paid even when one trader defaults. Had we had this system in 
place, AIG's collapse would not have posed a systemic risk.
  Swap dealers who sell uncleared contracts to end users, which are 
more risky than cleared trades, will be subject to significantly higher 
capital requirements enforced by the CFTC in cooperation with bank 
regulators.
  The bill helps small commercial end users such as utilities or 
trucking companies hedge their risks, but major financial institutions 
and mutual funds will have to conduct their trading in regulated 
markets. That is a good thing.
  It will require all cleared contracts to be traded on an exchange or 
on a swap execution facility. Trading on exchanges or execution 
facilities provides for pretrade transparency--again, light--which is 
necessary to fully understand and manage the risks being taken by 
market participants, to provide more efficient and accurate pricing, 
and to facilitate more cost-effective risk management.
  It will require speculative position limits to be set in the 
aggregate for each commodity, instead of contract by contract. Position 
limits provide an important restriction on market manipulation and the 
amount of risk that can build up in any one market participant.
  For the first time, the CFTC will be able to prevent speculators from 
assembling massive positions in a particular commodity, such as oil, by 
assembling large positions in multiple contracts. See how they do that.
  Traders can now simply buy positions in Brent Crude Oil when they 
have exceeded limits in West Texas Intermediate crude oil, and that 
makes no sense. See, it is a way to hide the size of your trading 
position.
  Aggregate position limits will prevent manipulative practices, such 
as those deployed by the defunct hedge fund Amaranth in 2006, which 
assembled massive positions in two separate natural gas contracts and 
manipulated one in order to profit on the other. Let there be no doubt 
about this, Amaranth settled and paid a huge fine in substantial 
millions of dollars.
  Further, the bill will close the London loophole so they can't go 
around American law, by requiring that Foreign Boards of Trade adhere 
to minimum standards comparable to those in the United States and 
report all trading activity to United States regulators on a timely 
basis.
  Finally--and perhaps most importantly--the bill will prevent FDIC-
insured retail banks and banks with access to the Federal Reserve 
discount window from engaging in the extremely risky practice of swaps 
dealing with a government guarantee. That is important.
  This innovative and important provision effectively implements the 
Volcker rules and protects taxpayers. So you can see what a big 
provision this is--remember, it was derivatives that brought the house 
of cards down. Now there will be transparency, clearing, and position 
limits. I very much thank the chairman of the Banking Committee for 
negotiating with Senator Lincoln and achieving this. It is a monumental 
gain.
  I very strongly believe that all swap activities and commercial 
banking should be distinct, so that taxpayers do not supplement, 
subsidize, guarantee, or insure the riskiest activities of large 
financial institutions.
  There is no denying that opponents of the bill are trying to come up 
with new and creative ways to block this bill.
  With so much at stake, it is not surprising that allies of the big 
banks and Wall Street lenders have already launched a multimillion 
dollar ad campaign to frame the debate and fight these changes. They 
are cynically twisting the facts to assert that this legislation will 
perpetuate more bailouts in the future. Nothing could be further from 
the truth. The big Wall Street firms that caused this crisis have hired 
lobbyists to portray Wall Street reform as something that is bad for 
taxpayers.
  The loudest detractors of financial regulatory reform claim that it 
will be another government intrusion in the free market. Well, we have 
found out that the free market is not self-regulating.
  Recently, the Wall Street Journal reported that opponents of 
regulatory reform have adopted talking points distributed by a 
messaging firm whose clients include Bank of America, Chase Card 
Services, and UBS. The memo suggests that the best way to kill the bill 
is to link it to the big bank bailouts.
  My colleagues on the other side of the aisle have adopted these 
talking points and are doing everything they can to block this critical 
bill. This is both dangerous and absurd. If we have learned anything 
from the recent past, it is that the disorderly failure of massive 
financial institutions is extremely destructive.
  For the first time, with the passage of this bill, we will have a 
process in place to ensure the most minimal disruption necessary in 
order to wind down failures on Wall Street. That is what this is about. 
And the $50 billion is not government money. The $50 billion is a fund 
that the companies contribute to, which is held in escrow by the 
government so that if it has to be used, it can be used.
  I stand behind Chairman Dodd when he emphasizes the level of 
bipartisan negotiations that have gone into the bill before us. But 
bipartisan compromise does not mean withholding support until you get 
everything you want. Financial reform is not a zero-sum game. We need 
solutions, not threats to block meaningful reform of our financial 
markets. Without strong reform, every American who has been blindsided 
by the profit-above-all-else mentality of Wall Street will lose, lose, 
lose, and that is what is at stake in these cloture motions.

  Anyone who has taken basic economics knows markets only function when 
market participants have good information--in fact, perfect information 
and when the transactions occur free of fraud, abuse, and manipulation. 
Handing control and oversight of financial markets to the biggest Wall 
Street banks does not produce a free market with good information, free 
from abuse, as has been painfully illustrated over the last few years.
  Accusations of fraud against Goldman Sachs, announced the Friday 
before last, underscore the need for financial reform. Goldman Sachs 
will have their day in court, but the allegations against the firm cry 
out for greater transparency at giant Wall Street banks.
  Let me return to where I began. I was 1 of the 40 Senators on the 
telephone in September of 2008, when both Secretary Paulson of the 
Treasury and Ben Bernanke of the Federal Reserve talked to Senators and 
said--and I am paraphrasing, but this is the sum and substance of it--
we are a hair's breadth away from a major collapse of the entire 
financial marketplace of our country, and it will be worse than the 
Great Depression if it happens.
  I never expected to hear that. I never thought these market 
activities could do that. To some extent, I believed the market was 
self-regulating, but it isn't. We found that out in spades. I think we 
are deleterious in our duty if we do not address this, if we do not 
fully debate it on the floor, if everybody who hears the debate doesn't 
understand what the evils are that are out there; that naked swaps, 
that credit default swaps need oversight, that hedge funds without any 
regulation must have transparency, must be regulated, and that trading 
must go over an

[[Page S2700]]

exchange. This bill accomplishes that. This bill protects the American 
people.
  I can't understand why anyone would not support this bill. If truly 
what we believe in and what we came to this office for and what we took 
our oath of office for was to protect the American people, this bill is 
mandatory. Not to do it is malfeasance of duty, in my view. Not to let 
us move forward with a robust debate, to waste time with cloture votes 
day after day--and it looks like they will continue--I believe is 
improper. To demand that a bill has to be agreed upon by both sides 
before it is even debated on this floor as a major bill is something 
that in this day and age, with the economic troubles of this Nation, I 
thought we would never ever hear.
  So the bottom line is: Now is the time to act. Now is the time to 
close the gaps in regulation. It is time to hold the big banks 
accountable to the people they serve. It is time to put a moral compass 
into trading. It is time to ensure that taxpayers will never again be 
forced to bail out big banks because they are too big to fail. No bank 
is. That is what Wall Street reform will achieve. That is why I feel so 
committed to making it happen and why I am asking for the support of 
all our colleagues.
  Senator Dodd and Senator Lincoln have assembled the strongest 
provisions of each of their respective bills into a proposal to reform 
the bilateral swaps and derivatives market that is more effective than 
any proposal to date. So I wish to thank both of them for their 
leadership in bringing this bill to the floor. I am very proud to stand 
with them, along with my long-time colleagues in this effort, Senator 
Snowe, Senator Cantwell, Senator Dorgan, Senator Harkin, Senator Brown 
of Ohio, and Senator Nelson of Florida. They have worked for a long 
time to bring about strong regulation of the derivatives market.
  So the question remains: What will happen? Will this bill be allowed 
to see the light of day? Will this bill be able to regulate fraud and 
manipulation? Will this bill be able to see that the American taxpayer 
is protected so we can say, truly, in good conscience: Never again will 
this happen in the United States.
  So I say to the other side: Stop this nonsense. Let this bill come to 
the floor. Come down to the floor and debate it. Vote against it, if 
you don't like it. That is the American way. I don't believe that when 
a bill comes out of committee by a majority vote, regardless of how 
that majority is achieved, whether it is bipartisan or the product of 
one party, that it should be refused debate on the floor. We have a 
chance to change that. I hope the Republicans will. I hope we will 
debate and pass this bill.
  I thank the Chair, and I yield the floor.
  The PRESIDING OFFICER (Mrs. Hagan). The Senator from Georgia.
  Mr. ISAKSON. Madam President, I rise for a second to talk about the 
financial services bill. I do want to say something in advance of that, 
and I am sorry Chairman Dodd is not on the floor.
  This Friday is the last day Americans can go under contract on the 
first-time homebuyer tax credit and the move-up tax credit. I had the 
privilege of working with the banking chairman on that legislation in 
the fall of last year--and its extension--and I felt a sense of reward 
today when the announcement came out that for the first time in 36 
months home values in the 20 test markets in the United States actually 
went up by six-tenths of 1 percent. That is not a lot of money, but it 
is the first time in 36 months. The chairman created an environment to 
allow that debate to take place, and this Senate voted 100 to 0 to pass 
it and the American people have benefited from it.
  As I tell so many who call me, it is not going to be extended because 
credits such as that are designed to do what it has done; that is, to 
bring the marketplace back and hopefully stabilize values and move 
forward. I commend Senator Dodd for setting up the environment where 
that could take place.
  That brings me to my point on the bill before us. Senator Feinstein 
did an excellent job of talking about Wall Street and some other people 
who certainly need to be held accountable where there wasn't any 
transparency, contributors to the problem, and the terrible problem the 
derivatives caused in the whole mess. But there is another story out 
there I wish to bring up, because when we do get to the debate on this 
bill, it is my hope we will truly have a debate and an amendment 
process because there are some things not in this 1,407-page bill that 
ought to be.
  What I specifically want to talk about is Freddie Mac, Fannie Mae, 
Moody's, and Standard & Poor's. When the market began to collapse, a 
lot of those derivatives that were talked about were bets, one way or 
another, against the housing market, which in many ways had been 
overheated in America because of the approval of something known as a 
subprime mortgage. But the devil in those details that caused us so 
much problem is that there was originally no market for subprime 
mortgage. They were B, C, and D credits. They were downpayment 
assistance loans. They were higher risk loans by their definition, but 
they got securitized and two things happened: First, Moody's and 
Standard rated them as investment grade, AAA investment-grade 
securities; secondly, Freddie and Fannie, at the behest of the U.S. 
Government and its Congress--us--started buying those securities to 
meet the desire to have more affordable housing in America, a noble 
goal but a goal that was being achieved by loaning people money who 
could not pay it back, by loaning them the downpayment they didn't 
have, by not validating their credit, their employment or anything 
else.
  So when this thing did collapse, when everything went down and went 
down fast, it was, in large measure, because Freddie and Fannie created 
the marketplace that started the buying of these securities around the 
world, these mortgage securities, No. 1. Equal with that is Moody's and 
Standard's rating them as investment grade when they obviously were 
not.
  I would think that as we move toward a debate on this bill, when that 
time comes, and it will come, that it will be a bill that includes 
Freddie and Fannie and includes Moody's and Standard. I do understand 
there are some references to Moody's and Standard, but I will submit to 
you that the best accountability on Moody's and Standard is for them to 
be paid by the purchasers of the securities, not the creator of them, 
because then they are accountable to the people who actually get stuck 
holding the bag, not to the guy who created them and dumped them and 
ran, which is some of what Senator Feinstein was talking about.
  I also wish to talk about the quality of lending. There are 
provisions in this bill that talk about shared risk and risk retention. 
There are provisions for a mortgage banker to retain 5 percent of the 
risk in a loan. That is a well-intended move, but as I said the other 
day on the floor and as I reminded people in this body, when the 
savings and loans collapsed, when the RTC, the Resolution Trust 
Corporation, was created--and that crisis cost the American people $\3/
4\ trillion--savings and loans in America didn't have 5 percent of the 
risk, they had 100 percent of the risk. They made those loans with 
deposits they had of their depositors and they were paid back over 
time. But when we took away their preference for deposits on $10,000 or 
less against the banking industry, and when--because they began losing 
money--we allowed them to form service corporations and get into 
businesses they didn't know anything about, they finally collapsed and 
imploded with 100 percent risk, not just 5 percent.
  So I would submit another thing that needs to be incorporated in this 
is for us to put in some underwriting standards--minimum standards--so 
anything that doesn't meet them has to be an insured mortgage by an 
MGIC or a PMI. We should go back to the good old days of the 1960s, 
1970s, and 1980s, where you had to have a job and a verification to 
borrow money, where you had to get a credit report, where you didn't 
have a windshield appraisal, where an appraiser drove by on the street, 
but a legitimate appraisal, where they valued a property, and where you 
couldn't borrow money that would cause you to spend more than 25 or 30 
percent on your monthly payment as a percentage of your gross income or 
a total of 38 percent on all debts you had, including that payment, for 
at least a year or more in duration.

[[Page S2701]]

  The real estate industry, the housing industry in America, with those 
very standards--which were the standards of the 1960s, 1970s, and part 
of the 1980s--ended up having a vibrant housing market, with 65 percent 
home ownership--the largest of any country in the world. But when Wall 
Street got greedy, when our idea of forcing Freddie and Fannie to be 
purchasers of resort, when all those things were created, the rush came 
to make the mortgage, to sell the paper, to produce the income that the 
investor wanted, and the quality of the house, the qualification of the 
buyer, and the legitimacy of the loan came in question.
  So I look forward to the point in time when we get to this debate 
that we will talk about three things: No. 1 is that Freddie Mac and 
Fannie Mae were, in fact, government-sponsored institutions and today 
are a lot more government sponsored than they ever were. No. 2, if we 
exempt them, we leave the potential and the temptation for them to be 
used as a dictated purchaser of certain kinds of paper that will get us 
right back into the same situation. If Moody's and Standard do not have 
an accountability to their rating standards, when something such as the 
subprime loans happen, we will be leaving open the opportunity for most 
of what happened that was the principal cause of the collapse to happen 
again. I think we have a responsibility not to do that.
  I hope to become a part of a debate on that part of this legislation 
that closes the loophole, that takes away this idea that if you just 
have a 5-percent shared risk, it is a safe loan, and instead make sure 
the underwriting to the borrower is what we count on because, after 
all, that is going to be how the money is paid back. We know for a fact 
that Freddie and Fannie were a major part of the problem, and we know 
that lack of quality underwriting was a major contributor to the 
quality of the security. Somewhere it ought to be addressed. But in 
these 1,407 pages, to the best of my reading and looking, it is not. 
That is unfortunate and it is a mistake. I hope, when we get to the 
final debate, we will correct that error or else we will not have 
addressed a major contributor to the problem for our taxpayers and our 
voters and our citizens.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. CARPER. Madam President, while the Senator from Georgia is still 
on the Senate floor, I want to say it is great to have him back. He has 
been back for a couple of weeks, but he had some pretty serious health 
challenges and it is good to see him back on his feet and in full 
voice.
  He mentioned in his remarks for the first time about 3 days ago the 
home buyers tax credit, which actually expanded a little bit the second 
time through, is coming to a halt, and we are seeing this enormous 
volume in terms of sales of homes in this country in no small part 
because of his leadership on this issue over the last year or two. I 
was pleased as a former member of the Banking Committee to be involved 
in that and encourage my colleagues to support what was a very good 
idea.
  The other thing I want to say while he is still on the floor is, he 
and I don't agree on everything, but we agree on a lot of stuff. I 
would like to invoke the 80-20 rule, which Senator Mike Enzi from 
Wyoming talks about. I used to say to him: Why do you and Ted Kennedy--
when he, Senator Kennedy, was with us; they were senior Democratic and 
Republican on the Health, Education, Labor and Pensions Committee--I 
would say to Mike Enzi, he is one of the most conservative Members of 
the Senate, and Ted Kennedy, arguably one of the most liberal Members 
of the Senate: How come you and he can get so much done in a very 
productive committee, regardless of whether Ted Kennedy was the 
chairman or Mike Enzi was the chairman?
  Mike Enzi used to say: Ted and I believe in the 80-20 rule; 80 
percent of the stuff we agree on, 20 percent of the stuff we don't 
agree on. What we decided to do is focus on the 80 percent on which we 
agree, set aside the 20 percent we don't agree on, and we will come 
back and worry about that another day.
  I think, hopefully, at the end of the day we will decide to do that. 
There is a whole lot more on which we agree than we don't agree. My 
hope is we will have an opportunity to bring this bill to the floor and 
do what we used to do in the Senate; that is, we have people actually 
offer their amendments, we have a chance to debate those amendments, 
and we vote them up or we vote them down; that one side wouldn't line 
up all together to vote against those amendments, and the other side 
line up to vote for them.
  I think with a lot of amendments Republicans and Democrats have 
actually gone across party lines, and it will depend a lot more in some 
cases on geography, in some cases on the business climate in a 
particular State or the nature of their businesses.
  We will have a couple of days voting not for cloture, not to bring 
the bill to the floor; I would say to my colleagues I will be voting 
with them, working with them on some of their amendments, and my hope 
is they will do the same on some of mine. But I hope we can get past 
this sticking point and actually do what we are sent here to do; that 
is, to legislate, to govern, and I know that is what is in their hearts 
as well. I wanted to share that.
  Mr. ISAKSON. If the Senator will yield, I thank the Senator for his 
good wishes. I always enjoy working with the distinguished former 
Governor, now Senator from Delaware, and I look forward to that moment 
where we are finding that 80 percent common ground.
  Mr. CARPER. It is out there. I thank my colleague. I want to take a 
minute or two to have us step back and think about how we got into this 
mess with the housing bubble and all that literally led us almost to 
the brink of disaster in this country.
  Part of what happened is market forces were not allowed to work. 
Regulation was not enforced. The regulators were in many cases, too 
many cases, asleep at the switch. But I will talk a little bit about 
the housing markets.
  I am a guy, as a Governor and as a Senator, I always pushed real 
hard--and as a Congressman before that--pushed real hard for home 
ownership. I love the idea that people own their own home, own a piece 
of the rock. For a lot of people the biggest part of their life savings 
is the home they own. They use that not just as shelter but to help 
send kids to school and borrow against for all kinds of things and at 
the end of their lives to live off of, in some cases, the equity in 
their homes. That is a good thing.
  That is not to say everybody ought to be a homeowner. In some cases 
there are some folks who ought not to be.
  As the housing market heated up and the housing prices were going up, 
folks assumed they would go up forever. They didn't. Few things go up 
forever, and that includes housing prices.
  We had a number of folks looking around at other people who wanted to 
become home owners. People who did not have the ability to become a 
homeowner, didn't have the financial wherewithal to become a homeowner, 
were sucked in or duped into buying homes. They took on exotic 
mortgages in the hopes they would somehow be able to pay for those and 
the value of the homes would keep going up over time and people would 
come out whole. It didn't work out that way.
  I think part of what went wrong, aside from the assumption that 
housing prices would go up, is the fact that regulators were asleep at 
the switch. The other thing that went wrong is kind of a basic concept 
that to make markets work, for there to be some market discipline, 
there has to be skin in the game.
  Others have talked about this even today on the Senate floor. We had, 
in some cases, mortgage brokers who would say to people who did not 
have the ability to be homeowners: Don't bother telling us what your 
income is or showing us what your income is. You tell us you are OK and 
your income is good, we will take your word for that.
  In too many cases that happened, and the regulators allowed that to 
happen. We had mortgage brokers originate a mortgage and pass the 
customer on to a bank or mortgage banker. They would write the 
mortgage, allow the mortgage to be done, and the person ended up with a 
home. They ended up with a mortgage. The mortgage was passed on, maybe 
bought by Fannie Mae or Freddie Mac, and they bundled

[[Page S2702]]

them together, a bunch of mortgages together, and created an investment 
instrument through securitization. Those securities were then kind of 
blessed by the credit agencies.
  The credit agencies, the mortgage brokers, made their fee, and they 
were out of it. The bankers made their fee, and they were out of it. 
Fannie and Freddie got some kind of fee, as I recall, for securitizing 
the loans, and they were kind of out of it. The credit agencies made 
their fee and they were out of it. We ended up with folks owning these 
securities, in some cases, all around the world.
  We sliced and diced these securities and they were acquired by 
different investors. Too many of the players in this business didn't 
have any skin in the game. At the end of the game, when folks started 
defaulting on the mortgages, not making the payments, those investments 
in mortgage-backed securities which were out there owned by different 
bunches of investors turned into what I call Swiss cheese. They had a 
lot of holes in them, holes created when folks stopped meeting their 
mortgage payments and eventually, instead of turning into Swiss cheese, 
they in many cases became illiquid, unmarketable, and they gathered, in 
some cases, on the books, the balance sheets of financial institutions.
  Despite all these tricks we tried to create and gimmicks we tried to 
create or financial tools we tried to create to deal with the risk, 
they didn't all work. In the end it came tumbling down.
  Among things we want to do, we want to make sure in the legislation 
we are working on regulators actually regulate. Second, one of the 
things we want to make sure of is we actually, when we are asking 
somebody what their income is, we want to verify it so some people 
don't end up taking on risks they obviously can't meet. We want to make 
sure people have skin in the game, the banks, the financial 
institutions have skin in the game; that the shareholders of those 
institutions are at risk; otherwise, what reason should they have--why 
should there be any discipline? There will not be in too many cases.
  There are some people who think we ought to mandate capital standards 
and risky activities, raise the capital standards, and we should do 
that by mandates or legislative fiat. I don't know if that is a smart 
thing to do because we are working in this international marketplace, 
and our financial institutions, if they have certain capital standards 
that are dramatically different from the capital standards or 
requirements for liquidity different from other countries, that sort of 
puts our institutions at a disadvantage, a competitive disadvantage. We 
have to make sure our regulators are coordinating with other regulators 
around the world and we actually do have standards so financial 
institutions, when they are involved in risky behavior, the capital 
requirements are higher and the liquidity requirements are higher.
  The last point I want to make, today somebody gave me some--I don't 
know if you call them talking points, if you will, what our vision is 
as Democrats, the idea we are on the side, not so much of the financial 
institutions, certainly not necessarily on the side of Wall Street, but 
we are on the side of regular people, many of whom have been damaged by 
all this.
  Among the points I would want to leave us with in terms of the things 
we are for is, we want to have in place strict new regulations to stop 
Wall Street from gambling with money, our money, in the end. We are not 
interested in more taxpayer bailouts. The idea of creating this $50 
billion fund that will be paid for by financial institutions 
themselves, to contribute to that so later on when these big 
institutions get into trouble, we actually have the money literally 
there, available to use to shut them down and retire them in an orderly 
way that doesn't disrupt the financial system, that is one of the 
things we are for.
  We are going to try to end too big to fail. We want to put a new cop 
on the beat in terms of consumer protection for consumers, at least 
working with the largest 100 or so institutions that have over $50 
billion in assets among the bankholding companies, and we--I think this 
is important, too, a reminder in the course of this debate--we want to 
put consumers in control with information in plain English.
  As I listen to this debate and a lot of folks coming to visit with us 
and talk about the issues before us, we can probably use more plain 
English on the Senate floor than not. Sometimes I hear my colleagues, 
certainly our staffs and folks who visit with us, talking about stuff 
that reminds me of the old saying--remember Albert Einstein's Theory of 
Relativity? Somebody once asked Mrs. Einstein: Mrs. Einstein, do you 
understand your husband's Theory of Relativity?
  She said: I understand the words but not the sentences. That is what 
she said: I understand the words but not the sentences.
  I hear some of the debate on some of what is presented to us. I 
understand the words, but some of the sentences I understand but not 
all of them. I want to make sure at the end of the day when we are 
finished and we bring the bill to the floor and offer amendments, we 
actually understand the sentences and not just the words of the 
amendments and actually write defined legislation, go through 
conference with the House, and actually do understand not just the 
words but the sentences, the paragraphs, the pages, and the whole kit 
and caboodle so at end of the day we will have taken some big steps to 
greatly reduce the likelihood we are ever going to have to go through 
this again--certainly not in our lifetimes and certainly not again 
ever.
  I know the things I mentioned that serve our Democratic vision--I 
hope the Republicans would share that. I think in many cases--maybe on 
an 80-20 basis--they probably do. If we ever get a chance to get a bill 
to the floor, we will find out. In the end, I think we will find out 
there is a lot on which we agree; that we will find common ground, we 
will address this issue and move on to other important issues and 
challenges that face our Nation.
  Madam President, 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. DURBIN. 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.
  Mr. DURBIN. Mr. President, again today, for the second day in a row, 
we have failed to break the Republican filibuster on the Wall Street 
reform bill. The votes are very clear. With one or two Democrats out--
one who is opposed to breaking the filibuster and the other absent--
there was not a single Republican vote in support of moving to the 
debate on the Wall Street reform bill.
  Tomorrow, there will be another opportunity, and it appears the other 
side, the Republican side, of the aisle is deciding they do not want to 
debate this issue. The Senate as an institution is designed to give 
people a chance to express themselves, both by votes and amendments 
they might offer. That is what we have offered.
  It is interesting to me, this bill which is before us, the Restoring 
American Financial Stability Act--I am just checking on how many pages 
it is; we count pages around here now--is 1,400 pages. OK. And I am not 
being critical of the size of this bill. It is a big challenge to make 
sure we pass the laws that are necessary to promote financial 
stability.
  But it was not but a few months ago that the Republicans were arguing 
that the health care reform bill was so big that we had to have it 
right out here in front of us and we should not be negotiating behind 
closed doors with secret negotiations on the bill; it ought to be right 
here on the Senate floor; let's have the amendments. Now comes this 
bill on Wall Street reform, and the Republican position is exactly the 
opposite. They say: We do not want to have an amendment process on the 
floor; we want you to agree ahead of time behind closed doors on what 
the bill is going to say. I do not know if they have noted the 
inconsistency of their position, but it is fairly clear.
  I think they probably have some good ideas to change this bill. I am 
anxious to see their amendments. I think we have some good ideas to 
improve the bill. I would like to offer a few amendments. It is almost 
sounding

[[Page S2703]]

like the U.S. Senate, isn't it--amendments on a bill and votes and 
speeches and debate. It really sounds like the good old days here. But 
we do not have the good old days anymore. We just lurch from one vote 
to an empty floor to the next vote to an empty floor to the next vote. 
People who are following this debate on the outside have to be 
wondering what we are trying to achieve.
  Unfortunately, for some, what they are trying to achieve is 
absolutely nothing. They want to stop the Senate from acting. They 
believe it is in their best political interest--maybe in the best 
interest of the country, from their point of view--that we do nothing.
  How could you take that position when it comes to Wall Street after 
what we have been through as a nation? How could you take the position 
that we should do nothing when it comes to the Wall Street banks and 
financial institutions? These banks and financial institutions got away 
with murder when it came to corrupting our economy and leading us into 
the most painful recession in modern memory. How could you take the 
position, as some Republicans have, that we should not debate or vote 
on a bill to try to avoid that catastrophe from recurring? That, to me, 
is so basic and fundamental.
  It strikes me that the American people have it right. They understand 
what we have been through. They understand that after the great minds 
of Wall Street made the greatest mistakes in modern economic history, 
they came whining and crying to the Federal Treasury to bail them out. 
They asked for hundreds of billions of dollars from hard-working 
families across America to get through their individual economic crises 
at their banks and their financial institutions. I will concede that I 
voted for that idea because the alternative was a disaster in our 
economy.
  Well, after sending the money to Wall Street, they showed their 
gratitude by giving one another bonuses, multimillion-dollar bonuses, 
for their bone-headed stupidity that led us into this mess and then 
deciding that once they were solvent again and moving forward, they 
would stop loaning money to businesses across America that are trying 
to survive and get out of this recession. It is the ultimate in 
irresponsibility, and it is what we have come to expect from some of 
the people on Wall Street.
  I mentioned earlier that many of us have been reading this book, 
``The Big Short'' by Michael Lewis. He tells the story of how we got 
into this mess, how these people dreamed up ways to create these 
financial instruments, which almost defy description, where they would 
take thousands of mortgages from all around the United States and 
package them into a little bundle and put some code name on them that 
only the insiders could understand and then decide to sell them in 
pieces--tranches, they called them. And they were betting that the 
value of real estate would continue to go up and the default rate would 
not. They guessed wrong on both accounts. The default rate on these 
rotten mortgages increased and the underlying value of the homes and 
businesses and other entities began to decline and the bottom fell out. 
Lewis tells the story about those who saw it coming and ended up making 
a lot of money because they shorted the market, as they say. They 
guessed that the real estate bubble was going to burst. How many more 
times do we need to go through that as a nation before we change the 
rules on Wall Street in terms of their conduct and what they can do?
  We think it is time. This bill is a product of the Senate Banking 
Committee and a lot of hard work. Senator Dodd, the Democratic chairman 
of the committee, met for several months with the Republican Senator 
who ranks No. 1 on that committee, Richard Shelby of Alabama, and they 
could not reach an agreement. Senator Dodd then said, I will meet with 
Senator Corker of Tennessee, also on the committee, and sadly that 
didn't result in an agreement either. Then Senator Dodd said, Let's 
have a hearing and let's put this bill right on the table and let 
people offer amendments to it. The Republicans prepared over 400 
amendments to this bill, and when Senator Dodd convened the committee, 
they refused to call up a single one of them--not one of them--to be 
put on this bill or voted on.

  So the bill comes to the floor in that situation and the Republicans 
refuse to let us move forward. That is because under the Senate rules 
we need 60 votes. We only have 59 on a good day here, and we clearly 
need Republican help to move this bill forward. They have decided as a 
party caucus to stand by Wall Street and to stand against reform. I 
don't understand it. I can't imagine that they are hearing anything 
that is different than what I hear when I go home. When I go home, 
basically people tell me that they believe it is time for 
accountability from the banks and the speculators on Wall Street and 
they believe we ought to do it now. They want to see us put a cop on 
the beat. They want to see the government keeping an eye on these big 
financial institutions, establishing standards of conduct, establishing 
margin requirements so we know they are not overextended again as they 
were leading into this recession, and they want to make sure we are 
doing something that is going to avoid a replay of what we have just 
been through.
  There is another aspect of this bill. When I spoke to one of the 
Republicans during the vote today, I said to him: What is the problem 
here? Why aren't you joining us in this Wall Street reform? Don't you 
hear the same things at home that we do?
  He said: My big concern is the consumer financial protection agency 
in here.
  Well, I am the wrong person to raise that issue with, because I 
happen to believe in it. We have created safety standards for the 
inspection of certain products across America. When you buy toys for 
your kids during the holidays, you want to make sure they don't have 
lead paint on them or tiny pieces the kids might ingest and choke on. 
The Consumer Product Safety Commission is supposed to watch out for 
those sorts of things, and they do. But when it comes to our financial 
instruments that we have as part of our daily lives, there is no real 
watchdog. I am talking about mortgages on our homes and credit card 
agreements, student loans, automobile loans, retirement plans, things 
that make a big difference in our lives and that can go bad and cost us 
dearly. This bill sets up within the Federal Reserve an agency for 
consumer financial protection. It will be the strongest consumer 
financial protection law in the history of the United States, and it 
isn't a massive bureaucracy. What it basically does is empower 
consumers across the country so that when they sit down to sign an 
agreement, the basics are explained to them. It also puts that watchdog 
in place to keep an eye on those banks when they start sneaking in new 
terminology, these tricks and traps that can explode on you at a later 
date. That is the part this one Republican Senator said has to go. We 
don't want this consumer financial protection.
  Well, the Senator may not want it; the banks don't want it either. 
They don't want someone looking over their shoulder, but I think the 
American people not only want it, they deserve it after what we have 
been through.
  I was standing in the airport in Chicago on Monday on my way out here 
and a fellow came up to me, a businessman in Chicago, and said: Oh, 
what a coincidence. I am on my way out to see you.
  I said: Good.
  He said: I am here so that we can exempt our business from the 
Consumer Financial Protection Agency.
  I said: Save the money on the airfare, because I am not voting that 
way. I don't think we ought to start carving out all of the different 
special interests and business groups that want to come here and say we 
are the good guys, we are not the cause of the problem. The fact is if 
they are, in fact, good guys and good gals, if they are honest in their 
dealings, if they are treating customers honestly, if they are 
conscientious and ethical, what are they worried about? This is an 
agency we have created to go after the bottom feeders, the predators 
who are out there taking advantage of consumers in the name of consumer 
credit.
  This has happened so many times in the time I have served in 
Congress, where you come in and say, We want to protect consumers from 
the worst in the financial industry, and the big banks come in and say, 
Oh, no, it is just a foot in the door. Pretty soon

[[Page S2704]]

they will be looking at us too, and they stop any kind of basic 
surveillance.
  Right now in Illinois--in fact, a couple of blocks from where I live 
in Springfield, IL--are a couple of operations that take this to the 
extreme--Payday Loans, Title Loans, Same Day Loans. It is an outrage. 
It is an outrage that my State lets them get away with it. They have 
tried to tighten up the law a couple of times, but these folks are 
slippery. They find a way around it. They charge outrageous interest 
rates. They are rolling over these debts time and time again until 
these people are absolutely out of luck. They have nowhere to turn.
  I introduced a bill, a cap on interest rates, a usury bill, and I 
said if you want to meet every creepy, crawly, slimy reptile in the 
financial industry, introduce a usury bill, and they will all slide 
under your door to come in and meet with you and tell you how you just 
don't understand. Yes, they will say to me, it is 108 percent a year 
annual interest, but it is not what you think it is. It is what I 
believe it is, and it is a rip-off of consumers that has to come to an 
end. I am joining with Senator Kay Hagan of North Carolina to put an 
end to some of these business operations. I don't think they do any 
good for America.
  It has been about 10 years ago now that Senator Jim Talent, a 
Republican from Missouri, put an amendment on a bill that didn't 
attract much attention. The amendment he put on exempted military 
families from being business clients of these payday loan operations. 
Why would he exempt military families? Because the Pentagon had 
reported to him that in many military installations around the United 
States, soldiers--Air Force, others--were borrowing money from these 
fly-by-night operations, couldn't pay it back, and got so deeply in 
debt they had to be discharged from the service. Men and women trained 
in our military, because of the debt they had incurred as a result of 
these rotten operations, fly-by-night operations, had to leave the 
military service, and the Pentagon was saying to this Senator and 
others, We invested a lot of money training that person and now they 
are gone.
  So we said 10 years ago that we were going to provide that these 
payday loan operations could not lend money to military families, and 
it passed and became the law. Well, if we are protecting military 
families and our national interests, why aren't we protecting all 
families? That is my point of view. I think Senator Kay Hagan of North 
Carolina shares that point of view and I want to make sure we move 
forward on that. I also want to make sure interest rates are regulated. 
There is a limit to how much should be charged. There are people who 
exceed that limit and take advantage of those. Those are the kinds of 
things that are at issue here.
  So this week, if you tried to follow what is going on in the Senate, 
sometimes there has been a big yawn, because the floor is empty. No one 
is here, because we are lurching to the next filibuster vote. We are 
going to ask the Republicans again tomorrow: Now is it possible for us 
to bring up this bill, a bill that will put consumers in control when 
it comes to some of the most basic decisions they have to make? Now is 
it time to have strict new regulations to stop Wall Street gambling 
from happening again in our financial sector? Now is it time to make 
sure that the agreements we enter into are in plain, understandable 
English?
  Now is the time to end taxpayer bailouts once and for all. Banks and 
financial institutions, not American taxpayers, should foot the bill 
for their own mistakes. If the Republicans object to that, offer an 
amendment. Stand up here and say, I think we ought to be ready to bail 
them out.
  I don't think they will. Also, it is time for consumers to have the 
information they need to compare rates so they can make the financial 
choices that are right for them and their families.
  American voters get it overwhelmingly. They want us to pass this 
bill. But the Wall Street lobbyists get it too. This morning an analyst 
came forward and said the Wall Street firms are spending $120,000 every 
day on Capitol Hill for lobbyists. They are working the phones. They 
are working the corridors. They are doing everything they can to kill 
this bill. These special interest groups have a lot at stake here. If 
we do, in fact, come through with this reform, the party is going to be 
over at some of these banks and they know it, so they are fighting it 
tooth and nail. If we have a consumer financial protection agency, they 
are going to change the way they do business. They won't make as much 
money. They are going to be held to honest standards and they don't 
like it. So they are spending a fortune begging the Republicans to 
continue this filibuster to stop the Wall Street reform. I hope a few 
Republicans will break ranks and join us. If they do, I think many 
others will follow, but it will take a few courageous, forward-looking 
people to step up and say, That is enough. Two filibusters in a week is 
enough.
  By Wednesday--by tomorrow--if we can get three or four Republicans to 
step up, we can start an honest, bipartisan debate that leads to the 
kinds of reforms we need to make our economy stronger, create more 
jobs, and protect American taxpayers from ever being soaked again for 
another bailout.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. WHITEHOUSE. 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. WHITEHOUSE. Mr. President, I am here because for the second day 
in a row the Republican minority has once again sided with the Wall 
Street bankers and taken their side in the battle the American people 
want us to have to clean up Wall Street and see to it that the kind of 
economic damage that reckless gambling by Wall Street created across 
our whole economy never happens again.
  We want to bring sensible, firm oversight to these Wall Street banks, 
and we want to create an independent consumer financial protection 
agency so that there is an institution out there that is looking out 
for the little guy, the person who can't hire a lobbyist or a lawyer 
and who has to take it or leave it when the bank comes calling.
  The history of what brought us here is instructive. It says a lot 
about the motivation of what is going on on the Republican side.
  We began with the most colossal bank failure and economic meltdown 
since the Great Depression. This body had to appropriate hundreds of 
billions of dollars to prop up the financial sector and save it from 
complete and utter collapse from a global financial meltdown. That is 
how dangerous the way Wall Street was playing was. It took us right to 
the brink of global financial meltdown and required unprecedented--and 
unpopular--actions by Congress to keep that from happening.
  You would think the lesson everybody would take from that experience 
is that Wall Street needs to change, that there needs to be regulatory 
reform. This cannot be allowed to happen to American families again 
because wild speculators on Wall Street are playing unregulated games 
with other people's money. But from then until now, we have seen no 
Republican bill. Chairman Dodd laid down his first bill on November 19, 
2009, and the Republicans didn't answer with an alternative of their 
own. There was no basis from which to negotiate back and forth. They 
just criticized his bill, and that was that.
  Negotiations continued--persistent negotiations--to try to get some 
Republicans to support Wall Street regulatory reform, and they led 
nowhere. Were Senators negotiating in good faith but being reeled in at 
the end by the leadership? Was it just a way to waste time with false 
negotiations to keep us from getting to this business? I don't know; I 
am not a mind reader. But what I do know is that there was no 
Republican alternative.
  Eventually, Chairman Dodd said: OK, we are going to hearing. We have 
our bill. Bring your amendments. Let's have a public debate in the 
Banking Committee about how we regulate Wall Street.
  On March 23, Chairman Dodd convened that markup. I know our committee 
members came expecting a long haul. They were expecting late nights

[[Page S2705]]

and many days. They were expecting the kind of effort we saw when we 
did the health care reform bill, and I had the pleasure to serve on the 
HELP Committee with Chairman Dodd. Day after day, week after week, 
hundreds of hours of hearings we went through amendment after amendment 
after amendment. We accepted 160, I think, Republican amendments in 
that process. We still didn't get their support, but at least there was 
a public discussion.

  But when the Banking Committee took up this bill, with that same 
expectation that there would be long, arduous hours of hearings, 
argument, public debate, and amendment, what did they get? The ranking 
member said: We have no amendments. We don't care to discuss this. Call 
up the vote on the bill. We don't want to do anything in the public 
light of day. Vote the bill out.
  So the chairman had no choice but to do that. He had no choice but to 
vote the bill out with no amendments. So here we are. We have gone from 
the worst financial disaster the country has seen since the Great 
Depression until this point, and the Republicans have no bill, no 
reform to offer. When it comes to their first opportunity, when their 
hand is forced in the committee to bring in amendments, they have no 
amendments, nothing to say.
  Now we try to move to the bill, and here we are--stuck.
  We are not here voting on the bill, we are here trying to get their 
clearance to bring up this bill to discuss it and go through the Senate 
process of debate and amendment and they are objecting to that.
  So what is the common theme of a party that has no bill, that offers 
no amendments, and that wants no floor debate? The common theme of 
those things is wanting to cut deals in the dark, wanting to have their 
deals not see the light of day until they are already buried in a bill. 
Some of them would probably even turn around and object to some of the 
things they argued to get in.
  We should be prepared to do the public's business in the light of 
day. In fact, after the most public process we have ever seen on health 
care, we took criticism from the other side for a couple occasional 
moments when people got together and cut a deal. But those were the 
exceptions in a hugely public process, ranging across several 
committees that took weeks and months, in which everybody knew where we 
were going, what we were doing, and what our priorities were to help 
the American people. This is the exact opposite. They do not want to do 
anything in the light of day. They do not have a bill where they are 
prepared to show the American people what their ideas are. When you say 
to them: OK. Our idea is, how would you change those, they have nothing 
to say. They do not want to debate, discuss or amend.
  When we call them to the floor to say: OK. Here we go, let's have 
this discussion for the American people, they say: Nope, we don't want 
to have a discussion, not until we have cut our deals, not until we 
have gone into backrooms and cut our deals, not until we have delivered 
for Wall Street in backroom deals we wouldn't bring to this floor 
because we know what they would look like in the bright light of day.
  That is where we are. Frankly, it is unfortunate and it is a shame 
for the American people because every day we continue with this is 
another victory for the Wall Street mischief. Every day we are delayed 
is another day that the champagne corks are flying out the window of 
the investment banks on Wall Street as they celebrate the fact that 
more highly leveraged gambles can go through because we haven't 
regulated them, more mortgage brokers can go out and sell junk 
mortgages to folks and take advantage of them with conditions that are 
buried deep in the fine print that they do not see. More people can get 
stuck in credit card tricks and traps that are unregulated by an 
independent consumer financial protection agency to stand up for them. 
Of course, the CEOs continue to get huge bonuses without the kind of 
governance this bill would put over executive compensation.
  Why do they do it? Well, the relationship between the other party and 
Wall Street is pretty well known. It has been publicly reported that 
leaders of the other party went running up to Wall Street not too long 
ago to have their favorite closed-door, private meetings in the 
shadows, no publicity, no press. They would not discuss what took place 
in those meetings, but you know they went up there to offer their 
services to Wall Street to help defeat this legislation. They just 
don't want to talk about it.
  So that has been pretty well established, and it runs afoul of the 
desires of the American people. Two-thirds of Americans want us to take 
action. As those of us who have spent time in public life know, usually 
people care about issues that relate to them very immediately. They 
care about pocketbook issues. They care about their family, the roof 
over their head, their paycheck. For a lot of folks in America, Wall 
Street is a long way off, and it is almost a kind of hypothetical 
concern for a lot of Americans. But they have it, just as strongly as 
they care about the economy right now. Because they know Wall Street 
has been taking advantage of America for too long; that the risks of it 
for ordinary families, when it gets out of control, are too great; and 
that Wall Street needs to be reined in. They know that, and that is why 
they want us to act.
  That is why it is a shame that the minority party is refusing to 
allow us to even go to the bill and have a public debate in the light 
of this Chamber, in the light of day, about our ideas. We have told the 
American people what our ideas are. They are in the bill. Here are our 
ideas: Our ideas are a strong Consumer Financial Products Safety 
Commission--an independent consumer financial products protection 
agency to look out after the little guy.
  How often have you looked at a credit card application and seen how 
many pages of small print are in it? Look at a mortgage. Look at any 
kind of commercial credit. In all that small print, the lawyers and the 
lobbyists have done their work. Too often, it is the person who signs 
on the bottom line who ends up discovering they signed up for a raw 
deal. Nobody is looking out for them. Nobody is putting at the top of 
the contract: Green light. This is fair. We have taken a look at it. 
Safe, good to go, Good Housekeeping Seal of Approval--or yellow light: 
Careful. You might want to truly know what you are doing before you 
sign up for this--or red light: Bad deal. Dangerous for consumers. Look 
out.
  Simple, helpful information for American consumers to get, an 
independent commission to help advise consumers in those ways and have 
some regulatory authority over the people who put those products 
together, that is what we want in this bill. It is not fancy. It is not 
tricky. It is just a way to unwind the ``gotcha'' contracts that too 
many Americans have had to put up with for too long because Wall Street 
and the bankers have been writing those contracts and there hasn't been 
discipline over them.
  So that is one of the ideas we are out there with. If they have a 
better idea, where is it? I don't want to deal that away in the dark. 
Come to the floor and tell us in the bright light of day what better 
idea you have than a consumer financial protection agency that is 
independent and out there to help the ordinary folks.
  We would also consolidate bank regulators so that a big Wall Street 
bank can't shop around and decide which regulator it wants to have 
regulated. You don't get to choose your ref when you go to play a game, 
and you shouldn't get to choose your regulator when you go out into the 
field of commerce. It allows game playing and it is not right.
  We should strengthen regulation over all financial firms and no more 
allowing them to change their charter to avoid rules they do not like. 
That is not complicated. That is simple. It is clear. It is our 
position in the bright light of day. If they have a better one, where 
is it? I am not going to deal that one away in the dark. It wouldn't be 
right.
  There are provisions that would crack down on CEO compensation, to 
make sure shareholders have a real say in executive pay and to make 
sure, in particular, that the compensation committees of the board that 
sets executive pay aren't just the pals and the golfing buddies of the 
people whose multimillion-dollar pay and bonuses

[[Page S2706]]

they are approving; to make sure it is independent directors who are on 
the compensation committee and making those decisions. That is our 
position. It is clear. It is out there in the bright light of day. It 
makes sense. If they have a better idea, bring it. We are happy to 
listen to it.
  But this room is empty of Republicans right now. There are no ideas, 
there are no alternatives. All they want to do is deal this stuff away 
in the dark and it is wrong. They will, however, attack it. They will 
say that a provision in this bill that provides for the banking 
industry to fund an orderly failure and wipeout of an existing bank so 
the government doesn't have to come in and bail it out, because there 
is no provision for an orderly failure, is actually taxpayer-funded 
bailout legislation. I mean, they couldn't be more wrong. The argument 
doesn't even make sense.
  For starters, there is no bailout. The bank isn't bailed out. It is 
put out of its misery, but it is put out of its misery and sold off in 
an organized way. So as far as a taxpayer-funded bailout, there is no 
bailout. As far as it being taxpayer funded, it is industry funded. 
There is no taxpayer money in the deal at all. We make the industry pay 
to basically have a funeral plan for their colleague banks that fail so 
the taxpayer doesn't have to be there.
  They turn that completely inside out, and they do so why? Not because 
it is true--we know that--but because they have a pollster who has 
taken a poll and who has discovered that, guess what, the American 
public doesn't like bailouts and doesn't like bailout bills. So, aha, 
the geniuses discover they are going to call this a bailout bill 
because that makes it seem unpopular. It doesn't matter that it is not 
true. A little confusion never hurts when you don't have a position of 
your own that you are willing to bring out in the light of day. But 
that is what they have to say about that provision.
  That is actually a provision that I think makes a lot of sense. There 
has to be a way to have an orderly failure of a bank that goes 
insolvent so the taxpayer doesn't have to come in and prop it up 
because people worry, if one goes, is there a run on the bank? What 
does this mean for the global banking system? You have to have a way 
for banks to fail, for managers to be fired, for shareholders to lose 
their money, for all the consequences for failure in a real market 
system to happen but in an orderly way. That is what the bill does.
  So you can go through this bill idea by idea, and I am willing to 
stand by the Democratic ideas. I actually have some amendments, if we 
could get to this bill, that I would like to see called up because I 
think we could improve it. I would love to see us reverse a decision 
called the Marquette decision--a decision by the Supreme Court that 
said the rules for a bank are determined by the State where the bank 
has its headquarters--where it is domiciled, and if there is a conflict 
between a State law that protects the consumer and the State law for 
where the bank is, it is the home of the bank that wins.
  Well, now, how did that all work out? What happened is the banks 
figured out the States that have the worst consumer protection laws in 
the country and they moved there. Not for nothing does your credit card 
usually come from one of just two or three States.
  The result of that is that the power of the States of the United 
States of America, the sovereign power of the States of the United 
States of America they have had since before the Revolution to protect 
consumers from exorbitant interest rates, from rates that were called 
usury because they were too high, illegally high, was taken away from 
them. Nobody in Congress made that decision. It slipped through in the 
back of the Supreme Court decision all those years ago and the industry 
saw their opportunity and they adapted. If you want to know why you are 
paying a 30-percent interest rate on your credit card when your home 
State has an interest rate cap of 18 percent, it is because of that 
decision.
  I am for putting that choice back in the hands of the States to 
protect their own consumers from these global, international, 
multinational banks. Global, international, multinational banks, huge 
Wall Street banks could not give a hoot about Rhode Island. But if they 
have to obey Rhode Island law, that is another question--Rhode Island 
law or Colorado law or California law or Vermont law; you name it. The 
States should be able to protect their consumers the way they always 
had until this decision--it is part of American history--from 
exorbitant and cruel interest rates. So I would like to see that 
amendment.
  But the bill as it is, is something we can be proud of. It is a shame 
that here we are with two votes now back to back, with the Republicans 
refusing to allow us to even enter that debate. I have wracked my brain 
to try to think of a way to explain why they are doing this. There are 
not any good reasons.
  One is to prevent progress on anything, anything and everything--the 
politics of obstruction. If it has President Obama's name on it, if it 
would reflect well on him no matter how important it is to the American 
people, forget it. Job No. 1 is to deny any victories, any support to 
Obama irrespective of the merits. We have seen plenty of evidence of 
that and maybe that is the reason.
  Reason No. 2, they have interests, special interests they want to 
protect--Wall Street interests, banking interests, people who do not 
want to see an independent consumer financial protection agency looking 
over consumer contracts and sticking up for the little guy. That could 
be another reason. That would explain why they do not want to put their 
positions on the record anywhere. That is why they will not write a 
reform bill. That is why they will not put forward a reform amendment 
in the committee. That is why they will not come to the floor and allow 
us to debate this bill.
  They know their arguments are running against the public interest, 
the concerns of the American people and the needs of our country, and 
are just to protect Wall Street. They don't want that in public so they 
are willing to have this fight. They are willing to blockade even going 
to this bill, just for the purpose of protecting the darkness in which 
they want to cut deals to protect Wall Street and the special interests 
behind them.
  That has to stop. Like many of my colleagues I am prepared to stay 
here, to keep banging away at this, to come and vote over and over 
again, to spend days and nights on this issue until we get the job 
done. I take some comfort from some of the stories of history, one of 
which is the Biblical story of Jericho. When Joshua and the Israelites 
surrounded Jericho, they didn't go and negotiate and ask them would you 
please open the door, we will give you what you want. No, they went 
around the city, time after time--seven times they went around the city 
of Jericho, blowing their horns, blowing the ram's horn. On the seventh 
day, on the seventh tour around Jericho, when they blew their horns, 
Joshua said to the Israelites: Let out a great shout. And they let out 
their great shout and the ram's horns blared and the walls fell flat.
  Maybe it will take seven times around this bill before the walls of 
obstruction the Republicans have put up to protect the dark deals they 
want to do for their special interests fall. Maybe it will take seven 
times. Maybe it will take 17 times. Maybe it will take 27 times. But 
when you look at the damage that Wall Street caused to this country 
with its speculative, dangerous practices, with its unregulated, 
uninhibited excesses, this is important.
  This is one we need to win for the American people. This is one we 
need to win for the safety of our economy going forward. This is one we 
need for every family that lost their job because the financial 
catastrophe washed through the business they worked for. They have 
never been to Wall Street, they have no interest in the financial 
industry, but they are as out of work as anybody else because of what 
splashed and sloshed across this country from what happened on Wall 
Street.
  Those are people we cannot forget. Those are people we cannot let 
down. Rhode Island still has the third highest unemployment in the 
country. We are in our 27th month of severe recession. It has been 
compounded by historic flooding that has 2,000 Rhode Islanders still 
out of their homes. The flooding sure isn't Wall Street's fault but it 
compounds the harm that Wall Street inflicted on the entire economy, 
and it focused so intensely in my home State of Rhode Island.

[[Page S2707]]

  As far as I am concerned, we are here, we are here to stay, we are 
going to get this done, and we cannot be discouraged by the Republican 
obstruction.
  I see the majority leader on the floor. Would it be convenient to 
yield to him?
  Mr. REID. I so appreciate my friend extending his usual courtesy.


                             Cloture Motion

  Mr. REID. Mr. President, I offer a cloture motion which is at the 
desk, and I ask it be reported.
  The PRESIDING OFFICER. The cloture motion having been presented under 
rule XXII, the Chair directs the clerk to read the motion.
  The legislative clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     hereby move to bring to a close debate on the motion to 
     proceed to Calendar No. 349, S. 3217, the Restoring American 
     Financial Stability Act of 2010.
         Christopher J. Dodd, Blanche L. Lincoln, Jeff Bingaman, 
           Mark Begich, Charles E. Schumer, Arlen Specter, Robert 
           Menendez, Benjamin L. Cardin, Daniel K. Inouye, Jack 
           Reed, Edward E. Kaufman, Byron L. Dorgan, Richard J. 
           Durbin, Tom Udall, John F. Kerry, Sheldon Whitehouse, 
           Robert P. Casey, Jr.

  Mr. REID. Mr. President, I ask unanimous consent that following a 
period of morning business tomorrow, Wednesday, April 28, the Senate 
resume the motion to proceed to S. 3217, with the time until 12:20 p.m. 
equally divided and controlled between the leaders or their designees; 
that at 12:20 p.m., the Senate proceed to vote on the motion to invoke 
cloture on the motion to proceed to S. 3217, with the mandatory quorum 
waived.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, I thank the Senator from Rhode Island.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. WHITEHOUSE. I thank the majority leader for his steady and strong 
leadership through these times.
  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. WHITEHOUSE. Mr. President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________