[Congressional Record Volume 156, Number 61 (Wednesday, April 28, 2010)]
[Senate]
[Pages S2721-S2726]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FINANCIAL REGULATORY REFORM
Mr. JOHANNS. Mr. President, I rise for a few minutes to talk about S.
3217, the financial regulatory reform bill. I focus, if I could, my
comments today on why the cloture vote on financial reform is such an
important key vote.
My colleagues from the other side have talked about this vote, and it
is often referred to as a procedural vote to begin debate. Almost in
the same sentence, I think both sides of the aisle recognize that
notwithstanding the good work that has been done by Chairman Dodd and
Ranking Member Shelby, there is still much to be done on this bill, and
there are still some significant flaws within the bill.
The argument goes on to say: Don't worry, these problems can be
worked out on the Senate floor. We will have a robust debate, and we
will have floor amendments. So get the bill to the floor--the argument
goes--and the promises made to fix it will then happen.
But that is where the logic goes into the ditch. Once this bill does
get to the floor of the Senate, we all recognize it is going to be very
difficult to change it. Look at the health care bill to see how
difficult it was to make changes. Let me make that comparison because I
think it is a fair comparison.
During the health care debate, let me remind my colleagues, there
were 488 amendments that were filed. Of those 488 amendments, only 28
received a vote--28 out of 488. Of those 28 amendments, only 11
amendments passed. This being said, only 2 percent of all the health
care amendments filed actually got passed.
If we look at the partisan nature of this bill, it even becomes more
blatant. If we look at the Republican amendments, we come to the
conclusion that there was a serious problem. Only one Republican
amendment passed. So the death knell of the amendment depended upon
whether it had an ``R'' or a ``D'' behind the name.
The notion that we will be able to fix a bill--and again, everybody
is acknowledging it is a flawed bill--on the Senate floor is pure
folly. History is our greatest teacher. Instead, I respectfully suggest
that what we need to do is get serious about reaching a bipartisan
compromise.
I have said publicly, and I will say on the Senate floor every
opportunity I get, that with a sufficient amount of work, this bill can
get 70 or 80 votes. We have worked on this issue on the Banking
Committee for months and months, trying to understand what went wrong
and how best to fix it. The American people want Members of the Senate
to work together on the bill. They wonder what on Earth has come of
Congress when they see us holding the exact same cloture vote on the
exact same legislation day after day.
They ask a simple question: Why can't you just sit down and work
through these differences of opinion?
I am mindful of the fact that this is probably clever messaging--a
clever messaging ploy by Washington's standards. But by Nebraskan
standards, we are tired of Washington cleverness and the partisan
rhetoric that goes with it. I can tell you that people want a bill that
will end too big to fail and protect our economy from financial
meltdown. What they don't want is a bill written so broadly that it
impacts businesses in segments of our economy that play no part in the
economic collapse. I want these same things.
I still believe we can accomplish this. My hope is that we can quit
making this an issue of political gamesmanship and talking points and
start working toward a solution.
I have consistently stated that the issue of regulatory reform isn't
a partisan exercise. The issue just doesn't cut on ``R'' or ``D''
lines. We can get a broad, bipartisan bill if we stop the attacks and
focus on trying to solve the differences that still exist on this
bill--important policy differences.
Stop the daily cloture votes. I understand the political theater of
that, but it doesn't lend itself to solving problems. What we need is a
bipartisan effort, where people sit down and work through these
differences of opinion.
With that, I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. LEVIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. LEVIN. Mr. President, yesterday, the Senate Permanent
Subcommittee on Investigations, which I chair, held the fourth in our
series of hearings to explore some of the causes and consequences of
the financial crisis. These hearings are the culmination of nearly a
year and a half of investigation.
The freezing of financial markets and the collapse of financial
institutions that sparked our investigation are not just a matter of
numbers on a balance sheet. These are numbers reflecting millions of
Americans who lost their jobs, their homes, and their businesses in a
recession that the housing crisis sparked, the worst economic decline
since the Great Depression. Behind these numbers are American families
who are still suffering the effects of a manmade economic catastrophe.
Our goal has been to construct a record of the facts in order to try
to deepen public understanding of what went wrong, to inform a
legislative debate about the need for financial reform, and to provide
a foundation for building better defenses to protect Main Street from
Wall Street.
Our first hearing, 3 or 4 weeks ago, dealt with the impact of high-
risk mortgage lending. It focused on a case study, as our committee
does, of Washington Mutual Bank, known as WaMu, a thrift whose leaders
embarked on a reckless strategy to pursue higher profits by emphasizing
high-risk loans. WaMu didn't just make loans that were likely to fail;
these loans also created real hardships for the borrowers, as well as
risk for the bank itself. What happened was there was basically a
conveyor belt that fed those toxic loans into the financial system like
a polluter dumping poison pollution into a river. That poison came
packaged in mortgage-backed securities that WaMu sold to get the
enormous risk of these mortgages off its own books and shifted to
somebody else's.
Our second hearing examined how Federal regulators at the Office of
Thrift Supervision watched and observed WaMu--saw the problems year
after year--and did nothing to stop them. Regulation by the Office of
Thrift Supervision that should have been conducted at arm's length was
instead done arm-in-arm with WaMu.
The third hearing dealt with credit rating agencies. These are
specific case
[[Page S2722]]
studies of Standard & Poor's and Moody's, the Nation's two largest
credit raters. And while WaMu and other lenders--and WaMu wasn't alone
by a long shot--dumped these bad loans, regulators failed to stop the
behavior. Credit rating agencies were assuring everybody that the
poisoned water was safe to drink. Triple A ratings were slapped on
bottles of high-risk financial products. So that was the third hearing.
We have to do something about the inherent conflict of interest that is
involved when the credit rating agencies are paid by the people whose
actual documents and whose transactions they are rating, putting labels
of triple A, double A, what have you, on them. There is a built-in
conflict of interest.
Yesterday's hearing explored the role of investment banks in the
development of this crisis, and we focused on the period of 2007, when
that housing bubble burst, of Goldman Sachs, one of the oldest firms on
Wall Street. Goldman's documents made it very clear that it was betting
against the housing market while it was aggressively selling
investments in the housing market to its own clients. It was selling
the clients high-risk, mortgage-backed securities and what they call
CDOs, and synthetic CDOs, that it wanted to get off its books. They
wanted to get securities off the books. They were reaching out with one
hand to prospective buyers and saying: Here. But with the other hand
they were betting against those same securities.
The bottom line is that what we have discovered in this
investigation, and heard yesterday at our hearing, is that there is a
conflict of interest too often between what was in Goldman's interest--
what was good for their bottom line--and what was in their clients'
best interest.
These are deeply troubling findings. There not only was a collapse of
a housing market, there was a collapse of values. Extreme greed is the
thread that connects these events, starting with those mortgages that
were sold out there in the State of Washington by Washington Mutual
Bank; extreme greed that indeed involved the people who were supposed
to be doing the credit rating, being paid and doing a lousy job of
rating the financial instruments that pension funds and others they
were buying, and the greed, of course, that was involved in Wall Street
selling securitizing financial instruments which they believed were not
good and that they were betting against at the same time they were
selling them to their clients and customers.
What we have to do is build defenses against these kinds of excesses.
I think most of us at the hearing--Democratic and Republican Senators
on the Permanent Subcommittee on Investigations--saw the problems right
from the beginning, upstream where the mortgages were created and
downstream where they landed in Wall Street securities. We see the
problems and Americans see the problems. We cannot understand, and
Americans cannot understand, how a company can design and build a
product and sell that product to its clients while at the same time
they are betting that product will fail. It runs contrary to common
sense--a kind of common ethics.
If you are going to sell somebody a pair of shoes, and you know or
believe that pair of shoes is defective and you bet against that pair
of shoes so that your profit is not just the profit you would make on
the immediate sale of that pair of shoes, but when the pair of shoes
fails there is, in some way, a profit that comes to you as well. When
you are betting on the failure of the product and will make money from
that bet when that product fails, most Americans, and I think most
members of the committee--hopefully, maybe all of us--would say to
ourselves: That kind of conflict of interest has got to be stopped.
That is not what the Wall Street folks were telling us yesterday is
``making a market,'' where you have someone who comes in and wants to
sell something and somebody who wants to buy something and they are put
together. That is ``making a market''--bringing a buyer and a seller
together.
This is where the firm--the entity that is going to be benefitting is
on one side of the deal--and that entity was Goldman Sachs. They
actually, in some of these deals, were taking securities from their own
inventory that they wanted to get rid of, packaging them into a
financial instrument and selling that instrument to their customers. So
far, so good, providing they disclose it is their own product they are
selling. That is okay. But then they take what they call a short
position. They take a bet. They make a bet against the very instrument
they put together to sell to their customers.
That, to me, is incredible. They also are engaged--and a lot of
people are engaged--in what we call these credit default swaps, which
are nothing more than casino bets as to whether something will happen;
where, for instance, people are betting that a particular stock will go
up or down. Neither party owns the stock, if it is a so-called
synthetic default swap. I bet that stock will go up, you bet it will go
down. That is okay; if people want to bet on that, let them bet. But
when the government ends up paying the winning bettor, now you have a
problem. Where the company that is making those bets, or insuring those
bets, as it was called in the case of AIG--supposed to be insuring
those bets--is too big to fail--they have insured so many bets for so
many companies and so many pension funds that if that private company
fails, the economy is going to be terribly damaged as a result and we
end up, as taxpayers, paying off those bets--that has got to be stopped
as well. These are casino bets and we shouldn't be paying them.
I yield myself 5 additional minutes.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. LEVIN. Now, throughout these hearings we see a lack of
accountability. Executives of Washington Mutual make the reckless
mortgage loans--not held accountable. Executives at Goldman Sachs and
their company packaged many of these same loans that were toxic
securities and then took a conflict-of-interest position on it--no
accountability. Regulators, credit rating agencies that were supposed
to check these excesses--no accountability. In each case, the senior
leaders managed to avoid responsibility for their contribution to a
crisis which has caused millions of Americans to lose their jobs or
their homes or their businesses.
Others may fail to take responsibility for their actions, but we must
exercise our accountability. We must act. I do not understand our
Republican colleagues, knowing what they know about the crisis, knowing
there is no real regulator on the beat on Wall Street, can vote against
beginning a debate. We don't have a cop on the beat on Wall Street. We
need a regulator there. We need credit rating agencies not involved in
conflicts of interest which are inherent to the way they are now being
paid. We need a banking regulator which acts; one that doesn't just
observe and watch things going off track but acts, and has a
responsibility to act as well.
The Dodd bill takes very significant steps relative to each of these
areas. Whether it is the banking area, the regulator area, the credit
rating area, there are some critical steps that are taken in the Dodd
bill. There are some people who say they do not like portions of the
Dodd bill. Okay, bring the bill to the floor and let's debate it. Let's
legislate.
The legislative process is supposed to involve, sooner or later, a
bill which comes to the floor and then is open to amendment and then
debate. There are a lot of areas in this bill that can be strengthened.
There are some areas in the bill that some people don't like and wish
to strike. We have been on this bill now in committees of jurisdiction
for months. There have been hearings in those committees. I think we
know what the issues are.
There is no agreement on the resolution of this. There is no
unanimous consent, obviously, as to exactly what reform should be put
in place and how that should be written. But we can't always operate in
the middle of a crisis by unanimous consent. At some point, where there
are differences, we have to bring those difference to the floor and
debate them and offer amendments on them and vote them up or down. That
is our responsibility. It is not responsible--it is irresponsible--to
block that process from taking place.
I think almost all of us say that we want reforms. But there are
enough of
[[Page S2723]]
us who say we are not going to allow this to be debated unless we get
our way that this has been stymied. The reform process has been
thwarted by a filibuster here. It is wrong. And the remedies that are
offered and can be debated and can be amended are essential to avoid a
repeat of this disaster. These are complex issues. We all know that.
But there has been a huge amount of debate, attention, and analysis on
these issues. There are going to be differences on these issues, but
the place to resolve differences finally is here on the floor.
Often we can resolve them before we get to the floor. Fine. But to
stop a legislative process from taking place, it seems to me, is an
irresponsible act when we are in the middle of a crisis and where the
people of the United States want confidence that their legislators are
addressing this crisis. So I would hope our Republican colleagues will
allow this bill to come to the floor and to offer amendments.
There are many amendments that are going to be offered. Senator
Merkley and I have an amendment which we believe will strengthen the
bill, to give one example. That amendment has not yet been ``worked
out'' with the sponsors of the bill. Hopefully, we can get them to
agree to language which will allow for a stronger step to be taken in
an area which we think involves a serious conflict of interest. But if
we can't ``work it out in advance,'' okay. There is such a thing called
an amendment. It is part of our rule book. You can offer amendments if
you want to. You can't always work out things in a back room somewhere.
I don't want to denigrate working out problems. I try to do it all the
time, as chairman of the Armed Services Committee. I don't denigrate
that process of working things out in advance. Lord knows, we work out
most things in advance. But with a threat of this size, which requires
us to act, and where there has been a good-faith effort to come to some
kind of agreement in advance that proves not to be possible, for
heaven's sake we have to legislate. We have to have an ability to move
to the floor with a bill and to go through the legislative process with
it. That is what has been thwarted. That is what has been denied us
because we don't have 60 votes.
I hope our Republican colleagues will see the importance of this
issue, the essential need for reform, and allow this bill to come to
the floor and be legislated upon.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Louisiana is
recognized.
Mr. DURBIN. Would the Senator from Louisiana yield for a question,
very briefly?
Mr. VITTER. Yes, I will.
Mr. DURBIN. If I could ask the Senator how long he expects to hold
the floor.
Mr. VITTER. I would expect to hold the floor for 14 minutes, at the
least.
Mr. DURBIN. Mr. President, I ask unanimous consent that following the
Senator from the Louisiana I be recognized for 15 minutes in morning
business.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. VITTER. Mr. President, I rise to strongly agree with Chairman
Levin that what we have heard in many of these hearings regarding
Goldman Sachs' activity and others is extremely disturbing--
outrageous--and I don't support that activity in any way, shape, or
form. I think I have a lot of credibility saying that, because back in
the fall of 2008, I didn't support huge taxpayer bailouts to Goldman
Sachs and the other megafirms. I opposed those taxpayer bailouts. I
thought it was wrong and counterproductive and moving us in the wrong
direction.
But I have to disagree with the distinguished chairman that the
present version of the Dodd bill fixes these key issues. I don't think
it does. So I encourage us to have a true bipartisan bill that can come
to the floor to address the problems that exist.
I have three major sets of concerns about the Dodd bill in its
present form. The first is very fundamental. It goes exactly to what I
was talking about, having opposed all the bailouts. The Dodd bill
expands too big to fail. It doesn't end it. The Dodd bill ensures
future bailouts; it does not stop bailouts. That is a big problem to me
and I believe to American taxpayers.
It is not just me saying this. It is many educated folks. Take Time
magazine, not exactly an arch-conservative publication. They have
reported:
Policy experts and economists from both ends of the
political spectrum say the bill does little to end the
problem of banks becoming so big that the Government is
forced to bail them out when they stumble. Some say the
proposed financial reform may even make the problem worse.
Also, Jeffrey Lacker--he is the President of the Richmond Federal
Reserve Board--agrees with that. In a CNBC interview, CNBC asked him:
``Doesn't the Dodd bill allow for winding down failed institutions?''
And Lacker said: ``It allows those things but it does not require
them.''
Let me repeat that because that goes to the heart of the problem:
It allows those things but it does not require them.
Moreover, it provides tremendous discretion for the Treasury
and FDIC to use that fund to buy assets from the failed firm,
to guarantee liabilities of the failed firm, to buy
liabilities of the failed firm. They can support creditors in
the failed firm. They have a tremendous amount of discretion.
Again, they have the ability for more bailouts, for continued pumping
of taxpayer dollars into failed firms.
William Isaac is a respected former Chairman of the FDIC. He agrees.
Nearly all of our political leaders agree that we must
banish the ``too big to fail'' doctrine in banking, but
neither the financial reform bill approved in the House nor
the bill promoted by the Senate Banking Committee Chairman
Chris Dodd will eliminate it.
Simon Johnson, distinguished MIT professor, put it succinctly:
Too big to fail is opposed by the right and the left,
though not, apparently, by the people drafting legislation.
These are specific ways the Dodd bill actually expands too big to
fail, specific authorities, specific sections that clearly do that. A
lot of the attention has been paid recently to the $50 billion prepaid
fund, and that is problematic in my mind. But that is not the only, not
even the most problematic section of the bill that expands too big to
fail. All these sections go directly to that issue.
My second main objection to the bill is, the bill also creates an
all-powerful superbureaucracy that goes well beyond the need for
targeted regulation to prevent what has happened in the last 5 years.
Again, these are specific sections that create this huge, new, all-
powerful superbureaucracy. One of the most worrisome is section 1081.
That subjects anybody, any business that accepts four installment
payments to the CFPB, the new superbureaucracy.
That is not just Goldman Sachs. That is not just Citigroup, Bank of
America. That is my family's orthodontist. That is my neighborhood
store that sells electronic equipment. That is a huge coverage
affecting millions of small businesses throughout America.
Imagine, anybody who accepts four installment payments--is that the
problem actor we are going after? This is a huge overreach, in terms of
Federal regulation, and this is a fundamental problem with the bill.
Finally, the third major problem with the bill is, the present
version of the Dodd bill does nothing to fix certain key causes of the
crisis. What do I mean by that? It does nothing on Fannie Mae and
Freddie Mac; a 1,100-page bill, supposedly comprehensive financial
regulatory reform. Yet the four words ``Fannie Mae, Freddie Mac'' are
nowhere in those 1,100 pages. This was not the only cause of the
crisis, but this clearly, admittedly, was a key cause of the crisis--
disastrous policy and administration at Fannie Mae and Freddie Mac. As
Lawrence White, distinguished economics professor, has said:
The silence on Fannie and Freddie is deafening. How can
they look at themselves in the mirror every morning thinking
that they have a regulatory reform bill and they are totally
silent on Fannie and Freddie? It just boggles my mind.
It boggles my mind as well.
Also, there is nothing on lending standards. Clearly, one of the
fundamental problems that caused the financial crisis is institutions
which lent money, subprime loans, with no meaningful standards. What
are the new standards we are enacting, putting into this bill?
Absolutely nothing--silence on lending standards, underwriting
standards. Clearly, that was a huge part of the last crisis.
[[Page S2724]]
Where is the change? These are the top firms that got bailout funds,
including Goldman Sachs. I voted against all these bailouts. But these
are the firms that got them.
These are the billions of taxpayer dollars that they received. This
is their old regulator, the Federal Reserve, and this is the brave new
world this Dodd bill will be introducing--exactly, precisely the same
regulator. Where is the change?
We need meaningful financial reform, but we need it targeted on the
problem. We need it to include all the causes of the problem.
These are key principles that would mean permanently ending bailouts
and too big to fail. I fought against the bailouts a few years ago. We
cannot continue that policy. We need to end it.
Ending all bailout authorities for the Federal Reserve and FDIC. It
is not good enough to say we have a new resolution mechanism. If those
bailout authorities continue as they do in the Dodd bill, they will be
used again.
Enhanced consumer protection without overreach, without creating this
new all-powerful superbureaucracy.
Greater transparency for derivatives, while allowing businesses to
properly, legitimately manage risk.
Begin addressing Fannie Mae and Freddie Mac. Again, the current Dodd
bill does not include four words, ``Fannie Mae, Freddie Mac.''
Establish minimum lending standards for mortgages. We had subprimes
with no underwriting standards, no lending standards. This present Dodd
bill does not change that. We must change that.
Increase competition for credit rating agencies. They were clearly
part of the last crisis.
Improve coordination and communication among all financial Federal
regulators.
These are the principles of strong regulatory reform. I hope these
are the principles around which we can come together in a bipartisan
way. I certainly support that effort by Richard Shelby and Chairman
Dodd. I encourage that effort. But those negotiations will not be
meaningful unless we demand on the Senate floor that they be meaningful
and demand that a bill moving to the Senate floor is true reform and a
bipartisan approach. I urge that approach. I enthusiastically support
that approach.
I yield the floor.
The PRESIDING OFFICER (Mr. Burris). The Senator from Illinois is
recognized.
Mr. DURBIN. Mr. President, in about 1 hour, the Senate will convene
for a vote. It is one of the few times this week that the Senate comes
together. Those who are following our proceedings will see Senators
from all over the United States gather on the floor of the Senate. That
gathering will be for a crucial vote as to whether the Republican
filibuster on Wall Street reform will continue or end. This will be the
third time this week we have given the Republicans an opportunity to
join us in a bipartisan effort to bring real reform to Wall Street and
the big banks on Wall Street.
Twice now we have failed to get a single Republican who will stand
and vote with us for Wall Street reform. I don't understand it.
Certainly, they understand what we have been through as a nation with
this recession. They realize that some $16 trillion of value has been
yanked out of our economy, yanked out of savings accounts and 401(k)s
and out of business ledgers. They know what has happened when
businesses have failed and millions of Americans are out of work and
they realize the root cause of this was on Wall Street, with some of
their dealings that, frankly, were outrageous, and now we are trying to
change them. Yet we have failed to come up with one Republican Senator
who will vote to begin the debate on Wall Street reform--not one.
A colleague of mine analyzed what Wall Street is doing to lobby
against this bill. He took the amount of money that Wall Street banks
and financial institutions are paying their lobbyists on Capitol Hill
and divided it and came up with a number. They are spending $120,000 a
day to stop Wall Street reform--$120,000 a day, 2 to 2\1/2\ times the
average income of an American, the Wall Street banks are spending each
day to stop this bill.
So far they have been successful. They have convinced every
Republican Senator to vote against beginning the debate on this bill.
They have convinced every Republican Senator to vote to continue the
filibuster because the Wall Street lobbyists know that if this bill
doesn't come to the floor, they are not going to have to change their
ways. They can keep doing what they have done for so long and they do
not have to face any new laws, any new oversight, any new regulation.
Of course, the American people know what has happened too. They saw
the hearings yesterday. Senator Carl Levin of Michigan, who was just on
the floor, presided over the Permanent Subcommittee of Investigations
of the Committee on Homeland Security. Carl Levin told me he had worked
for 16 months in preparation for that hearing, trying to understand the
complexity of Wall Street and how it works. He brought in the highest
executives from Goldman Sachs and asked them point blank to explain
what they had been doing. We saw it on television, last night and this
morning.
When the men who were called before him, who have literally made
millions of dollars out of this investment scheme, were asked to
explain it--something as basic as this--how could they sell a product
to a consumer at Goldman Sachs without disclosing that Goldman Sachs
was betting that consumer would lose money, that is what happened. They
were so-called shorting the market, meaning they were betting huge sums
of money that the investment they were selling to their customers was
going to fail. These men sat before that committee and said that is
business. That is how we do business.
That is the sort of thing that has to come to an end in this country.
There is a man by the name of Paul Krugman, who writes for the New York
Times. He wrote an article about what happened at Goldman Sachs, which
led to their investigation as well as charges that have been lodged
against them. I would like to read from this article, from April 19 of
this year, where Mr. Krugman says:
We've known for some time that Goldman Sachs and other
firms marketed mortgage-backed securities even as they sought
to make profits by betting that such securities would plunge
in value. This practice, however, while arguably
reprehensible, wasn't illegal. But now the S.E.C. is charging
that Goldman created and marketed securities that were
deliberately designed to fail, so that an important client
could make money off that failure.
Krugman writes, ``That's what I would call looting.''
He goes on to say, this legislation we are considering contains
consumer financial protection, the strongest law in the history of the
United States. Here is what Krugman writes:
For one thing, an independent consumer protection bureau
could have helped limit predatory lending. Another provision
in the proposed Senate bill,--
Which is before us, being filibustered by the Republicans--
requiring that lenders retain 5 percent of the value of loans
they make, would have limited the practice of making bad
loans and quickly selling them off to unwary investors.
He goes on to write:
The main moral you should draw from the charges against
Goldman, though, doesn't involve the fine print of reform; it
involves the urgent need to change Wall Street.
Listening to financial industrial lobbyists and the Republican
politicians who have been huddling with them, you would think that
everything will be fine as long as the Federal Government promises not
to do any more bailouts. But that is totally wrong, not just because no
such promise would be credible, but the fact is that much of the
financial industry has become a racket, a game in which a handful of
people are lavishly paid to mislead and exploit consumers and
investors. If we do not lower the boom on those practices, the racket
will just go on.
Every day that the Republican filibuster of Wall Street reform
continues is another day that we will fail to take into consideration
this bill, this Financial Stability Act, which is pending before the
Senate. Each day that the Republican filibuster continues is a victory
for the Wall Street lobbyists. That is just wrong. Have we learned
nothing from the recession we are in? Have we learned nothing from the
hearing yesterday where these men, these multimillionaires who pay
themselves lavishly sat and said they thought it was
[[Page S2725]]
perfectly acceptable to sell a product to one of their customers that
they were betting would fail with their own money? They think that is
just fine. It is part of the casino they run on Wall Street.
Well, John Ensign of Nevada took exception to that and said: That
gives Las Vegas casinos a bad name because we deal with things
honestly, and people know the odds are against them. It is not like the
situation on Wall Street where people are misled into believing they
are making a good bet when the house is betting against them. And that
is what happened at Goldman Sachs. That is the sort of thing that will
come to an end.
What this bill does is it holds Wall Street accountable. We are
fighting to hold them accountable for the reckless gambling that led to
our recession and the loss of 8 million jobs in America--8 million.
There are 8 million families affected by these activities on Wall
Street, and the Republican filibuster would stop us from even
considering changes to the regulation and oversight of Wall Street
activities.
We want to end taxpayer bailouts for good. I listened to the
criticism of this bill. I try to draw an analogy which I heard Senator
Menendez of New Jersey use. What we try to do in this bill is to
create, for lack of a better term, under Senator Menendez's analysis, a
prepaid burial plan. What it basically means is that if your company--
financial institution--is going to go out of business, we want to make
sure we have put enough money in the bank to pay for funeral expenses--
literally the winding down and liquidation of the company--because we
don't want the American taxpayer to do it. So this bill creates a so-
called prepaid corporate funeral fund and says, let the banks
themselves fund it so the taxpayers do not have to. I think that is
reasonable.
The Republican approach, though, is to say: Well, let's just bet
there is enough money left in the estate to pay for the funeral. Maybe
there will be and maybe there will not be. In that case, the taxpayers
are on the hook again. That is not a good outcome. So trying to create
some assurance that there is money to liquidate and wind down these
financial institutions protects taxpayers from another bailout. The
Republicans object to that, but they have not come up with a better
solution.
The third thing we want to do is to put commerce and consumers in
control in America. I do not have to remind most people, if you open a
bank account, if you enter into a mortgage, if you decide to sign up
for a credit card, go off to buy an automobile, sign up for a student
loan, sign up for a retirement plan, they usually send you some legal
documents along the way.
At a real estate closing--I have been to many as a consumer and a
lawyer--they give you a stack of papers and you sit there at the bank,
with your spouse nearby, signing these papers, one after the other
after the other, until after 20 or 30 minutes it is all over, they hand
you the keys, and you head on out to see your new house. Well, most
people do not know what is in those papers. Even if a lawyer is sitting
at the table with them, it is unlikely that they have parsed every
single word. As a result, a lot of people end up signing up for things
they did not understand. We want to change that. I do not think it is
too much to ask that these financial obligations and instruments be in
plain English so the average person knows what they are getting into.
What we want to do in this bill is to empower consumers so that you
can make the right choice for yourself, your family, your business, and
your future. We do not want you to fall victim to the tricks and traps
of the latest little turn of a phrase that can turn your world upside
down. That is why the consumer financial protection law is included in
this bill. It is the strongest consumer financial protection law in the
history of the United States.
There are lobbyists lined up outside this Chamber trying to carve out
exceptions. They are trying to argue: Wait a minute, we do not want
this to apply to pawn brokers; let's give them a pass. We do not want
this to apply to casinos; let's give them a pass. We do not want this
to apply to automobile companies, auto agencies; let's give them a
pass. They want to have loopholes and carve-outs for the favorite
industries they represent.
I was at the airport coming out here this week, and one of these
folks, a good, local businessman in the suburbs of Chicago, came up and
said: I am an honest businessman. I did not cause the recession. I have
never had a problem in my life. People do not complain about me. The
Better Business Bureau gives me the highest of marks. Why should I be
regulated? Why should the government look at what I am doing?
And I said to him: If you are doing everything you said, you should
not worry about it. What you ought to worry about is your competitor
down the street who is fleecing people and giving folks in your
industry a bad name.
These carve-outs and these changes--and they have been arguing for
them all morning on the Republican side of the aisle--are the reason
they are holding up the bill. They have promised the lobbyists that
they will cut out loopholes in this bill for the special interest
groups that are represented by them. They would exempt the automobile
dealers, some of them would exempt the home loan industry, and some of
them would exempt pawn brokers. The exemptions could be as long as your
arm, exemptions as long as the list of lobbyists who are trying to push
these loopholes.
I don't think that is a good outcome. I don't believe we should be
creating lobbyist loopholes in this law. Let's hold everyone to the
same legal standard, a good-faith standard of real disclosure and
honest dealings with consumers; clear English language whether you are
taking out a credit card, buying a car, buying a home, a student loan,
or a retirement benefit for the rest of your life. Shouldn't the
language be clear? We have to make that clear as part of this.
At some point, I hope the Republicans who are filibustering this Wall
Street reform will decide, if they have a good cause and they want to
bring it to the floor, that they can open the debate, provide their
side of the story, and urge the Members of the Senate to go along with
them. If a majority agrees, it will be in the bill. If not, it will be
outside the bill.
If that sounds vaguely familiar, like the Senate you read about when
you were going to school, it is. It is what we are supposed to be
doing. This is not supposed to be an empty Chamber of desks here
waiting as we launch day to day another filibuster vote. Ninety-nine
Senators are supposed to be out here with me in heated debate over the
biggest financial issue of our generation. Instead, the Republicans
continue to filibuster, stop the debate, refuse to go to amendments,
refuse to take their special pleadings on what they want to achieve in
this bill to the court of public opinion. That is not fair, and it is
not right.
It is also interesting, when we were in the middle of the health care
debate, how many times those on the other side of the aisle stood up
and said: Do you know what the problem is here? The Democrats are
trying to write this bill behind closed doors. They will not bring it
out to the floor of the Senate.
Now fast forward to the current debate. What are the Republicans
saying? You know what the problem is here--the Democrats refuse to
change this bill behind closed doors. They want to amend it right here
on the Senate floor.
It seems to me they are in an inconsistent position.
If they believe these amendments are good amendments, they should not
be afraid to offer them in front of the American people. But if they
want to cook a deal behind closed doors, I do have some problems with
that. If they have a good cause, they should bring it to the floor and
deal with it. Shady institutions are not good for this country and
sunlight is good, transparency is good. I believe it is time we stand
up for the American people and say that reckless gambling on Wall
Street with the future of the American economy is absolutely
unacceptable.
Some of them argue: Well, let's go after the biggest financial
institutions. Let's not blame the little people who are involved in the
credit business.
There was an article in the New York Times on Sunday, April 18, by
Jim Dwyer. He was talking about credit card companies turning $2.50
slices of pizza into a $37.50 slice. They did it, of course, when they
bought a slice of pizza with a debit card that was over
[[Page S2726]]
the limit and the penalty was $35. The question on that fee was, Were
the people notified ahead of time what they were going to face? I don't
think it is unfair to notify people what they have to pay. I believe
this kind of disclosure is important to confidence in our economy.
I am urging my colleagues to stand and join us in making sure we have
a chance to bring this bill to the floor. In less than 1 hour, this
empty floor will be filled with Senators, Democrats and Republicans. We
need 60 Senators to step up and say: This recession has taught us a
lesson. We are not going to let America go through this again because
of the greed and malpractice of those in Wall Street and financial
institutions. We are going to change the system. We are going to
require them to be more transparent, more accountable, to put their own
money on the table, and to be honest with their customers. We are going
to require financial institutions to make full disclosure to the people
they deal with so that those customers can be empowered to make the
right decisions for themselves and their families. We are not going to
exclude certain businesses in America and say they can do whatever they
like when what is at stake is the financial security of a family.
Everybody is going to be held to the same basic standard of honesty,
a standard which good businesses live up to every single day. I urge
the good businesses across America not to stand in defense of the
bottom feeders. I urge them to stand up for good business practices
which are part of the free market system and have made our Nation so
strong as the entrepreneurial spirit has blossomed into more jobs and
economic growth. That spirit needs to be regained, the confidence needs
be regained.
The embarrassing chapter yesterday in the Committee on Homeland
Security, when these Wall Street titans came in and said they saw
nothing wrong with misleading their customers into millions of dollars
of losses, has to come to an end. It will only end when the Republican
filibuster ends on the floor of the Senate.
I will hope at 12:20 when this vote begins that at least a handful of
Republicans will stand up and say: Enough is enough. Let's move forward
with reform. Let's move forward to putting the American economy back on
track.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________