[Congressional Record Volume 156, Number 61 (Wednesday, April 28, 2010)]
[Senate]
[Pages S2733-S2750]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



  Mr. SANDERS. 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for the quorum call be rescinded.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. SANDERS. Madam President, since the beginning of the financial 
crisis, the Federal Reserve, the Fed, has provided over $2 trillion in 
taxpayer-backed loans and other financial assistance to some of the 
largest financial institutions and corporations in the world. Let me 
repeat that: over $2 trillion--with a ``t''--$2 trillion.
  Over a year ago, as a member of the Budget Committee, I asked Ben 
Bernanke, the Chairman of the Fed, a very simple question--very simple 
question; it could not be simpler--and the question, in so many words, 
was: Mr. Bernanke, you lent out $2 trillion. Who got that money? Who 
received the money? What were the terms of those loans?
  Mr. Bernanke's answer was: No; I am not going to tell you, Senator 
Sanders. I am not going to tell the Budget Committee, and I am not 
going to tell the American people.
  I think that is outrageous. I think when $2 trillion of taxpayers' 
money is placed at risk, the American people have a right to know. How 
many debates have we had on the floor of the Senate about legislation 
dealing with $5 million, $30 million, with feverish debate--whether it 
is a good idea or a bad idea--and now you are looking at trillions of 
dollars of taxpayer money being placed at risk, and we do not know who 
received that. That, to me, is an outrage and that, to me, is 
unacceptable.
  On that very day, after Ben Bernanke denied the American people the 
right to know who received those loans, I introduced legislation 
requiring the Fed to put that information on their Web site.
  The Presiding Officer knows as well as I do, millions of lives have 
been ruined by the greed, the recklessness, and the illegal behavior of 
Wall Street. While the Fed was providing secret loans, at virtually no 
interest, to some of the largest financial institutions in this 
country, millions of Americans were losing their jobs, their homes, 
their life savings, their ability to send their kids to college--as a 
direct result of the same Wall Street firms the Fed was propping up.
  So you have a situation where all over this country families are 
suffering, small- and medium-sized businesses are in desperate need of 
affordable loans. Yet you have the Fed providing trillions of dollars 
to the people who caused the recession and to some of the wealthiest 
and most powerful CEOs in the country.
  The very least we can do for the American people is to tell them, to 
give them the information as to who got bailed out by the Fed. I do not 
think that is too much to ask. We have to explore whether there were 
conflicts of interest. How does it work when financial institutions get 
huge amounts of zero or near zero interest loans? Who sits on the 
committee? Are there conflicts of interest?
  We have to know, for example, what I believe to be the case: that 
some of those financial institutions that received billions in zero or 
near zero interest loans may have invested that money in T-bills, in 
Treasury bonds, earning 3 or 4 percent interest. What kind of scam is 
that? You get zero interest loans from the Fed, and you invest in 
government-backed T bonds at 3 or 4 percent interest. That is an 
incredible scam. Did some of those financial institutions do that? I 
suspect they did. But we do not know what they did with that money and 
we have a right to find out.
  Let us be very clear: The money put at risk does not belong to the 
Fed. It belongs to the American people. The American people have a 
right to know where their taxpayer dollars are going. Therefore, during 
the debate on financial reform, I will be offering an amendment to 
audit the Federal Reserve and to require that the Fed release all the 
details regarding the more than $2 trillion in virtually zero interest 
loans the Fed has provided to large financial institutions since the 
beginning of the economic crisis.
  We talk a lot around here about the need for bipartisanship or 
tripartisanship. I am an Independent.

[[Page S2734]]

Well, this amendment does that. I do not know that there is any 
amendment out there that has more bipartisan support. This amendment is 
being cosponsored by Senators Feingold, Leahy, Wyden, Dorgan, and 
Boxer; Democrats. It is being cosponsored by Senators DeMint, McCain, 
Grassley, Vitter, Brownback, Graham, Risch, and Wicker; Republicans. 
But, quite significantly, on the base bill I introduced, from which 
this amendment comes, this legislation is being supported by 32 
cosponsors; that is, 22 Republicans and 10 Democrats, and they run the 
gamut from some of the most conservative Members of the Senate to some 
of the most progressive.
  The Senators who are supporting the base bill are Senators Barrasso, 
Bennett, 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 a very broad cross-section of the Senate, from some of the 
most conservative to some of the most progressive Members on the base 
bill, who say it is absurd that the Fed could lend out trillions of 
dollars without the American people knowing who has received that 
money.
  Let me tell you what our amendment would do, and it is pretty simple. 
No. 1, it would require the nonpartisan Government Accountability 
Office, the GAO, to conduct an independent and comprehensive audit of 
the Fed within 1 year. Secondly, it would require the Fed to disclose 
the names of the financial institutions that received over $2 trillion 
in virtually zero interest loans since the start of the recession. That 
is it. That is the whole amendment. Pretty simple. I would hope and 
expect we would have widespread bipartisan support for this amendment 
when it gets to the floor.
  This amendment also has widespread community support from 
organizations all over this country. It has the support of Americans 
for Financial Reform--a coalition of over 250 consumer, employee, 
investor, community, and civil rights groups, including the AFL-CIO and 
the AARP.
  I should also mention that increasing transparency at the Fed is 
obviously something the American people want to see, and poll after 
poll suggests that.
  This amendment is similar to the Federal Reserve Transparency Act 
that was introduced in the House by Congressman Ron Paul and now has 
320 bipartisan cosponsors. That is a lot. There are 435 Members of the 
House, and 320 are on the House bill. A version of that bill passed the 
House Financial Services Committee by a vote of 43 to 28 and was 
incorporated into the financial reform bill that passed the House last 
December. So not only do we have widespread bipartisan support in the 
Senate, that same type of support exists in the House.
  Last year, the Speaker of the House, Nancy Pelosi, said Congress 
should ask the Fed to put this information ``on the Internet like 
they've done with the recovery package and the budget.'' That is 
exactly what this amendment would do. Interestingly enough, not only do 
we have widespread bipartisan support in the Congress, not only has the 
House moved vigorously on this issue already, but, importantly, the 
courts have ruled in support of what we are trying to do.
  Bloomberg News has been very aggressive on this issue, and they have 
won court decisions requiring the Fed to release this information to 
the public. But despite widespread congressional support, despite two 
court decisions, the Fed continues to resist the transparency which our 
country desperately needs.
  As long as the Fed is allowed to keep the information on their loans 
secret, we may never know the true financial condition of the banking 
system. This has resulted in a whole myriad of problems, and I think it 
is time we brought some sunshine to the goings on of the Fed.
  Let me conclude by saying this: The American people are outraged, 
regardless of their political views, by the behavior of Wall Street. 
They have seen the greed of Wall Street lead us into a recession in 
which millions of jobs have been lost, homes have been lost, savings 
have been lost, families have been destroyed, and they want to make 
sure we do everything we can to make sure what caused this terrible 
recession never happens again.

  I think one of the most important things we can do in terms of Wall 
Street reform is to bring transparency to the Fed. So this is an 
incredibly simple amendment. This is an amendment that has grassroots 
support. This is an amendment that has support from the most 
progressive and conservative Members of the Congress.
  When I bring up this amendment, I certainly hope we can get a great 
deal of support from Members of the Senate.
  Mr. DURBIN. Madam President, will the Senator from Vermont yield for 
a question?
  Mr. SANDERS. I am very pleased to yield to my friend from Illinois.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. I would like to ask the Senator from Vermont, through the 
Chair, about another issue in this bill relative to the interest rates 
that are being charged across America. I would like to ask the Senator 
from Vermont if he would tell me his take or evaluation of the 
provision in this bill which exempts usury laws and interest rates from 
the consideration of the Consumer Financial Protection Agency.
  I know the Presiding Officer has an interest in some exploitation 
that is occurring in her State of North Carolina--frankly, in my State 
of Illinois, and probably across this Nation--by the so-called payday 
loan and title loan operations, where average people who are struggling 
economically go in for high-interest loans that are then rolled over, 
time and time and time again, until they lose whatever security has 
been offered for the loan and, frankly, find themselves even deeper in 
debt.
  I would like to ask the Senator from Vermont, whom I have discussed 
this with on many occasions, his thoughts about consumer financial 
protections and the interest rates being charged across this Nation.
  Mr. SANDERS. I thank my friend from Illinois for raising that 
question. I wish to congratulate him because our colleagues should know 
he has been a leader on this issue for many years and has already 
achieved some significant success.
  My memory is, we had payday lenders that, if you can believe this, 
were charging men and women in the U.S. Armed Forces--who, in many 
cases, do not have a lot of money, who are trying to take care of their 
families--outrageously high interest rates on check cashing and payday 
loans. The Senator from Illinois led the effort successfully to put a 
cap on that, and I thank him very much for doing that. That is a start.
  But, clearly, as the Senator from Illinois indicates, we have to go 
further. Here is the story. Just a couple weeks ago, there was a rally, 
right here on Capitol Hill, led by religious groups--religious groups--
who said it is immoral and unacceptable that in the United States of 
America we are now seeing usury and loan sharking taking place by some 
of the largest financial institutions in this country. So we are not 
just talking, I would say to my friend from Illinois, about an economic 
issue; we are talking about a basically moral issue. If one reads the 
Bible, the Old Testament, the New Testament, the Koran, every major 
religion on this planet has said that usury is immoral; that if you are 
desperate and you need money, I cannot charge you outrageously high 
interest rates. That is immoral and the wrong thing to do. Yet in this 
country today, as a result of a Supreme Court decision some years ago, 
we have millions of Americans who are paying 25, 30, 35, 40 percent 
interest rates. This is not from loan shark gangsters on a street 
corner in Chicago; this is from some of the largest, most distinguished 
financial institutions in the world. We have to put an end to that.

  I would tell my friend from Illinois that the legislation we have 
offered would put a cap of 15 percent, except under extraordinary 
circumstances, on the interest rates banks can charge the American 
people. We came up with this idea because this is what credit unions in 
this country have been doing for several decades, and they have been 
doing it successfully.
  Mr. DURBIN. Madam President, I wish to ask through the Chair again--
first, I wish to give credit where it is due. The original amendment we

[[Page S2735]]

talked about that protects military families was offered by Senator Jim 
Talent of Missouri, and I supported it and everyone supported it 
because we found men and women in the military trained to defend our 
country who signed up for these payday loans and quick loans, and they 
became so deeply mired in debt they were forced to leave military 
service. So we said as a matter of national security, we can't 
sacrifice well-trained men and women who can keep us safe as a nation 
to loan sharks who have these storefront operations in my hometown of 
Springfield and in your hometown in Vermont and all across the Nation.
  I would say to the Senator from Vermont--and he and I have joked 
about this a little bit--I tried to come up with a number to say this 
will be the maximum interest rate that can be charged. I went to a 
mutual friend whom I respect and said: What is a number that no one can 
argue with? She said 36 percent. When I mentioned that number to people 
back in Illinois and other places, they were aghast. They said: We 
don't want to pay 36 percent for anything. I said: I don't either. But 
this is like a ceiling.
  Well, it turned out it is a little more confusing than illuminating. 
I happen to think the Senator from Vermont is certainly right with the 
cap he is suggesting.
  Now, is it not true, I ask the Senator from Vermont, as this rollcall 
vote reflects, if the Republican Senators in this Chamber continue this 
filibuster against this financial reform bill, this Wall Street reform 
bill, this consumer financial protection bill, we can't even engage in 
this debate, let alone this amendment, to try to protect families 
across America from being preyed upon by these outrageous reptilian 
credit operations?
  Mr. SANDERS. The Senator from Illinois is, of course, absolutely 
right. The point the Senator from Illinois is making, which makes 
eminent sense, is if our friends disagree, if our friends want to offer 
an amendment, if the Republicans want to alter the bill, that is their 
right. That is what the Senate is about. But we can't proceed or go 
forward in putting a cap on the outrageous interest rates financial 
institutions are charging the American people--the loan sharking--
unless we get this bill going. We can't talk about Fed transparency 
unless we get this bill going.
  So I certainly agree with my friend from Illinois. People have a 
right to disagree, but the American people are disgusted and frustrated 
with what is going on on Wall Street. They want action. So to simply 
have our Republican friends saying: No, no, no, we are not going 
forward, doesn't make any sense to me.
  Mr. DURBIN. Madam President, I would ask the Senator from Vermont 
through the Chair, as informative and as entertaining as our 
presentations are on the floor, the fact is, 98 chairs are empty on the 
Senate floor, chairs that could be filled with Members of the Senate 
from both political parties debating the issues we are talking about; 
actually voting on amendments, proposing changes in the law to 
ultimately work with the House and send it to the President to solve 
some of the problems of our Nation. But as long as we are facing--and 
we have had three filibuster votes so far this week with more to 
follow--as long as we are facing this Republican filibuster where not 
one single Republican Senator will break with the Republican caucus or 
the Wall Street position that opposes any reform, we can't even bring 
this bill to the floor for debate so we can address the biggest 
economic and financial challenge America has faced in decades.
  Mr. SANDERS. Madam President, my friend from Illinois is exactly 
right. Let me just add to it. We have the House of Representatives that 
voted to go forward. We have the President of the United States who 
wants to go forward. We have 57, or whatever the number is, Senators 
who wish to go forward. Now is the time to go forward.
  I would add to what my friend from Illinois has just said. Let's be 
very clear about this. Last year, in 2009, as I understand it, our 
friends on Wall Street who are doing everything they can to make sure 
Congress does nothing to reform the way they do business--that is what 
they want; let's be clear about it--do you know what they spent last 
year? I would tell my friend from Illinois that my understanding is 
they spent $300 million on lobbying and campaign contributions.
  I know my friend from Illinois knows that we can't walk around the 
Capitol without bumping in to one or another lobbyist representing Wall 
Street. Why are they here? Why are they representing hedge fund 
managers who make billions of dollars in a year? They want to be able 
to continue to do the exact same things they have done in the past 
which has led to this terrible recession.
  So let's not be naive. There are huge amounts of money flooding 
Capitol Hill right now, and the goal is, no matter what anybody may 
say: Let's do no Wall Street reform.
  Mr. DURBIN. I thank the Senator from Vermont for yielding for 
questions. I yield the floor and unless someone----
  Mr. SANDERS. Madam President, I wish to thank the Senator from 
Illinois for his continued efforts on Wall Street reform and the 
excellent work he has done.
  Mr. DURBIN. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BURRIS. 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. BURRIS. Madam President, we just witnessed a few moments ago the 
third attempt to try to do something about financial reform legislation 
in this body, and for the third time, it went down. I am an old 
baseball player. I played a lot of baseball in my young days, and there 
is a rule in baseball that says three strikes and you are out. Well, we 
have had three tries at this financial reform, and I will tell my 
distinguished colleagues on the other side of the aisle: We are not 
out. We are just beginning to fight under the circumstances we are 
confronted with because we are fighting on behalf of the American 
people.
  Earlier this week, our distinguished majority leader called for a 
vote to open the debate on major financial reform. We have seen well-
designed proposals from the Senator from Connecticut, Chairman Dodd. 
This bill reflects the priorities articulated by President Obama and 
supported by an overwhelming majority of the American people. It will 
end the so-called ``too big to fail'' and prevent massive banks from 
making risky decisions that threaten the entire American economy. It 
will eliminate the need for government bailouts, and it will institute 
commonsense regulations so companies cannot create investments that are 
designed to fail and then bet against them.
  In short, this legislation is a good starting point. As a matter of 
fact, we have heard Chairman Dodd say time and time again we have to 
get it on the Senate floor so we can improve this legislation. I know I 
am supportive of a couple of amendments that would be beneficial to 
improve the legislation. It may not be the complete Wall Street reform 
package in its final form, but it contains a number of good provisions, 
and it is worth debating. So I am asking my colleagues, let's stop 
debating to debate.

  The majority leader scheduled a vote to bring this bill to the floor 
so Members of both parties could offer amendments and make 
improvements. This was not a vote on the legislation itself. Leader 
Reid was not asking the Senate to pass the bill without debate or 
without amendment. He simply wanted to start the process. He wanted to 
begin deliberations on the floor of this Chamber in front of C-SPAN 
cameras and in front of the American people. But when the roll was 
called and my colleagues and I came to the Chamber, every single one of 
my Republican friends voted to block the debate, plus one of ours.
  So we will try again, I hope, this afternoon, if not tomorrow, but we 
are not playing baseball on the floor of the Senate. This is not the 
all-American game, but it is the all-American future.
  There was a second vote to start debate--to move ahead this process 
and take up the consideration of financial reform. But for a third 
time, my Republican friends stood in the way. They know they will have 
plenty of opportunity to try and defeat the bill once it

[[Page S2736]]

is on the Senate floor, but they decided to drag their feet anyway.
  We have seen this kind of thing before. This is the same Republican 
playbook we saw with health care reform, the same obstructionism, the 
same tired politics. In the past, they have been able to use this 
strategy to score political points. This time, I would respectfully 
suggest that my Republican friends have miscalculated. The issue of 
health care reform was complicated, so when it came time for debate, it 
was easy to distract and delay and to spread misinformation.
  It was easy to muddy the waters so they could gain traction and delay 
President Obama's agenda. When the health care debate was over, good 
policy won out over good politics, and we passed the bill--but not 
before my friends on the other side had scored some political points.
  This time it is different. Financial reform itself is very complex. 
That is why it is so easy for big banks to take advantage of consumers. 
That is why it is difficult to apply the kind of oversight we should 
have seen in the years leading up to the recent collapse.
  The issue itself is hard. This time around, the tactics of 
distraction and delay will not work. That is because Americans are 
smarter than that. They know who the bad guys are.
  About 2 years ago, Lehman brothers was one of the first dominoes to 
fall. Next came Bernie Madoff. Then a handful of other Ponzi schemes 
came crashing down. Most recently--just yesterday--we witnessed Goldman 
Sachs, one of the largest and most respected firms on Wall Street, was 
charged with fraud.
  When it comes to financial reform, we know where the problem lies. My 
Republican friends can try to distract and obstruct all they want, but 
they will not succeed in confusing the American people. Ordinary folks 
have had their pocketbooks bled dry by this financial crisis. They have 
seen their hard-earned savings disappear and their future become 
dramatically less secure, and they know exactly who to blame.
  For far too long, Wall Street banks have been subject to relaxed 
oversight. As a result, the focus of their business has changed. It 
stopped being about lending money to businesses, making smart 
investments, and encouraging free enterprise. When I was in the banking 
business, that is what we did. I was at the biggest bank in Illinois, 
the seventh largest bank in America, where we worked with companies, 
made loans, collected interest, and took the people's deposits in and 
paid them interest. And we kept the economy going.
  Instead, Wall Street has basically turned into a casino. Look at the 
derivatives market. Here you essentially have an object that is being 
traded that has no value of its own. It has no ties to the actual 
economy. There is no product, no business idea, and no actual 
investment. It is just a high-stakes bet.
  Without intelligent risk management, capital standards, and basic 
rules of the road, these bets have the potential to undermine the 
strength of our entire economy. Wall Street is a casino gone wild, and 
they are gambling with our money not theirs. They are making money off 
of our money.
  The American people know this. They can see through the distractions 
and political posturing. They recognize the need to reform Wall Street 
so we can end bailouts, put commonsense rules in place, and make sure 
we never experience this kind of economic crisis ever again.
  I am not sure what my Republican friends hope to gain by blocking our 
debate on this bill. They say they want to improve it, but that is 
exactly what we would be able to do once it is on the floor. Maybe they 
believe they can water down our reform package by dragging out this 
process. Maybe they would like the chance to hold some more Wall Street 
fundraisers before they have to take a vote on the legislation itself. 
Maybe they simply don't have an alternative plan, and they know they 
cannot win this argument on the floor of the Senate, with the eyes of 
the Nation on them.
  I am not sure what they hope to gain by stalling financial reform. I 
urge my distinguished colleagues on the other side to please let us 
move ahead with this process. I urge them to set aside these political 
tactics and bring their ideas to the table so we can strengthen this 
bill and make sure our economic future is safe.
  I call upon them to join us in debating, amending, and improving this 
important legislation rather than dragging their feet on a bill that 
has so much public support.
  When we pass this into law, after extensive discussion, it will be a 
victory for the American people. If my Republican friends join us in 
this effort, it can be a victory for both political parties, as well. 
We will all benefit. The American people will benefit.
  This legislation deserves to be debated in open session. I ask my 
Republican friends to let us move ahead. But if they will not, and they 
continue to delay and obstruct, then I challenge them to come to the 
floor and explain. I challenge any one of my distinguished colleagues 
on the other side of the aisle to walk into the Senate Chamber today 
and seek recognition from the Chair. I challenge them to stand before 
the American people and tell them why American families should be asked 
to fund Wall Street's recklessness and greed.
  I want them to explain that, Mr. President. I believe we need to end 
these practices. I believe we need to take up the issue of financial 
reform without delay. If my friends on the other side disagree, it is 
their privilege to do so. But I believe they owe the American people an 
explanation. I am pretty sure it will be very difficult to explain to 
them why they are holding up this important piece of legislation.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Missouri is 
recognized.
  Mr. BOND. Mr. President, I am delighted to join in this debate, and I 
invite my friends on the other side to listen to what the people in 
communities in our home States are saying, who don't spend time 
soliciting funds on Wall Street.
  Let's be very clear: We all agree we need to hold Wall Street 
accountable for the havoc wreaked on Main Street. We all agree we need 
to enact reform to prevent another financial crisis. Where we disagree 
on is what the responsible reform looks like. I have real concerns 
that, in its current form, the Democrats' bill, written with the White 
House, is a massive government overreach that will punish Main Street, 
hurt families, and cost jobs by stifling small businesses and 
entrepreneurs.
  To sum it up, Democrats want to treat Main Street, our community 
banks, our farm lenders, and our auto dealers like they were Goldman 
Sachs or others on Wall Street. We Republicans want to ensure we fix 
Wall Street, without crippling Main Street. The only way to do that is 
to force the Democrats to listen to the concerns of Main Street, to 
open this up and make it a bipartisan process. It has not been, and it 
isn't going to be until we get some discussion and real substantive 
changes in what I view as a very dangerous bill to the economic climate 
and health of our country, our States, our communities, and the 
creation of jobs.
  Today, let me share with you some of the concerns I have heard from 
Main Street. Like families in every community and every State, small 
businesses were the victims. They weren't the perpetrators of the 
financial crisis caused, among other places, on Wall Street.
  Small businesses were not responsible for the financial crisis and 
should not be treated as if they were. But that is exactly what this 
bill does. This 1,400-page bill reaches far beyond Wall Street and will 
impose new costs and onerous new regulations on small businesses to fix 
a problem they were not responsible for causing. In short, this bill 
would change the way every American does business.
  We are not just talking about changing the way Wall Street banks do 
business, but also how every community banker, local dentist, farm 
lender, and auto dealer does business. I urge my colleagues to take 
time away from the floor and listen to the people at home. They have a 
very different message than that which we are hearing from our friends 
on the other side of the aisle.
  These concerns are not just Republican concerns. I hope my colleagues 
on the other side of the aisle are also hearing from their constituents 
back home about disturbing provisions in the Democrats' proposal and 
have begun to agree with Senate Republicans that there is a lot of work 
to be

[[Page S2737]]

done before we bring this 1,400-page monstrosity to the floor.
  Don't misunderstand me. Like the nearly two-thirds of all Americans 
who favor some sort of reform of Wall Street, so do I and my Republican 
colleagues. But we need responsible and bipartisan reform that all 
Americans and businesses can be proud of. I want to work with my 
friends on the other side to ensure that the concerns I have heard from 
Missourians--1,000 miles away from Wall Street--are addressed as the 
process moves forward.

  First, I continue to be stumped that any real form of our financial 
system could ignore Fannie Mae and Freddie Mac, which were 
significant--if not the majority--contributors to the financial crisis. 
But that is what this bill does. That is a mistake, and so is leaving 
out the rating agencies who gave triple-A ratings to bad paper that was 
foisted on the system.
  Fannie Mae and Freddie Mac--these government-sponsored GSEs--
contributed to the financial meltdown by buying high-risk loans made to 
people who could not afford them. In addition to the cost to taxpayers, 
these irresponsible actions turned the American dream into the American 
nightmare for too many families who faced foreclosure, lost their 
homes, which devastated entire neighborhoods and communities as the 
property values diminished, as well as the credit rating of the 
families displaced.
  Responsible reform must address the GSEs. Responsible reform would 
put an end to the taxpayer-funded bailout of Fannie and Freddie and 
refocus them on promoting affordable housing.
  Next, it is critical that in reforming Wall Street, we are not 
punishing Main Street. Instead, we should be protecting small business 
startups that are so critical to job creation.
  Unfortunately, this bill will kill small business startups. While 
title IX of the Dodd bill has been little noticed, it would have 
devastating consequences. Specifically, this provision would kill small 
business startups by delaying and limiting the availability of private 
investor seed capital, which is essential for the survival and growth 
of these startups.
  Through new, burdensome regulation by the SEC, innovators and 
entrepreneurs would be subject to registering with the Commission for a 
4-month review before they could get out and start soliciting money. 
This tying up of vital venture capital dollars needed for immediate use 
by small businesses would cripple their startup efforts. This is not a 
measure that will protect people from Wall Street. This is not a 
measure needed because venture capitalists and small startup 
entrepreneurs and innovators were causing the crisis. No, they are part 
of the solution of the jobless problems we have now.
  This provision is an overreach by the Federal Government, which would 
shut down the job creation that Main Street provides, which this 
country desperately needs. Raising the net worth threshold for those 
who can invest in these venture capital firms to $2.3 million from the 
existing $1 million, and raising the annual household income threshold 
to $450,000, as the Dodd bill proposes to do, would disqualify two-
thirds of the current accredited investors, according to the Wall 
Street Journal, who otherwise would help fund small startups in our 
communities. These are the people whom these innovators and 
entrepreneurs have to go to, and this will make it impossible for them 
to get the money they need. Therefore, some woman, some man with a 
great idea is much less likely in your hometown to be able to get the 
funds she or he needs to start a business.

  I believe strongly--and I have always said and will continue to say--
that small businesses and the startup companies are the backbone of our 
country. I understand the critical role these so-called angel investors 
can play in the creation and development of new companies, small or 
large. Let me tell you about my position. Right now, in Missouri, I 
have been working to help build an agri-biotech corridor across the 
State. In Missouri, we have the potential to foster a whole new 
industry in advanced agricultural research and biotechnology. This 
agriculture research and biotech industry is our best opportunity to 
stimulate and create high-paying skilled jobs in rural Missouri, rural 
America, and in the cities as well.
  The stimulus these biotech companies are spurring in Missouri is also 
happening in other States across the Nation. According to the Kauffman 
Foundation, located in Kansas City, between 1980 and 2005, companies 
less than 5 years old accounted for all--all--net job growth in the 
United States. As a matter of fact, the same study showed that in 2008, 
angel investors provided roughly $19 billion in more than 55,000 
companies. You are going to put an end to that with this bill?
  Let us go back and think about it before we bring this monstrosity to 
the floor. The new bill, if enacted, would deny immediate access to 
capital. If enacted, it would say to innovators and entrepreneurs: You 
are too small to succeed, too small to survive. That is far different 
from what this bill was promised and promoted as doing--stopping too 
big to fail. Yes, I am going to see in my communities and you are going 
to see in your communities too small to survive. That is not where we 
should be going.
  Killing small business startups and jobs on Main Street is not the 
only unintended consequence of the Democrats' current proposal that has 
come to light. Caught up in the Democrats' fervor to pass a bill--any 
bill--without careful consideration, are members of the U.S. military 
and their families. Last week, I heard from active-duty and retired 
military members who fear this bill would hurt their financial 
security. You see, under the Democrats' bill, United Services 
Automobile Association--USAA, a financial and insurance provider for 
members of the U.S. military and their families--would, after an 87-
year track record, no longer be able to manage their own portfolio.
  Also as a result of the Dodd bill, this company that serves our 
military and veterans would have their ability to offer certain 
competitive products to servicemembers and their families jeopardized 
and their ability to return money to servicemembers and their families 
limited by this massive expansion of government authority. This must be 
fixed. I would urge my colleagues to listen to the military and 
veterans and their families in your States. See what they think.
  Unfortunately, the unintended consequences of this bill keep piling 
up. The next major concern I have heard from Missouri community banks 
that provide critical lending to families and small businesses is the 
creation of the so-called Consumer Financial Protection Bureau--CFPB. 
This massive new government bureaucracy has unprecedented authority and 
enforcement powers to impose mandates on any entities that extend 
credit. We are not just talking about big Wall Street banks here but 
also your community banker, your local dentist. Dentists are telling me 
that if they offer credit, they would be regulated. Farm lenders would 
find it very difficult for them to be able to operate to make their 
farm loans and to be able to hedge the risk that they normally do. Auto 
dealers can sell cars only through the benefit of private sector 
financing. As a result, there will be no choice but to pass the costs 
on for this financing, if they can get it, to the consumers--the very 
people this bill is supposed to protect. And it may cut some of them 
out of getting credit altogether.
  The National Federation of Independent Businesses, a strong voice for 
small businesses, voiced their serious concern over the creation of 
this new bureaucracy. I am sure you all have received it, but if you 
have not, I would urge you to check your mail, because the letter from 
the NFIB to Congress says:

       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 survey shows, small businesses continue to 
     struggle with lost sales, and such regulations could make 
     these problems worse--stifling any small business recovery.

  In other words, they are saying: We do this and small businesses are 
going to be even less likely to be able to create jobs. We have already 
put too much debt on the Federal books. We are threatening to increase 
their taxes by a tremendous amount, and now we see regulations that are 
going to interfere with their normal credit operations. That is a cause 
for concern.

[[Page S2738]]

  This very high unemployment the stimulus bill didn't touch, other 
than getting more people working for the Federal Government. It was 
supposed to bring our unemployment rate down to 8 percent, but it is 
going to continue to fail and fail miserably if we stifle the ability 
of small businesses to create jobs.
  The only way to ensure that the CFPB does not unintentionally hurt 
Main Street but still protects consumers is to narrow the scope and 
authority with clear language outlining exactly who this new regulator 
will regulate and what it will do. Instead of unlimited authority, this 
new regulator should focus on the shadow banking entities operating 
outside of the regulatory framework and preying on vulnerable people. 
The banks and the savings and loans that issue loans are regulated by 
government regulators. Are the people who are making these large loans, 
such as home loans, regulated? In a lot of areas they are not. CFPB 
could look at those.
  I proposed 2 years ago a mortgage origination commission to make sure 
everybody originating mortgages was regulated by some appropriate State 
agency. Well, we haven't done it. We also need to ensure that we are 
not empowering, through this new government agency regulator, the same 
organizations which pushed home ownership at any cost onto families who 
could not afford to repay their loans. This is one of the key problems 
we had. People who couldn't afford homes were told that they could get 
them with no downpayment, even if they had bad credit. If they didn't 
have the money to have a home, they were told they could have a home 
anyhow. These are the people who saw their American dream turn into the 
American nightmare. These are the people whose houses were foreclosed, 
their families thrown out, their communities devastated, and ultimately 
the entire network of not only America's financial system but the 
world's financial system brought down by this bad paper.
  Surely, my colleagues would not want to vote for a bill that creates 
a new government bureaucracy without knowing exactly what the 
bureaucracy is empowered to do and if it will take on the real bad 
actors who got us into this mess. This CFPB is a perfect example of how 
the ``one size fits all'' of this hurried legislation will have 
unintended consequences for those who did not contribute to the 
financial meltdown. Treating community banks like Goldman Sachs is a 
mistake, and one we cannot afford to make.
  If we are aware of these unintended consequences now, why won't we 
correct them now? Why do my colleagues want to bring these unintended 
consequences in the bill closer to being codified into law on the 
Senate floor? If you want to have some real consumer protection, I 
purchased several homes, as we have moved around recently, and I can 
tell you that the best thing we can do for consumer protection is to 
repeal all the laws that require a stack of paper that high that you 
are supposed to sign saying you have read it. Have consumer protection 
with a very simple one- or two-page form. I have talked about that 
before. That is simple consumer protection. Let people know, for people 
who are not adequately informed on financial situations.
  The one thing we found out when I joined with the chairman of the 
Banking Committee, Senator Dodd, in pushing home foreclosure 
counseling, as we worked with agencies that were counseling people who 
were losing their homes through foreclosure, is these agencies were 
crying out and saying: We need financial counseling for these people 
before they get into homes. That is the best way to avoid foreclosure. 
Let us go back to that. It sounds simple, but it happens to be the 
thing that would work.

  I doubt my Democratic colleagues intend to pass a bill that will hurt 
families every time they turn on the light switch or try to heat their 
home, but that is what this bill in its current form will do, once 
again, trying to go for the easy one-size-fits-all approach to entities 
that it does not fit in any way. The $592 trillion over-the-counter 
derivatives market needs stronger rules of transparency on the things 
that are run through Wall Street. Some of these derivatives traded in 
this market played a significant role in the recent crisis, through 
products such as credit default swaps.
  I have called these derivatives computer game derivatives. They were 
so complex. They were something somebody thought up and ran through a 
computer. You know what. Our regulators fell down on the job. They 
didn't look at these derivatives. They were not transparent. They were 
not regulated. Some of that is the fault of the regulators, who are now 
scrambling to come in and file suits. They are supposed to regulate and 
make sure that these products that are complicated are fully 
transparent and related to reality and go to those who are at least 
sophisticated. You can't guarantee that they win or lose, but at least 
know what they are; make sure they are clearly understood by everybody; 
get the rating agencies to judge them independently, not as captured 
entities for the people who issue them and will pay the rating agency 
if they get the rating they want.
  But there is an important distinction between the computer game 
derivatives or the very sophisticated derivatives that are traded on 
Wall Street. You can make good financial arguments for them, so long as 
they are traded on an exchange--the Wall Street derivatives, so long as 
somebody is looking at them to make sure there is some integrity in 
them. But not all derivative contracts pose systemic risk. As a matter 
of fact, commercial contracts initiated by energy companies, utilities, 
and the agricultural industry are used to manage risks associated with 
their daily commercial operation, from cost fluctuations in materials 
and commodities to foreign currencies used in international business. 
These end users, these commodity hedgers, make up less than 3 percent 
of the market.
  I don't know of any farmer or any farm agency or any utility who 
caused the crisis on Wall Street by entering into a long-term supply-
and-purchase contract. There is no reason to make this be traded on an 
exchange when you have an ongoing partner; no reason to acquire 
collateral to be posted. The end users, as they are called, do so in 
order to plan for future pricing so they can provide the least 
expensive goods or services to the consumer as possible. Costly margin 
requirements for the end users will be directly passed on to their 
families. Guess who pays for that? That is us. That is us. Because all 
Americans will see their costs go up whenever they turn on their 
lights, put food on their table, and use any form of transportation--
whether it be cars, trucks, buses, or airplanes. This is a problem that 
must be fixed.
  For the purpose of my time on the floor, I won't go into each and 
every problem I have heard about in the bill. I have only been given 
minutes to speak rather than hours. But the current concerns I have 
outlined are critical. The unintended consequences on which I have 
shined a light must be stopped. Americans do not want another massive 
flawed bill that will kill more jobs, make it harder to get a home or 
car loan, or make it more expensive to heat their homes.
  Yes, Americans are rightfully angry and frustrated about the bad 
actors on Wall Street who caused the financial crisis, costing many 
Americans their jobs and even their homes. Americans are rightfully 
angry and frustrated about the trillions of dollars the government has 
committed to rescuing the financial industry when so many of them are 
still struggling to pay their bills. These are the people from whom I 
am hearing. I agree with the majority of Americans who believe it is 
unfair for bad actors who caused this financial crisis to get bailed 
out with their tax dollars--with our tax dollars--when there is no 
bailout for families who lost their savings or jobs. I agree with the 
majority of Americans who are rightly skeptical of the Democrats' bill 
and the rush the majority wants to pass it in. It is no surprise that 
my constituents are skeptical. After all, it is the few bad actors on 
Wall Street who caused the financial crisis who are now cheerleading 
this so-called reform bill.

  I was stunned when I read that the head of the investment bank 
Goldman Sachs, Mr. Blankfein, said, ``The biggest beneficiary of reform 
is Wall Street itself.'' The head of Goldman Sachs said that the 
biggest beneficiary of this reform bill is Wall Street. Did you hear 
that, everybody who has been looking at Goldman Sachs? I also 
understand that Citigroup now supports

[[Page S2739]]

this measure. They are huge Wall Street players who have had access to 
the White House and the majority leaders of both Houses to push for all 
the good things this bill does for them. They are the ones who have 
been in there. They are the major contributors. Look where the money 
goes. If you want to say: OK, who is looking for contributions, look at 
that and see what is in the bill.
  This bill clobbers Main Street and it glances off of Wall Street. 
Instead of helping Wall Street, I want to ensure a bill is passed that 
will protect Main Street. While Wall Street may be cheering this bill, 
I am here to ensure this bill represents Main Street concerns. What I 
am hearing from Main Street, they are concerned, and it doesn't address 
their concerns, it puts more burdens on them. I urge you, I ask you to 
listen to the folks at home.
  We need to hold Wall Street accountable for the havoc wreaked on Main 
Street and enact reform to prevent another financial crisis. This bill 
is too large, too costly for consumers, and will kill job creation at a 
time when working Americans need to be left to do what they do best; 
that is, succeed.
  My friends on the other side of the aisle can hold vote after vote, 
but until this bill fixes the problems and I can be sure it is not just 
Goldman Sachs, Citigroup, and the rest of Wall Street that will 
benefit, I will continue to force Democrats to listen to the concerns 
of Main Street America.
  I urge my colleagues to turn up the hearing and turn down the volume 
and listen to what the people in your States are saying.
  I yield the floor and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant editor of the Daily Digest proceeded to call the roll.
  Mr. REED. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER (Mr. Merkley). Without objection, it is so 
ordered.
  Mr. REED. Mr. President, yesterday we and the nation heard from 
Goldman Sachs executives indicating they had no regrets about the 
financial crisis, a crisis that has left 8.5 million people without 
jobs and stripped billions of dollars of retirement savings from 
working Americans. In fact, the Pew Institute released a study that 
indicates the financial crisis and recession have already cost U.S. 
households $100,000, on average, in lost wealth and income. That is a 
huge blow to the families who are struggling to pay for their 
retirement, to pay for their children's education, and provide a better 
life for themselves and their children.

  We have seen, in the last five quarters, because of this financial 
crisis associated with and connected with the recession, $648 billion 
less in gross domestic product than was projected initially--$648 
billion of productive enterprises. The cost of this crisis is something 
we all should not only recognize but commit to preventing in the 
future. We also should calculate the cost not just in terms of gross 
domestic product and how well executives on Wall Street are doing, who 
are doing pretty well, but how well the average family in this country 
is doing, and how well they will do in the future. We must consider how 
much in terms of their wealth has been diminished, if not lost, in 
rebuilding our economy.
  One of the major functions of any financial sector in any part of the 
world is to efficiently allocate capital to grow domestic product--not 
to reduce it--to invest in productive enterprise and employ people. The 
financial sector shouldn't undercut companies or force them to lay off 
workers. All of this, in the last few months, I think has represented a 
failure in that basic function of making sure capital is accumulated 
and then efficiently allocated to productive means.
  So Wall Street, I think, has a lot to regret about their role, and we 
have a lot to do to improve the situation, to ensure the regulatory 
structure is in place, and to set clear rules for the conduct of 
financial business that will protect families, protect consumers, and 
protect the taxpayers.
  This is the third time our colleagues on the other side have blocked 
such efforts to begin the discussion. We recognize this is a complex 
topic, with many different parts: credit rating agencies, capital 
requirements, financial institutions, derivatives. You can go on and on 
and on. So anyone who implies they have all the wisdom, I think, will 
find themselves sadly mistaken. But we have to get on with this bill 
because unless we bring the bill to the floor, we cannot begin to, in 
the open, talk about those policy issues that people can disagree on--
people have different approaches--and ultimately resolve this and 
create a better regulatory structure and a stronger foundation for our 
economy.
  But in the last several days, this has been, again, ``say no and the 
problem might go away.'' Well, if they continue to say no, the problem 
will get worse. We are looking across the globe today at a crisis in 
Europe because of Greek sovereign debt. It is spiraling. Already, 
Spanish debt has been downgraded. If we think we are immune from these 
global currents, both good and bad, we are mistaken. If we do not put 
in a stronger structure of regulation, the next crisis might not be 
starting on Wall Street, but the impact on Main Street could be the 
same, and it could be just as devastating.
  We have to look forward. We have to move on. The notion that we have 
all the time in the world and we can sort of nonchalantly go about our 
business--or in some cases, if it is a political judgment that it is 
better to resist--is not serving the people of this Nation well.
  We recognize there are principle differences. Let's resolve them, as 
we do on the floor through debate, through discussion, and through a 
vote, and let's move on. We have a lot of work to do. The underlying 
bill Senator Dodd has brought to the floor already incorporates so many 
of these disparate views, and I think in a very sensible way.
  Let me, for the record, recall that legislation like this has been 
pending for months and months and months. The Presiding Officer will 
recall--because he participated with me in the first markup last 
November--Senator Dodd brought a bill to the committee, opened it up to 
amendment, and it was quite clear there was going to be no serious 
discussion. In fact, our colleagues on the other side said: We need 
more time. We want to participate with you. I think it was done with 
great sincerity. Senator Dodd entertained those proposals for months. 
From November until a few weeks ago, we were working collaboratively 
and creatively to try to bridge our gaps and bring a bill to the floor.
  Well, finally--and somewhat in exacerbation--Senator Dodd concluded 
this was leading nowhere, except to more delay, if not denial of the 
great problem we face. So we had a committee markup. Again, it was an 
opportunity for our colleagues on the other side to bring forth their 
proposals, their ideas, in a markup in which we would be able to 
consider their views, vote on them, and then move that bill to the 
floor. But it was a perfunctory session. They had concluded that, no, 
they were not quite yet ready to offer their proposals, their ideas, 
and to engage in the business of legislation.
  So now the bill is before us, months after we started this process, 
months after we have entertained and incorporated proposals that have 
been made by our colleagues because they are very good proposals. It 
was Senator Corker and Senator Warner--who have done an outstanding 
job--who structured the whole issue of resolution, that there would be 
an upfront fund so that financial institutions--not taxpayers--would 
pay for the failure of a financial institution.
  Yet when that bill was brought to the floor--or we attempted to do 
it--that provision, that bipartisan provision was singled out for, 
shall we say, criticism, if not ridicule, as a perpetual bailout bill. 
That was a misrepresentation of the bill and it, frankly, contradicted 
the whole effort, the whole bipartisan effort to come up with something 
that both sides could support.
  But this bill incorporates so many different ideas and aspects that 
have been shared. In fact, it was interesting, in the lead up to this 
floor consideration, so many times on both sides of the aisle, people 
would say, routinely: well, we agree on 80 percent of the bill. I think 
if you have 80 percent of the bill agreed to, at least conceptually, 
you are probably ready to bring the bill up for debate and to vote. Yet 
again, the Republican side refuses to do that.

[[Page S2740]]

  They are, I think, assuming, I guess, they have a lot of time. But as 
you look around the globe, at the crises in Europe, at the stock market 
falling dramatically yesterday because of Europe, I think we have to 
move aggressively to protect American families, and that means getting 
the bill on the floor and voting for it.
  This bill will make changes that are urgently necessary. Again, the 
issue of too big to fail--through the extraordinary effort, painstaking 
effort, the hours of discussions by Senator Warner and Senator Corker, 
there was a proposal for resolution that effectively ends too big to 
fail. In fact, Sheila Bair, who is the Chairwoman of the FDIC and was 
appointed by President Bush, says it virtually eliminates the 
possibility of a taxpayer bailout. So that is part of it. Strengthening 
consumer protection. There has been, I think, an unfortunate 
generalization that consumer protections are bad for business. Frankly, 
we should have discovered in the last several months that good consumer 
protections are very good for business. Many of those consumer laws--
which would have protected people seeking mortgages--which were ignored 
or exempted would have, I think, improved dramatically the mortgage 
situation. It would have improved business. It would have made that 
overriding issue of efficient allocation of capital much easier.
  But when you have very little protections for consumers, they are at 
the mercy of people who will exploit them for a quick buck. And that is 
what happened. Mortgages were given to people who were not qualified. 
Why? Because no one was watching out for them. But not only that, the 
individual issuing the mortgage did not have, as they say, any skin in 
the game because they simply sent it in to the big securitization 
process. Someone got a fee for securitizing it. Someone wrapped it up 
into a big mortgage-backed security. Someone else wrapped it up into a 
collateralized debt obligation, which is a collection of securities. 
Then someone else wrapped that up into a synthetic collateralized debt 
obligation and sold it off. Not a lot of efficient allocation of 
capital for productive means, but a lot of fees for investment bankers, 
securitizers, and mortgage brokers. At the very beginning, good 
consumer protections would have been an effective way to mitigate some 
of that damage. They are in this bill.
  We are attempting to eliminate huge gaps and loopholes in financial 
regulation. Our regulatory scheme has grown up over many years, in 
fact, through the life of this country. So we have a national bank 
authority that was created in the 1860s. We have an Office of Thrift 
Supervision that was created many years later because of thrift 
institutions. We have the FDIC, which was created in the 1930s by 
Franklin Roosevelt as a result of the Depression and the need to insure 
deposits. We have the Federal Reserve System that monitors local banks 
and large banks that was created in the Wilson administration.

  All of them have a little different piece of the action, and all of 
them have been routinely used in what is termed regulatory arbitrage, 
to move to the most favorable position for your business, which may not 
be favorable to the overall economy. Some of the big mortgage lenders 
that ultimately collapsed started off being regulated by the Office of 
the Comptroller of the Currency, and then they decided they would have 
a better deal at OTS. Frankly, if they had an opportunity--if they were 
still with us--they would be looking elsewhere. Hit and run, I think, 
was probably the business plan. We have to stop that.
  This bill takes a strong step forward, consolidating that 
supervision, by consolidating the Office of the Comptroller of the 
Currency and the Office of Thrift Supervision, by limiting the 
supervision of the Federal Reserve over a countless number of small 
banks, and concentrating their efforts at the big institutions, where 
their expertise and their focus should make a difference.
  This is a huge improvement over what the present system is. Yet our 
colleagues are not recognizing the need to improve and the need to move 
forward. We have been engaged, through Senator Lincoln and Senator 
Dodd, with derivatives legislation, which, for the first time, 
recognizes and regulates those derivatives. There was a great debate 
here in the 1990s, and through that debate derivatives were left 
unregulated. Today we have to recognize we have to put them back under 
regulatory supervision.
  The legislation creates the steps, the architecture, which will go a 
long way to prevent some of the problems we have seen. It requires 
reporting all derivative transactions to a data repository which the 
regulators will have access to so they can see firsthand in real time 
what is happening out there. Is there a big buildup in Greek debt? Are 
there huge positions in credit default swaps on Greek bonds? They can 
quickly get a macro sense of what is happening.
  Then, with limited exceptions, all derivatives have to be cleared on 
a clearing platform. That takes away the bilateral nature of 
transactions. Someone says: I will sell you insurance on this interest 
rate for a fee. You give me the fee, et cetera. That is bilateral. If 
one of these parties is unable to carry out its obligations, the 
transaction fails. In a clearing platform, there is a central party 
that assumes the risk of one of the parties failing. It is a 
mutualization, really, of risk, and it is a step forward.
  But we have to step even farther than that. We have to push as many 
of these trades onto a trading platform, not just clearing it and 
holding collateral, but actually pricing it. Because of the complexity 
of some of these products, unless there is a market, no one knows the 
real value. On a trading platform, there is a market value and people 
can value it because basically if someone will buy it, that is the 
value. So we have to do that. This legislation goes a long way to doing 
that.
  With respect to credit rating agencies, one of the great failures is 
the credit rating agencies. As to all of these exotic mortgage products 
that collapsed in value, most of them were rated investment grade--AA, 
AAA, according to whatever the rating is--and yet they failed. Part of 
it was because of the way credit rating agencies operate.
  Senator Levin conducted recently some very good hearings on this 
issue. The familiarity between the investment bank that is bringing the 
product to the street and the raters, the interconnectedness, the 
failure to have the appropriate checks on the models that raters were 
using, an independent risk analysis within the rating agency that is 
going to look at these models not for the benefit of who is paying for 
it but for the propriety and correctness of the model. That is in the 
legislation.

  We have done something else too: We have inserted language that would 
allow someone who has invested their savings through a pension plan or 
other method to go to court and make the case that they should find out 
what happened within the rating agency with respect to the poorly rated 
investment that caused them to lose their savings. Today, these cases 
are routinely dismissed before anyone can question the rating agency. 
Our legislation would allow them to get beyond the pleadings stage. But 
it would also give the rating agencies an affirmative defense. They 
would have to factually check their models. They would have to actually 
look at some of these mortgages. Frankly, this might be 20/20 
hindsight, but if someone drove out to one of those counties in Florida 
where there were all of these exotic mortgages but no one seemed to be 
living there and the communities were deteriorating, I think they would 
pretty quickly check their rating. That appears not to have been done.
  For the first time, hedge funds are regulated. They would have to 
register with the SEC and be subject to registration, notifying the SEC 
of the size of their pool and other basic information.
  Well, we have had months of opportunities to share additional 
thoughts and work together to amend the bill in committee, which was 
not done, but, more importantly, to begin today--in fact, we should 
have begun last week--this issue of finally passing a Senate bill that 
responds to the crisis we saw; that builds a stronger foundation of 
financial expansion; that protects consumers and taxpayers as well as 
leads to the increase in the wealth of families, not to the dramatic 
decrease and decline we have witnessed because of some of these forces 
at work today in the marketplace on Wall Street, which still have to be 
addressed.

[[Page S2741]]

  There will be parts of the proposals that come up that will be an 
attempt to weaken some of these provisions, particularly with respect 
to consumer protection. Again, I think it flows from the false logic 
that if it is good for consumers, it is bad for business. Actually, I 
always thought, in smalltown business, the customer is always right. 
You believed the customer, made sure you provided value for your 
product, and made sure he or she would come back because they were 
happy and satisfied. Apparently, that old-fashioned rule has been 
tossed out, but I think that old-fashioned rule has to be 
reestablished.
  We have seen, as a way to deflect attention from the need to reform 
and the need to move this legislation, misrepresentations about the 
bill. I mentioned one: It is a bailout bill. Well, I think that has 
been dropped because it was transparently misleading. Indeed, this 
bailout mechanism was a bipartisan product of two of our distinguished 
colleagues, Senator Warner and Senator Corker. Now we are at the old 
standby: It is going to hurt business. I will tell my colleagues what 
has hurt business, and that is the behavior on Wall Street.
  I can recall that several years ago there was a study by the McKinsey 
Company that said that if we did not loosen further the already, I 
think, lax rules, we would lose all the securities business; all of 
Wall Street would go to England or other places; we would lose 
thousands of jobs. Guess what. They have lost, unfortunately, thousands 
of jobs there. And it wasn't because regulation was too stringent; it 
was because it was too lax.
  Again, if there is any case to be made for what hurts business, it is 
irrational allocation of capital; lax rules with respect to consumers; 
a market driven not by value but by compensation, not by long-term 
growth but by short-term profit. That is what has cost every family in 
America $100,000.
  So if we move purposely and with the input of our colleagues, which 
we have already accepted, we can establish a framework where business 
will begin to grow again. So I reject the argument that what we are 
doing will hurt business. In fact, I think this uncertainty of whether 
we will have this reform or that reform continues to, at least to a 
degree, impede capital formation and to impede investments in the 
country. When there are clear rules of the road, then the economy will 
again begin to pick up, as it is beginning to pick up for other 
reasons.
  If we don't take up this bill, work on it, and pass good legislation, 
who wins? Well, I will tell my colleagues who wins. It is the big banks 
that have survived this crisis today, that are reporting record 
profits. What are they making their money on? Giving loans to small 
business men and women across America? Investing in municipalities? No. 
They are making huge profits in trading--betting, in some respects, on 
how the economy is going to do. Well, we need a situation in which 
capital is dedicated to growth and to investment and productivity.
  The speculators will continue to reap billions of dollars of profits. 
I am sure there are several clever people who are doing quite well over 
the demise of sovereign wealth in Greece, who have taken short 
positions on Greek bonds and are making a lot of money. That is not 
helping us, it is not helping the country, and indeed it is not helping 
our trading partners across the globe. That, unchecked, will continue.
  The opaque and unregulated market that I just referred to in 
derivatives, a $600 trillion notional market. When you talk to people 
about clearing of derivatives, it is not billions, no; it is trillions 
of dollars. That market is unregulated, and if it goes the wrong way 
quickly, the consequences can be devastating. We have seen that with 
the mortgage crisis.
  So we have to move. We have to move at every level, not just the big 
banks, but we have to provide appropriate regulation for people in 
terms of the mortgage industry so those abuses in mortgages will be 
corrected. We have to go ahead and look at payday lenders who are 
charging 900 percent interest, who are stripping people of their hard-
won resources. We have to look at the credit card companies. We have 
passed legislation, but we have to look at what they are doing. If 
those people--the payday lenders and the mortgage brokers--can continue 
to operate with impunity, the bankers win. Who loses? Well, consumers 
lose--paying the excessive rates, seeing their homes devalued, all of 
that.
  I think we have to stand up and start the work of legislating. The 
status quo is no longer affordable, and I think the notion that we will 
never see another crisis is undercut by looking around. If there are 
not today some steady hands at the tiller in Europe in terms of the 
European community and their financial arrangements, the cascading 
effect of Greece to Spain to Ireland, et cetera, could be another 
problem we have to deal with.
  We have lots of work to do, and the longer we delay, the more we are 
neglecting the real needs of our constituents. I urge that on the next 
vote we get down to business.
  Mr. President, I 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. NELSON of Florida. Mr. President, I ask unanimous consent that 
the order for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Franken). Without objection, it is so 
ordered.
  Mr. NELSON of Florida. Mr. President, I ask unanimous consent to 
speak on the motion to proceed for up to 30 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NELSON of Florida. Mr. President, we have now voted three times--
once on Monday, the second time on Tuesday, and a third time today--
merely trying to get to the Wall Street financial reform bill. Each 
time we have been blocked from being able to proceed because we can't 
muster 60 votes to cut off the debate to get to the bill.
  The Republican leadership remains united in opposition to bringing up 
the bill, at a time in which we have just seen a display of 
extraordinarily intense, shall we say, arrogance on the part of 
executives at a major Wall Street firm in the way they conducted 
themselves in front of Senator Carl Levin's investigation subcommittee 
yesterday in a hearing. It is rather extraordinary that the Republican 
leadership is not letting us come up with the bill so we can get it out 
here, debate it, and amend it.
  This Senator has a number of amendments that I would like to offer in 
order to, as we say, perfect the Banking Committee's bill. But we can't 
even get to that.
  I don't know what the thinking of the Republican leadership is that 
they would do this, especially in light of the fact that the American 
people want some changes with the way investments are handled on Wall 
Street. They want to see some movement. They want to see some action. 
So when we attempt to bring up a comprehensive bill to reform Wall 
Street and the reckless practices that nearly brought down the global 
economy, we are prevented from having a free and open debate on the 
bill and we are prevented from perfecting that bill by adopting 
amendments.
  I guess the Republican leadership's alternative to this, since we 
can't do it out here in the normal legislative process, is to do this 
in the backroom, behind closed doors, outside of the sunshine. They 
want to have a deal cut before it comes to the floor in order to avoid 
an open and free debate to reform the financial system.
  Why do they want to do this? Well, it seems to me common sense would 
tell us it is because they want to water down the bill. They want to 
water it down to the point where Wall Street--where we are trying to 
tighten the screws in order to better regulate them and prevent another 
near financial meltdown such as we had--will sign off on a final 
compromise, and that is why they are blocking the motion to proceed to 
get to the bill.
  Does this tactic sound familiar? It is the exact kind of backroom 
wheeling and dealing the American people have come to resent. The only 
difference between now and decades ago is that in the old days those 
deals were cut in smoke-filled backrooms. At least now there is not a 
lot of tobacco that is being consumed in those backrooms. But what is 
similar is that the special interests are still calling the shots.
  So my plea is that we break this filibuster. Let's get a bill in 
front of the

[[Page S2742]]

Senate so it can be in the full light and the glare of the headlights 
and the cameras. Let's get it in front of the American people and then 
let's let the legislative process work its will as we amend the bill.
  Listen to some of the arguments the Republican leadership, over and 
over and over, has used. They have said the Banking Committee bill 
guarantees future bailouts. Well, that is not true. It might be a good 
sound bite, but it is simply untrue. The Banking Committee bill puts an 
end to the promise of future bailouts.
  The Republican leadership attacks the $50 billion resolution fund 
created in the bill. This Senator is not convinced we need that fund, 
and I am certainly not convinced it is going to survive the debate on 
the floor, but we ought to have some honest debate about that 
particular provision. The fund is paid for in the Banking Committee 
bill directly from the coffers of the largest banks. The fund acts, in 
the way it is devised by the Banking Committee, as a buffer to protect 
taxpayers so that if there is another breakup, another potential 
meltdown, the fund is there--already funded by the banks--so the 
taxpayers don't have to go in and do the rescue operation such as we 
have done in the past.
  Under the Banking Committee bill, the fund can only be used to 
liquidate a financial institution, to break it up. In short, it is a 
funeral tax. It is a funeral tax on the largest banks, not the 
taxpayers. The $50 billion fund in that Banking Committee bill only 
gets tapped to pay for their funeral expenses.
  So here we are. The American people hear the Republican leadership 
talking about all this, and it is a red herring. The American people 
want action, and here we are stuck in procedural gridlock. Guess who 
the only real winners are. As we sit here, trying to break a filibuster 
on Monday, again Tuesday, and again today, shortly after noon, the only 
winners are the Wall Street bankers who have mastered the art of using 
the broken financial regulatory system to almost bring down the 
country's finances by deceiving investors and, ultimately, in order to 
save our system, milking the American taxpayer.
  One of the major beneficiaries of the current system is the credit 
rating agencies. This is a subject matter the Senator from Minnesota--
who now sits in the Presiding Officer's chair--has some familiarity 
with and on which he will be offering an amendment. This Senator is 
going to join him in that amendment. Credit rating agencies--something 
that normally is down in the weeds because it is so complicated--are 
private companies that assess the creditworthiness of various types of 
debt instruments, such as bonds and mortgage-backed securities, as well 
as the issuers--rating the issuers of those instruments.
  They typically assign a letter grade that is designed to convey the 
risk of default, and there are three major credit rating agencies on 
Wall Street: There is Moody's, there is Standard & Poor's, and there is 
Fitch Ratings. For most of the last century, the rating agencies were 
paid by investors who subscribed to their services. Why did they do 
that? Because it made sense. Investors were the ones who were investing 
their money and they were the consumers of the ratings. They wanted the 
best information regarding the risk that they would have in that 
investment.
  Well, unfortunately, in the 1970s, all this changed and the business 
model flipped. The rating agencies began charging the issuers of the 
bonds, not the people who were seeking to know if it was a good credit 
risk in order to invest their money. It was reversed. It was the very 
issuers of the credit, rather than the investors, who were charging for 
their services. So beginning in the 1970s, rating agencies began to be 
paid by the very same people who had a vested interest in receiving a 
high investment grade.
  Think about that. The very issuers of the bonds who wanted people to 
invest their money in these bonds needed a high credit rating on that 
bond in order to get people to invest. If they could be rated at AAA, 
as opposed to B, people were much more willing to put their money into 
this instrument.
  Well, talk about a conflict of interest. Now the issuers of the 
bonds, who have an interest in a high AAA rating, go out and hire the 
services of the credit rating agencies.
  Did you ever hear the old adage, ``He who pays the piper calls the 
tune''? Well, those who were going to pay the piper were going to call 
what that tune was. Do you think if you are paying the bill to the 
credit rating agency that you have a better chance of getting a AAA 
rating than a lower rating? Of course you do. That is a walking 
conflict of interest.
  How could we allow this unavoidable conflict of interest to exist and 
allow it to exist since the 1970s is unfathomable and unbelievable. Yet 
that is the way it is. Credit rating agencies failed miserably in the 
runup to the financial crisis, and it sure looks like--looking 
backward--they put profits ahead of professionalism. They failed to 
detect the severe deterioration in lending standards that began in the 
late 1990s. They failed to review all available information about the 
loans on which the securities they were rating were based. The conflict 
of interest in their business model gave the rating agencies an 
enormous incentive to overlook problems in mortgage-backed security 
markets.

  In 2006, Congress passed the Credit Rating Agency Reform Act. I put 
that in quotes, the Credit Rating Agency ``Reform'' Act. The bill was 
written in the Senate by the Republican leadership, and it had the full 
sign-off of the credit rating industry. Here is what the bill did--
2006. It standardized the process for registering rating agencies, and 
it gave the SEC some new oversight powers over rating agencies. At the 
same time, however, this so-called reform act prohibited the SEC from 
regulating ``the substance of credit ratings or the procedures and 
methodologies by which any rating agency determines credit ratings.'' 
It gutted the ability to double-check credit rating agencies.
  Furthermore, to add insult to injury, the act also clarified that it 
creates no private right of action. So if a party invested in a 
particular financial instrument because that credit rating was high, 
and it turned out to be a dog and they lost lots of money, they had no 
private right of action through the courts.
  No wonder the industry supported that legislation back in 2006. The 
bill, written by the Republican leadership, took away any power of 
Federal regulators that they might have had to crack down on the 
baseless credit ratings that were fueling the boom in subprime lending. 
To make matters worse, the bill made it clear it was not empowering the 
private sector to hold the credit rating agencies liable for their 
ratings.
  The bill we hope one day, at some hour, to get to the floor so we can 
start working on it does some important things to improve credit rating 
agencies. It requires these agencies to disclose their methodologies 
and their ratings track record. Wouldn't you think you would want to 
know their track record if you are going to invest a lot of money based 
on their triple-A rating? It requires agencies to consider information 
in their ratings that comes from outside sources. But when it comes to 
addressing the fundamental conflict of interest in the credit rating 
agency business model, this bill coming out on the Senate floor falls 
short.
  It would require the rating agencies to separate ratings activities 
from their sales and marketing activities, and that is like saying my 
left arm has no idea what my right arm is doing. In reality, it is the 
brain in your head that controls both the right arm and the left arm, 
and no one is proposing to chop off the head. So we have to deal with 
this conflict of interest, and we are going to. Here is what we are 
going to do.
  We are going to do this with the help of the Presiding Officer of the 
Senate. We are going to offer an amendment that would establish a 
clearinghouse to randomly assign rating assignments with rating 
issuers. As simple as that, we can end the conflict of interest in the 
credit rating industry if, randomly, it is going to be assigned among 
companies that rate issuers of financial instruments.
  Second, this Senator is going to offer an amendment to require the 
rating agencies to monitor, to review, and to update their credit 
ratings after the initial issuance of their credit rating so it does 
not become stale. They are going to have to continue to look at it,

[[Page S2743]]

to review it, to update it, and to publish it. The rating agency should 
not be able to walk away from a rating after it has been issued. It is 
going to be fresh. The rating agencies ought to conduct continued 
surveillance of these securities and update them along the line.
  The credit rating agency reform is just one of the many areas the 
Senate needs to debate. But as long as the Republican leadership 
continues to prevent the bill from coming to the floor, this broken 
system remains in place. The Wall Street bankers win and the American 
public loses.
  Let me give some other examples. Remember the name ``AIG''? It was 
this Goliath organization that started out as an insurance company. It 
became this huge financial institution. The core product of this 
company was its insurance. It was deemed too big to fail at the time of 
the near meltdown of our financial system. This was back in the fall of 
2008.
  It was deemed that when we passed the Troubled Assets Relief Program, 
TARP, that money had to go into this big, Goliath organization, all the 
way to the tune of about $80 billion of taxpayer money, as I last 
recall. It may be a lot more than that.
  Guess what this did. They had already issued, in effect, an insurance 
policy that had a fancy name. It was called a credit default swap. It 
was an insurance policy against some of the companies if their 
investments went bad. That is not bad. But what happened was, when the 
American taxpayer dollars went in to save AIG, AIG took those taxpayer 
dollars and turned around and paid off those insurance policies, 100 
cents on the dollar. Is that fair, when folks like some of these folks 
who have been in the news recently, such as Goldman Sachs, got paid off 
to the tune of $13 billion instead of going in and negotiating a lower 
payoff since it was taxpayer money? We ought to change that, and I 
think we will if we can ever get to the bill, if the Republican 
leadership will ever allow us to get to the bill.
  Let's take another example. What about the same insurance policies 
called credit default swaps? Let's say the same set of circumstances 
with AIG occurred, but AIG had not been bailed out by the American 
taxpayer and instead had gone into bankruptcy. AIG, in this 
hypothetical example, had a lot of creditors that would get in line 
under the bankruptcy law to get whatever they could. But, oh, no; these 
insurance policies called credit default swaps would be exempt from the 
bankruptcy laws. They would get paid off in full first instead of 
having to get in line with all the other creditors under the bankruptcy 
law.
  That is not right. This Senator is going to have an amendment to the 
Banking Committee's bill to correct that. There is no reason those 
insurance policies should be at the head of the line of everybody else 
in the case of bankruptcy.
  Are we pleased about the executive compensation of some of these 
folks who have nearly caused the financial collapse of our country? 
When taxpayer money, through the TARP system, was bailing out these 
institutions--whether it was directly, such as into AIG, or directly 
into a place such as Bank of America, or whether it was indirectly 
coming through these credit default swaps that were getting paid off 
100 cents on the dollar that I just described, through the conduit of 
AIG--what was happening to the compensation of those executives? Were 
they still getting bonuses? Were they still getting high salaries? Were 
they having to tighten up their belts when, in fact, their financial 
institutions were kept alive by the American taxpayer bailing them out?
  No, we didn't see that tightening of the belt. We did not see any 
evidence of humility. We didn't see any evidence of appreciation. But, 
instead, we saw arrogance displayed through huge bonuses that were 
being given with a total disregard for the American people's sacrifice, 
of putting their hard-earned taxpayer dollars in to save those 
financial institutions.
  Mr. President, I think you will see once we get out here on the floor 
that we are, in fact, going to get a number of amendments, including 
the amendment of this Senator, on a limitation--not on executive 
compensation but a limitation on the ability to deduct from their tax 
liability excessive executive compensation, and a tie of that excessive 
executive compensation to, in fact, performance for that company that 
pays their salary. We are going to see that. Sooner or later, we, in 
fact, are going to get to the bill, even though the Republican 
leadership continues to try to obstruct and delay because sooner or 
later the American people are going to have their way. They clearly 
want Wall Street financial reform.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I rise today to speak on the financial 
regulatory reform, and particularly the effect of the Dodd proposal 
that came out of the Banking Committee on which I sit, that we have 
been voting on cloture on for this whole week.
  I heard Senators from the other side talk about delay; the 
Republicans are delaying this bill. I have heard them for the last week 
say it is because we are siding with Wall Street, Republicans are 
siding with Wall Street.
  That is odd to me because it is the Wall Street big banks that are 
for this bill. It is Citigroup, it is Goldman Sachs that are in support 
of this bill. They are publicly supporting the bill.
  It is the community banks that are flooding my office and the offices 
of my colleagues. It is the community banks that had nothing to do with 
the financial meltdown that are hugely concerned with this bill.
  That is the issue. The groups that are opposing Dodd's bill are the 
National Federation of Independent Businesses, the small businesses of 
our country; the U.S. Chamber of Commerce; Americans for Tax Reform; 
the Americans for Limited Government; Freedom Works; the National 
Taxpayer Union; the United States Automobile Association.
  We have had auto dealers in our offices all week who are very 
concerned about not being able to get credit from the little banks and 
the ability to finance the buying of automobiles. It is the Military 
Officers Association that has concerns with this bill; the National 
Council of Farmer Cooperatives; the Farm Credit Council; the National 
Association of Home Builders; the Fertilizer Institute.
  This is a bill that is going to affect our economy. So many of the 
groups I have named are the groups that are providing jobs in our 
country that we want to encourage to create more jobs, not discourage 
in a time such as this. So, yes, Republicans have been trying to have 
input on this bill. There has not been any Republican input at all. If 
we have learned one thing as Republicans, it is that we know what it is 
like to be completely shut out. We were completely shut out of the 
health care debate. We had amendments offered day after day after day. 
Oh, the process worked. Not one Republican amendment was passed. Not 
one. Neither was there one Republican vote in the House or Senate on 
the health care bill. So we have had that experience. So this time, 
because we see the dangers in the Dodd bill to our economy and the 
small businesses and the small banks, we are saying we are not going to 
let this bill go to the floor if we have the power to stop it until 
there is Republican input.
  The biggest failure in the bill is that it still allows taxpayer 
bailouts. That is wrong. That is why Republicans are voting not to 
bring it up yet, because we are trying to change the language in the 
bill before it comes to the floor to assure that the taxpayers will not 
have the responsibility to bail out big financial institutions that 
took gambles with other peoples' money. That is the holdup.
  This bill is not a bill that is favored by community and little 
banks. It is favored by the big banks. It is favored by Goldman Sachs 
and Citigroup. So let's be clear about that. As we consider the bill 
before us, the Dodd bill, it should focus on the gaps and holes in 
regulations that led to our nation's financial crisis from which we 
have not yet recovered, because there are still millions of people who 
are unemployed because of the financial crisis.
  We must end too big to fail. We must end taxpayer bailouts. That is 
not done in this bill, and that is why Republicans are saying: Stop 
this bill from coming to the floor until it does at least that one 
major thing; that is, to be clear, that we stop too big to fail in this 
country.

[[Page S2744]]

  Putting the big banks in one level of operation and scrutiny and one 
level of access to the Fed, which this bill does, the Fed keeps its 
scrutiny of every bank company holding company of $50 billion or more 
in assets. That is it. All of the other banks in our system throughout 
our country are not allowed access to the Federal Reserve. They cannot 
be members of the Federal Reserve under the Dodd bill. That is the 
major reason I am not supporting this bill.
  In fact, I have an amendment, if this bill comes to the floor, I am 
going to offer that says the law today will prevail, that is, that 
community banks may join the Fed, the State-chartered banks may join 
the Fed, because if you do not do that, you are going to give the 
impression that the $50-billion-and-above banks are in one category, 
that they are going to be taxpayer protected. That means they are going 
to be able to give lower rates in competition with the community banks 
because it will be perceived that the risk is less.
  That is not what we ought to be doing. So I am going to offer an 
amendment to the Dodd bill which would eliminate that part of the Dodd 
bill that takes away Fed access to the community banks. The other 
reason it is important is that we have regional Fed banks. The reason 
it was set up that way is so that throughout the country the Federal 
Reserve would be able to make monetary policy with input, with input 
from Kansas City, and Dallas, and Houston, and San Antonio, and Los 
Angeles, and San Francisco, and San Diego, and Minnesota, and 
Wisconsin.
  That was the concept of the regional Fed bank. Let me give you an 
example. The Federal Reserve Bank of Dallas is headed by Richard 
Fisher, who came to see me last week. He said: I would go from 
regulating about $70 billion in bank assets, with all the community 
bank members that we have in the Dallas Regional Fed, to 3.
  If the Fed is going to listen in Washington, when they are making the 
monetary policy, to the Kansas City Fed chief who completely agrees 
that we need to keep access for State and community banks to the Fed, 
for their information, as well as the level playing field. So that will 
be my amendment.
  Community banks did not cause the financial meltdown. In fact, they 
provided lending and depository services to families and small 
businesses across Texas and across our country. Even in the hard times 
they were mostly the ones that helped small business get their 
inventory loans and the help they needed for liquidity.
  A lot of people I talked to in my home State, when I visit the small 
businesses and the community, felt as though nobody was lending. The 
big banks certainly were not. So the community banks are continuing to 
make credit available, much more than the big banks, so businesses and 
consumers can invest and create jobs that will lift our Nation into a 
recovery.
  Do not talk to me about recovery when it is still a jobless--that is 
an oxymoron--a jobless recovery. There are millions of people out there 
unemployed. Is that a recovery? No. ``Jobless recovery'' should be out 
of our lexicon. That is wrong. If we are going to build jobs in this 
country, it is going to be through small businesses. The big businesses 
are not hiring. Do you know why the stock market is up right now? It is 
because the big businesses are not hiring. They have lowered their 
costs. Yes, they are more profitable because they are working with 
fewer people. I do not considering that a success. I think we have to 
save our community banks. This bill before us is going to hurt them. 
That is why we are holding it up.
  I wish I could say that is the only part of the bill that hurts 
community banks, but there is another part. It is the Consumer 
Financial Protection Bureau that is created in the Dodd bill that will 
add a new layer of regulations and a new agency issuing new regulations 
that will affect those same community banks that are already fully 
regulated.
  We have seen the effect of poor and predatory lending standards in 
this financial meltdown. We need reform in that area. Americans should 
understand all the terms of a transaction, and they need to be 
creditworthy. Subprime loans to people who are not creditworthy are not 
healthy for our economy. We have learned that for sure. We do not need 
a new bureaucracy housed in the Fed but without Fed oversight, which is 
sort of a non sequitur. But that is the way it is in this bill, which I 
hope we can change. Community banks are already regulated. They have 
all of the regulations, either State bank regulation or by the FDIC 
insuring them, requiring reserves. They are doing their job.
  The new agency would remove safety and soundness from consumer 
protection and have unlimited and unchecked rule-writing authority. The 
legislation does include an exemption which would allow a community 
bank with less than $10 billion in assets to retain examination from 
its prudential regulators, or the regulators they have now.
  But the exemption is false because community banks will still be 
subject to the new agency's new rules, pricing, and prohibitions, all 
of which will only serve to curtail consumer credit options.
  Enhancing consumer protections should instead focus on leveraging the 
experience of agencies that are already in place, such as the Federal 
Trade Commission. I am the ranking Republican on the Commerce 
Committee. I see the work the FTC is doing on a daily basis to stop 
unfair and deceptive practices that prey on consumers of financial 
products and services offered by nonbank entities such as mortgage loan 
services.
  As an example, in 2009 alone, the FTC and the States, working 
together closely, brought more than 200 cases against firms that 
peddled phony mortgage modification and foreclosure rescue scams. 
Rather than focusing on too big to fail or the practices of large 
banks, the Dodd bill overreaches and threatens the authority of the FTC 
to protect consumers of nonbank financial products, as it has for many 
years.
  The FTC wrote a letter to me as ranking member of Commerce, and our 
chairman, Jay Rockefeller, and asked for assistance with preserving 
their consumer protection and enforcement authority. I am working now 
with Chairman Rockefeller. He is very focused on this. I can tell you 
he is very focused, because I talked to him on the telephone yesterday 
several times, including at 8 o'clock last night, because he is so 
concerned that we are not going to fix this bill to make sure the FTC 
is not shut off from what it already does, what it already has in 
place, with a new overlay of a new agency that does not have the 
experience, that does not now exist, and would need startup time and 
more taxpayer dollars.
  Instead, Senator Rockefeller will have an amendment, and I will 
cosponsor it, that will keep the FTC exactly where it is now with the 
enforcement actions against companies that offer nonbank financial 
products. I hope Senator Dodd will work with us on that amendment. In 
fact, I am going to expand it even beyond that and say: We should put 
all of the nonbank regulation into the FTC instead of this new agency 
that will be another bureaucracy that will be confusing in many 
instances to the banks which are already regulated.
  I hope we can do something in this bill that is right in the 
regulatory area, and particularly the area that contributed to the 
financial meltdown, such as the nonbank financial institutions, not the 
banks. The community banks did not have a part in this financial 
meltdown. I hope we can fix this bill when it comes to the floor.
  It appears that the chairman of the Banking Committee and the ranking 
Republican, Senator Dodd and Senator Shelby, have come to an agreement 
on the language that will tighten and close the loophole in too big to 
fail. We are going to hear exactly what that language is in a few 
minutes in our Republican caucus. That will be very good for us to be 
able to then come to the floor, if the Democrats will allow Republicans 
to have some input into this bill on the other issues, such as Federal 
Trade Commission jurisdiction, the new consumer agency that I think is 
overreach and overkill, and most certainly to keep community banks 
without a competitive disadvantage against the big banks. I want a 
level playing field because I don't want the community banks to suffer 
in this country. They are the lifeblood of the heartland, and they are 
in peril with this bill.

[[Page S2745]]

  I am somewhat frustrated at hearing some of the speeches in the last 
week that have railed against Republicans for holding up this bill. 
Sometimes ``no'' is the right answer because if we bring a bill to the 
floor with no ability to amend it and we don't fix too big to fail, 
then once again, like the health care reform bill that was jammed 
through the Senate and the House with no Republican support and no 
input, we will be doing it to our economy and our financial 
institutions. I hope we will not do that again.
  I hope that we will have a bill we can all agree closes the loopholes 
on too big to fail so that taxpayers will not be on the hook again for 
big financial institutions that bet with other people's money on fancy 
derivatives and all of the hedges that don't make sense; that we 
protect the hedges that do make sense, that are used by the end user to 
keep a budget in place rather than passing big price hikes on to 
consumers in oil and commodities. That is what derivatives are supposed 
to be for, and we don't need to stop that. We just need to know what is 
in those big derivatives so that people will have the information and 
so will the regulators.
  We can do this job right. This should not be political. Democrats and 
Republicans aren't going to get an advantage for passing a financial 
regulation bill because most people are not going to know how it will 
affect them until it is passed and in place. Why don't we do it right? 
Let's bring the bill to the floor with some key parts that are agreed 
to, and then let's start having amendments. I am not saying every 
Republican amendment should pass, but I think it should have a fair 
hearing. And I think some of them should pass if this bill is going to 
pass the test of a true bipartisan bill that will have more than just a 
partisan vote out of the Senate.
  I thank the Chair for listening--not that it was his choice, but I 
appreciate it anyway.
  I hope we will do the right thing on this bill. It will affect our 
financial communities, every community in Texas, and especially small 
businesses and community banks that are going to be the reason we 
recover, if we do this right.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant editor of the Daily Digest proceeded to call the roll.
  Mr. GRASSLEY. I ask unanimous consent that the order for the quorum 
call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. I ask unanimous consent to speak for 12 minutes as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                        General Motors and TARP

  Mr. GRASSLEY. Mr. President, I ask unanimous consent to have printed 
in the Record at the end of my remarks some letters to which I will 
refer.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GRASSLEY. Mr. President, last Thursday, I wrote Secretary 
Geithner asking why the Treasury Department allowed General Motors to 
use TARP money from a Treasury escrow account to repay its 
multibillion-dollar TARP taxpayer loan. This afternoon, I received a 
response from Treasury. I would like to say a few words about the reply 
and the questions that remain unanswered.
  Last week, Treasury and GM announced with press releases and 
nationwide TV commercials that GM had repaid its TARP loans ``in full, 
with interest, ahead of schedule, because more customers are buying [GM 
vehicles].''
  However, the hype does not match the reality. Taxpayers have not been 
repaid in full--far from it. Many billions of TARP dollars remain 
invested by Treasury in GM, and much of it will never be repaid. The 
Congressional Budget Office estimates that taxpayers will lose around 
$30 billion on GM.
  In addition, the payment that occurred last week did not come from 
revenue GM earned by selling cars, despite what was claimed. Instead, 
Treasury allowed GM to use funds in a separate escrow account to pay 
its TARP debt. The Treasury Department's response to me today makes a 
point of saying that GM ``owns'' the money in the escrow account, as if 
that somehow justifies all the hoopla about GM's so-called 
``repayment.''
  Well, let's look at how GM came to ``own'' those escrow funds in the 
first place. The escrow funds were part of the TARP money Treasury paid 
for GM stock coming out of the bankruptcy. The money was supposed to be 
used by GM for expenses, as Treasury concedes. Treasury had the power 
to approve or disapprove GM's use of the money to repay the TARP 
taxpayer loan. Treasury approved, and GM pretended it was paying the 
loan back from revenue because business had improved.
  Business may have improved, but that is not how they paid the loan. 
Taking TARP money out of one account to pay back TARP loans in another 
account is not at all the same as paying off a loan with earnings, as 
GM's TV commercials imply they have done. That is why I called it ``an 
elaborate TARP money shuffle'' and nothing in Treasury's reply today 
changes that.
  The public would know nothing about the TARP escrow money being the 
source of the supposed repayment from simply watching GM's TV 
commercials or reading Treasury's press release. Treasury's letter 
today says all these details are public knowledge and nothing new. 
Well, that may be technically correct, but it wasn't clearly 
communicated that way to the average citizen. Most Americans don't pore 
through SEC filings and special inspectors general reports.
  The GM commercial also did not mention that GM could have used the 
TARP escrow funds to repay a $2.5 billion 9 percent loan it received 
from its union health plan as part of the bankruptcy process. The union 
loan runs until 2017. The TARP loan was at 7 percent and ran until 
2015. What sort of money manager would advise you to pay off a lower 
interest loan before a higher interest loan? GM and Treasury have still 
not explained that, and I have asked the TARP watchdog, Special 
Inspector Neil Barofsky, to get to the bottom of it. And to make 
matters worse, Treasury has admitted that it let GM take an additional 
6.6 billion of TARP dollars out of the escrow fund last week with no 
strings attached. That money, too, could have been used to repay the 
high interest union loan.
  There are reports that GM also applied to the Department of Energy 
for a $10 billion 5 percent loan to retool its plants to meet fuel 
economy standards. GM seems to be using government money to pay back 
government money, and then asking for more government money at a lower 
interest rate. It sounds like a plan to refinance GM's government debt 
with more taxpayer money--not pay it back.
  GM had to ask permission from Treasury to use the taxpayers' stock 
investment to pay off the taxpayers' loan. Treasury's response to my 
letter says that ``Treasury retained approval rights over GM's use of 
funds from the escrow account in order to protect the taxpayer.'' Well, 
why didn't they protect the taxpayer then?
  Why would Treasury allow GM to use its equity investment to pay off 
the loan when it means giving up the legal right to 7 percent rate of 
return for the taxpayers in exchange for essentially nothing? Since the 
taxpayer has an equity stake in the company, it's true that future 
growth of GM could theoretically make taxpayers whole, but taxpayers 
already had that equity interest before this latest transaction and 
didn't get any more equity as a result of the transaction.
  Another key question is: Why would GM orchestrate a major media 
campaign to make the public think this all represents some big 
accomplishment by GM when the truth is that the taxpayers are still on 
the hook for billions that we may never recover?
  Using the taxpayers' stock investment in GM to reduce its debt to the 
taxpayers is not the same as repaying that debt from money actually 
earned by selling cars. Treasury's reply today does not explain why it 
approved this transaction. Maybe it is a step in the right direction, 
maybe not. But instead of misleading the American people, we should be 
clear and up front about what happened here.

[[Page S2746]]

                               Exhibit 1

                                                      U.S. Senate,


                                         Committee on Finance,

                                   Washington, DC, April 22, 2010.
     Hon. Timothy F. Geithner,
     Secretary, U.S. Department of the Treasury, Washington, DC.
       Dear Secretary Geithner: General Motors (GM) yesterday 
     announced that it repaid its TARP loans. I am concerned, 
     however, that this announcement is not what it seems. In 
     fact, it appears to be nothing more than an elaborate TARP 
     money shuffle.
       On Tuesday of this week, Mr. Neil Barofsky, the Special 
     Inspector General for TARP, testified before the Senate 
     Finance Committee. During his testimony Mr. Barofsky 
     addressed GM's recent debt repayment activity, and stated 
     that the funds GM is using to repay its TARP debt are not 
     coming from GM earnings. Instead, GM seems to be using TARP 
     funds from an escrow account at Treasury to make the debt 
     repayments. The most recent quarterly report from the Office 
     of the Special Inspector General for TARP says ``The source 
     of funds for these quarterly [debt] payments will be other 
     TARP funds currently held in an escrow account.'' See, Office 
     of the Special Inspector General for TARP, Quarterly Report 
     to Congress dated April 20, 2010, page 115.
       Furthermore, Exhibit 99.1 of the Form 8K filed by GM with 
     the SEC on November 16, 2009, seems to confirm that the 
     source of funds for GM's debt repayments was a multi-billion 
     dollar escrow account at Treasury--not from earnings. In the 
     8K filing GM acknowledged:
       Of the $42.6 billion in cash and marketable securities 
     available to GM as of September, 30, 2009, $17.4 billion came 
     from an escrow account with Treasury,
       $6.7 billion of the escrow account available to GM was 
     allocable to the repayment of loans to Treasury,
       $5.6 billion in cash would remain in the Treasury escrow 
     account following the repayment by GM of their loans, and
       Upon repaying Treasury, any balance of escrow funds would 
     be released to GM.
       Therefore, it is unclear how GM and the Administration 
     could have accurately announced yesterday that GM repaid its 
     TARP loans in any meaningful way. In reality, it looks like 
     GM merely used one source of TARP funds to repay another. The 
     taxpayers are still on the hook, and whether TARP funds are 
     ultimately recovered depends entirely on the government's 
     ability to sell GM stock in the future. Treasury has merely 
     exchanged a legal right to repayment for an uncertain hope of 
     sharing in the future growth of GM. A debt-for-equity swap is 
     not a repayment.
       I am also troubled by the timing of this latest maneuver. 
     According to Mr. Barofsky, Treasury had supervisory authority 
     over GM's use of these TARP escrow funds. Since GM's exit 
     from bankruptcy court, Treasury had approved the use of the 
     escrow funds for costs such as GM's obligations to its parts 
     supplier Delphi. See, Office of the Special Inspector General 
     for TARP, Additional Insight on Use of Troubled Asset Relief 
     Program Fund (SIGTARP-10-004), dated December 10, 2009, at 
     page 6. According to the GM 8K, GM had planned to use the 
     TARP funds in escrow to pay back the TARP loans on a 
     quarterly basis beginning in the fourth quarter of 2009. But 
     following the April 20, 2010, hearing of the Senate Finance 
     Committee, where Treasury's decision to exempt GM from the 
     bank TARP excise tax was questioned and GM's refusal to 
     testify was noted, it is odd that GM suddenly drew down on 
     the TARP escrow and accelerated the repayment of the 
     remaining balance of GM's outstanding TARP loans.
       The bottom line seems to be that the TARP loans were 
     ``repaid'' with other TARP funds in a Treasury escrow 
     account. The TARP loans were not repaid from money GM is 
     earning selling cars, as GM and the Administration have 
     claimed in their speeches, press releases and television 
     commercials. When these criticisms were put to GM's Vice 
     Chairman Stephen Girsky in a television interview yesterday, 
     he admitted that the criticisms were valid:
       Question: Are you just paying the government back with 
     government money?
       Mr. Girsky: Well listen, that is in effect true, but a year 
     ago nobody thought we'd be able to pay this back.
       Mr. Girsky then said that GM originally planned to pay the 
     loan over the next five years. So the question is why--other 
     than a desire to justify excluding GM from the 
     administration's TARP tax proposal--would Treasury and GM 
     reduce GM's TARP debt with TARP equity and then 
     mischaracterize it as a repayment from earnings? Accordingly, 
     please explain:
       Your department's justification for allowing GM to use 
     funds from the TARP escrow account to repay TARP loans,
       The amount of funds remaining in the TARP escrow account at 
     Treasury that may be released to GM, and
       The date that you anticipate that the remaining funds in 
     escrow will be released to GM.
       Thank you in advance for your cooperation. Please provide 
     the requested information by April 30, 2010. Should you have 
     any questions regarding the contents of this letter please do 
     not hesitate to contact Jason Foster. All formal 
     correspondence should be sent electronically in PDF format to 
     Brian_D[email protected].
           Sincerely,
                                              Charles E. Grassley,
     Ranking Member.
                                  ____



                                   Department of the Treasury,

                                   Washington, DC, April 27, 2010.
     Hon. Charles E. Grassley,
     U.S. Senate, Washington, DC.
       Dear Senator Grassley: Thank you for your letter dated 
     April 22, 2010 to the Secretary regarding General Motors' 
     (GM) repayment of its loan from the Department of the 
     Treasury. He asked me to respond on his behalf.
       Your letter states that the repayment of the loan was made 
     with funds from ``an escrow account at Treasury'' and that it 
     constituted a ``debt-for-equity'' swap. These statements are 
     not accurate.
       On April 20, GM repaid the Treasury loan with cash in an 
     escrow account that it owns. The escrow account was created 
     last summer in connection with the restructuring of GM. The 
     money used to fund the escrow account came from a portion of 
     the proceeds of a loan made by both the Treasury and the 
     Canadian government. The escrowed funds were expected to be 
     used for extraordinary expenses, and a portion of the funds 
     were so used. Treasury retained approval rights over GM's use 
     of fluids from the escrow account in order to protect the 
     taxpayer, but the cash was still the property of GM.
       In making its April 20 loan repayment, GM determined that 
     it did not need to retain the escrowed funds for expenses. 
     The fact that GM made that determination and repaid the 
     remaining $4.7 billion to the U.S. government now is good 
     news for the company, our investment, and the American 
     people. Consistent with Treasury's goal of recovering funds 
     for the taxpayer and exiting TARP investments as soon as 
     practicable, we approved GM's loan repayment.
       It has long been public knowledge that GM would use these 
     specific funds to repay the Treasury and Canadian loans, if 
     it did not otherwise need them for expenses. Under GM's loan 
     agreement with Treasury, any funds in the escrow account on 
     June 30, 2010 had to be used to repay the Treasury and 
     Canadian loans. We have highlighted the repayment requirement 
     in our monthly Section 105(a) reports to Congress. During a 
     meeting last fall, we also informed the staff of the Special 
     Inspector General of TARP (SIGTARP), Neil Barofsky, that we 
     expected GM to use these funds to repay these loans. In fact, 
     according to the SIGTARP Report on the Use of Funds (released 
     on December 10, 2009), ``GM officials stated that it intends 
     to seek release of additional escrow funds to repay its 
     outstanding $6.7 billion loan to Treasury and $1.3 billion 
     loan to the Canadian Government.''
       After the full repayment of the Treasury loan, 
     approximately $6.6 billion remained in GM's escrow account. 
     These funds became unrestricted on April 20 and available for 
     GM's general use.
       In addition, it is not correct that the timing of the 
     repayment was motivated by concurrent Senate hearings. In 
     fact, GM's Board of Directors approved the loan repayment at 
     its monthly meeting on April 13, 2010.
       As is widely known, Treasury continues to hold $2.1 billion 
     in preferred stock and 60.8% of the GM's common equity that 
     it received in the restructuring in July 2009. Treasury will 
     begin selling equity once GM makes an initial public 
     offering.
       Thank you again for your attention to this important 
     matter.
           Sincerely,
                                          Herbert M. Allison, Jr.,
     Assistant Secretary for Financial Stability.
                                  ____


                             Reserve Notice

     U.S. Department of the Treasury,
     1500 Pennsylvania Avenue, NW.,
     Washington, DC.

     Attention: [XXXXX]
     Telecopy: [XXXXX]
     Email: [XXXXX]

     with a copy to:

     The U.S. Department of the Treasury,
     1500 Pennsylvania Avenue, NW.,
     Washington, DC.

     Attention: Cash Management Officer
     Telephone (for borrowing requests): [XXXXX]
     Email: [XXXXX]
       Reference is made to that certain $7,072,488,605 Second 
     Amended and Restated Secured Credit Agreement dated as of 
     August 12, 2009, as amended, supplemented or modified from 
     time to time (the ``Credit Agreement''), among General Motors 
     Holdings LLC, a Delaware limited liability company (the 
     ``Borrower''), the Guarantors named therein and The United 
     States Department of the Treasury (the ``Lender''). Terms 
     defined in the Credit Agreement and not otherwise defined 
     herein are used herein with the meanings so defined.
       In connection with the repayment in full of the outstanding 
     Loans and other Obligations on April 20, 2010 (the 
     ``Repayment Date''), the Borrower hereby requests that a 
     Reserve Disbursement in an amount equal to the entire amount 
     of the Reserve Funds (the ``Disbursement'') be made as 
     described below.
       $4,684,964,350.73 of the proceeds of the Disbursement shall 
     be used to pay the entire outstanding amount of the Loans and 
     other Obligations, including all accrued and unpaid interest 
     on the Loans, on the Repayment Date.
       In accordance with Section 4.2(e) of the Credit Agreement, 
     the balance of the proceeds of the Disbursement shall be 
     retained by the Borrower.

[[Page S2747]]

       The Borrower hereby requests that the proceeds of the 
     Disbursement be made available to it as follows:
       A. On the Repayment Date, $4,684,964,350.73 to be wired to:

     Bank: [XXXXX]
     ABA No: [XXXXX]
     Beneficiary: [XXXXX]
     Account No.: [XXXXX]
       B. On the Repayment Date or on any date thereafter, as 
     shall be determined by the Borrower in its sole discretion, 
     all remaining amount of the Disbursement or a portion 
     thereof, as shall be directed by the Borrower in its sole 
     discretion, are to be wired to:

     Bank: [XXXXX]
     ABA No: [XXXXX]
     Beneficiary: [XXXXX]
     Account No.: [XXXXX]
     General Motors Holdings LLC

     By: [XXXXX]
     Dated: April 19, 2010.

  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant editor of the Daily Digest proceeded to call the roll.
  Ms. KLOBUCHAR. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. KLOBUCHAR. Mr. President, I rise to discuss the very important 
bill we are very hopeful we can move on today to start the debate on 
Wall Street reform. I understand there may be an agreement to move 
forward with this bill. We don't know that yet. If it is true that we 
have an agreement to start the debate on this bill, then it is very 
fitting that I go through why this bill is so important. If we don't 
have an agreement, then it is even more fitting because we know the 
American people got severely hurt by the crisis on Wall Street, by the 
fall of many of our financial institutions, and they were not the ones 
who were supposed to be hurt. So we need to fix this so it doesn't 
happen again.
  Nearly 3 years after the financial system began to melt down, America 
continues to suffer the effects of the worst economic crisis since the 
Great Depression. Millions of Americans have lost their jobs, homes, 
and their retirement savings. Although some key indicators are 
beginning to move in the right direction, many families, such as those 
we know in Minnesota, are still struggling, and the economic damage is 
very slow to heal in their towns.
  On Wall Street, however, it seems to be back to business as usual.
  Last year, Wall Street's largest firms handed out record bonuses 
totaling nearly $146 billion, an 18-percent increase from 2008. 
Meanwhile, overall U.S. per capita income declined 2.6 percent. So it 
is little surprise that Wall Street financiers are not enthusiastic 
about reforms that could change the way they do business. In fact, some 
of them claim Wall Street just has a few potholes that need fixing. 
Well, I think they need more than that. What Wall Street needs is more 
stop signs and key intersections and some good traffic cops.
  This bill we have is the product of months of bipartisan 
negotiations. For the first time ever, this bill would create a nine-
member financial oversight council chaired by the Treasury Secretary 
and made up of Federal financial regulators. This council would serve 
as an early warning system for systemic risk, something that was 
clearly lacking 3 years ago when these institutions that people were 
advertising as gold and their investments as gold went tumbling down 
onto the people of this country.
  The domino effect of deeply interconnected financial companies, such 
as insurance giant AIG, didn't just create economic ripples, they sent 
a tsunami surging through the entire economy. This financial oversight 
council will be charged with scanning the system for systemic risks and 
putting speed bumps in place to ensure we never see a crisis such as 
this one again. This council will, for the first time, bring the 
regulators together to form a picture of the entire system, so one 
regulator will not be dealing with one problem while another is dealing 
with another with no information being shared. This way there will be 
one place where they can look at the entire financial system and look 
for those warning signs of problems.
  This bill will also stand at the intersection and make firms slow 
down by increasing the costs of being large and complex. The most 
interconnected firms will be required to hold larger levels of capital 
to minimize their risk to the system if the investments go bad. All we 
are asking for, so taxpayers don't have to bail out these firms, is 
that they have significant resources and enough resources on hand in 
case they face troubled times again. If firms are going to create risk 
to the system, they need to take some responsibility. We clearly saw in 
this crisis what a lack of capital can do, how it can bring a firm to 
the brink, and the downward spiral it can cause when they are unable to 
attract new investors.
  As much as we would like, we simply can't predict how a future crisis 
might unfold. I believe one of the most important lessons we can take 
from this crisis is that the American taxpayer should never again be 
left on the hook for the unconscionable bets of Wall Street. The 
American taxpayers' money is not meant to be used to play games within 
a casino, where you can throw their money around and then maybe some of 
it will come back and some of it will not. We have to make sure this 
doesn't happen again. Preventing American taxpayers from being forced 
to bail out financial firms starts with strengthening big financial 
firms to better withstand stress, looking out for systemic risk, and 
putting a price on activities that pose a risk to the financial system.
  In the event that a firm was to fail, this bill creates a safe way to 
liquidate failed financial firms that will not leave the taxpayer on 
the hook. First of all, it updates the Federal Reserve's authority to 
allow systemwide support but no longer allows it to prop up an 
individual firm. Second, it requires large, complex financial companies 
to submit plans for their rapid and orderly shutdown should they start 
to go under. These plans will help regulators understand the structure 
of the companies they oversee and serve as a roadmap for shutting them 
down if the company fails.
  Under this plan, most large financial companies are expected to be 
resolved through the bankruptcy process. Bankruptcy allows those who 
invest in a firm to better access their risks, and it allows the 
possibility that a company will emerge again in some way intact. If we 
have a situation where a firm would not go into bankruptcy and its 
failure could bring down the whole system, we make the process of 
resolution as hard as we can on that firm. We start by shutting down 
the business and throwing out those who caused the mess. This is a very 
different route than we took in this crisis where we propped up firms 
and kept them alive because of the risk it was going to pose for the 
entire financial system. We don't want to be in that position again. 
The taxpayers don't want to be in that position again.
  If a firm chooses our resolution, the Treasury, the FDIC, and the 
Federal Reserve must first all agree to put a company into the orderly 
liquidation process. A panel of three bankruptcy judges must then 
convene and agree within 24 hours that a company is insolvent. At that 
point, the FDIC would step in and resolve the firm through this orderly 
process and in a way that doesn't harm the overall system. The cost of 
resolution would be paid for not by the taxpayer but by a $50 billion 
fund built up over time--and this is key--paid for by the industry, 
paid for by the industry, not by the taxpayers.
  Finally, I wish to talk about a key portion of the bill that came out 
of the Agriculture Committee, a committee on which I serve, led by 
Chairman Lincoln. The portion of that bill I wish to talk about is the 
focus on transparency and accountability to the over-the-counter 
derivatives market.
  Bringing transparency and accountability to the over-the-counter 
derivatives market is essential to our economic system and the American 
taxpayer and is as important as any other piece of reform we are going 
to be debating. Reckless trading of unregulated over-the-counter 
derivatives played a significant role in triggering the financial 
crisis in the fall of 2008. AIG, using a type of derivative known as a 
credit default swap, took enormous risks in guaranteeing at least $400 
billion worth of other companies' loans, including those of Lehman 
Brothers. When the financial crisis hit and AIG was unable to make good 
on its commitments, Treasury and the Federal Reserve were forced to 
step in to accept untold, unknown risk to the financial system. In

[[Page S2748]]

the end, the government put up $180 billion of taxpayer money to save 
AIG from collapse.
  I bring up AIG to point out the dangers of an unregulated, over-the-
counter derivatives market. Derivatives, when used properly and backed 
by sufficient collateral, play a crucial role in our financial and 
economic systems. We think about airlines that want to hedge their risk 
with the price of oil. You think about agribusinesses. All over this 
country that goes on. But this is a whole different issue we are 
talking about. When irresponsible financial institutions are allowed to 
make unconscionable bets, hidden from the view of the markets and its 
regulators, the stability of our entire financial system is threatened.

  Right now, the over-the-counter market counts its transactions in the 
hundreds of trillions of dollars, but under the current system, there 
are almost no requirements that the most basic terms of these contracts 
or even their existence be disclosed to regulators or the public. Think 
about it: Trillions of dollars changing hands and no one even knows 
what is happening.
  The goal of the bill we have today is to finally bring transparency 
and accountability to these unregulated markets. For the first time, 
under this bill, all trades will be required to be reported to the 
regulators and to the public. With this information, regulators will be 
able to effectively monitor risks to the system and prevent market 
manipulation and abuse. Transparency will also benefit those who use 
derivatives to hedge risks, as they will be better equipped to evaluate 
the market, as price information will finally be made public. By 
requiring mandatory clearing and trading for standardized derivatives, 
this bill will greatly reduce the ability of risk to build up to a 
point that could, once again, burst and threaten the financial 
stability of our financial system.
  I have often said that when Wall Street gets a cold, Main Street gets 
pneumonia. We can't let this happen again. In this bill, careful 
consideration has been made to ensure that commercial entities--this 
was the work done in our Agriculture Committee--to make sure that 
commercial entities that hedge solely to mitigate their own commercial 
risk are not brought under requirements meant to address the failures 
of a market they had no hand in. We think about all the people who 
didn't have a hand in this problem that got affected. We think even 
about our small banks in the State of Minnesota. They didn't engage in 
this kind of risky behavior. I think about them sometimes standing 
there with their briefcases in the heartland, with those credit default 
risks swirling around their head that they never used or engaged in, 
saying: Toto, we are not in Kansas anymore. Because, as we know, some 
banks in this country had a brain. Some banks didn't go to Oz and think 
they could go back with the American taxpayers' money. So we have to 
remember that as we go forward.
  But the most important thing is to make sure we put a traffic cop at 
those intersections, that we put some stop signs at those 
intersections, that Wall Street isn't allowed to drive down in their 
Ferraris while the government is following behind in a Model T Ford.
  Enacting these reforms is not just important for our financial 
markets, it is important for ordinary Americans. While very few people 
outside of those involved in these markets understand or see the impact 
of derivatives on their daily lives, their misuse contributed to a 
recession that left millions without jobs, businesses shuttered, and 
trillions in household savings lost. The legislation we passed out of 
the Agriculture Committee and that Chairman Dodd has worked to 
incorporate into this bill will bring these dark markets into the light 
of day and ensure they will never again threaten the stability of this 
financial system.
  It is very important that we bring this before the Senate, that we 
begin debate on this bill. That is why, as we look at the rumors 
swirling around that, in fact, there is a deal and that we are going to 
be able to at least begin the debate on whether to proceed--not debate 
on the bill--we are still working out the details. We think this is a 
good bill. We look forward to working with our colleagues on it, but we 
can't even get to ``go,'' we can't even get to ``start'' if we can't 
get this bill on the floor to debate.
  So we are looking forward to discussing this bill, debating for the 
American public and getting it done. The Americans who lost their jobs, 
their homes and their savings and are scared every day that it is going 
to happen again because of the recklessness of Wall Street deserve no 
less.
  Thank you. I yield the floor. I 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. REID. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Begich). Without objection, it is so 
ordered.
  Mr. REID. Mr. President, I now ask unanimous consent the motion to 
proceed to S. 3217 be agreed to; and that once the bill is reported 
tonight, the Senate then proceed to a period of morning business, with 
Senators permitted to speak therein for up to 10 minutes each, and on 
Thursday, April 29, following the recognition of the leaders or their 
designees, the Senate then resume consideration of S. 3217; that after 
the reporting of the bill and recognition of Senators Dodd and Shelby 
to make opening statements on the bill, Senator Lincoln then be 
recognized to speak for up to 20 minutes; that on Thursday, no 
amendments or motions be in order prior to the offering of the Dodd-
Lincoln substitute amendment; and that once the substitute amendment is 
offered, it be considered read.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Republican leader.
  Mr. McCONNELL. Mr. President, I want to take a few moments here to 
thank the distinguished Senator from Alabama who has been our leader on 
the Banking Committee and an expert on this very complex subject of 
financial regulation, for his steadfast effort in bringing us to where 
we are today. As Senate Republicans plus Senator Ben Nelson of Nebraska 
have demonstrated over the last few days, we believed the bill we 
started with was not insignificant but that it needed to be improved. 
Senator Shelby was given the opportunity, as a result of us staying 
together, to be empowered to improve the bill that had previously come 
out of the Banking Committee on a straight party-line vote. So I want 
to take the opportunity to thank all of my Republican colleagues, plus 
Senator Nelson of Nebraska, in giving us the opportunity to improve the 
underlying bill.
  I want to thank the Senator from Alabama for his efforts in that 
regard. I think we have a better starting place than we would have had 
earlier and we look forward to, as the majority leader indicated, an 
open amendment process and plenty of opportunities to treat this like 
the serious comprehensive bill it is. We have many amendments we intend 
to offer. Our members will be prepared to accept reasonable and short 
time agreements so we can get these amendments up and voted on, and 
hopefully have an opportunity to make further improvements in the bill.
  I know Senator Shelby may want to make a few observations.
  The PRESIDING OFFICER. The majority leader.
  Mr. REID. I will be happy to yield to my friend from Alabama and my 
friend from Connecticut, but I want to say a few words first. I too 
have great respect for my friend Senator Shelby. He and I were 
neighbors in the Longworth Building many years ago and we have 
maintained that friendship since. There are times when we disagree on 
issues but our relationship is one of friendship.
  Chris Dodd has had an extremely difficult year. He has had to 
legislate on some of the most difficult issues to come before this 
body, and he has been the one who has been the chairman of that 
committee and had to do it. In addition to that, his dear friend, his 
best friend, Senator Kennedy, was ill. He had to take over that 
committee and do his Banking Committee. It has been a tremendously 
difficult year for him. He has done it with mastery of the Senate rules 
and with the ability to articulate his position as well as anyone who 
has ever served in the Senate. I admire and appreciate him so very 
much.

[[Page S2749]]

  We also have a new chairman, Senator Lincoln, on the Ag Committee. 
She has done a very good job. She took it over a couple of months ago 
but stepped into that committee and has done a remarkably good job on 
an extremely difficult issue dealing with derivatives and things such 
as that. I admire her work and I appreciate so much the ability of 
Senator Dodd and her to work together. Their staffs worked all weekend, 
trying to put together this substitute amendment we will offer 
tomorrow. I am very grateful for their leadership in the conference, 
the Democratic conference. They do good work all the time.
  We have so much to do in the weeks ahead in this work period. But 
this is the issue we are going to go on. The American people waited 
long enough for their leaders to get to work cleaning up Wall Street--
first on Monday, then on Tuesday, and twice more today. We didn't have 
to vote today. That is a decision that Senator McConnell and I made--
that there was no need to have a vote. There was an agreement to move 
to the bill and that is what we have been trying to do all week.
  Senate Democrats have asked one thing, that we be allowed to debate, 
we simply be allowed to do our job as legislators and legislate. We 
believe in this bill to crack down on Wall Street, to protect families' 
savings and seniors' pensions. We never asked the Senate to unanimously 
or blindly approve a single policy. We never sought to send this bill 
directly from the committee room to the President's desk. The only 
thing we fought for is the opportunity to have that conversation.
  After months of bipartisan meetings and negotiations, it is time to 
move this debate from the sidelines to the playing field, to the Senate 
floor, which is where it belongs. Senate Republicans have finally 
agreed to let us begin this debate. I appreciate that and I hope it 
foreshadows more cooperation to come. I know Republicans have their own 
suggestions and amendments for improving this bill. So do Democrats. 
Now that we will be able to begin that process, the American people 
will finally have the opportunity to watch and weigh those ideas. 
Nothing has changed from our end since Monday. The only thing that is 
different is the date. We have always wanted to start the debate on 
Wall Street reform with an open, bipartisan amendment process.
  I will offer the first amendment combining the best parts of the 
Banking Committee and Agriculture Committee's bills. That will be what 
we will work from. Obstruction has wasted enough of the American 
people's time. Now let's do our work and do our utmost to make the 
American people proud of our efforts. Let's work for them, the American 
people. Let them know Wall Street needs reforming. Democrats and 
Republicans all over America believe it, so let's show the American 
people we will listen to what they say.
  There will be no more votes tonight.
  The PRESIDING OFFICER. The Republican leader.
  Mr. McCONNELL. Mr. President, let me say again before turning to 
Senator Shelby how much we appreciate his leadership on this and how 
much we appreciate all of our Republican colleagues, plus Senator 
Nelson, giving him the ability to improve the bill that came out of 
committee. Much has indeed changed since Monday. I thank Senator Shelby 
for his leadership. I also commend Senator Dodd for the spirit in which 
those discussions were commenced.
  I see the Senator from Alabama on the floor.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SHELBY. I will be brief.
  First, I thank the Republican leader Senator McConnell for his kind 
words. Also I thank my friend, the majority leader, Senator Reid, for 
helping bring us where we are today.
  But more than that, I commend Senator Dodd, the chairman of the 
Banking Committee, with whom I have worked for years and years. We have 
worked exceedingly closely on many issues dealing with the Banking 
Committee. What we are bringing to the floor now is something very 
complex, very far reaching. The idea that something should be too big 
to fail is very important to me. Nothing should be too big to fail, in 
my judgment, in this country.
  I commend Senator Dodd. In our negotiations, they haven't been all 
loss--we have reached some assurances in that. He and his staff have 
made some recommendations that we like. We made some they liked. I 
think we have made real progress. I know we have to seal it all, but I 
think Senator Dodd is working in good faith on that.
  But we have the derivatives title and we have the consumer products 
deal. We have not been able to resolve those yet. I hope we will on the 
floor of the Senate. We have moved to a new forum and it is going to be 
a very important debate in the weeks ahead here because this is very 
important to the American people.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Let me begin by thanking the majority leader for his work. 
I thank the minority leader as well. This has been a bit acrimonious 
over the last 10 days or so as we tried to get to the floor with this 
bill.
  Of course I thank Richard Shelby. He and I, as he points out, have 
been working together over the last about 37 months during my 
stewardship of the Banking Committee that I inherited in January of 
2007.
  I noted the other day there are some 42 measures we brought out of 
our committee and 37 of them have become the law of the land. This is a 
good result. We will now be on this bill, which the American people 
want us to be on. This is an important issue. As I pointed out this 
morning, we had the headlines, the hearings here yesterday involving 
mortgage deals and the other headlines about Greece and its debt. Its 
bonds were sinking, causing economic problems in Europe and potentially 
here.
  These problems are huge. As Senator Shelby has said and I have said 
over and over, this is a complex area of law we are talking about and 
it has to be gotten right. We have had very good conversations on a 
number of issues, but on this over many weeks, going back, obviously, 
and clearly we both share, as everyone does in this Chamber, our 
determination that we never again have institutions that become too big 
to fail where there is that implicit guarantee that the Federal 
Government will bail them out.
  I am satisfied that our bill does that already, but I appreciate that 
there are others who would like to see it tighter, who think we can do 
more to make it better and more workable. I am anxious to hear them.
  I know our colleague from California, Barbara Boxer, has some ideas 
on this as well that she has raised and I mentioned those with my 
friend from Alabama. He has raised issues with me that I like as well, 
and he can help us get there. As he rightly points out, we have not 
sealed anything but we have had great conversations, as two people of 
good will can have, that I think will allow us to get there.
  We are going to have a very busy couple of weeks coming up now. There 
are a lot of Members who have very strong feelings about this bill. My 
job--our job--will be to see to it people have a chance to offer their 
amendments, to debate them, to go through that process.
  I may sound pretty old-fashioned in this regard. I pointed out last 
night, I first got involved in this Chamber as a young person sitting 
here in the same outfits as these young people in their blue suits, as 
a page, watching Lyndon Johnson sitting in that chair where you are, 
Mr. President, and watching Mike Mansfield in that chair over here and 
Everett Dirkson in that chair.
  I remember sitting there and listening to the debates on civil rights 
in the early 1960s, when this Chamber, in difficult moments, worked 
together to achieve great results for our country. I have great 
reverence for this institution and I want to see it work as our 
Founders intended, where you have a great, important debate--and this 
is one--that we work together as American citizens chosen by our 
respective States to represent them in this great hall. That is what I 
intend to do as the manager of this bill, to make sure that each and 
every one of my colleagues--whether they sit on this side of the aisle 
or that side of the aisle--are all in this Chamber together to try to 
improve the quality of life for the people who have been so badly hurt, 
homes

[[Page S2750]]

lost, jobs that have evaporated, retirement accounts that disappeared 
for people. They want to see us work together to get a job done to make 
a difference for our country and I firmly believe we can do that. I 
will do my very best, I say to my friend from Alabama, I say to the 
minority leader, as I said to the majority leader, to act with 
fairness, to work together to try to resolve matters so we can have a 
good outcome on this bill.
  Obviously we cannot predict that. I know there are some who want to 
make this a great fight--that this is a great, great issue, maybe, for 
the day or the week you do it--who wins, who loses. That is a great 
story. But this is not an athletic contest we are involved in. It is a 
decision to try to put our country on a far more sound and secure 
footing than it is today. I look forward to the opportunity to work, as 
I have, with Senator Shelby. We are good friends. I admire him 
immensely. He was chairman of this committee before I was. He 
understands the job of being a chairman.
  I am determined to get this job right. I encourage our colleagues who 
have ideas and amendments to come forward and share them with us. We 
are going to set up shop over the weekend to make sure we are there. So 
we have ideas to consider, accept, maybe modify, make it work right. If 
that spirit comes forward we can do a good job here and we can leave 
this Chamber at the end of this Congress, knowing we confronted a 
serious problem and stepped up to the best of our ability to try to 
solve it for the people we seek to represent.
  Again, I thank the majority leader and the staff and others for their 
work. I thank Senator Shelby in his work. This conversation will 
continue. We have a lot of work to do. It has been very worthwhile and 
very productive over these last number of weeks and we intend to keep 
it in that form. I thank the minority leader as well and the Republican 
Conference. I know it must have been probably a healthy, good, vibrant 
conversation for the last hour and a half in there. But for those who 
question whether we can do this, I want this institution to get back 
again to the idea of listening to each other, debating the issues, 
taking our votes and putting together the best product we can.
  I yield the floor.

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