[Congressional Record Volume 156, Number 65 (Tuesday, May 4, 2010)]
[Senate]
[Pages S3065-S3088]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     RESTORING AMERICAN FINANCIAL STABILITY ACT OF 2010--Continued

  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. GREGG. Mr. President, will the Senator yield for a second?
  I ask unanimous consent that after Senator Brown speaks, Senator 
Mikulski be recognized and then I be recognized.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Massachusetts.


                       Honoring our Armed Forces

                       Sergeant Robert J. Barrett

  Mr. BROWN of Massachusetts. Mr. President, I rise today to say a few 
words about a hero: Massachusetts Army National Guard SGT Robert J. 
Barrett who was killed in Afghanistan on April 19. I had the sad honor 
of attending his funeral this past weekend.
  So everyone knows, Robert was on foot patrol south of Kabul when an 
IED exploded, killing him and injuring eight of his fellow soldiers of 
1st Battalion, 101st Field Artillery Regiment. He was 21 years old.
  Robert was from Fall River, a city of 90,000 in the southeastern part 
of Massachusetts. He was a long-time member of the 54th Massachusetts 
Volunteer Regiment. He geared his life toward helping others, 
especially veterans.
  He was selected for the regiment's honor guard in early 2008 and took 
part in more than 350 events honoring our fallen soldiers, including 
marching in the President's inaugural parade a little more than a year 
ago.
  His primary mission in Afghanistan was of the utmost importance. He 
was training Afghan soldiers so they would be able to stand up and 
provide security for their own country. Rather than spend his free time 
relaxing, he gave of his time and knowledge by volunteering at local 
orphanages and

[[Page S3066]]

schools. Robert was a shining example of ``selfless service,'' one of 
the seven Army values.
  Before his deployment, Robert wrote several lines that summarized his 
thoughts about his service and our mission overseas. I wish to take one 
final moment to read one of his thoughts:

       I volunteered to put my life on the line for freedom and 
     country. For my fellow soldiers, for my little girl, for my 
     weeping mother and father. I am going to a land where 
     American freedom is just a dream, a hope, a slow reality. I 
     am an American Soldier.

  That was by Robert J. Barrett before he mobilized.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Maryland.
  Ms. MIKULSKI. Mr. President, I rise to speak on the issue of 
financial services. Before I do, I wish to say to the Senator from 
Massachusetts, Mr. Brown, that we in Maryland express our condolences 
to him and his loss. We have suffered many of our own. We are comrades 
in arms in this moment of grief. We salute him and respect the family.
  Mr. BROWN of Massachusetts. I thank the Senator from Maryland.
  Ms. MIKULSKI. Mr. President, I come to the floor today to talk about 
an issue about which I care very deeply and have fought for all of my 
life. That is financial services reform.
  I am not a Janie-come-lately to this issue. In 1999, I opposed the 
repeal of the Glass-Steagall Act which led to the crisis we have today. 
I was one of eight Senators to vote against the repeal of the Glass-
Steagall Act which tore down the walls between conventional banking and 
investment banking. Had that bill been defeated in 1999, we would have 
not had the crisis that faced us in the last 2 years.
  My family, too, has fought over generations to protect consumers and 
expand access to credit. At the beginning of the old century when the 
downtown banks would not lend to people such as my family, whom they 
regarded as on the other side of the tracks, my grandfather, along with 
other small business people in the area, got together and started a 
savings and loan to serve that community. They lent to people who did 
not have access to credit. They lent to small business owners, such as 
my father, who opened a grocery store. They lent to women, such as my 
grandmother, who opened a bakery. When tough times came during the 
Great Depression, this savings and loan wanted to make sure that people 
would not lose their homes. If you paid a nickel a week on your 
mortgage, you were current.
  I was raised in that sense that financial institutions should be on 
the side of the people and they should have access to the American 
dream to buy a home, to start a business.
  As a young social worker working in Baltimore's African-American 
community, I saw, once again, there was no access to credit. The 
African-American community was sidelined and red-lined. What we saw 
were these local payday vendors who had names such as Happy Harry. Why 
was Harry so happy? It was because he was charging 18 to 20 percent 
interest for a loan.
  I got together with the people in the community at the parish council 
and we were able to start a credit union so there would be access to 
credit and end the scamming and scheming and gouging of those hard-
working people.
  I continued that fight in the Senate. I helped create a task force in 
Baltimore to end that scheme and scam. I also worked as the Chair of 
the Commerce-Justice-Science Appropriations Subcommittee. I made sure 
in 2009, working with Senator Shelby and listening to the comments of 
Senator Dodd, that we put extra money in the Federal checkbook so the 
FBI could come after the financial fraud crowds, the mortgage fraud, 
the securities fraud.
  It sure was not the Securities and Exchange Commission. They were too 
busy sitting on their wingtips while money was flying out the door with 
these terrible lending practices.
  As we deal with this bill pending before the Senate, the Restoring 
American Financial Stability Act, I want you to know I support this 
bill. I have been a reformer and a watchdog all of my life. I have a 
deep suspicion of how big banks treat the little people and what they 
do with the little people's money. Time and time again, we see the 
consequences of loose regulations and wimpy and tepid enforcement. Yes, 
I said it, wimpy and tepid enforcement.
  Time and time again, I voted for more teeth and better regulation and 
more enforcement. I always wanted to be sure it was Main Street that 
got access to credit, and I was against the unfair and abusive 
practices of Wall Street.
  Here we are again in this financial situation where we bailed out the 
big banks. We bailed out the whales, we bailed out the sharks, and we 
have left the people in the community, the little minnows, to swim 
upstream and be on their own.
  Now is the time to right this reform. Now is the opportunity to pass 
real financial reform that puts the strongest consumer protections in 
financial reform and to ensure that the greed of Wall Street does not 
trump the needs of Main Street.
  We need to put government back on the side of the middle class. If we 
can bail out the banks, how about we make sure we protect the middle 
class against fraud, duplicity, and gouging? People with limited access 
to credit are being victimized, abused, and defrauded. It is both a 
crime and a shame.

  Since the people who do it have no shame, maybe we have to make it a 
crime. In fact, I think we ought to make it a crime. When they get out 
of their pinstripes and start wearing orange jumpsuits and stand out in 
the crowd on visiting day, rather than cruising parents' weekends, 
maybe they will have some remorse, and maybe they will be ready to 
change the nature of their practices.
  When I travel around my State, whether it is in diners or grocery 
stores, there is anger and frustration in people's voices. They are 
mad, and they are scared. They have watched Wall Street executives pay 
themselves lavish salaries while they are worried about their job and 
being laid off. They have watched Wall Street mortgage brokers profit 
off irresponsible lending while their husbands work an extra shift to 
make sure they can make the monthly mortgage payment. And they have 
watched big firms take very risky gambles with their money without any 
regulation. It essentially was casino economics. This is why people are 
mad, and they are losing trust in government. People they counted on to 
protect them did not.
  What infuriates the people of Maryland and of this country and me is 
there is no remorse by Wall Street about what they did. Nothing about 
their behavior suggests they have learned or even care what is wrong. 
Look at what happened with AIG after receiving $170 billion in taxpayer 
money. They paid themselves $165 million in bonuses. I stood on the 
floor and said ``AIG'' stands for ``ain't I greedy.''
  I do not want to have catchy phrases. I want to have concrete, 
enforceable, tough regulations. Again, what bothers me is the lack of 
remorse and a commitment to reform.
  Right or wrong, if you are in a 12-step program, people usually say 
that one of the ways to right those wrongs is to say ``I am sorry'' and 
mean it. I did wrong and I will never do it again. I want to make 
amends by making it right.
  Not these guys. They need us to have a tough approach to this 
situation. They say: We will never do anything like that again. 
Actually they do not even say that.
  What we need to do is to make sure we have the strongest regulations. 
We have an opportunity now to choose between real reform or business as 
usual. Consumers need protection in regulation to guarantee the safety 
of their deposits and the availability of basic banking services. Small 
business needs credit to grow so that they can create a job for 
themselves and for those in their community. And we need to hold Wall 
Street accountable. We need to make sure there are no taxpayer bailouts 
ever again and to ensure when banks take risks, they do it with their 
own money, not with money out of the deposits of hard-working people.
  The bill before us is an excellent bill. It provides a 21st century 
regulatory framework for the financial system. No more scheming, no 
more scamming, no more preying.
  It is time to pass this bill. There are amendments pending that I 
think will also help to improve the bill, but I

[[Page S3067]]

think it is time that we pull the sharks out of the tank, make sure the 
whales do not crush the little guy, and to make sure that the minnows 
get a chance and that we have an economy that is swimming.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Mr. President, I wish to speak briefly on the bill that is 
before us and how I think it can be improved.
  First, I congratulate the chairman of the committee, working with the 
ranking member. I understand they have reached an agreement on how to 
do the issue of resolution, which addresses the issue of too big to 
fail, which is a very critical part of this bill. I congratulate them 
for making that type of initiative. I hope the rumors are true and that 
such an amendment will address strong too-big-to-fail language so the 
American taxpayers will not be on the hook for institutions that 
overextend themselves and take on too much risk but are institutions 
that are so large it is felt they are too big to fail, that concept 
will no longer be part of our lexicon, and we will essentially put an 
end to that. I congratulate the chairman and ranking member.
  There are, however, other major issues in this bill that need to be 
addressed. They are substantial and rather complex. A few that are not 
even in the bill--for example, how we address Fannie Mae and Freddie 
Mac. We know that the American taxpayers today are on the hook for 
somewhere between $400 billion and $500 billion--$400 billion to $500 
billion--that we are going to have to underwrite in order to stabilize 
those two entities on the credits which they have run up which have 
gone bad and they have purchased. That is serious.
  There will be a proposal that comes from our side of the aisle. It 
will not totally be structured to Fannie and Freddie. It should. I 
would like to see that. It is too complex to do in this bill. It will 
at least address some of the core issues that ought to be addressed. 
For example, we ought to tell the American people upfront and 
forthrightly how much they owe. It should be put on budget. We ought to 
put on budget what the obligations are, because they are scoreable, 
relative to the costs the American taxpayers are going to have to bear 
to bail out and maintain Fannie and Freddie. It is going to be 
somewhere around $400 billion to $500 billion additional debt. It is 
coming. We do not want to talk about it because it affects other debt 
obligations of this country in a lot of different ways, primarily in 
crowding out.
  Second, the bill has language on underwriting but it is not strong 
enough. If you want to look at what caused this event at the end of 
2008, what caused this traumatic event which almost brought the entire 
financial system of America down, which almost put us into a depression 
and put us into a very severe recession, cost a lot of people their 
jobs--and there are still a lot of people experiencing trauma because 
of it--there are three or four main causes. I have talked about them 
before:

  One, of course, is that I believe the money was made too easy to get, 
at too low a price, for too long by the Fed.
  Another was the fact that the Congress specifically encouraged and, 
in fact, forced lenders, for all intents and purposes, to lend to 
people who couldn't afford the homes they were buying because it became 
congressional policy to do that.
  Another was that people were shopping for the weakest regulators. 
This is what happened in the derivatives market, and the derivatives 
were not structured in a way that actually put capital or liquidity or 
margin behind derivatives.
  The fourth and I think probably the most significant was that there 
was a total breakdown in underwriting standards. In other words, the 
people who were making the loans on subprime mortgages and on other 
types of exotic instruments so that people could buy houses who 
couldn't afford them were making those loans and not looking at the 
underlying value of the asset, and they weren't looking at the ability 
of the person to pay back that loan. What they were doing, quite 
simply, was making the loan because they were going to get a fee for it 
and then they were going to sell the loan, securitize it. It was going 
to be chopped up, sent out, and syndicated, and they didn't really care 
what the loan did because they were basically making a loan for the 
purpose of making a fee. Those were the one-off lenders.
  In the banking industry, you had a complete breakdown. Banks were 
lending to people they knew couldn't repay when these loans reset, and 
they knew the value of the asset could only support that loan if there 
was an appreciation in the market, which was a gamble.
  This happens every time we go through one of these events, by the 
way, one of these real estate-driven recessionary events. It happened 
in the late 1970s; it happened in the late 1980s when I was Governor of 
New Hampshire and New England went through a horrific contraction as a 
result of an expansive effort of lending money in the real estate 
markets--underwriting standards break down.
  There needs to be a clear national definition of what proper 
underwriting standards are. Senator Isakson and I and a number of other 
people--Senator Corker--are going to put forward an amendment in that 
area.
  One of the core areas here that needs to be addressed and hopefully 
will be included in this bill and improve the bill in this area--one 
area of this bill that simply has to be changed if it is to be 
effective in doing what it is supposed to do is the language of 
derivatives.
  Most Americans don't understand derivatives. It is understandable. 
They are complex products. But basically think of it this way: You are 
on Main Street, and you have a business--usually a fairly large 
business--and you are making a product. You want to be able to sell 
that product to somebody at the price you quote that person and make 
the profit you expected at that quoted price.
  But there are a lot of things that affect that product that you can't 
control. If you are selling it to another country, you can't control 
what the dollar is going to do in relationship to the currency of that 
country--for example, if you are selling it to Brazil, whether their 
currency goes up or down vis-a-vis the dollar. If you enter into a 
contract today and can't sell your product for 6 months, your whole 
profit could be wiped out by the market devaluing as relates to that 
currency. The materials you buy to make that product may change in 
value or viability. The person you are getting a loan from to allow you 
to expand your business to build that product may have financial 
troubles and you may have an issue there or, vice versa, you may have 
an issue with that person. All of these are things which are usually 
beyond the ability of the individual who is making the product--and in 
this case, I am talking about making products--to control.
  So there is something called a derivative, which is an insurance 
item. Basically, someone insures for you over those risks. There is a 
lot of complexity to this because these insurance items mutate into all 
sorts of different instruments. They can affect financial instruments, 
they can affect commodities, they can affect goods, they can affect 
just plain currencies, but they are critical instruments--derivatives--
for making the economic engine work. They are sort of the grease you 
put in the economic engine to make sure it doesn't seize up, to allow 
the economic engine to move down the road. They are so critical, in 
fact, that they are approximately $600 trillion--trillion--of notional 
value. Notional value is not really what the risk is because there are 
underlying assets here, but that is a big number--a big number.
  So we have to make sure that when we amend the derivatives section of 
this bill to try to have a stronger derivatives industry, we don't make 
big mistakes and basically undermine the ability of people to use this 
type of instrument to get credit and to make the markets work and to 
create jobs on Main Street because these all tie back to jobs on Main 
Street. Even if you are not working for the company that uses the 
derivatives, you are probably working for somebody who does business 
with a company that does derivatives. In Nashua, NH, there are a bunch 
of big companies that do derivatives. There are a lot more smaller 
companies that sell products to those companies on Main Street. So it 
will affect Main Street if we do this wrong because credit will 
contract.

[[Page S3068]]

  The unique advantage America has is that we are the place in the 
world where, if you have a good idea and you are willing to take a risk 
yourself and you are an entrepreneur, you can usually get capital and 
credit to allow you to do that idea, to take that risk and thus create 
jobs, which is the bottom line for all of us; we want to create jobs. 
So derivatives play a large role in making that system work. This bill, 
unfortunately, adopted language which was put forward in the 
Agriculture Committee which literally undermines the safety and 
soundness of the derivatives market and, secondly, the ability of 
America to be a leader in the derivatives market.
  Our goal here should be very simple. Our goal should be two steps: 
One, make our banking and financial system safer, sounder, and a system 
which will, to the extent we can anticipate it, avoid systemic risk. 
While doing that, our second goal must be to have a vibrant credit 
market and capital market and be the primary place in the world where 
people come to create credit and capital because that gives us a 
competitive advantage over the rest of the world. That creates jobs 
here in the United States. Unfortunately, this bill, as structured, 
doesn't accomplish that. In fact, it undermines that.
  A good derivatives reform bill would essentially create an atmosphere 
where derivatives are more transparent, where the pricing is more 
transparent, and where there is standing behind the two parties to an 
agreement on a derivatives contract--assets, liquidity, margin--
something that can be turned to should one of the parties fail to 
perform on the contract. This can be done by creating a reasonable 
exception for end-use derivatives--those are the ones where you 
basically have a purely commercial purpose--and if people don't fall 
into that reasonable exception, then requiring essentially all the 
other derivatives to go through what is called a clearinghouse.
  The clearinghouse becomes basically the situation where the two 
parties to the contract--there are multiple parties to the contract--
essentially put up collateral, margin, liquidity, so that the contracts 
are supported--the counterparties are supported. The clearinghouse 
itself also has to be collateralized adequately, capitalized 
adequately, so that it doesn't become a risk because it is going to be 
the insurer, basically, of these contracts--all very doable through new 
regulatory restructure or a modified regulatory restructure.
  Then, as these contracts become more standardized or are 
standardized, they move over to an exchange. A lot of them could do 
that right now, but some simply can't because their contracts are too 
customized to move directly to an exchange. But over time, most of them 
probably will. And that is the way it should be structured.
  Unfortunately, in this bill, it is directed that we set up a new 
process for doing these derivatives by taking basically the market 
makers in these derivatives--which are the swap desks--and moving them 
out of the financial institutions into separate institutions. Where 
this idea came from is hard to fathom because on its face it makes 
absolutely no sense. I mean, it is so counterproductive to the purpose 
of making the derivatives market safer, sounder, and more efficient 
and, as a result, a better market which creates credit in a 
transparent, fair, effective, and sound way. It is so counterproductive 
to that on its face, you would think anybody who suggested it would 
have it immediately pointed out that this doesn't work. But for some 
reason, it has found its way into this bill.
  The practical effect of doing this is that you will create these 
separate entities. These separate entities are going to have to be 
capitalized because you have to have capital behind these derivatives 
desks. That is the whole point. You have to have something standing 
behind these desks to make them viable so that you don't end up with an 
AIG. What was the AIG problem? There was nothing behind the derivative 
contracts except for the name AIG. You don't want to do that again. You 
want capital.
  It is estimated that it would cost $250 billion to set up these 
separate desks. What does that mean? That means that capital is not 
going to be available for the creation of credit. You will see an 
immediate contraction. It is estimated by the industry--and again, this 
is an industry number, not mine, so you can take it with a grain of 
salt--that will cause a $\3/4\ trillion contraction in credit. That is 
Main Street not being able to get credit. Let's even say they have 
exaggerated. Say it is only going to contract 80 percent. That is still 
$600 billion to $700 billion of credit that is not available on Main 
Street to do business, to create jobs, to take risk. It is foolish to 
do that type of contraction and to set up this structure.
  Plus, you have nobody who is going to oversight this as effectively 
as the people who oversight the present derivative market makers. The 
FDIC won't be able to get on top of this. The Fed probably will have 
trouble getting on top of this. You will create a less stable platform 
from which to view these markets, when the whole purpose of the bill 
was to make it more stable. It makes absolutely no sense.
  This is section 106 in the Agriculture bill. I think it is section 
714 in this bill. And you don't have to believe me on this. I mean, two 
of the major, premier regulatory agencies--which are the fair arbiters 
here, really; I mean, they are the umpires--have come out in a very 
unusual way, because they do not usually comment in the middle of a 
legislative process such as this, and said that this--this is my 
paraphrasing--is a stupid idea, a counterproductive idea, the type of 
idea which, if it were to be put in place, would be cutting off your 
nose to spite your face and we would end up with a less sound system.
  Let me read to you from the commentary of the Federal Reserve staff 
on section 106, which is now, I believe, section 714. Here is what the 
Federal Reserve staff said about this approach:

       Section 106 would impair financial stability and strong 
     prudential regulation of derivatives; would have serious 
     consequences for the competitiveness of United States 
     financial institutions; and would be highly disruptive and 
     costly, both for banks and their customers.

  That is pretty specific. That is pretty damning testimony as to the 
effect of this language. It is going to reduce our competitiveness 
because a lot of these derivatives will go overseas. It is going to 
make it much more difficult to have sound regulatory policy toward 
derivatives, and it will be highly disruptive and costly not only for 
the banks but for their customers. That is called Main Street--the 
people who create the jobs. This is a very inappropriate idea that has 
been put in this bill.
  But don't just rely on the Fed if you are a Fed hater--and there 
appear to be a number in this body, for reasons I still have trouble 
fathoming. They must have something against having a sound money 
policy. But if you don't like the Fed, listen to the FDIC. I don't 
think anybody around here doesn't give great credibility to the way 
Sheila Bair, the Chairman of the FDIC, handled the bank crisis. Very 
honestly, they stepped in, they settled out a lot of major banks, and 
they did it in a way that was extraordinarily professional. As a 
result, the markets remained calm, people got their money back, and 
deposits were not at risk.
  This is an agency which has high credibility, and this is what 
Chairman Sheila Bair has specifically said about this:

       If all derivatives market-making activities were moved 
     outside the bank holding companies, most of the activities 
     would no doubt continue, but in less regulated and more 
     highly leveraged venues.

  In other words, be much more risky.

       Such affiliates would have to rely on less stable sources 
     of liquidity which--as we saw during the past crisis--would 
     be destabilizing to the banking organizations in times of 
     financial distress, which in turn would put additional 
     pressure on the insured banks to provide stability.

  In other words, bad idea. It undermines the banking industry to do it 
this way.
  Finally: ``Thus, one unintended''--actually, this is not finally. The 
whole letter is three pages long and has a lot of strong points. But 
the final part I am going to read:

       Thus, one unintended outcome of this provision would be 
     weakened, not strengthened, protection of the insured bank 
     and the Deposit Insurance Fund, which I know is not the 
     result any of us want.

  That is pretty specific. So you have the Fed on one side, one of the 
major regulators, saying this idea doesn't work, it will undermine the 
structure of the banking industry. You have the FDIC on the other side 
saying this proposal doesn't work, it is going to undermine the 
insurance deposit system.

[[Page S3069]]

So you do not have to listen to myself or others who pointed out the 
failure of this section. Listen to these regulators. This section has 
to be removed from this bill.
  There are other things that need to be done in the derivatives areas 
which would improve the language. For example, once you are on a 
clearinghouse, you should not be mandated to go directly to an exchange 
because it simply will not work. There needs to be an intermediary step 
as standardization and then the best thing to do would be to require 
regulators to look at these different instruments and then, if they 
feel they can be standardized, tell the people producing them they can 
be standardized and then move them over. To unilaterally say everything 
has to go to an exchange is, I think, going to be counterproductive and 
again push a lot of business offshore.
  But clearly this one section is damaging to our efforts to produce a 
safer, sounder, more transparent derivatives regime which has adequate 
liquidity and capital behind it and which keeps America as the primary 
place to do credit in the world so our entrepreneurs can get credit at 
a reasonable price, so they can go out and take the risks to create the 
jobs in America.
  I ask unanimous consent to have both these statements printed in the 
Record, and I yield the floor.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

    Comments on Senate Agriculture Committee's OTC Derivatives Bill

                             April 24, 2010

     1. Section 106 should be deleted.
       a. Lending to financial market utilities. Section 106 would 
     prohibit any federal assistance to swap dealers, major swap 
     participants, swap exchanges, clearinghouses and central 
     counterparties. This would appear to override the provision 
     of Title VIII that would allow the Federal Reserve to provide 
     emergency collateralized loans to systemically important 
     financial market utilities, such as clearinghouses and 
     central counterparties, to maintain financial stability and 
     prevent serious adverse effects on the U.S. economy.
       i. As systemically important post-trade ``choke points'' in 
     the financial system, it is imperative that these utilities 
     be able to settle each day as expected to avoid systemic 
     problems and allow for a wide range of financial markets and 
     institutions to operate. The failure of a systemically 
     important utility to settle for its markets would not only 
     call into question the soundness of the utility as a critical 
     market infrastructure but could also create systemic 
     liquidity disruptions for one or more markets and potentially 
     other financial market utilities. The increased importance 
     that Title VIII places on central counterparties and central 
     clearinghouses to reduce risk in the financial system 
     necessitates ensuring that short-term secured credit is 
     available to these utilities in times of stress.
       b. ``Push-out'' of bank swap activities. Section 106 would 
     in effect prohibit banks from engaging in derivative 
     transactions as an intermediary for customers or to hedge the 
     bank's own exposures.
       i. Title VI, which includes the so-called Volcker rule 
     provisions, better addresses the problem of risks from 
     derivatives activities by prohibiting any bank, as well as 
     any company that owns a bank, from taking speculative, 
     proprietary derivative positions that are unrelated to 
     customer needs.
       ii. Section 106 would impair financial stability and strong 
     prudential regulation of derivatives; would have serious 
     consequences for the competitiveness of U.S. financial 
     institutions; and would be highly disruptive and costly, both 
     for banks and their customers.
       iii. Banks are subject to strong prudential regulation, 
     including capital regulations that take account of a bank's 
     exposures to derivative transactions. The Basel Committee on 
     Banking Supervision has recently proposed tough new capital 
     and liquidity requirements for derivatives that will further 
     strengthen the prudential standards that apply to bank 
     derivative activities. Titles I, III, VI, VII and VIII all 
     add provisions further strengthening the authority of the 
     Federal supervisory agencies to address these risks.
     2. The foreign exchange swap exclusion should not be limited 
         to non-exchange-traded non-cleared transactions.
       a. The bill permits the Treasury to exclude foreign 
     exchange swaps and forwards from coverage as ``swaps,'' but 
     the exclusion applies only if the transaction is not listed 
     or traded on an exchange or a swap execution facility and not 
     cleared through a derivatives clearing organization. A 
     substantial share of foreign exchange swaps and forwards are 
     entered into using electronic trading platforms. The broad 
     definition of swap execution facility appears to capture 
     these platforms, thereby rendering the Treasury's exemptive 
     authority largely meaningless.
       b. Foreign exchange forward and swap transactions should be 
     treated in a way comparable to other physically settled 
     forwards for securities and nonfinancial commodities that are 
     exempted under the bill. Foreign exchange forwards and 
     foreign exchange swaps are delayed purchases and sales in 
     broad and deep cash markets. Prices for foreign exchange are 
     already readily available and transparent and that existing 
     transparency, coupled with the breadth and depth of the 
     foreign exchange markets, makes the foreign exchange markets 
     not easy to manipulate.
     3. Core principles for financial market utilities should not 
         be hard-wired in the statute.
       a. The bill sets out specific core principles for 
     derivatives clearing organizations, swap execution 
     facilities, and swap data repositories, and would not give 
     the CFTC or SEC leeway to adjust the core principles to 
     reflect evolving U.S. and international standards (as does 
     the Dodd bill).
       b. The current international standards for central 
     counterparties are under review for needed changes in light 
     of market developments, particularly in the OTC derivatives 
     market, and are expected to change, thus potentially creating 
     an immediate conflict with the bill.
       c. Providing regulatory flexibility would permit changes to 
     the international standards and other future refinements in 
     risk management standards to be addressed. In addition, such 
     flexibility would facilitate the ability of the U.S. 
     regulatory agencies to work together to adopt consistent 
     standards across financial market utilities that perform 
     similar functions.
     4. The definition of ``swap data repository'' is overly 
         broad.
       a. The definition (``any person that collects, calculates, 
     prepares, or maintains information or records with respect to 
     transaction or positions in or the terms and conditions of, 
     swaps entered into by third parties'') appears to include 
     entities whose purpose is not related to acting as a central 
     record-keeping facility. For example, the definition may 
     sweep in trade comparison services and news organizations 
     that collect trading information.
       b. Given its breadth, it will be difficult to apply core 
     principles to such disparate activities and organizations.
     5. Data-sharing among regulators is unnecessarily restricted.
       a. The bill would require a swap data repository to notify 
     the relevant Commission of any information requests from 
     other regulators and require that those other regulators 
     indemnify the repository and the Commission from any claims 
     stemming from those requests. These provisions restrict 
     access by relevant U.S. regulators to needed data.
       b. These restrictions may lead foreign regulators to demand 
     a local repository so that they can have adequate access to 
     the data. Splitting the market data into repositories in 
     different countries will make it significantly more difficult 
     for regulators to get a holistic view of the market.
       c. The bill allows swap data to be shared with foreign 
     central banks, but not the U.S. central bank (the Federal 
     Reserve).
     6. Prudential regulators should retain their safety-and-
         soundness enforcement authority over bank swap dealers 
         and major swap participants.
       a. Section 131 provides the prudential regulators with 
     authority to enforce the prudential requirements of the Act 
     over bank swap dealers and major swap participants and 
     provides the CFTC with the authority to enforce non-
     prudential requirements.
       b. Although section 133 preserves the prudential 
     regulators' authority under other law, the conforming 
     amendments in section 131 limit the prudential regulators' 
     authority under section 8 of the Federal Deposit Insurance 
     Act over swap dealers and major swap participants.
       c. In order to carry out their obligations as safety-and-
     soundness supervisors over banks, the prudential regulators 
     need to retain their full Federal Deposit Insurance Act 
     enforcement authority over bank swap dealers and major swap 
     participants.
     7. The Act should clarify that risk management is part of 
         prudential rules.
       a. Section 121 provides that the prudential regulators are 
     to prescribe prudential requirements, including capital and 
     margin requirements, for bank swap dealers and major swap 
     participants. Section 121 also requires swap dealers and 
     major swap participants to establish robust and professional 
     risk management systems.
       b. The bill is unclear about which agency should set risk 
     management rules. These rules should be set by the prudential 
     regulator . . .
                                  ____

                                         Federal Deposit Insurance


                                                  Corporation,

                                   Washington, DC, April 30, 2010.
     Hon. Christopher J. Dodd,
     Chairman, Committee on Banking, Housing, and Urban Affairs, 
         U.S. Senate, Washington, DC.
     Hon. Blanche L. Lincoln,
     Chairman, Committee on Agriculture, Nutrition and Forestry, 
         U.S. Senate, Washington, DC.
       Dear Chairman Dodd and Chairman Lincoln: Thank you for 
     reaching out to the Federal Deposit Insurance Corporation for 
     our views on Title VII of the ``Wall Street Transparency and 
     Accountability Act'' contained in S. 3217, the ``Restoring 
     American Financial Stability Act of 2010.'' At the outset, I

[[Page S3070]]

     would like to express my strong support for enhanced 
     regulation of ``over-the-counter'' (OTC) derivatives and the 
     provisions of the bill which would require centralized 
     clearing and exchange trading of standardized products. If 
     this requirement is applied rigorously it will mean that most 
     OTC contracts will be centrally cleared, a desirable 
     improvement from the bilateral clearing processes used now. I 
     would also like to express my wholehearted endorsement of the 
     ultimate intent of the bill, to protect the deposit insurance 
     fund from high risk behavior.
       I would like to share some concerns with respect to section 
     716 of S. 3217, which would require most derivatives 
     activities to be conducted outside of banks and bank holding 
     companies. If enacted, this provision would require that some 
     $294 trillion in notional amount of derivatives be moved 
     outside of banks or from bank holding companies that own 
     insured depository institutions, presumably to nonbank 
     financial firms such as hedge funds and futures commission 
     merchants, or to foreign banking organizations beyond the 
     reach of federal regulation. I would note that credit 
     derivatives--the riskiest--held by banks and bank holding 
     companies (when measured by notional amount) total $25.5 
     trillion, or slightly less than nine percent of the total 
     derivatives held by these entities.
       At the same time, it needs to be pointed out that the vast 
     majority of banks that use OTC derivatives confine their 
     activity to hedging interest rate risk with straightforward 
     interest rate derivatives. Given the continuing uncertainty 
     surrounding future movements in interest rates and the 
     detrimental effects that these could have on unhedged banks, 
     I encourage you to adopt an approach that would allow banks 
     to easily hedge with OTC derivatives. Moreover, I believe 
     that directing standardized OTC products toward exchanges or 
     other central clearing facilities would accomplish the 
     stabilization of the OTC market that we seek to enhance, and 
     would still allow banks to continue the important market-
     making functions that they currently perform.
       In addition, I urge you to carefully consider the 
     underlying premise of this provision--that the best way to 
     protect the deposit insurance fund is to push higher risk 
     activities into the so-called shadow sector. To be sure, 
     there are certain activities, such as speculative derivatives 
     trading, that should have no place in banks or bank holding 
     companies. We believe the Volcker rule addresses that issue 
     and indeed would be happy to work with you on a total ban on 
     speculative trading, at least in the CDS market. At the same 
     time, other types of derivatives such as customized interest 
     rate swaps and even some CDS do have legitimate and important 
     functions as risk management tools, and insured banks play an 
     essential role in providing market-making functions for these 
     products.
       Banks are not perfect but we do believe that insured banks 
     as a whole performed better during this crisis because they 
     are subject to higher capital requirements in both the amount 
     and quality of capital. Insured banks also are subject to 
     ongoing prudential supervision by their primary banking 
     regulators, as well as a second pair of eyes through the 
     FDIC's back up supervisory role, which we are strengthening 
     as a lesson of the crisis. If all derivatives market-making 
     activities were moved outside of bank holding companies, most 
     of the activity would no doubt continue, but in less 
     regulated and more highly leveraged venues. Even pushing the 
     activity into a bank holding company affiliate would reduce 
     the amount and quality of capital required to be held against 
     this activity. It would also be beyond the scrutiny of the 
     FDIC because we do not have the same comprehensive backup 
     authority over the affiliates of banks as we do with the 
     banks themselves. Such affiliates would have to rely on less 
     stable sources of liquidity, which--as we saw during the past 
     crisis--would be destabilizing to the banking organization in 
     times of financial distress, which in turn would put 
     additional pressure on the insured bank to provide stability. 
     By concentrating the activity in an affiliate of the insured 
     bank, we could end up with less and lower quality capital, 
     less information and oversight for the FDIC, and potentially 
     less support for the insured bank in a time of crisis. Thus, 
     one unintended outcome of this provision would be weakened, 
     not strengthened, protection of the insured bank and the 
     Deposit Insurance Fund, which I know is not the result any of 
     us want.
       A central lesson of this crisis is that it is difficult to 
     insulate insured banks from risk taking conducted by their 
     nonbanking affiliated entities. When the crisis hit, the 
     shadow sector collapsed, leaving insured banks as the only 
     source of stability. Far from serving as a source of 
     strength, bank holding companies and their affiliates had to 
     draw stability from their insured deposit franchises. We must 
     be careful not to reduce even further the availability of 
     support to insured banks from their holding companies. As a 
     result, we believe policies going forward should recognize 
     the damage regulatory arbitrage caused our economy and craft 
     policies that focus on the quality and strength of regulation 
     as opposed to the business model used to support it.
       The FDIC is pleased to continue working with you on this 
     important issue to assure that the final outcome serves all 
     of our goals for a safer and more stable financial sector. We 
     hope that a compromise can be achieved by perhaps moving some 
     derivatives activity into affiliates, so long as capital 
     standards remain as strict as they are for insured 
     depositories and banks continue to be able to fully utilize 
     derivatives for appropriate hedging activities.
       Please do not hesitate to contact me or have your staff 
     contact Paul Nash, Deputy Director for External Affairs.
           Sincerely,
                                                   Sheila C. Bair.

  The PRESIDING OFFICER. The Senator from Montana.


                           Amendment No. 3749

  Mr. TESTER. Mr. President, I rise today to talk about amendment No. 
3749, the Tester-Hutchison amendment.
  Before I talk about this amendment, I want to thank Chairman Dodd for 
his work on a very strong Wall Street reform bill. I think his work has 
been very much appreciated by me and other members of the Banking 
Committee. I look forward to getting to this bill and making it even 
stronger and passing it out of this body to the President and into law.
  This amendment would lift a burden inappropriately placed on our 
community banks in this country.
  These are the banks that make rural America run. They do not deserve 
to be left holding the bag for the risky behavior of big banks.
  What the Tester-Hutchison amendment does is hold big banks 
accountable for their actions by basing FDIC deposit insurance premiums 
on risk.
  Our amendment would force big banks to pay their fair share of 
insurance. And it would fix the lopsided assessment system that we 
currently have--which unfairly burdens community banks.
  The recent turmoil in the financial sector has placed significant 
strains on the FDIC's Deposit Insurance Fund--the first line of defense 
and resource tapped to provide assistance to troubled federally insured 
banks.
  Since the beginning of 2008, the FDIC has closed 229 banks, including 
7 banks last week. That has left a wake of devastation that has 
impacted the entire banking system.
  Some of the larger failures--including those of IndyMac and Bank 
United--caused significant destruction. They have left the FDIC's 
Deposit Insurance Fund depleted and destabilized. In fact, the fund 
began the year with a negative balance of over $20 billion.
  Why is that? We now know that some of these institutions were engaged 
in risky activities--some far beyond the traditional depository 
functions.
  But, because the FDIC's Deposit Insurance Fund was still based solely 
on the institution's deposits--rather than assets, the fund wasn't able 
to take into account the impact that this risky behavior would have on 
the fund.
  In fact, under the current system, community banks pay 30 percent of 
total FDIC premiums while only holding 20 percent of the Nation's 
banking assets.
  Let me repeat that Mr. President. Under the current system, community 
banks pay 30 percent of total FDIC premiums while only holding 20 
percent of the Nation's banking assets.
  Our bipartisan amendment brings some common sense back into the 
equation.
  The FDIC--and the fund--have never faced such troubling times. In 
light of these failures, the FDIC was forced to make emergency, upfront 
assessments on all banks to protect the integrity of the Fund.
  Montana banks didn't get involved in this risky behavior--they didn't 
offer subprime mortgages or sell sophisticated financial instruments 
meant to manipulate markets.
  But Montana banks, like community banks around the country, have had 
to pay the price for the risky behavior of the larger banks that 
destabilized the fund.
  Mike Richter, President and CEO of the State Bank of Townsend in 
Townsend, MT, tells me that because of the emergency assessments in 
December, his bank had to prepay 3 year's worth of premiums--3 years.
  For the Bank of Townsend, that was a bill of $190,000 on top of the 
$70,000 that he already paid in 2009 assessments. I am no banker, but I 
know that is no way to run a business.
  When I think about the impact that the community banks have in my 
State and the role that they play--originating mortgages and providing 
small businesses and farms with credit--it pains me to see them suffer 
as a

[[Page S3071]]

result of the risky activities of larger banks.
  That is why I have teamed up with my friend from Texas, Senator 
Hutchison, as well as Senators Conrad, Murray, Burris, Brown of 
Massachusetts, Harkin and Shaheen in offering this important, 
bipartisan amendment.
  We want to ensure that the FDIC implements a genuine risk-based 
assessment system to protect the health of the Deposit Insurance Fund 
and to ensure equity among FDIC-insured institutions.
  This amendment builds on the underlying language included in the 
bill, directing the FDIC to base assessments on assets rather than 
deposits.
  Specifically, the amendment would require the FDIC to implement this 
change, rather than permitting them to make the change as in the 
current language.
  It also further shifts the assessment base formula to benefit 
community banks by eliminating ``long term unsecured debt'' as a factor 
in calculating assessments. And it includes language directing the FDIC 
to implement risk based assessments for banker's banks and custodial 
banks which have different structures than traditional banks.
  The FDIC has already taken a step forward in recognizing the risks 
that larger banks pose to the Deposit Insurance Fund, voting to base 
their emergency assessments on a bank's assets rather than deposits.
  The Independent Community Bankers of America also support this 
amendment. They believe that it will codify these important changes and 
bring greater equity to the assessment base.
  In closing, let me say how much I appreciate all of the work of my 
colleague from Texas, Senator Hutchison, and how much I appreciate the 
committee's willingness to work with us on this important amendment.
  I yield the floor.
  Mr. DODD. Will my colleague yield before yielding the floor?
  Mr. TESTER. I will.
  Mr. DODD. Mr. President, I commend my colleague and friend and our 
colleague from Texas, Senator Hutchison. This is exactly the kind of 
effort we are trying to achieve in this bill. It is a complicated area 
of law. I appreciate the work of Senator Tester and others. I didn't 
hear all. I gather it is Senator Tester, Senator Hutchison, Senator 
Scott Brown, Senator Harkin--you have a list of Democrats and 
Republicans here who have worked on this amendment to bring it to this 
point. I support the amendment. I think this is a strong amendment that 
will require the FDIC, as I understand it--my colleague will correct 
me--to change how it charges for deposit insurance, which I think makes 
a lot of sense--from charging each bank's domestic deposits as it does 
now, to charging its total liabilities, which makes far more sense. 
This is a great help to community banks across the country, of which 
Senator Tester has been a champion since his arrival in the Senate and 
as a member of our Banking Committee. The change will help ease the 
burden of FDIC assessments on our community banks by requiring the 
largest banks in the country to shoulder a little more of the 
responsibility to rebuild and maintain a sound deposit insurance fund.
  The amendment is fundamentally about fairness, which I think is one 
of its most important features. Community banks, as we all know, have 
been victims of a severe economic recession brought on by the behavior 
of major Wall Street firms. This has led to a high rate of community 
bank failures and a sharp increase in premiums necessary to rebuild the 
FDIC's insurance fund. Meanwhile, the largest banks have been saved by 
TARP moneys and other government programs that were necessary, 
obviously, as we all know, to avoid the economic meltdown and 
catastrophe we were facing in the fall of 2008.
  The change required by this amendment will lead to a far more 
equitable distribution of the responsibility to maintain a strong 
deposit insurance fund. It also will free up new resources for smaller 
banks to lend to households.
  So on every front, this amendment is a very positive contribution to 
this overall bill and one of the real features Members ought to keep in 
mind as we try to get this bill done. Without this amendment, which I 
support and want to see included, this will make even additional 
pressures on our community banks.
  I thank both our colleagues, from Montana and Texas, as well as our 
new Senate colleague from Massachusetts, and Senator Harkin as well, 
for their contribution. As soon as we find a window here to bring this 
up, we wish to see this amendment get adopted and be part of the bill.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. TESTER. I very much thank Senator Dodd. I think he is right. It 
is about equity. It is about assessing the premiums for the FDIC 
insurance fund to the banks that pose the most risk. Community banks 
are not among them. They played by the rules, they have done things 
right, and they have not tried to manipulate the market. I very much 
appreciate my colleague's comments and appreciate his support.
  Mr. DODD. Mr. President, we have some potential action here. I hope 
in a few minutes to move along. The amendment of Senator Tester and 
Senator Hutchison is an amendment I hope we can deal with at some point 
fairly quickly. Again, it is one of those amendments where we have 
reached an agreement on both sides. My experience is when you have an 
agreement such as that, you better move on it.
  I know there are others as well. The Boxer amendment I hope we can 
get up. Senator Shelby and I have worked on a larger amendment to deal 
with the too-big-to-fail provisions. Again, all of us want to see 
language, but let me say in the absence of language, we have reached 
agreement. Obviously we both need to look at the language of it before 
we can say that categorically. But I am satisfied, as is, I believe, my 
colleague from Alabama, that we have reached that agreement on the too-
big-to-fail provisions which, with the Boxer amendment, takes that 
issue completely off the table as far as any further debate goes about 
title I and title II of the bill.
  We have other issues. Senator Gregg mentioned a couple that obviously 
are going to need some work and some amendments are going to be offered 
on those. But in my view the sooner we move along on the ones where we 
have agreement, such as the Tester-Hutchison amendment, and some ideas 
I believe our colleague from Maine, Senator Snowe, wants to offer, we 
will demonstrate, I think once again, that we have the capacity to work 
with each other to actually advance what we are all trying to achieve, 
and that is reform of the financial system. My hope is rather shortly 
we will get to some agreements on time and bring up these efforts and 
not have another day go by when we are not actually dealing with 
specific amendments in this bill.
  With that, I don't see another Member seeking recognition, so I 
suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DODD. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. Gillibrand.) Without objection, it is so 
ordered.
  Mr. DODD. I ask unanimous consent that the pending Boxer amendment 
No. 3737 be temporarily set aside and that Senator Snowe of Maine be 
recognized to call up two amendments, Nos. 3755 and 3757; that no 
amendments be in order to either amendment; that upon the conclusion of 
debate with respect to the Snowe amendments, they be set aside and the 
Boxer amendment reoccur.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Maine is recognized.


                Amendment No. 3755 to Amendment No. 3739

  Ms. SNOWE. Madam President, the pending amendment was set aside. I 
call up the Snowe amendment No. 3755.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Maine [Ms. Snowe] proposes an amendment 
     numbered 3755 to amendment No. 3739.

  Ms. SNOWE. I ask unanimous consent that further reading of the 
amendment be dispensed with.

[[Page S3072]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

                   (Purpose: To strike section 1071)

       Strike section 1071.

  Ms. SNOWE. Madam President, I ask unanimous consent that Senator 
Shaheen be added as a cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. SNOWE. I would like to thank the distinguished chairman of the 
Banking Committee, Senator Dodd, for working with me so constructively, 
as well as his staff, on these two amendments I am calling up this 
afternoon. And I thank Senator Shelby, as well, for agreeing to the 
substance of these amendments.
  I think it is important to address these issues that are so 
fundamental to so many small businesses across the country. The first 
amendment I have made pending would reduce cumbersome and unnecessary 
restrictions on the banking industry that may potentially infringe on 
Americans' privacy rights and curtail the ability of financial 
institutions to serve their customers.
  Specifically, the underlying legislation contains language that would 
compel banks to make the following disclosures to the Consumer 
Financial Protection Bureau: Banks would have to report from each 
deposit-taking facility, including each individual automated teller 
machine, a record of the number and dollar amount of the deposit 
accounts of customers; a geo-coding, by census tract, of the residence 
or business location of each customer; and a record of whether each 
customer is transacting commercial or residential business.
  This type of detailed reporting imposes a regulatory cost on banks 
and provides an extraordinarily large amount of data to the Federal 
Government.
  While many have advanced the image of banks as monolithically large 
entities with tens of thousands of employees spread across the globe, 
the vast majority of banks are small community-centered institutions. 
For small community banks, every dollar spent on complying with 
government regulations is another dollar that cannot be used for 
customer service or extending credit. While these existing processes 
may be in place at large banks--and even if not, their procurement 
would be relatively inexpensive--for a small bank this could have a 
sizeable impact on their bottom line and prove to be an extremely large 
regulatory burden.
  In addition, the Federal Government's track record when it comes to 
securing its citizens' privacy data is less than stellar. As we all 
recall, in May of 2006 the Department of Veterans Affairs lost Social 
Security numbers and dates of birth of more than 26 million veterans. I 
cannot imagine what would occur if the sensitive deposit data that 
banks are required to track under this legislation was inadvertently 
lost.
  The legislation does contain a provision requiring that the personal 
identities of all customers be removed, but one slip could result in 
the intimate financial details of bank customers being revealed to 
unscrupulous computer hackers.
  I would note both the Independent Community Bankers Association and 
the Credit Union National Association are supporting this amendment due 
to its regulatory burden. I am pleased that we have reached agreement 
to have it accepted in this legislation.


                Amendment No. 3757 to Amendment No. 3739

  I ask unanimous consent the pending amendment be set aside, and I 
call up Snowe amendment No. 3757.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Maine [Ms. Snowe] proposes amendment No. 
     3755 to amendment No. 3739.

  Ms. SNOWE. I ask unanimous consent that the reading of the amendment 
be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To provide for consideration of seasonal income in mortgage 
                                 loans)

       At the end of section 1031, add the following:
       (f) Consideration of Seasonal Income.--The rules of the 
     Bureau under this section shall provide, with respect to an 
     extension of credit secured by residential real estate or a 
     dwelling, if documented income of the borrower, including 
     income from a small business, is a repayment source for an 
     extension of credit secured by residential real estate or a 
     dwelling, the creditor may consider the seasonality and 
     irregularity of such income in the underwriting of and 
     scheduling of payments for such credit.

  Ms. SNOWE. This second amendment would fix an unintended consequence 
of the Consumer Financial Protection Bureau in the underlying 
legislation, which would have the effect of choking off access to 
credit by small business.
  According to the February 2010 survey of the National Federation of 
Independent Business on the state of credit:

     . . . 16 percent of all small employers have a mortgage on 
     their residence that helps to finance the(ir) business. . . .

  The Small Business Administration's Office of Advocacy has calculated 
that there are nearly 30 million small businesses in America. Taken 
together, this means approximately 4.8 million small firms, hardly an 
unsubstantial number, rely on a home mortgage for their financing.
  Many of those small business owners also make loan payments intended 
to reflect the cashflow of their business models. For example, 
innkeepers often make larger loan payments during their busier seasons, 
and farmers and fishermen borrow funds based on their crop or catch 
cycles.
  As brought before the Senate, the underlying bill would prohibit 
lending products if the Consumer Financial Protection Bureau has a 
``reasonable basis to conclude that . . . substantial injury is not 
outweighed by counterveiling benefits to consumers.''
  This means if the Consumer Financial Protection Bureau finds that the 
injury of a loan product is outweighed by the benefit it might create, 
the Bureau can prevent a financial institution from offering it.
  The problem with the manner in which the bill is drafted is that it 
does not take into account that many entrepreneurs use home mortgage 
loans with customized repayment terms for business purposes. 
Accordingly, overzealous regulators could determine that such loans, 
which are consumer products, are abusive and thereby either prevent or 
make it extremely difficult for financial institutions to continue 
offering these types of critical products.
  For example, a loan to a borrower with balloon payments in June, July 
and August and interest-only payments for the rest of the year might 
look suspicious to the Bureau and be declared abusive. Yet this is 
exactly how many seasonal firms in Maine and throughout the Nation 
finance their businesses.
  My amendment simply preserves the ability of small business owners to 
use their homes as collateral and to make payments based on an 
alternate lending cycle by clarifying that the CFPB must allow banks to 
offer home loan products with customized payment terms for small 
businesses.
  I originally raised my concern that the underlying bill could 
inadvertently harm small business lending during meetings with Treasury 
Secretary Tim Geithner and National Economic Council Chairman Larry 
Summers. They were both immediately receptive and agreed that the bill, 
if not altered, could have unintended consequences that would restrain 
access to capital for small businesses.
  The necessity of this amendment is especially critical given the 
small business credit crisis that continues to plague the Nation. This 
fact has been underscored by numerous studies including the Federal 
Deposit Insurance Corporation's survey that found outstanding loan 
balances have dropped by the largest margin since 1942. Furthermore, 
the Federal Reserve's April 2010 Senior Loan Officer Opinion Survey 
shows that only 1.9 percent of banks surveyed had loosened credit terms 
for small businesses in the past quarter.
  While harming small businesses, lack of access to affordable capital 
also has a ripple effect across the greater economy. In his April 14 
testimony before the Finance Committee, Dr. Mark Zandi, the chief 
economist for Moody's Analytics, stated that ``small business credit 
(is) key to job creation.''
  By preserving financing flexibility for small business owners, this 
amendment ensures that home equity will remain as a possible means for 
entrepreneurs to secure funds to start or grow their businesses. With 
small businesses adding two-thirds of all net new

[[Page S3073]]

jobs, this provision will help small business owners create jobs, 
finance their businesses, and help us reduce our current 9.7 percent 
unemployment rate.
  We understand how instrumental small businesses are to job creation. 
We have to remain deeply concerned that in the last 3 months, we have 
had static employment growth with a 9.7-percent unemployment rate. 
Small businesses are the engine that will drive this recovery and will 
lead us out of a jobless recovery. A jobless recovery is not a true 
recovery. Anything we do here, particularly on this legislation, that 
could affect small business's access to capital will certainly infringe 
upon our ability to promote job creation. I reiterated that this 
morning in the Finance Committee hearing, where Treasury Secretary 
Geithner indicated he shared my deep concerns about stagnation when it 
comes to lending. It is important to improve upon these regulations 
that are vetted in the underlying legislation.
  I appreciate the chairman's effort to be flexible and to address and 
modify some of these issues and these constraints, and for allowing me 
to offer these amendments and agreeing to them.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Madam President, I thank my fellow New Englander and 
colleague for her two amendments. They are very strong and positive 
contributions to the bill. She raises very worthwhile points. We have a 
tendency to think of small businesses all operating the same way, and 
they obviously don't. Particularly, the seasonal businesses have 
moments of peak activity and then periods when not much happens, 
whether we are talking about farming or fishing or tourism, other such 
industries. It was never our intent that they be adversely affected, 
but the amendment she has offered makes a huge difference in that 
regard. I thank her. The Consumer Financial Protection Agency to allow 
mortgages to be made on the basis of seasonal income is of great value.
  The second amendment, 3755, on the collection of deposit account 
data, is a very good suggestion. The last thing we want to do is 
overburden the regulatory environment. The intentions were sound 
enough. We have an awful lot of people who go into the sort of nonbank, 
nontraditional sources of support financially. That was sort of the 
motivation behind it. Her concern, that this could be burdensome--and 
the last thing we need is more burdens--is worthwhile. I thank her for 
her contributions. I support these efforts.
  I believe, at the appropriate moment, we can adopt these amendments.
  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. LEVIN. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LEVIN. I ask unanimous consent to speak as in morning business 
for 3 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.


              Congratulating Kalamazoo Central High School

  Mr. LEVIN. Madam President, I come to the floor to congratulate the 
students, faculty, staff, and parents at Kalamazoo Central High School 
in Kalamazoo, MI, who learned today that President Obama will deliver 
the commencement address for their high school next month. It is a 
tremendous honor to host a President, particularly this President. I am 
proud not only that Kalamazoo Central High has been accorded this honor 
but how the school earned it. More than 1,000 schools submitted 
applications for a competition called Race to the Top Commencement 
Challenge. This competition encouraged academic excellence and 
innovation. Evaluators narrowed the contestants down to six who were 
finalists. Public voting selected the final three, and the White House 
then announced today that the President had chosen Kalamazoo Central 
from those three finalists.
  I am not going to make any claim that I am unbiased here, but I 
believe it is meaningful that this Michigan school represents what is 
possible for a large, urban public school, open to all students. 
Kalamazoo, similar to many communities in my State, is not without its 
challenges. The tough economic times have given public educators an 
extremely difficult task. Kalamazoo has had to cope with the effects of 
plant closings, corporate mergers, and downsizings that meant 
administrators have had to do more with less.
  But the people of Kalamazoo have not allowed those challenges to 
stand in the way of excellence. Kalamazoo is the home of the Kalamazoo 
Promise. Every graduate of the Kalamazoo public schools is entitled to 
a scholarship covering a portion of their higher education costs at a 
Michigan public university, up to 100 percent for those who attended 
Kalamazoo schools from kindergarten through 12th grade. Since the 
Promise was established, thanks to the generosity of a small group of 
anonymous donors, more than 90 percent of Kalamazoo High graduates have 
gone on to college.
  This commitment to quality education for all is nothing new to 
Kalamazoo. In 1873, a small group of property owners, convinced that 
they did not need to pay taxes to support a public high school, sued 
the Kalamazoo School Board. In the ``Kalamazoo Case,'' as it became 
known, the Michigan Supreme Court upheld the establishment of a public 
high school supported by tax dollars and open to all. The case settled, 
once and for all, the status of public education in Michigan and has 
been cited by courts throughout the country where public education has 
come under attack.
  Today's announcement adds to the rich history of public education in 
Kalamazoo. It is a fitting honor for the students, educators, parents, 
and citizens of a community that has once again demonstrated its 
commitment to academic excellence.
  I spoke after today's announcement with the principal of Kalamazoo 
Central High, Von Washington, and offered my congratulations. He told 
me the news brought cheers and excitement to the high school students 
and even a few tears as the word spread quickly throughout the entire 
Kalamazoo community--the justifiably proud community.
  So we all look forward to President Obama's visit to Kalamazoo, and I 
know that a proud city and a proud school will offer both the best in 
hospitality and an example for other schools to follow.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Madam President, I rise to speak on my amendment with 
Senator Tester because we are trying to ensure that safe community 
banks and large financial institutions are treated equally. I heard 
Senator Tester's speech on the floor just a little while ago on our 
amendment, and I am very pleased we are able to put this amendment 
forward. I am also pleased the chairman has said he supports my 
amendment. I think that is a great first step for us, for the chairman 
to support an amendment, because we all know this bill came to the 
floor on good faith, the good faith that we would have amendments and 
we would try to address the legitimate concerns of many in our country, 
from small businesspeople such as dentists to food manufacturers, as 
well as community bankers. We don't want--and I know the chairman 
doesn't want and no one wants--to hurt our economy with financial 
reform.
  I also think I can say we all have a goal of good reform that 
eliminates some of the things that happened a couple years ago that 
American taxpayers are paying dearly for right now. We don't want 
bailouts. We don't want taxpayer-funded bailouts of financial 
institutions that have taken great risk, and we certainly don't want to 
hurt our economy, which is not all that great right now, we all must 
admit. I think that going forward we must address the issues that 
caused the financial meltdown and stop the misuse of derivatives and 
get our financial house in order while also protecting our financial 
house.
  So that is what the Hutchison-Tester amendment tries to do. We want 
to ensure that large banks pay their fair share in deposit insurance 
premiums and community banks are not over-assessed and, therefore, can 
continue to

[[Page S3074]]

provide lending and depository services to creditworthy American 
families and small businesses. I am very pleased we have a group of 
cosponsors. Senator Tester and I are joined by Senator Burris, Senator 
Conrad, and Senator Harkin in this amendment.
  While much debate has centered on systemic risk and the $50 billion 
fund to unwind large financial firms, the Hutchison-Tester amendment 
focuses on bringing parity to the existing FDIC deposit insurance fund. 
Our amendment will reform the FDIC's assessment base to ensure that 
banks pay assessments into the deposit insurance fund based on the risk 
they pose to the banking system.
  Currently, the FDIC levies deposit insurance premiums on a bank's 
total domestic deposits. Unfortunately, domestic deposits are not the 
best measure to analyze the safety of banks. Financial assets, other 
than deposits, also create risk in the system but are not considered in 
determining FDIC assessments. Yet because the system does not charge 
assessments based on assets, it doesn't fairly assess all the risks in 
the system.
  Community banks with less than $10 billion in assets rely heavily on 
customer deposits for funding, which penalizes these safe institutions 
by forcing them to pay deposit insurance premiums above and beyond the 
risk they pose to the banking system. How? Despite making up just 20 
percent of the Nation's assets, these community banks contribute 30 
percent of the premiums to the deposit insurance fund. At the same 
time, large banks hold 80 percent of the banking industry's assets but 
pay 70 percent of the premiums.
  We must fix this inequity. This is a clear imbalance. We must ensure 
that banks of all sizes pay deposit insurance premiums based on the 
risk they pose to the system. The Hutchison-Tester amendment will do 
this by requiring the FDIC to change the assessment base to one which 
is a more accurate measure--a bank's total assets less tangible 
capital. This change will broaden the assessment base from $8.5 
trillion to $11.5 trillion, and it will better measure the risk a bank 
poses.
  Throughout Senator Dodd's legislation, a bright line asset test is 
used to measure risk to the system. A bank's assets include its loans 
outstanding and securities held. One need only look back over the last 
2 years to realize that assets show a bank's exposure to risk. It 
wasn't a bank's deposits that contributed to the financial meltdown. 
Instead, the meltdown was caused by bad mortgages that were packaged up 
into risky mortgage-backed securities and used to create derivatives. 
These risky financial instruments, and the large banks which created 
and held them, were what led to the financial crisis.
  Our amendment is especially timely because of the great strains 
placed on the deposit insurance fund because of the crisis. Numerous 
banks have failed over the past 2 years, forcing the FDIC to dip more 
and more into the fund to cover insured deposits of customers.
  In February 2009, with the fund already in a precarious state and 
more failures expected, the FDIC made an unprecedented move and levied 
a $5 billion special assessment on all insured institutions. 
Originally, the FDIC intended this assessment to be eight basis points 
of an institution's domestic deposits.
  This assessment stood to penalize community banks by forcing them to 
pay for the faults of others, despite having nothing to do with the 
risky practices that caused the crisis and ensuing bank failures. To 
add insult to injury, community banks would have paid a 
disproportionate amount based on domestic deposits in the assessment 
base.
  The FDIC had the regulatory authority to broaden its base to total 
assets. I raised this point with the FDIC following the announcement of 
their assessment. I was pleased the FDIC listened. They altered their 
special assessment to a base of total assets less tangible capital.
  As a result, the assessment was lowered to 5 percent of assets--a 
move which ensured that large banks with heavy assets paid an 
assessment which fairly accounted for the added risk they posed to the 
banking system. So I applaud Chairman Sheila Bair for making that 
decision.
  However, the broader base was only used one time and the FDIC has now 
reverted to the traditional annual premium based on domestic deposits 
assessments. The Dodd bill continues to give the FDIC the authority to 
continue using this narrow base of domestic deposits.
  The Hutchison-Tester amendment will put in place a statute which 
ensures that we will have the fair assessment. That will be the 
mandate. There will not be options to create this unlevel playing field 
between the big banks and the community banks. It just makes sure the 
community banks will never have to pay a higher portion of the 
deposit insurance when they have a lower amount of the assets. Our 
amendment levels the playing field.

  Since the beginning of 2008, 229 banks from across the United States 
have failed, and because of these failures, it has left the deposit 
insurance fund below the statutory minimum requirement, despite last 
spring's special assessment. The discouraging state of the fund has led 
the FDIC to make yet another unprecedented move. The FDIC is requiring 
its banks to prepay deposit insurance premiums, all due over the next 3 
years, by the end of this fiscal year. We must act now to ensure that 
these prepaid deposit premiums and all premiums in the future are 
assessed proportionately so banks pay premiums based on the risk they 
pose.
  I ask my colleagues to support the Hutchison-Tester amendment, to 
bring additional parity between banks on Wall Street and those on Main 
Street.
  I thank my colleagues who have cosponsored the amendment. I thank the 
chairman for supporting the amendment. This is one step we can take. I 
would love for the first amendment taken up to be one that would have 
bipartisan support, and I hope it is overwhelming support, because our 
community banks did not participate in the financial meltdown and are 
not at fault. Yet they are paying a much heavier price. But if we ask 
the small businesspeople in Texas and probably in most parts of the 
country where are they getting the loans they need for their businesses 
to continue to operate, it is mostly from community banks. It is the 
community banks that have stepped forward in this crisis and have done 
the best they could to make sure that in every way possible we keep our 
economy growing with small businesses that are the economic engine of 
America. So I hope we can have a time agreement very shortly and be 
able to vote on the Hutchison-Tester amendment, and I look forward to 
working on this bill for the next few weeks.
  There are many amendments that I think are quite legitimate that will 
help this bill to be one that will fix what was bad in our economic 
system that caused the financial meltdown but at the same time will 
protect the legitimate uses of the derivatives, the legitimate banking 
concerns of our community banks, our Main Street banks, our small 
businesses needs, and certainly not create another new level of 
government bureaucracy piled on top of banks that are already 
regulated. I just hope we don't do overkill, as I would say the 
Sarbanes-Oxley bill did, which was passed in the aftermath of the Enron 
scandal. Back then I think there was overkill that hopefully we will be 
able to go back and address so we keep the bad things from happening, 
while assuring that our economy can go forward and compete not only in 
the communities across our Nation but globally.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Madam President, very briefly, let me thank my colleague 
from Texas. I already commented when Senator Tester of Montana spoke, 
but I will again thank her and the Senator from Montana and others 
cosponsoring this amendment. It is a very solid contribution to the 
bill.
  Again, I think the idea of considering the total liabilities 
obviously makes a lot more sense. It alleviates the burden financially 
on smaller institutions. It adds that larger institutions have a 
greater capacity to share more equitably in these costs. Whether it is 
in our State or not, we read accounts of--as we have seen over the last 
year and a half--small banks having to close their doors. The pressures 
on the FDIC are mounting. Again, you don't want to keep adding 
assessments on institutions that are already trying to lend to

[[Page S3075]]

businesses in their communities, to provide mortgages and the like.
  This is a very constructive amendment and a very solid idea to add to 
the bill. I thank the Senator from Texas and the Senator from Montana 
and the others involved. As soon as we work out time agreements, 
hopefully we can conclude and give the Senator from Texas a couple of 
minutes before we vote. It is exactly the way I want to manage this 
bill, if I can. There is a lot of commonality and many common 
interests, and too often the public only sees the fights we have and 
they don't realize how many issues we agree on. We are making the 
effort to try to reach agreements with each other. Obviously, it is not 
as interesting a story when we agree. It is not as exciting as when 
there is a brawl on the floor over some issue. I appreciate the media's 
appreciation of the brawls, but my intention is to limit that and get 
us to the point where we have common interests in putting a good bill 
together. Senator Hutchison's contribution to this amendment does 
exactly that, just as our colleague from Maine, who talked about her 
amendment a moment ago. Senator Warner has also been very helpful in 
this bill. I see Senator Whitehouse here. He is also interested in the 
subject matter. I thank my colleague from Texas.
  Mrs. HUTCHISON. Madam President, there is certainly one thing we can 
all agree on, and that is our assessment of the media and what they 
really like to write about. I hope we can make progress on this bill 
and do something good for our country and the economy. I think we have 
the same goals, and if we really work for the next 3 weeks or so trying 
to get amendments through, that would be great.
  Mr. DODD. Madam President, one of the important things about this 
amendment is this: There will be amendments offered in which we will 
take things out of the bill or put things in, but this is an idea which 
has great value as a freestanding idea in many ways. That is why it has 
great value. This is something we clearly need to do. You can talk 
about other parts of the bill, but this is an idea that brings value to 
the bill--significant value, in my view, in light of the economic 
circumstances we are in. I appreciate this amendment more than kind of 
a strike something in the bill or modify something. This adds real 
value to the legislation. I am appreciative of that.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. WHITEHOUSE. Madam President, I had planned to offer an amendment 
this afternoon. I have been informed by the managers that the amendment 
slots are full at the moment. I wish to speak about my amendment and 
then return to the floor at the earliest opportunity to offer it for a 
vote.
  First, I say to the chairman of the Banking Committee that the bill 
we are currently debating would do great things to regulate an out-of-
control Wall Street, to end the pernicious practice of too big to fail, 
and to provide for regular consumers an independent financial 
protection agency to look out for their interests against all the big 
sharks and lobbyists and lawyers who are ganged up against them on 
consumer debt. I appreciate the work Chairman Dodd and Chairman Lincoln 
have done, and I look forward to continuing to work with them on this 
important piece of legislation.
  My amendment is cosponsored by Senators Merkley, Durbin, Sanders, 
Levin, Burris, Franken, Brown of Ohio, and Menendez, and we are 
continuing to solicit cosponsorships. We are also receiving 
endorsements from outside of this body.
  The amendment would address an area that is not yet covered by the 
Wall Street reform bill; that is, runaway credit card interest rates. 
It would do so not by imposing new restrictions on lending but, rather, 
by restoring historic State powers--powers that were eliminated in the 
relatively recent past.
  Madam President, when you and I were growing up, a credit card offer 
with a 20-percent or 30-percent interest rate might have been a matter 
to bring to the attention of the authorities. Such interest rates were 
illegal under the laws of most, if not all, of the 50 States. Laws 
against charging excessive interest rates go much further back than our 
youth, however. The Code of Hammurabi in the third millennium B.C. 
limited interest rates. Hindu laws of the second century B.C. limited 
interest rates. Roman law limited interest rates. So when America was 
established, there was already a long tradition of protecting citizens 
against excessive interest rates, and that tradition carried to the 
founding of the United States of America.
  For the first 202 years of our Republic, each State had the sovereign 
power to enforce usury laws against any lender doing business with its 
citizens. During those two centuries, our economy grew and flourished, 
and lenders profited while complying with those laws.
  Then, in 1978 came an apparently uneventful Supreme Court case. It 
was little noticed at the time it was decided. The case was called 
Marquette National Bank of Minneapolis v. First of Omaha Service 
Corporation. The Supreme Court there had to determine what the word 
``located'' meant in an old statute, the National Bank Act of 1863--
whether it meant that the transaction between a bank in one State and a 
consumer in another State was governed by the law of the bank State or 
of the consumer State. The resolution was that the term ``located'' 
referred to the location of the bank and not the location of the 
consumer. This meant that in a transaction between a bank in one State 
and a consumer in another, the transaction would be governed by the 
State in which the bank was domiciled.
  Well, it did not take long for the big banks to see the loophole this 
very narrow decision created. This loophole was never sanctioned by 
Congress, apparently never intended by the Supreme Court, but it was a 
significant loophole. It allowed banks to, for the first time in the 
Nation's history, avoid interest rate restrictions by the States of 
their consumers. It allowed them to get through that loophole by 
reorganizing as national banks and moving to States with comparatively 
weak consumer protection.
  Once the banks figured out that loophole, what is called ``a race to 
the bottom'' ensued. Bank credit card centers moved to States with the 
worst consumer protections, and in some cases States made their 
consumer protections even worse in order to attract that business to 
their State. The result of that is that today the credit card divisions 
of major banks are based in just a few States. That deal with the bank 
State causes consumers in all other States to be denied their 
traditional, historic, lawful protection against outrageous interest 
rates and fees.
  With millennia of interest rate protections behind us and hundreds of 
years of protection by the sovereign States of our Nation, the current 
system that has developed since that 1978 decision is the oddity in our 
history.
  My amendment would do nothing more than reinstate the historic, 
longstanding powers of our sovereign States to protect their citizens 
against excessive usurious interest rates. Let me be clear about what 
this amendment would not do. It would not mandate anything. It would 
not even recommend interest rate caps. It would not impose any other 
lending limitations. It would just restore to our sovereign States the 
power they enjoyed for over 200 years from the founding of the 
Republic--the power to say: Enough. Thirty percent or 50 percent or 100 
percent is too much interest to be charged to its citizens.
  The current system is unfair to consumers, but it is also unfair to 
local banks--banks that continue to be bound by the laws of the State 
in which they are located. A small local bank has to play by the rules 
of fair interest rates. The gigantic national credit card companies can 
avoid having any rules at all. That is not fair. We need to level the 
playing field to eliminate this unfair and lucrative advantage for Wall 
Street banks against our local Main Street community banks.
  To make sure lenders cannot find another statute to use to once again 
avoid State law, my amendment would apply to all types of consumer 
lending institutions and not just national banks. So no more changing 
your charter or your means of business to avoid limitations on gouging 
your customers.
  My amendment gives State legislatures ample time to revise their 
usury statutes if they wish and gives lenders ample time to adjust. The 
amendment would not go into effect until 1 year

[[Page S3076]]

after the President signs the bill into law.
  In the meantime, it is worth noting that most States' usury laws are 
around or above 18 percent. Presently, federally regulated credit 
unions do quite well under a Federal 18 percent interest rate cap. So 
there should not be a large shock when this amendment goes into effect 
as law. It is the 30-percent-and-over interest rates that are the 
recent anomaly, the historic peculiarity, the oddity, and cruelty to 
consumers that States have traditionally been able to defend against.
  We should go back to the historic norm, the way the Founding Fathers 
saw things under the doctrine of federalism, and close this modern 
bureaucratic loophole that allows big Wall Street banks to gouge local 
citizens and compete unfairly with local banks.
  I ask my colleagues for their consideration of this amendment and 
urge them to support it. I think it is a good amendment.
  I see the distinguished majority whip on the floor. I yield back my 
time so that he may speak.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Madam President, I thank the Senator. I hope to join him 
as a cosponsor. It wasn't that long ago--the Senator will remember--
when we had a debate on the floor about credit card reform. People 
across America said: There are some things going on with credit cards 
that aren't fair and right, and we need you to police these credit 
cards and make sure they don't do outrageous things and charge people 
unreasonably.
  I think we made some progress in the law we passed, but we made one 
critical error: we gave the credit card companies a long grace period 
to adjust to the changes. If you will notice, over the last year or so 
you received notices--I got them at my home in Springfield, IL--from 
credit card companies saying they were going to raise interest rates on 
the credit cards before the new law went into effect. My wife saved 
them and said: Mr. Smart Senator, how did you let this happen? It 
turned out that we had no control on those interest rates during that 
period of time and very little after the reform bill.
  What the Senator from Rhode Island is challenging us to look at is 
this: What is a reasonable amount to charge for an interest rate? His 
decision--and I concur with it--is, let's let each State make that 
decision.
  Thirty-two years ago, the Supreme Court incorrectly removed the 
authority of States to make that decision. They said: If your credit 
card company is located in State X, you are bound by the laws of State 
X when it comes to interest rates for all of your customers across the 
United States. You don't have to change for a customer living in 
Arkansas, which has a cap on interest rates, or for a customer living 
in Illinois. You just take the law of State X and that is the law you 
apply to your customers.
  The Senator from Rhode Island says: Why would we allow that? Why 
don't we let standards be established by each State? He doesn't dictate 
the standard--whether it is 5, 10, or 100 percent. That will still be 
up to the State. He doesn't say it will happen overnight. He gives a 
year for them to phase it in.
  It will also level the playing field for a lot of community banks and 
local financial institutions in each State bound by State law.
  When the community banks in Illinois are doing business with me as a 
resident of Illinois, there are laws that can apply, and in other 
States as well. But when it comes to credit cards, they can charge me 
whatever they want because the States they say they do business in have 
no rules whatsoever.
  The net result of this most people understand. If the interest rates 
are not regulated, if they literally go to the high heavens, people end 
up paying enormous sums of money. The penalties involved go through the 
roof as well.
  This is a legitimate issue and a legitimate subject for us to raise. 
I believe, as the Senator from Rhode Island does, that there is a 
reasonable level of interest rates where a reputable institution can 
make a good profit. Beyond that, it turns out to be a trap that a lot 
of people fall into because they do not realize there is no ceiling 
whatsoever on the interest rates they are being charged.
  There will be other amendments on this financial stability bill. This 
is one that I think most people will understand completely. The law of 
your State will determine the interest rate you are going to pay on 
your credit card, not the law of some other State. I do not think it is 
an unreasonable amendment. It is a very reasonable one. It reduces the 
cost for families and businesses and the life they lead, and it gives 
to each State the authority to decide what that limit will be within 
each State. For those who argue against Federal control, the Senator 
from Rhode Island is taking this right back to the local level where 
the decisions will be made.
  I am happy to support his amendment, and I encourage my colleagues to 
join us in cosponsoring it.
  The PRESIDING OFFICER (Mr. Kaufman). The Senator from Rhode Island.
  Mr. WHITEHOUSE. Mr. President, I thank the Senate majority whip for 
cosponsoring our legislation. I appreciate his support immensely. He 
has a wonderful way of making things clear and helping people 
understand how basic and simple and historic this amendment is. It 
takes us back to the way the country was through the vast majority of 
its history.
  The ``greatest generation'' served in World War II, came home, and 
went to college and built the society we now live in under these rules. 
George Washington and his men at Valley Forge served under these rules. 
The Civil War took place and the Korean war took place under these 
rules. There are 202 years of solid history behind this issue.
  I will close with an appeal to my colleagues to continue to show 
interest in this legislation, in particular my colleagues on the other 
side of the aisle. If you believe in States rights, this is a good 
piece of legislation.
  If you believe in States as laboratories of democracy, as centers of 
innovation, as places where you multiply times 50 the chance of getting 
the right answer when you allow a little bit of innovation to take 
place, you should support this legislation.
  If you take comfort in more than 200 years of solid American history 
proving that this is the right way to go, you should support this 
amendment.
  If you want to protect consumers in your State from out-of-State 
banks that are out of control and have no restrictions on interest 
rates they can charge your consumers, you should support this 
amendment.
  If you think the Federal Government has too much power and you want 
the States to have more say about what can take place with its own 
citizens, you should support this amendment.
  I look forward to continuing to push for a vote on this amendment. I 
think it is an important one.
  I yield the floor. 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. SCHUMER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SCHUMER. Mr. President, more than 18 months after the collapse of 
Lehman Brothers put our financial system into a deep freeze, we are at 
a crossroads in history. We can continue to turn a blind eye to the 
very real threat that excessive risk taking and reckless deregulation 
pose to our economy or we can choose to learn from the financial 
disaster that nearly brought our economy to a screeching halt. I urge 
my colleagues to choose reform.
  We can't wait any longer to take on the challenge of overhauling the 
rules of the road for our financial system. We have a regulatory system 
based on the 1930s and 1970s and a financial world in the year 2010. We 
have an economic imperative to pass a strong set of financial reforms. 
The shock waves in the real economy that resulted from the financial 
crisis are still being felt today by the millions of Americans who 
can't find a job or are facing foreclosure, who can't pay their 
children's college tuition or have to put off retirement because their 
savings have been decimated.
  We have 9.7 percent unemployment in this country, not because of any 
reform proposal that has yet to become law

[[Page S3077]]

but because of an irresponsibility in the financial system and a 
broken-down financial regulatory system that was last updated in the 
1930s and allowed too many firms, and even whole markets, to slip 
through the cracks. If we do nothing, we will surely find ourselves 
facing a similar crisis in the not too distant future.
  Senator Dodd and my colleagues on the Banking Committee have put 
together a bill with strong forward-looking reforms that make our 
financial system stronger and more stable so it can return to its 
fundamental role--helping our economy grow and innovate and create 
jobs. The bill lays out new rules of the road, fills gaps in our 
regulations, and protects consumers and investors. Most importantly, by 
creating a new resolution authority--which I know my colleague from 
Virginia, who is sitting on the floor here now, has worked very hard 
on--this bill ensures that taxpayers will never again have to bail out 
large financial institutions. Firms that fail, will fail, period. There 
will be no rescue or bailout, only an orderly unwinding that forces 
stockholders and bondholders to suffer, not taxpayers.
  As a New Yorker, I see the connection between Wall Street and Main 
Street every day. The financial industry is responsible for 500,000 
jobs in New York City, and most of them are not the kind of fancy, 
high-paying jobs you read about or see in the movies. The average 
salary for these jobs is about $70,000. But I realize the financial 
system plays a special role far beyond Manhattan. There are many 
analogies. It is the heart of the economy, the lifeblood, the 
circulatory system, the engine of the economy or the oil that greases 
the gears. Whatever image you choose, it is absolutely critical to 
helping businesses grow and innovate and create new jobs. So our reform 
must be forward thinking and strong but not punitive or vindictive or 
vengeful, because that will hurt the whole economy.
  With the special status of the financial system come special 
responsibilities. The industry has reacted to many of the new proposals 
by arguing that they will kill innovation. But because we can make cars 
that go 200 miles per hour doesn't mean we shouldn't have speed limits. 
In general, I think this bill strikes the necessary balance between 
maintaining an innovative and competitive financial system while 
ensuring that the recklessness that occurred by some on Wall Street 
will never again threaten the financial health of Americans on Main 
Street. Make no mistake about it, these reforms will be good for both 
Wall Street and Main Street.
  The bill will create a financial system where consumers and investors 
on Main Street can have confidence in the products and services they 
receive and where they put their money; a financial system focused on 
getting capital into the real economy, so people can start new 
businesses and grow their existing ones. At the same time, the 
certainty and stability that reform will provide will make our 
financial system even more attractive to investors around the world and 
will help keep America at the forefront of the world's economy.
  I believe this bill will strengthen jobs and income creation in my 
State of New York, not leak it, because it will make the system 
stronger. It will make people have more confidence in that system, and 
money from around the world will flow into New York, which is the 
capital of the financial system for our Nation and our world.
  The bill Senator Dodd put together is stronger in many ways than most 
people expected it to be a couple of months ago. It contains several 
core reforms that will go a long way toward fixing the problems that 
crept up in our financial system over decades. The bill would make sure 
taxpayers never again have to foot the bill when large institutions 
fail; make sure every large financial institution has a regulator 
looking over its shoulder to prevent excesses, and a council of 
regulators looking at risks across the whole system; make sure 
derivatives--which, when abused, can put the whole system at risk--are 
traded transparently, at the very least, and on an exchange whenever 
possible.
  I should note this is a huge change from the way the derivatives 
market works now. We would go from a totally unregulated market to one 
that is regulated, where regulators know every trade that happens and 
risks can't build up in the system without anyone knowing better.
  The bill will also make sure there are stronger consumer protections 
to ensure institutions can't take advantage of average Americans in 
their mortgages, credit cards, or other financial instruments. It would 
give investors additional power to hold their boards accountable so 
they are not asleep at the wheel the next time their management is 
loading up the company with risk.
  Like many of my colleagues, however, I believe there are areas of the 
bill I wish to see improved, and I will continue to work with my 
colleagues on the floor to do that. First, I wish to see even stronger 
consumer protection in the financial services area, and I am working 
with Senators Reid and Durbin and others to strengthen this part of the 
bill. This is an area where I have worked hard for decades now in 
Congress, both in the House and Senate. It is clear to me we can't 
force Congress to pass a new law every time a credit card company 
figures out a way to skirt the old laws. We need an independent agency 
whose only mission is to protect consumers, and that agency needs to 
write and enforce rulings across the board for all financial 
institutions.
  I am sponsoring an amendment to expand the enforcement authority of 
the Consumer Protection Bureau over all nonbanks, such as payday 
lenders and rent-to-own companies, to make sure consumers are protected 
no matter who they rely on for financial services.
  In the area of consumers, small companies can rip off consumers just 
the way large companies can. And while large companies can pose a 
greater risk to the system as a whole, small companies can pose every 
bit as great a risk to the individual consumer, and the distinction 
between the two is faceted and unfair.
  I also think the bill could go farther in dealing with credit rating 
agencies, and I am working with Senator Franken on a proposal that 
would reduce the conflicts of interest inherent in their current 
business model. There are other changes I will proposal as well.
  In conclusion, we have many tasks in front of us if we are to rebuild 
the American economy, but a stronger financial system focused on the 
needs of the real economy is crucial in that effort. There should be no 
doubt that part of putting us back on the path to prosperity requires 
instituting smart, thoughtful financial reforms.
  Mr. President, I yield the floor.


                            Enemy Combatants

  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SESSIONS. Mr. President, I wish to share a few remarks about the 
recent arrest of the Faisal Shahzad, the individual who allegedly 
attempted to detonate a car bomb in Times Square in a plot to kill a 
lot of Americans.
  I have been asked about that incident several times over the last 
several days, and I think I was incorrect in making comments to 
reporters and even to friends about the precise legal situation in 
which we are involved. Let me briefly summarize what I think the 
current state of the law is, and all of us will then be better able to 
respond to the questions we may be asked.
  The Christmas Day bombing suspect, Umar Farouk Abdulmutallab, as was 
established pretty quickly, is an unprivileged enemy belligerent and is 
thus eligible to be tried for his offenses and detained as a person at 
war against the United States. Mr. Abdulmutallab is an individual who 
could be held as a prisoner of war, if the military so chooses, for so 
long as the hostilities continue, just as we did in World War II and 
every war the United States has been part of. Also, the military would 
be entitled to try Mr. Abdulmutallab, the Christmas Day bomber, by 
military commission. That is what we would normally do, and that is 
what was done in World War II when we caught Nazi saboteurs plotting to 
blow up targets in the U.S.
  I believed the administration made a mistake when they treated Mr. 
Abdulmutallab as a civilian criminal and provided him Miranda rights 
and appointed him a lawyer, which we have to do if we are going to 
treat somebody as a criminal rather than an unprivileged enemy 
belligerent. I believe firmly that was an error, and the

[[Page S3078]]

normal procedure should be for these types of individuals to be tried 
or detained by the military because they are not criminals, they are 
warriors.
  Yesterday's arrest of the Times Square bombing suspect, Faisal 
Shahzad, raises similar questions. My initial thought was that the 
Supreme Court has clearly held that a U.S. citizen who has joined the 
enemy to fight against this country can be designated as an unlawful 
enemy belligerent and could be detained for the duration of 
hostilities. That is a fact Abraham Lincoln never had any doubt about 
when he took people prisoners. I guess George Washington, when there 
was the Whiskey Rebellion, he never had any doubt he had the ability to 
attack, destroy, or arrest people when they were at war with the United 
States. Fortunately, he did not have to go so far, but that is the kind 
of thing the Supreme Court reaffirmed in Hamdi v. Rumsfeld.
  In the Hamdi case, Justice Sandra Day O'Connor, who wrote the 
opinion, made clear that a citizen who has taken up arms in hostilities 
against the United States can be designated as an unlawful enemy 
combatant--``unlawful enemy belligerent'' is the phrase she used--and 
she wrote the opinion which said:

       There is no bar to this Nation's holding one of its own 
     citizens as an enemy combatant. . . . A citizen, no less than 
     an alien, can be ``part of or supporting forces hostile to 
     the United States or coalition partners'' and ``engaged in an 
     armed conflict against the United States''; such a citizen, 
     if released, would pose the same threat to returning to the 
     front during the ongoing conflict.

  That is perfectly sound and perfectly reasonable. She concluded that 
Mr. Hamdi, who was captured alongside the Taliban in Afghanistan but 
who was an American citizen, could be detained for the duration of the 
hostilities authorized by the Authorization for the Use of Military 
Force that Congress passed, authorizing military force against him in 
order to keep him from rejoining the enemy.
  We have had quite a number of people who have been released from 
Guantanamo, who have been captured in the process, who have returned to 
the combat and attacked us. So it is clear that under Hamdi, the 
administration has the authority to detain the Times Square terror 
suspect as an unprivileged enemy combatant if he can be linked to our 
terrorist enemies within the definitions of the Military Commission's 
Act.
  But I want to be clear. There is a distinction: this suspect, unlike 
the Christmas Day bomber and the 9/11 plotters, cannot be tried via 
military commission under current law. He can be detained by the 
military, but not tried by military commission. In previous conflicts, 
military commissions were used to try civilians who took up arms 
against the United States in ways that violated the rules of war. For 
example, Herbert Haupt was one of the Nazi saboteurs who was prosecuted 
via military commission after plotting to blow up targets within the 
United States in the early months of World War II. He was a naturalized 
U.S. citizen, and the U.S. Supreme Court, in the landmark case of ex 
parte Quirin, allowed the commission to go forward with his trial, and 
I think he was executed. A number of the people involved in that case--
most of those who sneaked into the country by submarine, as I recall, 
off our coast, to blow up our cities and infrastructure and kill 
civilians--were tried for being in violation of the rules of law, very 
much unlike a German soldier who was captured on the battlefield during 
the Battle of the Bulge. They were detained as prisoners of war 
throughout the war. Because these people had violated the rules of war 
they could be tried by a military commission.
  But what happened in the Haupt case ex parte Quirin is no longer law. 
Since 2006, the Military Commissions Act that Congress passed required 
and made it clear that the military commission trials are only 
available for alien unprivileged enemy belligerents. Accordingly, the 
Times Square bombing suspect who appears to be a citizen must be 
prosecuted, if he is prosecuted and tried at all, in Federal court--if 
the reports are accurate that he is a citizen.
  I want to be sure. I think we have this matter straight. I believe an 
alien unlawful belligerent who is captured should not be treated like a 
criminal. They should not be appointed a lawyer that day to tell them 
don't say anything. They should not be advised of their rights because 
they are prisoners of war. If their actions amount to a violation of 
the rules of war, an alien unlawful enemy belligerent can be tried in 
civilian court, if we choose, or tried by a military commission. But if 
they are a citizen and they are caught under these circumstances, they 
can be detained in military custody, but they can't be tried by a 
military commission. They can only be tried by the civilian courts in 
civilian trials.
  With regard to the matter of Miranda warnings, Miranda is not a 
constitutional requirement. It was never part of American law until 
recently--40 years ago, 50 years ago. No nation in the world I think--
except perhaps one, I forget which one--provides that you have to warn 
people they have a right to remain silent. We can ask them questions. 
They can remain silent. We can't force them to talk, but we don't have 
to read them the Constitution before we ask them questions. But we do.
  So, to me, it makes no sense that we would provide this extra 
constitutional right to unlawful enemy alien combatants like a 
Christmas Day bomber. They should be detained by military custody. If 
they need to be tried, the choice should be made between whether to be 
tried in civilian courts or military courts. The ability to obtain good 
intelligence about the operation is more enhanced, in my view, without 
any doubt--even though sometimes people who are given the Miranda 
rights talk--but there is no doubt we will have less people talking if 
they are appointed lawyers and read Miranda rights than if we don't.
  Since war is won or lost so often on the question of who has the best 
intelligence, we should not provide lawyers to individuals who are at 
war with us and seek to destroy our country and kill innocent men, 
women, and children.
  I think that is the basic state of the law today. I have been a bit 
confused myself, and I am glad my staff has helped me get correct.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. JOHNSON. Mr. President, this week, as the Senate moves forward 
with consideration of Wall Street reform legislation, I am optimistic 
that legislation will be passed that reforms our financial system and 
prevents those who nearly brought down the economy from ever being able 
to do that again.
  As we have heard many times over the last several weeks, the bill 
creates a mechanism to monitor the economy for nationwide trends and 
risky patterns that could lead to problems. It establishes a consumer 
watchdog dedicated to identifying and preventing lending trends that 
are harmful to consumers. In addition to preventing future bailouts, 
the bill also requires that most financial speculation be done in the 
open, while addressing the underlying problem that allowed the banks to 
go casino-crazy in the first place. It also brings derivatives into a 
transparent marketplace. I believe all these changes will make the 
American financial system more transparent, accountable and responsive 
to future risks.
  It has been discouraging to see some Members and special interests 
opposed to these changes. In fact, I believe it is hard to argue 
against these reforms with a straight face. Yet those against reforming 
Wall Street have been doing just that, asserting that making markets 
fair and transparent will somehow hurt the economy. These reforms will 
help, not hurt, American consumers, small banks and small businesses.
  As I have said before, our community banks in South Dakota, and 
across the Nation, have acted responsibly. It was the actions of large, 
interconnected financial institutions that endangered our economy and 
received Federal bailouts.
  This bill eliminates the likelihood that the government would once 
again be forced to throw billions of dollars at Wall Street or run the 
risk of bringing down our entire economy.
  The community banks in South Dakota, and across the country, are a 
vital part of our economy, as they reinvest money back into the 
communities they serve. This legislation will help community banks 
since it levels the

[[Page S3079]]

playing field between banks and nonbank financials, such as mortgage 
lenders.
  In addition, the bill fills many regulatory gaps, helping solve the 
problem of charter shopping, meaning financial institutions will no 
longer be able to choose the regulator they think will be the 
friendliest.
  I would also like to see the legislation go further in some areas, 
such as the registration of private equity and venture capital with the 
SEC, in addition to hedge fund registration.
  I also believe the legislation fills important regulatory gaps 
relating to insurance regulation. This legislation establishes the 
Office of National Insurance, and gives this office the ability to 
negotiate international agreements, a task that is currently a struggle 
for our country in a global marketplace.
  These provisions will give us a better picture of what is happening 
in this national and international industry, something we do not have 
now. We should resist efforts to take authority away from the Office of 
National Insurance.
  This bill has had substantial input from Republicans and Democrats. 
As the legislation process moves forward, I hope that bipartisan 
language on investor protection can be retained, that we can find 
common ground on national preemption and State AG enforcement, and that 
additional good ideas from both sides of the aisle can be incorporated 
into this legislation through the amendment process.
  I believe all Members of this body want to support bipartisan 
legislation to reform Wall Street. But, as we seek bipartisan 
consensus, we should assess all amendments from a Main Street, 
commonsense perspective.
  South Dakota's small farms, ranches and business operate with 
transparency and accountability. It is time for that same transparency 
and accountability to be extended to Wall Street.
  Taxpayers, consumers, and businesses across our Nation have been 
affected by the gambling of Wall Street. The fallout of Wall Street's 
recklessness has affected all of us, whether it is job loss, 
foreclosure, loss of retirement funds, or decreased access to a loan or 
other type of credit.
  Nearly 2 years have passed since the financial crisis. It is time to 
move forward and fix our failed system of financial services 
regulation.
  A young South Dakotan was in my office last week, and said that he 
thought this bill represents South Dakota values, because he was raised 
with the value that you should be careful with your money, and even 
more careful with someone else's money. That is something that Wall 
Street forgot.
  Any legislation that passes this body must make our markets safer, 
better protect consumers, create a level playing field for industry, 
and remind Wall Street that our Nation's economy is not something they 
are free to gamble away.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, I just wish to say to my friend how much I 
appreciate his involvement and support and effort over the past many 
months that we have worked in this area, since the collapse of our 
economy back in the fall of--well, it began earlier than that, 
actually, as we witnessed early in 2007 the mortgage crisis occurring 
across the country.
  Senator Johnson has been tremendously helpful and valuable. He is my 
seatmate on the Banking Committee. We have been sitting next to each 
other on that committee for the past 3 years and working on these 
issues together. He brought great value to this debate and discussion, 
contributed significantly to the product before us, and I wished to 
thank him for that.
  We have some work to do, obviously, in the next number of days on 
this bill. But it is a good bill. I appreciate his comments about how 
it has been a bill crafted not by one member, not by a chairman of a 
committee but by a group of us on that committee, Democrats as well as 
Republicans who contributed to this bill.
  So I thank him for his work.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mrs. Hagan). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DORGAN. 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. DORGAN. Madam President, I know the Senator from Connecticut has 
been on the floor all of this day managing a piece of legislation, and 
it appears to be kind of a lonely process here. He is managing what is 
a very important piece of legislation dealing with financial reform or 
Wall Street reform. I know he is perhaps as frustrated as everybody 
else that we are not making more progress and voting on amendments. I 
know work is going on behind the scenes as well.
  I hope we will be able to move ahead and get a good piece of 
legislation through the Senate. I don't know what time it will take, 
but what is far more important is that we get it right. The 
consequences of not making the changes necessary would be that we would 
experience again at some point in the future the kind of financial 
crisis we have seen in the last couple years. It is a significant 
crisis for a lot of Americans--about $15 trillion of lost value, but 
that is an aggregate number that doesn't mean much.
  What means something is that millions of people are losing their 
jobs, their homes, and many are losing hope. That is the consequence of 
this kind of very deep recession--the deepest recession since the Great 
Depression.
  Following the Great Depression, if you read the economic history of 
the country, you will find that a number of very aggressive pieces of 
legislation were put into place to protect our country and make certain 
that could not happen again. Those pieces of legislation enacted into 
law lasted for a long time--70 or 80 years--to protect this country's 
economic interests. But what happened was that a number of people 
decided they were old-fashioned provisions and needed to be modernized, 
so we had modernization legislation that I did not support. We had to 
modernize the system. That modernization a decade ago caused massive 
problems. So now we are back having experienced the last couple of 
years and a very deep recession that is not a natural economic 
disaster; it is manmade. I think it is caused by the most unprecedented 
greed this country has ever seen among some of its largest financial 
institutions.
  It is important to say that banking is critical to this country's 
economic existence. You need production and you need finance. I don't 
think we ought to suggest--and nobody has--that finance is not 
worthwhile. It is very important. You can't produce or have businesses 
without the ability to provide finance for those businesses. But over a 
couple of centuries of economic history in this country, sometimes 
producers have had the upper hand; sometimes those in the finance 
production have had the upper hand. For the last 15, 20 years, those in 
finance production in this country have had an unbelievable amount of 
clout and sway and the upper hand. That has caused us serious problems.
  Today, I am not talking about the origins of this latest economic 
wreck--I have done that many times before--but starting with the 
subprime loan scandal that permeated much of the country, there was 
unbelievable greed and excess, securitization of bad mortgages that 
were rated AAA and passed from one to another, from mortgage bankers, 
to hedge funds, to investment banks, and back and forth.
  Then even that wasn't enough. They were passing a bunch of bad paper 
around where everybody was making big fees, not knowing what they were 
buying, and buying things they would not get from people who never had 
it.
  That wasn't enough. Then we created synthetic securities and naked 
swaps. I guess that was a natural extension by those who were greedy 
enough to believe you have to have something to trade no matter what 
the circumstances. So they created instruments--debt instruments, 
securities, and others--that had no value. They were debt instruments 
related to values of things that were extraneous, so there was no 
insurable interest.
  A naked credit default swap is something that has no insurable 
interest on either end. It is simply two people who have decided to bet 
on whether a bondholder over there may or may not default, despite the 
fact that neither of these people has an economic interest in the bond. 
They are just making a wager. They could have just as well put

[[Page S3080]]

it on black or red at the roulette wheel or played the craps table or 
played blackjack. It is not an investment; it is just betting.
  That all went on, and there was a dramatic amount of new leverage and 
borrowing. I cannot begin to describe the excess that occurred. I guess 
the final circumstance for me to see what was wrong with all of this 
was that in 2008 the ``Wall Street'' firms earned a net negative of 
about $36 billion, that is, they had $36 billion of losses, and still 
paid, I believe, $17 billion in bonuses. That represents sort of the 
most egregious excesses you can imagine.
  The question now and the circumstance that exists that I know the 
Senator from Connecticut cares a lot about is how do we restore 
confidence? How do we restore some confidence for the American people 
going forward? If we do not have confidence, this economy is not going 
to expand and rebound.
  The answer is, we put together a piece of legislation called Wall 
Street or financial reform and construct it the right way to try to 
make certain the things that were done cannot be done again, to make 
certain the kind of economic wreck that occurred cannot happen again.
  My colleague from the Banking Committee, the chairman of the Banking 
Committee, Senator Dodd, and others have done quite a good job of 
putting together a piece of legislation that moves in that direction. 
It can be improved, in my judgment, and perhaps will be. I know he will 
agree with that as well. There are other ideas that can be brought to 
the floor of the Senate on this legislation.
  I am going to talk about two of them ever so briefly--actually three, 
but one of them will be very quick.
  Senator Grassley and I intend to offer an amendment that says to the 
Federal Reserve Board: You must disclose to whom you were providing 
emergency assistance during the financial debacle on Wall Street, 
including loans out of the discount window to investment banks for the 
first time in history. You must disclose whom you provided loans to, 
what the terms were, and how much those loans amounted to. Two Federal 
courts--the district court and now the appeals court--have ordered the 
Fed to do so. The American people, they said, deserve to know. The Fed 
announced they intend to appeal that once again.
  Tomorrow, Senator Grassley and I will offer an amendment that says 
the law will require them to make that disclosure. The American people 
deserve to know.
  On the other two issues, one is on too big to fail. This is central 
to the bill. There are a lot of ideas about too big to fail. Mine is, I 
think, the most direct, the most decisive, and the most effective.
  If the Financial Stability Oversight Council decides that an 
institution is too big to fail--that is, by definition, the construct 
and size of that organization would create a moral hazard to this 
country, would create unacceptable risks and grave risks to the entire 
future of the American economy--if that is the case, if that is the 
judgment, then it seems to me you have to pare back portions of that 
enterprise until it is not any longer too big to fail and causing grave 
risk to the future of this economy.
  In my judgment, the most direct and reasonable thing to do is to 
simply require that you restructure and require divestiture, where 
necessary, of those portions of an institution that have become too big 
to fail and cause a grave risk to the future of this country's economy, 
should they fail.
  I will be offering that amendment. I know it is different than some 
others. My colleagues, Senator Brown and Senator Kaufman, have an 
amendment which I will vote for and support as well on this issue. I 
think this is probably the most direct and probably the most effective 
amendment on the issue of too big to fail.
  Finally, I am going to offer an amendment that would ban what are 
called naked credit default swaps. If people want to gamble, just bet 
one another. There are plenty of places to do that in America. Las 
Vegas comes to mind. Atlantic City comes to mind. It seems to me, we 
should not mistake betting for investing. We ought to get back to 
basics in our financial institutions.
  I think we have something close to $25 trillion of credit default 
swaps that exist now. I don't know what percent of them have no 
insurable interest, that represent just wagers, just flatout bets 
rather than investments. In England, a study suggested that about 80 
percent of credit default swaps are what are called naked credit 
default swaps with no insurable interest. If that is the case on this 
side, we are talking about a notional value of perhaps $16 trillion, 
$17 trillion of instruments out there that simply allow for the making 
of wagers that have nothing at all to do with the insurable interest 
and bonds.
  I mentioned earlier that Mr. Pearlstein, who writes for the 
Washington Post, once observed a pretty simple question: Why should 
there be more insurance policies to insure bonds than there are bonds 
to insure? The answer is obvious. They created these excess insurance 
policies that have no insurable interest so people could just gamble. 
It is fine if you are gambling with your own money, but once you start 
gambling with the taxpayers' money, if you are a federally insured bank 
and the taxpayers are going to bear the risk, that is a different 
matter.
  I am going to offer these amendments. I say, again, as I said when I 
started, all of us who come to this debate about financial reform or 
Wall Street reform understand that an effective, functioning system of 
finance in this country is essential to the well-being of America. I do 
not think anybody wants to take apart a system of finance that has the 
different levels of FDIC insured banking, commercial banking, 
investment banking, venture capitals, hedge funds--all those are 
important to this country's long-term future. I personally would like 
to see hedge funds and derivatives regulated. I have talked about that 
with Senator Feinstein and others for a long time. It is very important 
that we have a system of finance that has the confidence of the 
American people and that we need in order to finance the production in 
this country.
  Ultimately, all of us would like the productive sector to be 
repaired, to grow and hire people once again, employ people, and have 
``Made in America'' put on products once again. All of us would like to 
see that happen. That will not happen unless we have a working system 
of finance as well.
  We had a hearing where representatives from three businesses came to 
that hearing. All three were small- to medium-sized businesses. All 
three had sailed through this deep recession, with some difficulty, but 
were still profitable. All three were ready to expand, ready to hire 
more people, and none of them could find any financing to do it. None 
of them have been delinquent. All of them had existing banking 
enterprises with which they had a relationship and always paid back 
everything they owed. They had never been delinquent. Yet they could 
not find the funding to expand their business and hire more people. 
That is what is wrong.
  Even today, by the way, some of these record profits that are coming 
from some of the biggest financial institutions are coming not as a 
result of their lending money to people but as a result of their 
trading, in many cases in some of the same securities that caused some 
of the same problems a couple years ago and over the last decade.
  This reform legislation is essential. This is one of the most 
important pieces of legislation we will have considered in this 
Congress--probably the most important. In many ways, the consequences 
of what we do will be with us for a decade or more. That is why it is 
important to get this right.
  I say to my colleague from Connecticut, I wish to be helpful to him. 
He has written a piece of legislation that has much to commend it. This 
Senate owes him a debt of thanks and the Banking Committee a debt of 
thanks. That does not mean we cannot offer amendments that might 
improve pieces here and there. But this is an awfully good start.
  My hope is, Senator Dodd will have sufficient cooperation in the 
Senate to begin getting votes on amendments so we can get through this, 
have the debate, and get the best ideas that everybody has to offer and 
get a piece of legislation that will give the American people some 
confidence once again.

[[Page S3081]]

  I yield the floor. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. 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. GRASSLEY. Madam President, I wish to speak as in morning business 
for 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                 Extension of the Biodiesel Tax Credit

  Mr. GRASSLEY. Madam President, last Tuesday, President Obama traveled 
to Iowa. He visited counties and towns that have been hit particularly 
hard by the economic downturn. While Iowa's average unemployment rate 
stands at 6.8 percent, Lee County's unemployment rate stands near 11 
percent. Wapello County's unemployment rate is at 9.5 percent. These 
were the counties that President Obama visited. Over 1,000 jobs have 
been lost in each of the 3 counties he visited since the recession 
began.
  The visit to Iowa was billed as an effort to highlight the steps 
taken to achieve long-term growth and prosperity by creating a new, 
clean energy economy.
  During his trip, the President visited a Siemens wind blade 
manufacturing facility in Fort Madison. I had the opportunity to visit 
there about a year and a half ago. The President touted Iowa's 
leadership in the production of wind energy. This Siemens facility is a 
great facility. I recall just a few years ago speaking to Siemens 
manufacturing when they were looking for a site for their first wind 
production facility in the United States. I told the executives at 
Siemens they would not be disappointed if they chose Fort Madison for 
their facility because Iowans are some of the hardest working and 
honest people in the country.
  I am particularly proud of the second-in-the-Nation status of Iowa's 
wind production. I first authored and won enactment of the wind 
production tax credit in 1992. This incentive has led to the 
exponential growth in the production of wind across our entire United 
States.
  It has also helped my State of Iowa to become a leader in the 
production of wind energy component manufacturing.
  The emerging wind industry has created thousands of jobs in recent 
years in the cities of Newton, West Branch, Cedar Rapids, and Fort 
Madison.
  When President Obama says energy security should be a top priority, I 
agree with our President. When he says we need to rely more on 
homegrown fuels and clean energy, I agree with our President. When he 
says our security and our economy depend on making America more energy 
independent, I agree with our President.
  During a subsequent visit to an ethanol facility in Missouri, 
President Obama stated unequivocally that his administration would 
ensure the domestic biofuel industry would be successful. The President 
and I are in strong agreement that renewable biofuels are a key part of 
our future.
  Unfortunately, I believe President Obama missed an important 
opportunity to make a push for the message of the biodiesel tax credit. 
While the President was in Iowa touting green jobs, this Democratic 
Congress has, in effect, sent pink slips to about 18,000 people who 
depend on the production of biodiesel for their livelihood.
  On December 31, 2009, the biodiesel tax credit, which is essential to 
keep a young bioindustry competitive, expired. In anticipation of the 
expiration of the tax credit, Senator Cantwell and I introduced a long-
term extension in August of 2009. That bill was never considered last 
year.
  In December, as the expiration loomed, I came to the Senate floor to 
implore my colleagues to put partisan politics aside and pass a clean 
extension of the biodiesel tax credit because, without an extension, I 
knew the industry would come to a grinding halt, and it has.
  For whatever reason, the Democratic leadership in the House and the 
Senate have never considered this extension a priority. Now the 
industry is experiencing the dire situation I predicted.
  On January 1 of this year, about 23,000 people were employed in the 
biodiesel industry. Because of the lapse in the credit, nearly every 
biodiesel facility in the country is idle or operating at a fraction of 
capacity. Nearly all of Iowa's 15 biodiesel refineries have completely 
halted production. This has led to the loss of about 2,000 jobs in Iowa 
alone.
  The thousands of jobs created by the wind industry in Iowa have 
essentially been offset by the thousands of jobs lost in the biodiesel 
industry.
  You do not have to take my word for the dire state of the industry. A 
$50 million biodiesel facility in Farley, IA--that is in northeast 
Iowa--announced that they just laid off 23 workers and cut the pay of 
the rest of the staff. Renewable Energy Group laid off 9 employees in a 
facility in Ralston, IA, and 13 in Newton, IA. Ironically, the Newton 
biodiesel facility is 1 mile down the road from a wind manufacturing 
facility that President Obama visited on Earth Day just last year. 
During President Obama's trip to Iowa, he was within a few miles of 
three biodiesel facilities that are idle: one in Keokuk, IA, one in 
Washington, IA, and another in Crawfordsville, IA.

  According to a press release from the Iowa Renewable Fuels 
Association, an Iowan affiliated with biodiesel industry was able to 
speak to President Obama very briefly following a townhall session in 
Ottumwa, IA. Mr. Albin, vice president at Renewable Energy Group, told 
President Obama that plants are idle and 90 percent of the biodiesel 
employees have been laid off simply as a result of the tax credit 
lapse. According to Mr. Albin, President Obama assured him that he 
would not let the biodiesel industry die.
  He recalls the President saying something like this--and I want to 
quote what I suppose was a paraphrase by Mr. Albin:

       I'm the President and I promise I will do whatever I can. 
     Look, I'm on your side, but I've got a Congress to deal with.

  Well, I can understand what the President would say. I happen to 
believe that in my 4 years of serving with then-Senator Obama, that 
Senator Obama, now President Obama, is very sincere about the promotion 
of ethanol and biodiesel or biofuels--whatever you want to call it. In 
fact, I had the good occasion of working with then-Senator Obama on a 
Senate bill when I was still chairman of the Finance Committee to 
promote the tax credit that is now in place so that filling stations 
can get a tax credit for putting in for E85 ethanol, as an example. So 
I don't question President Obama's response to Mr. Albin. Of course, we 
do have checks and balances in government and the President has 
Congress to deal with. But I hope President Obama will take strong 
action to insert himself into this debate in the Congress.
  It seems that even President Obama, from this quote, is frustrated by 
the lack of action by the Democratic congressional leadership on this 
issue.
  Mr. President, I ask unanimous consent to have printed in the Record 
this press release from Iowa RFA at the conclusion of my remarks.
  The PRESIDING OFFICER (Mr. Udall of Colorado). Without objection, it 
is so ordered.
  (See exhibit 1.)
  Mr. GRASSLEY. The board president of Western Iowa Energy in Wall 
Lake, IA, recently stated:

       Due to the continued lapse of the biodiesel tax credit, 
     Western Iowa Energy continues to suffer from significantly 
     limited sales and reduced sales forecasts. Due to these 
     market conditions, we have made the difficult decision to 
     idle our facility. Today we are laying off 15 full-time 
     employees. This represents more than 50 percent of our staff.

  On February 10, Senator Baucus, chairman of the Finance Committee, 
and I worked in a bipartisan fashion to develop an $84 billion jobs 
package that included a 1-year extension of several energy tax credits, 
including the biodiesel tax incentive. Before the ink was even dry on 
the paper, Majority Leader Reid scuttled our bipartisan package in 
favor of a partisan approach. That delayed passage of an extension in 
the Senate for well over a month, until the month of March.
  Now it has been languishing for 6 weeks. Where is the urgency? This 
Congress jammed through a stimulus bill that spent $800 billion to keep 
the unemployment rate below 8 percent, and of course it didn't stay 
below 8 percent. Yet we can't find the time to pass a

[[Page S3082]]

simple tax extension that will likely reinstate 20,000 jobs overnight. 
We are 4 months delinquent in our obligation to these biofuel producers 
with no end game in sight. The lack of action on this issue defies 
logic or common sense.
  So while the Democratic leadership talks about creating green jobs, 
their action has led to job cuts. Americans are unemployed today 
because of the action--or more aptly the inaction--of the Democratic 
congressional leadership, particularly on this biodiesel issue.
  The United States is more dependent upon foreign oil because of the 
inaction of the Congress. Automobiles are producing more pollution 
because we have essentially eliminated this renewable, cleaner-burning 
biofuel. Rural economies are being stripped of the economic gain of 
this value-added agricultural product.
  So I urge the Senate to take immediate action to extend this tax 
incentive and reduce our dependence upon foreign oil and save green 
jobs.
  Mr. President, I yield the floor.

                               Exhibit 1

           President Obama Gets Biodiesel Message in Ottumwa


   IRFA Secretary Albin Uses 90 Seconds with the President to Share 
                         Urgency of Tax Credit

       Ottumwa, IA.--During his Iowa visit on April 27, 2010, 
     President Barack Obama heard firsthand of the urgency to 
     reinstate the biodiesel tax credit from Brad Albin, Vice 
     President at Renewable Energy Group and Secretary of the Iowa 
     Renewable Fuels Association (IRFA).
       Following President Obama's speech and town hall session at 
     Indian Hills Community College, Albin grabbed the President's 
     attention. During a 90 second exchange, Albin shared the 
     message of the biodiesel industry's state of disruption and 
     uncertainty resulting from the lapse of the federal biodiesel 
     blenders tax credit since January 1, 2010.
       ``I shook his hand and told him that we're losing jobs as 
     we stand here, which seemed to get his attention,'' explained 
     Albin, who had been sitting in the second row. ``I told him 
     about plants idling and that more than 90 percent of 
     manufacturing staff at U.S. biodiesel plants have been laid 
     off as a result of the tax credit lapse.''
       President Obama acknowledged that his biodiesel tax credit 
     updates are coming through USDA Secretary Vilsack. The 
     President continued to listen as Albin explained that for 20 
     years Americans have worked to meet the challenge of 
     increasing energy independence, that farmers and families 
     have invested billions, and that now companies are bleeding 
     to death or bankrupt. Albin further explained that the five 
     month lapse of the tax credit could not have come at a worse 
     time as the Renewable Fuels Standard goes into effect July 1, 
     2010.
       ``We're going to die without this tax credit,'' Albin added 
     even after the President's assurances. ``The President then 
     responded, `We won't let you die.' ''
       ``Those that know me know I want to make sure my message is 
     clearly understood; so as the President was walking away to 
     shake another hand, I asked him if he could commit to the tax 
     credit being in place by May 31,'' Albin said. May 31, 2010, 
     the start of the Memorial Day recess, is the date Chairman 
     Sander Levin of the House Ways and Means Committee promised 
     as a reinstatement deadline for the biodiesel tax credit 
     during an energy hearing earlier this month.
       ``The President heard me ask him again about the May 31 
     date. He turned back to me and said, `I'm the President and I 
     promise I'll do whatever I can,' '' Albin recalled of the 
     exchange. ``President Obama then assured me of his commitment 
     to clean energy by saying, `Look, I'm on your side, but I've 
     got a Congress to deal with.' ''
       ``I believe he now has our urgent message straight from the 
     state where the tax credit lapse is having the most impact--
     the nation's top biodiesel state,'' Albin said. ``It really 
     was a miracle to be in that right spot at the right moment to 
     be able to get the biodiesel message straight to the 
     President of the United States of America.''
       The Iowa Renewable Fuels Association was formed in 2002 to 
     represent the state's ethanol and biodiesel producers. The 
     trade group fosters the development and growth of the 
     renewable fuels industry in Iowa through education, 
     promotion, legislation and infrastructure development.

  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. FRANKEN. Mr. President, I rise today to discuss an amendment that 
I have just filed. But before I begin, I would like to thank Chairman 
Dodd for his exemplary work on this Wall Street reform bill. It is the 
result of months of tireless work and many hours of negotiation by 
Chairman Dodd and his staff.
  This Wall Street reform bill will vastly improve the regulatory 
structure currently on the books. It creates a strong consumer watchdog 
within the Fed--a bureau that will put consumers first, ahead of Wall 
Street profits. This bill also brings derivatives out of the shadows 
and onto exchanges so that Wall Street's bets upon bets never again 
threaten to bring down our entire economy. This bill accomplishes many 
things and brings us a long way toward robust reform.
  But there is one area we need to make stronger. We need to go further 
in addressing the rampant problems plaguing the credit rating industry. 
That is why I intend to introduce an amendment to change the way the 
initial credit ratings are assigned and encourage competition within 
the credit rating industry.
  Currently, Wall Street firms that issue complex securities request 
and purchase ratings from nationally recognized statistical rating 
organizations--or NRSROs. I am sure all of you are familiar with them--
Moody's, Standard & Poor's, and Fitch. What you may not know is that 
there are actually a handful of other credit rating agencies doing the 
same work. But the big three agencies have effectively shut all others 
out of the market. It is easy to see how.
  In the current system, the issuer of the bond pays the credit rating 
agency. So there is an incentive to rate every product that comes 
across your desk as AAA. If you give a risky product a low rating, the 
issuer can just go to one of the other agencies and shop around for a 
better rating. Guess which agency that issuer is going to go back to 
the next time? Of course, the agency that gave them the higher rating. 
Does anyone see a problem? I do.
  Well, the problem is that the entire credit rating structure is 
basically one enormous conflict of interest. Issuers want high ratings, 
and raters want business. The market offers incentives for inflated 
ratings not accurate ratings. These perverse incentives have driven the 
behavior of all participants. Any rating agency looking to enter the 
market with better methods or any rating agency that refuses to inflate 
its ratings will never be able to compete.
  My friend and colleague, Senator Levin, held a hearing not long ago 
in the Permanent Subcommittee on Investigations. His PSI investigative 
team unearthed some very unsavory e-mail exchanges between issuers and 
raters--e-mails which implied that an issuer could obtain a higher 
rating if he paid more money. And money--money--is what drove this 
industry not performance. As an example, the New York Times reported 
Sunday that 93 percent of AAA-rated subprime mortgage-backed securities 
issued in 2006 have since been downgraded to junk status.
  This might be easy to dismiss if these junk bonds simply cost some 
Wall Street speculators a few bucks here and there. But, in fact, these 
junk securities permeated the entire market. These junk securities were 
in older workers' pension funds and working peoples' retirement funds. 
These junk bonds contributed to the loss of $3.4 trillion in retirement 
savings during this crisis.
  To me, it is obvious we need an entirely different model. My 
amendment, which I am introducing with Senators Schumer and Nelson, 
would finally encourage competition and--get this--accuracy, in an 
industry that has little of either. Specifically, my amendment creates 
a credit rating agency board--a self-regulatory organization--tasked 
with developing a system in which the board assigns a rating agency to 
provide a product's initial rating. Requiring an initial rating by an 
agency not of the issuer's choosing will put a check on the accuracy of 
ratings. Simple.
  My amendment leaves flexibility to the board to determine assignment 
process. But the board will be inclined to make the process one that 
incentivizes accuracy because the representatives of the investor 
community will make up a majority of the board--for example, pension 
fund managers and endowment directors; folks who have a vested interest 
in the AAA bonds they have selected actually performing as AAA bonds. 
The board gets to design the assignment process it sees fit. It can be 
random, it can be based on a formula, just as long as the issuer 
doesn't get to choose the rating agency.
  The board will select a subset of qualified credit rating agencies to 
be

[[Page S3083]]

eligible for the assignment pool. The board will be required to monitor 
the performance of the agencies in the pool. If the board so chooses, 
it can reward good performance with more rating assignments. It can 
recognize poor performance with fewer rating assignments. If the rater 
is bad enough, that might even be zero assignments.
  My amendment gives the SEC a year and a half to carefully implement 
this new system with input from the board members. The result will be 
increased competition among the credit raters, generally, and 
incentives to produce accurate ratings, not inflated ratings. The 
amendment does not prohibit an issuer from then seeking a second or a 
third or a fourth rating from an agency of its choice.
  But rating agencies will be disinclined to give inflated ratings to a 
product if the initial rating reflects its true value. Some smaller 
credit rating agencies, which haven't taken part in the inflated 
ratings game, would finally have a chance to compete. An assignment 
mechanism for initial ratings will break up today's credit rating 
oligopoly, promote real competition, and produce more accurate ratings. 
More accurate ratings will decrease risk and create more stability in 
our financial system. And that is what this is all about.
  Now, Wall Street lobbyists may claim this issue is too complex for 
Congress to address, but imagine that your child came home from school 
one day saying their chemistry teacher was offering an A to anyone who 
wanted to skip the final exam and instead pay $100.
  You don't need to know anything about chemistry to understand that 
this system of rewards is harmful. Not only is the teacher making easy 
money, but nobody is holding the student accountable for doing good 
work.
  Now I don't know any teachers that corrupt. But the credit rating 
agencies have demonstrated that they have blindly followed the perverse 
incentives of the current market. Congress should not sit idly by and 
let the credit rating industry continue to expose our economy to great 
risk just because Wall Street insists the problem doesn't have an easy 
solution. Now, my amendment may not fix the entire system, but it will 
provide checks, encourage accuracy, and increase competition.
  And there is no need to take my word for it--the idea in my amendment 
was actually first proposed by several well-respected academics. 
Matthew Richardson, a leading expert and professor of applied financial 
economics at NYU's Stern School of Business, supports this proposal, 
and has been integral in the development of my amendment, and I would 
like to thank him for his assistance.
  Economist Paul Krugman has suggested this model as a step toward 
improvement. And so has economist Dean Baker. Americans for Financial 
Reform, which includes the Nation's most prominent consumer groups, 
supports it.
  I would like to thank my colleagues, Senator Schumer and Senator 
Nelson, for their leadership on this issue and for their expertise in 
helping me craft this amendment. I also thank my colleagues, Senators 
Brown, Whitehouse, and Murray for joining us in cosponsoring it.
  Going forward, I hope that more of my colleagues will join with us in 
taking action to restore integrity to the credit rating industry.
  I yield the floor.
  Ms. MIKULSKI. Mr. President, if there is one thing that we should all 
be able to agree on, it is that the American taxpayer should never 
again have to bail out a Wall Street firm. We need to be fighting for 
Main Street, not Wall Street, and the Boxer amendment is a step in the 
right direction on that path.
  This amendment sends a clear message to Wall Street firms that they 
can no longer take risks with our financial security and then expect 
the taxpayers to be there to prop them up. Wall Street must be held 
accountable. It is time to end to taxpayer bailouts once and for all.
  When I talk to people in Maryland, I hear their frustration and I 
feel their anger. They want to know, why should AIG receive a bailout, 
when nobody is bailing out them from this economic crisis? They wonder, 
who is on their side? Who is going to bail out their stagnant wages? 
Who is going to bail them out when they are trying to pay their 
utilities and put gas in the car? And, seniors wonder who will bail 
them out as they try to make sure they do not lose their income.
  This amendment shows that we heard their concerns and we are on their 
side. It sends a message to Wall Street that their time of running 
around acting like masters of the universe--with irresponsible lending 
practices and risky investments--has come to an end. And, it sends a 
message to American families and small businesses that their government 
is looking out for them. We are here fighting for them--fighting so 
that consumers can be sure that their deposits are safe; fighting so 
that small businesses have access to the credit they need to create and 
retain jobs; and fighting to make sure that taxpayers' money is 
protected.
  We teach our kids at a young age that they will be held responsible 
for their own actions. When they make a mess, they must take 
responsibility and clean it up. We must pass this amendment so that 
corporate America can see that the same lesson applies to them, and to 
show the taxpayers that we are serious about being stewards of their 
money. This amendment makes sure that if a Wall Street firm gets in 
trouble, they will be required by law to clean up their own mess. If a 
company gets in trouble from this point forward, the responsibility 
will be placed where it belongs--on the financial sector. No longer 
will taxpayers be standing by.
  I support the Boxer amendment because I believe it is time to put an 
end to all taxpayer bailouts.
  Mrs. FEINSTEIN. I have filed an amendment to the Wall Street reform 
bill before us that would remove one barrier between the unemployed and 
a job.
  Forty-seven percent of employers use credit reports to screen at 
least some potential hires, according to the Society for Human Resource 
Management. Thirteen percent of employers checked the credit history of 
all hires.
  Unfortunately, many of our country's 15 million unemployed are facing 
more challenges than ever. For instance, some have seen their credit 
drop precipitously as a result of the economic downturn. In some cases, 
their credit history is affecting their ability to find employment.
  My amendment would prohibit employers from using a consumer credit 
report as a condition of employment. It would impact potential hires 
and current workers.
  Put simply, an employer would not be able to hire or fire someone 
based upon their credit history.
  I certainly understand that some jobs require workers to display a 
pattern of financial responsibility. To that end, my amendment would 
exempt those applying for the following:
  Positions at financial institutions, including banks and credit 
unions, that require substantive work with customer accounts and funds; 
jobs that require a national security or Federal Deposit Insurance 
Corporation clearance; State or local government jobs that otherwise 
require a credit report; and, positions otherwise requiring credit 
checks by law.
  This amendment is similar to a bill introduced in the House of 
Representatives by Representative Steve Cohen known as the Equal 
Employment for All Act, H.R. 3149.
  Why is this legislation needed? As of March 2010, 15 million 
Americans continue to struggle with unemployment, and over 2.3 million 
of them live in my State alone.
  It is critical that obstacles to employment be removed for these 
victims of the economic downturn.
  During these difficult times, many unemployed Americans have seen 
their credit scores reduced precipitously for events largely outside of 
their control. These events include bankruptcy, foreclosure, and credit 
card debt.
  Millions of American homeowners have also experienced foreclosure 
over the past 3 years. Through the first 3 months of this year alone, 
216,000 have been filed in California. Last year, more than 1 million 
foreclosures were filed in my State.
  Foreclosures can have a devastating impact on one's credit history. 
Moreover, responsible alternatives to foreclosure, such as a short sale 
or loan modification can also affect a homeowner's credit.
  A short sale can reduce a homeowner's credit score between 200 to 300 
points, according to the Third Way.

[[Page S3084]]

  And in a report prepared by First American CoreLogic, in February 
2010, 35 percent of California homeowners were underwater, or owed more 
on their mortgage than the value of their home. This means that short 
sales, in which a homeowner sells a home for less than they owe, will 
likely continue as an alternative to foreclosure.
  According to the National Bankruptcy Research Center, more than 1.4 
million individuals and businesses filed for bankruptcy in 2009. This 
is a 32-percent increase over the prior year 2008.
  Federal Reserve statistics show that average credit card debt in the 
U.S. per household is over $16,000.
  These are disturbing trends, and display a pattern of difficult 
financial situations facing many Americans.
  Unfortunately, if you have lost your job in this economy, these 
circumstances are often out of your control. But, they should not 
impede your ability to find another job.
  I have received many heartbreaking letters from Californians facing 
these situations. They can't pay off debt because their debt is 
limiting their ability to find work.
  For example, a chemist from San Diego wrote to me about her student 
loans, which have ballooned from $60,000 to $110,000. At the time she 
wrote, she had been unemployed for 15 months.
  But, she feels she cannot find a job in the field she trained for due 
to her poor credit score.
  A former job recruiter from Corona wrote to share her firsthand 
experience with this practice, which prevented her from hiring well-
qualified, experienced candidates. This constituent, herself now 
unemployed and late on her mortgage payment, is worried that her credit 
will now prevent her from finding a new job in the recruiting field.
  These are just two examples of how credit history is posing an 
unnecessary obstacle for the long-term unemployed.
  An April 9, 2010, article in the New York Times highlighted the issue 
that my amendment seeks to address.
  It cited testimony provided by an executive of the credit bureau 
TransUnion before the Oregon legislature. He stated that he was not 
aware of research linking job performance to the contents of a worker's 
credit report.
  Research by Professor Jerry K. Palmer of Eastern Kentucky University 
has also found no correlation between worker performance and the 
strength of their credit report.
  While credit bureaus argue that credit background checks are a 
helpful tool in preventing employee theft and workplace violence, 
little evidence supports that conclusion.
  To be clear, I recognize that in some cases, a credit history is 
important. Mortgage brokers or bank employees working with deposits 
should be able to demonstrate a responsible credit history.
  That is why my bill would exempt these industries from the 
prohibition in my amendment.
  The unemployment situation in California is untenable. It is my goal 
to develop fiscally responsible solutions to help those in need.
  My amendment does just that.
  Workers should not be prevented from a job they are well-qualified 
for, on account of reasons beyond their control.
  If my colleagues have concerns about this legislation, I am happy to 
work with them to improve it.
  I hope this amendment will be adopted and provide assurance to 
workers that their credit will not keep them out of work.
  Mr. President, I have also filed an amendment to the Wall Street 
Reform legislation that would require the Consumer Financial Protection 
Bureau to undertake a study on the availability of credit to the 
unemployed.
  An article in the Los Angeles Times in March 2010 highlighted a 
disturbing new trend in the payday lending industry targeting the 
unemployed. Specifically, payday lenders are providing cash advances to 
individuals using unemployment checks as collateral.
  This is a troubling practice, especially for those surviving solely 
on their unemployment benefits.
  In California, payday loans can carry interest rates of up to 459 
percent.
  In light of this, I believe more must be done to ensure reasonable 
and fair credit terms are available to the unemployed.
  This Wall Street Reform bill creates a research unit within the 
Bureau of Consumer Financial Protection housed at the Federal Reserve.
  My amendment would require this unit to conduct a study on the 
following:
  The effects of payday lending on the unemployed; the potential 
impacts, both positive and negative, of providing payday loans to 
individuals using their unemployment checks as collateral; alternative 
credit options for the unemployed, including the accessibility and 
costs associated with them; and policy recommendations that the Bureau 
of Consumer Financial Protection could implement to prevent 
unscrupulous lending practices.
  This report would be completed within 1-year of the bill's enactment 
and be made available to the public.
  To be clear, my amendment would not provide the Bureau of Consumer 
Financial Protection with any new authorities, nor require it to carry 
out the study's recommendations. It is intended as a guide for the 
Bureau as it works on rules to protect consumers, notably the 
unemployed, from deceptive and predatory lending practices.
  In California, those individuals who turn to cash advances from 
payday lenders can expect to pay roughly $15 in fees for every $100 
they borrow.
  This interest rate, when expressed in terms of an annual percentage 
rate, amounts to 459 percent. While this is the maximum rate that may 
be charged for a payday loan in California, some States, such as 
Delaware and Wisconsin, have no interest rate limit at all.
  The maximum payday loan that can be extended to a borrower at any one 
time in California is $300.
  So in practical terms, a borrower wishing to take out the maximum 
$300 payday loan will pay $45 in fees just to borrow $255.
  Often, borrowers must take out additional payday loans in order to 
pay off their current debts. In 2006, approximately 450,000 borrowers 
in California made more than six back-to-back payday loans.
  Such reliance on this form of credit can lead some working families 
to fall into a harmful spiral of debt.
  Over 2.3 million people in California are out work and roughly 
100,000 of them have reached the 99-week maximum for receiving 
unemployment benefits.
  The average unemployed Californian receives roughly $300 a week in 
benefits, which is also the State's limit for a payday loan.
  Typically, payday loans are offered as advances on paychecks and 
should be used in cases of emergency. Such cases include falling short 
on bills or rent during a difficult month.
  However, unemployment, especially in this economy, can be long-term. 
Payday loans may not offer a sustainable solution.
  Unemployment is one of the underlying factors contributing to the 
rise in foreclosures throughout our country. In California alone, over 
215,000 foreclosures were filed in just the first 3 months of this 
year. In tough months, those facing the dual threat of unemployment and 
foreclosure need to access credit more than ever.
  And now, payday lenders have made it easier for the unemployed to 
fall into a cycle of debt.
  By offering cash advances on their primary source of income, Federal 
or State unemployment benefit checks, payday lenders are specifically 
targeting this vulnerable group of borrowers.
  Now is not the time to be doing this.
  Such high loan fees are a burden for those surviving solely on their 
unemployment benefits.
  So why is this study important?
  Studies and reports on the effects of payday lending are already 
available, some of which consider its benefits and others its burden to 
borrowers. But the study required by my amendment should offer much 
more than just the pros and cons of payday lending.
  I hope this study will determine if payday lending practices, 
including cash advances on unemployment checks, are useful credit 
options for the unemployed.
  If they provide a benefit, I hope the study's recommendations will 
make these loans more fair and reasonable to borrowers.
  If not, the study should review and recommend alternative credit 
options for the unemployed.

[[Page S3085]]

  As I mentioned, we all agree this is not the time to be exploiting 
the unemployed. Many of the unemployed are experiencing some desperate 
financial straits right now.
  I believe policymakers should be provided with clear options to help 
improve the financial situation for them.
  Mr. WYDEN. Mr. President, along with Senator Grassley, I am 
introducing as an amendment to the financial reform bill, S. 3217, our 
bipartisan resolution to amend Senate rules to eliminate secret holds.
  The legislation now before the Senate is intended to bring greater 
openness and accountability to Wall Street and other financial 
institutions. At the same time the Senate is reforming how financial 
markets do business, there is no better time for the Senate to reform 
the process for how the Senate conducts its own business.
  Under current Senate rules, it is still possible for Senators to use 
secret holds to block legislation or nominations from coming to the 
floor without having to give any reason. There is no openness or 
accountability to anyone when a Senator places a secret hold.
  The Senate should not have a double standard that requires greater 
openness and accountability on Wall Street while tolerating a practice 
that keeps both the public and colleagues in the dark with no 
accountability to anyone.
  That is why Senator Grassley and I are offering our bipartisan 
proposal to end the practice of secret Senate holds as an amendment to 
the financial reform bill. Because our amendment would eliminate secret 
holds by amending Senate rules, I hereby give notice of our intent to 
amend the Senate rules by filing the Wyden-Grassley amendment to S. 
3217.
  I urge colleagues to support this bipartisan reform of Senate rules.
  The PRESIDING OFFICER. The Senator from Delaware is recognized.


                    IN PRAISE OF KENNETH CONCEPCION

  Mr. KAUFMAN. Mr. President, I rise once again to recognize the 
service of one of America's Great Federal Employees.
  So many of our outstanding Federal employees spend their careers in 
our uniformed services, standing at the ready to guard our liberties 
and protect lives. One of these services has a unique mission that 
combines coastal defense, maritime search and rescue, and environmental 
protection.
  I am speaking about the U.S. Coast Guard.
  The 42,000 men and women who serve in the Coast Guard embody the 
highest principles of our nation. Their dual responsibilities in both 
civil and military matters require Guardians to demonstrate 
flexibility, patience, and resolve.
  This year is 95th anniversary of the Coast Guard's creation from the 
old Revenue Cutter Service. That earlier service evolved from our 
nation's first maritime force in the infant years of our republic.
  The Federal employee I have selected to honor this week served as 
Chief of U.S. Flag Deepdraft Vessels and Plan Review for the Coast 
Guard at the time of the September 11 attacks.
  Kenneth Concepcion was based on Staten Island, within view of the 
twin towers of the World Trade Center. On that fateful morning, Kenneth 
was the first Coast Guard employee on the scene, arriving at New York's 
Pier Eleven just 20 minutes after the collapse of the second tower.
  What he found there was disorder and masses of frightened people with 
no way to get home. Kenneth took charge and recruited NYPD officers and 
Transportation Department officials to help him organize the crowds 
into lines based on intended destination. He assumed control of all the 
vessels at the pier and prioritized the safe evacuation of first-
responders who had been injured in the attacks.
  Thanks to Kenneth's leadership and steady hand, the Coast Guard was 
able to evacuate 70,000 people from Lower Manhattan that morning to 
points across the Hudson River. In addition, he made sure that 
commercial ships continued to have safe passage in and out of New York 
Harbor, keeping some of America's vital ports open for business.
  But Kenneth's heroism doesn't end there. Two months after the 
attacks, American Airlines flight 587 crashed tragically near JFK 
airport in Queens. Kenneth served as the on-scene coordinator for the 
maritime recovery of debris. Under his leadership, and as a result of 
his ability to get different agencies to work well together, all 
significant debris from the crash was recovered in less than 2 days.
  Our Coast Guard members, like Kenneth Concepcion, stand ever at the 
ready to keep our maritime interests safe and to serve as our Nation's 
first line of search and rescue when disaster strikes. We rely on them 
to protect us, and I hope my colleagues will join me in thanking 
Kenneth and all members of the Coast Guard for their service to our 
Nation.
  They are all truly great Federal employees.


                   REMEMBERING KENNETH EDWARD CARFINE

  Before I yield the floor, I want to note with sadness the passing of 
one of my previous honorees.
  On October 19 of last year, I stood at this desk and spoke about an 
outstanding employee from the Department of the Treasury, Kenneth 
Edward Carfine.
  He served in the Treasury Department since 1973 and worked over the 
last 37 years in banking, cash management, payments, check claims, and 
government-wide accounting.
  Recently, he had served under the Fiscal Assistant Secretary as an 
adviser to senior department officials. Ken's intellect and diligence 
had been critical to the Treasury's economic recovery efforts. He 
helped shape how the Treasury deals with debt financing, cash 
management, trust fund administration, and a range of services.
  One of his lasting legacies will be the ability to use a national 
debit card to receive Social Security benefits--a program he helped 
implement.
  Kenneth Edward Carfine lost his battle to cancer last week. He is 
survived by his wife of over 40 years, Deborah, as well as by his two 
sons, Ken Jr. and Greg, their families, and his two granddaughters.
  Ken worked at the Treasury Department for 37 years, and I know there 
literally must be hundreds of Treasury employees, past and present, who 
are grieving deeply today for this incredibly fine person and dedicated 
public servant. His passing is a great loss for all of them, the 
Department and for the nation he served so ably.
  My thoughts are with his family, friends and colleagues at the 
Treasury Department, and I hope my Senate colleagues will join me in 
offering our condolences.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The clerk proceeded to call the roll.
  Mr. INHOFE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. INHOFE. Mr. President, with all of the trauma that is going on 
right now with the oilspill and all of the other problems that are out 
there and, of course, the bill under consideration, I ask unanimous 
consent that I be recognized as in morning business for 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                          EPA Lead Paint Rules

  Mr. INHOFE. On April 22, a new EPA lead-based paint rule went into 
effect that has caused all kinds of serious problems, not just in my 
State of Oklahoma but throughout the country. My office has received an 
incredible number of calls and e-mails from constituents, from 
homeowners, from contractors, to landlords, to plumbers, all trying to 
get information about a rule that, in most cases, they had never heard 
of until last week. I think everyone in this Chamber stands strongly 
behind the intent of the rule, which is to protect women who might be 
pregnant, children, and others from harmful effects of lead. With over 
20 kids and grandkids, I understand that. I appreciate the importance 
of the rule and the potential it has to future decrease lead exposure. 
But, as even the Obama administration admits, implementation of the 
rule has been painfully slow and seriously flawed.
  Specifically, the rule requires that renovations to homes built 
before 1978 that disturb more than 6 square feet of surface area have 
to be supervised by a certified renovator and conducted by a certified 
renovation firm. In order to be certified, contractors have to submit 
an application with a fee to the

[[Page S3086]]

EPA and complete a training course for instruction on lead-safe 
workplaces. Now, that sounds simple enough. There is one serious 
problem; that is, there aren't any instructors around to certify these 
people.
  What is worse than that, those who violate the rule; that is, they go 
and they try to do something to their own home, if it was a home that 
was built prior to 1978, if they violate this, they can be fined up to 
$37,500 a day. Just imagine how hysterical people are, not just in 
Oklahoma but throughout the country.
  There are not nearly enough contractors who have been certified, and 
that is because there are far too few people certified to teach the 
classes.
  That is why today, with 23 cosponsors, I am introducing legislation, 
S. 3296, to remedy this implementation travesty. This bill provides 
additional time for contractors and others to get certified so they can 
become qualified to go ahead and do these things and not be subjected 
to fines. It actually extends the time for a period of 1 year or until 
the EPA can have enough people to certify people around the country so 
that this can be done.
  The need for the bill is on display in Oklahoma, where, until 
yesterday, no one was teaching classes publicly. Keep in mind, no one 
is teaching these classes. Yet, if they try to do any renovation, they 
can be fined up to $37,500 a day.
  I am pleased to hear that Metro Tech of Oklahoma City has finally 
received its certification from the EPA and will begin teaching classes 
on May 13. I should note that because the demand is so high, they 
anticipate having full classes until July.
  Because access to courses is so limited, renovators and contractors 
cannot be trained and they cannot pass along the benefits of their 
lead-safe work practices to homeowners and help protect pregnant women 
and children from further lead exposure. Without enough certified 
renovators, we will simply not get the benefits this rule can provide.
  Let me give you a couple of statistics to help illustrate the 
problem. As of April 22--that was implementation day--the EPA had only 
accredited 204 training providers. Those providers have conducted more 
than 6,900 courses. They trained an estimated 160,000 people in the 
construction and remodeling industries to use lead-safe work practices. 
This is far too few people to ensure everyone who works on a pre-1978 
home, including roofers, plumbers, painters, general contractors, or 
just individual homeowners, can have access to training to get 
certification they have to have.
  Let me share with you a few examples from Oklahoma.
  Paul Kane, executive vice president and CEO of the Home Builders 
Association of Greater Tulsa, was in my office with a number of 
Oklahoma homebuilders the day before the rule was implemented. That 
would have been April 21. During our meeting, I was pleased that Cass 
Sunstein, head of the Obama administration's Office of Information and 
Regulatory Affairs, was available to hear from my constituents about 
their concerns with the rule.
  As the Tulsa World reported:

       Kane explained the difficulty local contractors are having 
     in getting certified, adding that only one trainer in the 
     entire State of Oklahoma has been certified, and that that 
     person has been certified only a few weeks. Moreover, he told 
     Sunstein, that person is not offering training to the public 
     but is limiting his classes to his own organization.

  So we have one guy who can teach these classes in the State of 
Oklahoma. Yet there are literally thousands out there who are out of 
work until such time as they can go back and start working again.
  I really appreciate the fact that Mr. Sunstein was listening to the 
concerns of my Oklahoma constituents. He told us he recognized that the 
implementation of the rule was causing economic hardship. He raised the 
possibility of providing a 60-day delay to help sort out of some of the 
implementation problems. In the end, however, this option was not 
workable, and we simply ran out of options to stop the rule from going 
into effect. Now, that was the day before the rule became finalized. 
But we certainly appreciate his attention, looking into it, and we are 
going to try to work with his staff.
  My staff also spoke with a property owner who rents homes to low-
income residents in Tulsa. He has been unable to get contractors out to 
his properties to replace carpet or even paint because they do not have 
EPA certification, which means they can get fined by the agency if they 
work without it. So it is no surprise that my constituent is concerned 
that his housing units could fall into disrepair and that people would 
lose their access to affordable housing--not not only losing access to 
affordable housing but exposing people to lead paint.

  Additionally, we heard from a painter in Oklahoma City who has 
experienced delays in getting trained for the simple reason that his 
trainer has not yet been certified by the EPA. This issue reaches far 
beyond Oklahoma. There are a number of Senators, Republicans and 
Democrats, who have expressed concerns about the implementation of the 
rule. Several Members weighed in before the rule went into effect. 
Senators Byron Dorgan and Kent Conrad of North Dakota and a bipartisan 
group of Members of the House of Representatives sent a letter 
outlining these concerns to the EPA.
  During a recent EPW subcommittee hearing, Senator Amy Klobuchar urged 
the EPA to come up with a solution that will ensure contractors have 
the opportunity to come into compliance with this rule. We are talking 
about everybody, Members of the House, the Senate, Democrats, 
Republicans. They are all affected the same.
  The issue has also been raised before the Senate Energy and Natural 
Resources Committee. In testimony before the committee on March 11, Bob 
Hanbury, speaking on behalf of the National Association of Home 
Builders, raised concerns about potential conflicts between Homestar 
and the lead rule. Members may recall that Homestar is one of President 
Obama's signature issues. It is a program that helps homeowners 
increase the energy efficiency of their homes. But Mr. Hanbury believes 
the lead rule won't allow the Star program to move forward.
  As we can see, there were plenty of concerns raised about the lead 
rule implementation before it went into effect. Nevertheless, EPA 
repeatedly said, in the 2-year period leading up to the rule, that it 
could meet these implementation challenges. As the ranking member of 
the committee with jurisdiction over the EPA, I wrote to the EPA two 
times that I believed EPA appeared to be far from prepared. In both 
cases, EPA said they were ready. In a June 3, 2009 letter responding to 
my concerns, the EPA wrote:

       I agree that both EPA and the regulated community have a 
     great deal of preparation in front of us as we approach next 
     April's deadline. I am confident, however, that the ten 
     months between now and April of 2010 will allow us to meet 
     these deadlines.

  That was a year ago. Of course, it didn't happen.
  In a letter dated December 1, 2009, EPA wrote me explaining:

       We are confident there will be enough training providers to 
     meet the demand. EPA does not plan to revise the April 2010 
     effective date [for the] rule.

  The EPA also stated in the letter:

       Currently, the capacity for training is in excess of the 
     demand as several training courses have been canceled for 
     lack of attendance.

  What they are saying is they have been providing all these people, 
but it is just flat not true. In light of this situation, what can 
lawmakers do to help provide guidance for constituents back home?
  First and foremost, we have to get out the word. I have raised the 
issue both in my travel around Oklahoma and on Oklahoma radio. Last 
week I sent out a ``Dear Colleague'' letter to all Senators with 
information to help them navigate the confusion associated with the 
rule's implementation. Included are Web links to EPA's Web site which 
take constituents to important information about the lead rule as well 
as the rule itself. It also provides a link to the EPA and the Ad 
Council's new Web site, www. Leadfreekids.org, which is a consumer 
friendly Web page with information on protecting yourself from lead. I 
wish also to commend the coverage of the rule by the Tulsa World. The 
paper's reporting has informed the public and even resulted in more 
classes being taught throughout Oklahoma.
  Further, along with Senator Coburn and some 23 of my fellow Senators, 
I

[[Page S3087]]

have introduced S. 3296 to delay the implementation of the rule by 
several months, giving contractors, trainers, and the EPA breathing 
room to get more people through classes. The EPA has said the people 
have had a year to get ready for this rule. However, the first training 
class wasn't even held until June 16, 2009. Renovation firms could not 
apply for certification until October of last year. Our bill would 
delay the implementation and give people time to comply with this.
  This is in a way bureaucracy at its worst. We say we are going to 
demand that no one is going to be able to do something to their very 
own home if it disturbs as much as 6 square feet. And if they do, they 
could be fined $37,500 a day. Imagine how frightening that is. Yet they 
don't have enough instructors to teach people to be certificated. This 
is one we have to address.
  I think the only thing we can do right now is to get an extension. 
That is what I am doing with this Senate bill. I certainly call on my 
colleagues, Democrats and Republicans. The problem I am pointing out in 
Oklahoma is not just in Oklahoma; it is in all States. We will have to 
address this thing, get something done, or we have a lot of risk out 
there. We have children and pregnant women who could be at risk of 
exposure to lead and lead paint. Of course, one of the things that is 
almost as bad is the fact that we have literally, only in Oklahoma, 
thousands of people out of work because they cannot do renovation. Most 
of the homes they deal with are pre-1978. It is something that will 
have to be dealt with. I certainly encourage others to join the cause 
to relieve us of this problem. The rule will affect more than 70 
million homes. The implementation of this rule to date has been a 
disaster. Congress will have to ensure that enough people are trained 
and certified. That way, the rule can do what it is supposed to do--
protect the health of young people and pregnant women.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, I am forever amazed at my friends on the 
other side of the aisle. They have clearly established themselves as 
the party of no. America knows that. But what they have done on this 
bill dealing with Wall Street reform is hard to comprehend. We started 
on this bill a week before last. We filed cloture on it. On Monday, we 
had a cloture vote last week; Tuesday, a cloture vote last week; 
Wednesday, a cloture vote last week. Finally, they said: OK, we don't 
need any more cloture votes. Let's start legislating on the bill.
  Tomorrow is Wednesday. It has been a week. Nothing has happened. Why? 
Because the party of no says no to everything we try. Listen to this 
one. This is something. They will not let us vote on amendments the 
Republicans have offered and amendments we have agreed to they would 
not let us vote on.

  I came to the floor of the Senate today to let everyone know the 
frustration the American people must feel and the frustration many 
people feel in the Senate as a result of the party of no continually 
doing what they are doing. I want to make sure everyone understands the 
facts in more detail than what I have given.
  On Thursday, April 15, Wall Street reform legislation was introduced 
and placed on the Legislative Calendar. Thursday, April 22, I sought 
consent to proceed to that bill. The Republicans objected, and I was 
forced to file cloture. I don't want to get into a lot of the 
procedural problems we have, but remember, the Republicans have caused 
us to file cloture almost 100 times this Congress. So everyone 
understands, it is more than just a word--``filibustering.'' That is 
what they have done almost 100 times.
  I moved to the bill. They would not let me--I had taken it off the 
calendar and tried to bring it to the floor. They said no. I had to 
file a motion signed by 17 or 18 Senators. It took 2 days for that to 
ripen before we could vote on it. Once we voted on it and we got 
cloture, they got another 30 hours. So in this instance, they had a new 
game.
  They said: Go ahead and move to the bill. We are not going to use the 
30 hours. We are going to use a week. We have done nothing for a week 
waiting for this phantom amendment they think is floating around here 
someplace, this so-called Shelby amendment.
  Monday, April 26, when my cloture motion had ripened, we failed to 
get cloture 57 to 41. We did some other things--moved to reconsider, 
some parliamentary maneuvers so we could get this bill moving along. 
Tuesday, April 27, cloture failed, 57 to 41, the same vote as the day 
before. Wednesday, April 28, cloture vote failed, 56 to 42. One of 
their Members, I guess, was gone or maybe somebody switched a vote. I 
really don't know. Remember, each time I voted on the prevailing side. 
I had to change my vote so I could move to reconsider.
  So on April 28, after the cloture vote failed, they said: OK, we give 
up. You can start legislating for the American people. But that wasn't 
being fair and square with the American people. They had no intention 
of doing that. They are stalling on everything we do. We know they have 
said publicly they want health care to be Obama's Waterloo.
  So just to be very clear, we were ready to start debate on this last 
Monday--actually, frankly, the Thursday before that. Even though we 
were able to overcome the objections to begin this debate, we now find 
many of the same parties are preventing us from making any progress on 
this important legislation.
  One Senator I saw quoted in the newspaper last week said I had 
stopped--I had told that person I was going to move to a certain bill--
a Republican Senator--and that Senator said: He hasn't done that. I 
wrote that person a letter today going over the long list of 
filibusters to prevent us from moving to that and many other pieces of 
legislation.
  We haven't had a single vote on this legislation, not a single vote. 
People are waiting around on both sides, I am told, to offer 
amendments. We can't get votes on even the amendments we have agreed to 
and one Senator Snowe has offered.
  We have to finish this legislation. We have provisions that are 
expiring at the end of this month that are extremely important. A jobs 
bill--the expiring provisions and all the stuff we have put in that 
bill that we passed once before are extremely important to our country 
and will create lots and lots of jobs. But we can't get to that because 
of what is going on here. Food safety--we can't get to that. Why? 
Because the Republicans are stopping us from moving to anything.
  I had a conference call just from the sparsely populated State of 
Nevada with a few of the people who have suffered terrible injuries as 
a result of eating contaminated food.
  One little girl has missed a year of school. Her growth is stunted. 
People have spent--one woman I talked to--or I talked to her husband 
because they were getting first aid. They went home. She had been in 
the hospital for months and months from eating contaminated food. We 
are trying to do something about that. We can't do that. It is a 
bipartisan bill. It is nothing the Democrats are trying to jam down the 
throats of the Republicans. They won't let us move to anything.
  Scores of nominations. The House has passed more than 300 measures 
that are stuck over here because the Republicans won't let us move to 
them, measures in years passed that would pass by unanimous consent.
  I hope everyone understands. I know my caucus understands what is 
going on, but I hope the Republicans will accept reality and understand 
why we are not going to have all of the amendments they want to offer 
be able to be offered. We are not going to be on the bill that long. We 
can't be. We are trying to do something with this legislation that will 
change America forever for the better. What has happened as a result of 
Wall Street doing business not in the shadows but in the dark of night, 
the blackest dark you could ever see is where they have been doing 
their work, causing people in Colorado, in Nevada, and all over this 
country to suffer irreparable damage. People have lost their homes, 
their jobs as a result of what went on in Wall Street, the shady deals 
that are worse than any illegal

[[Page S3088]]

gambling game that was ever conducted in America. That is what they 
were doing up there: betting our money--our money. If they win, they 
keep our money. If they lose, they want more of our money. We are 
trying to stop that. That is what this legislation is all about. This 
is a good bill.
  Obviously, from the shenanigans the Republicans have performed on 
this legislation, they don't want us to do anything about Wall Street 
reform; otherwise, they wouldn't have done all of these efforts to stop 
us from moving to the bill. We want to hold Wall Street accountable. We 
want to end taxpayer bailouts. We want to guarantee the taxpayers will 
never again be forced to bail out reckless Wall Street. We want to end 
too big to fail, restrict new capital and leverage requirements to 
prevent firms from becoming too big to fail.
  As I said before, and I say again: We want to bring sunlight and 
transparency to these shadowy markets where Wall Street executives make 
gambles that threaten our entire economy, the same laws that are in 
effect basically today that were in effect when Wall Street crashed and 
caused us all this harm. We are trying to change that so it can't 
happen again. We want to rein in these big shots who have unlimited 
control of money and get these huge bonuses--not bonuses of $50,000, 
which is huge in most people's lives, but they get bonuses in the 
hundreds of millions of dollars.
  We want to protect consumers. We want to put a new cop on the beat, a 
consumer protection entity that will look at all of these different 
financial shenanigans that are going on. We want to make sure people 
who get something in the mail from--however they get it. They take them 
out and they look at it, they can't understand it. We want it in plain, 
simple English so the American people can understand what they are 
being asked to sign. We want to protect consumers from these hidden 
fees, abusive terms, and deceptive practices that are running rampant 
in America.
  So despite the party of no saying no again and again, we are going to 
be patient and do our best to work through this. Chairman Dodd is 
working with, it seems, this never-ending amendment the ranking member 
wants. It has been weeks and weeks. Remember, there have been 
negotiations going on in this matter for months--not weeks, not days--
months. I guess the Republicans are saying, until that amendment comes, 
there is not going to be anything else happening on this bill. That is 
the decision they have made. They won't even let us set amendments 
aside and move to amendments that are agreed upon.
  There is only so much I can do--we can do--in the face of determined 
obstructionism that is so clearly the brand the Republicans have now.
  I yield the floor, Mr. President.
  The PRESIDING OFFICER. The majority leader.

                          ____________________