[Congressional Record Volume 156, Number 66 (Wednesday, May 5, 2010)]
[Senate]
[Pages S3121-S3144]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           RESTORING AMERICAN FINANCIAL STABILITY ACT OF 2010

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will resume consideration of S. 3217, which the clerk will 
report.
  The assistant legislative clerk read as follows:

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

  Pending:

       Reid (for Dodd/Lincoln) amendment No. 3739, in the nature 
     of a substitute.
       Reid (for Boxer) amendment No. 3737 (to amendment No. 
     3739), to prohibit taxpayers from ever having to bail out the 
     financial sector.
       Snowe/Shaheen amendment No. 3755 (to amendment No. 3739), 
     to strike section 1071.
       Snowe amendment No. 3757 (to amendment No. 3739), to 
     provide for consideration of seasonal income in mortgage 
     loans.

  Mr. DODD. Mr. President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  The ACTING PRESIDENT pro tempore. The Senator from Georgia.
  Mr. CHAMBLISS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. CHAMBLISS. Mr. President, what is the current status of the 
Senate?
  The ACTING PRESIDENT pro tempore. The pending business is S. 3217.
  Mr. CHAMBLISS. Mr. President, I ask unanimous consent to be 
recognized for up to 10 minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. CHAMBLISS. Mr. President, I come to the Senate floor this morning 
to talk about the current pending business before this body. This is an 
issue which obviously raised its ugly head a couple of years ago with 
the financial meltdown that occurred in this country, and I think all 
of us in this body agree it is imperative the Senate take action to try 
to make sure what happened to the financial industry in America never 
has the opportunity to happen again. I commend Senator Dodd and Senator 
Shelby for their work on this bill. We have had our disagreements. Yet 
we have had significant agreement on some areas.
  We are now trying to take the base bill and make it a bill that all 
of us in this body, hopefully, will wind up being able to support 
because we improve the bill to the point where it addresses the real 
cause of the problem that arose during 2007, 2008, and on into 2009 and 
2010.
  There are some provisions in the bill that I have particular 
objection to, and there are some things that are not in the bill that I 
think should be in the bill. For example, one of the major causes of 
the problem--and I think it goes without saying--is the fact that the 
GSEs, Fannie Mae and Freddie Mac, have been authorized over the years 
to purchase mortgages from individuals who simply could not make their 
payments, and those mortgages have been bundled together and sold on 
the market, which has been one of the root causes of the problem. I am 
not by myself in thinking that. There are other individuals but, more 
important, people who know a lot more about the root cause of the 
problem who think that. Everybody in this body agrees that is a major 
issue that has to be addressed in any overall financial reform. To 
leave any reference to the GSEs, Freddie Mac and Fannie Mae, out of any 
additional regulation I think is a mistake. There are going to be 
amendments with respect to that, and I look forward to that debate.
  Another issue is, there are no mortgage standards that are 
specifically set forth in the underlying bill. I can remember very well 
going in and buying my first house, making an application for a 
mortgage. I was as nervous as I could be. Even though my payment was 
going to be fairly minimal to the amount of money I was making, I had 
to pay 20 percent down, and it took me a couple of weeks to be approved 
by individuals in my hometown whom I knew very well. At the end of the 
day, they just wanted to make sure I was going to be able to pay that 
loan back. It is not that we need to go all the way in that direction 
but certainly we need standards in place that will ensure that people 
who are buying houses can afford to make the mortgage payments for 
which they are making application.
  With respect to the Consumer Financial Protection Act, it appears 
that in the underlying bill, there is an umbrella that is cast out that 
is going to require the inclusion of more nonproblem areas of the 
consumer finance industry than are, in any way, potentially a part of 
any future financial meltdown.
  I hope as we debate these amendments--and I know we will have a 
spirited debate on them--we can come to some agreement as to what is 
reasonable. Let's do what we need to do to provide our regulatory 
agency also with the additional oversight they need to make sure we 
give them the tools not to allow the situation that occurred in 2007, 
2008, and 2009 to recur but that we don't go too far to where we 
overreach and exercise more control on the part of the regulators than 
what is absolutely necessary.
  I wish to speak for just a minute about the derivatives section and 
some amendments we are going to have on that particular title. The 
Agriculture Committee has jurisdiction over swaps and derivatives by 
virtue of the fact that we have jurisdiction over the Commodity Futures 
Trading Commission, which in turn has jurisdiction over swaps and 
derivatives. There are some swaps and derivatives that are secured by 
securities themselves, and those securities--being regulated by

[[Page S3122]]

the SEC--give the SEC some jurisdiction here. That has been part of the 
discussion and will continue to be as we go through the debate.
  There are a couple of things I particularly wish to address which I 
think are faulty in the base bill and need to be corrected as we go 
through it. We are going to have a substitute amendment for the 
derivatives title that will do several things that are of primary 
importance to the industry that, today, is very unregulated, which will 
bring all the derivatives trades out of the shadows and into a totally 
transparent matter and make those trades available to the regulators so 
they can look not only at the trades themselves, to make sure entities 
that are entering into those trades are the right kind of entities that 
ought to be trading and that they are not creating systemically risky 
industries that will have the potential to create situations similar to 
what we saw in 2007 and 2008 but also that the agencies--the 
regulators--will have the ability to call into play additional margin 
requirements or other tools that they will have to ensure that those 
entities that are engaging in these practices don't ever reach that 
point of being systemically risky.
  There are some specific provisions we need to look at. One of those 
is an expansion of what we call the end user provision. An end user is 
an individual--an entity, whether it is a manufacturing company or it 
could be an individual but, for the most part, it is a financial 
entity, usually a manufacturer of some sort that doesn't engage in the 
finance end of the economy of our country but does seek to hedge its 
own particular financial issues in the more productive, more 
conventional financial industry itself. For example, manufacturers such 
as John Deere or Caterpillar or Ford Motor Company or, for that matter, 
any manufacturer across the country that seeks to have stability in the 
marketplace with respect to interest rates because they don't look out 
90 days or 120 days, they look at years into the marketplace to ensure 
that there is stability from an interest rate standpoint so they know 
how to purchase items, know how to purchase what they need to make 
their widgets or whatever it may be. Those manufacturers engage in the 
purchase of derivatives by hedging the interest rate that they are 
going to pay. They also hedge the purchase of metals. Ford Motor 
Company, for example, may hedge the purchase of steel in the steel 
market, so they can ensure themselves of stability in that market.
  These are the types of derivatives we are going to be talking about 
and that we need to make sure--because they were not part of the 
problem that caused the financial meltdown. But if we are not careful, 
they are going to be overregulated to the point where the cost of an 
automobile will be increased, and that is an unintended consequence of 
this bill, I know. The cost of a John Deere tractor to one of my 
farmers will be increased. Again, that is an unintended consequence.
  I wish to take a minute to read a portion of an unsolicited letter I 
got from a fairly new bank in Atlanta, which is a community bank that 
began in 2007. According to the chairman of the board, this bank:

       . . . has built an exceptionally strong balance sheet with 
     superior asset quality, solid and stable deposit funding, and 
     robust capital levels. At quarter end, our equity to assets 
     ratio was 14.39 percent.

  He also wrote:

       The Bank received regulatory approval to offer and has been 
     offering interest rate derivatives to our middle market and 
     commercial real estate clients who are concerned about the 
     effects of rising interest rates on their businesses. This 
     affords our clients an opportunity to fix interest rates in 
     what would otherwise be a floating rate environment which 
     could work against them. The Bank will not take interest rate 
     risk on these derivative contracts but instead will hedge all 
     trades with one of our correspondent bank counterparties. In 
     other words, the Bank will operate a matched loan-level 
     hedging program. The Bank does not otherwise engage in any 
     derivatives activities.
       There are three key problems from our perspective with the 
     regulation as drafted by the Senate Agriculture Committee 
     [which is part of the base bill that we are debating now]:
       1. The Bank would likely be considered a swap dealer (under 
     section 50(A)(iii) of the proposed regulation) and would have 
     to spin off or terminate its swap activity.
       2. There are no practical end user exemptions for our 
     clients, who would be subject to posting margin against their 
     trades with a clearinghouse.
       3. All swap parties have to be an eligible swap 
     participant, so a real estate single project partnership 
     would not qualify.
       It makes no sense that community and regional banks that 
     run matched loan-level hedging programs should be subject to 
     the swap dealer provisions, as such programs are fully hedged 
     and are not taking undue risk.

  The letter goes on to say they hope that as we go through this 
debate, we can fix these unintended practical issues or consequences 
that provide practical issues in the day-to-day operation of commercial 
and community banks that are not on Wall Street but are in Atlanta and 
in Moultrie or other communities around my State and in every other 
community in America.
  Just because a bank is big does not mean that bank is risky. We need 
to remember, as we think about this, that our regulators need to have 
the right kinds of tools to look at every single trade that comes up. 
That is why it is important and why we agree on both sides of the aisle 
that there needs to be 100 percent transparency in these markets. We 
are going to provide for that in our substitute.

  There needs to be a fixing of the definition in the underlying bill 
of what is a major swap participant. There again, that goes to the 
issue of whether you are a big bank, you are automatically systemically 
risky, which is not the case, but you are automatically covered by this 
provision. Should Wall Street be covered? Yes. Will they be covered in 
the base bill? Yes. Will they be covered in our amendment? Yes.
  Every swap dealer on Wall Street needs to have not just 100 percent 
transparency but all their transactions with other financial 
institutions go through a clearinghouse. That is done in the base bill. 
That is also provided for in our amendment. We wish to make sure these 
end users who don't deal in these swaps on a daily basis in the kind of 
volume the banks do are not thrown into a category of all of a sudden 
having to pay huge fees and costs added to the cost of doing business. 
At the end of the day, we know who will pay for that: we consumers who 
buy the automobiles and the widgets or whatever it may be.
  Lastly, I wish to talk about the provision in the bill that 
requires--it is section 106, the 716 provision. What this provision 
does is require all swaps dealers and financial institutions to be 
physically moved out of the financial institution and kind of operate 
on its own. Here is the practical effect of what that will do. Any Wall 
Street bank that is a dealer in swaps and derivatives today--and every 
one of them are--will simply take the swaps desk and move it across the 
street. Under the base bill, they are going to be required to raise 
huge amounts of capital for that swaps dealer desk. There is no reason 
for that to happen. If they are going to raise capital, it ought to be 
in the bank, where they can utilize it and loan that money out to 
customers.
  The other truly unintended consequence of moving the swaps desk out 
is the fact that the financial institution itself--again, major banks 
will be included in this--those individual banks are not going to be 
able to access the discount window at the Fed because they are all of a 
sudden not going to be able to borrow money from any Federal entity 
under the language that is in the underlying bill. That doesn't make 
sense. The reason it doesn't make sense is that all these swaps and 
derivatives transactions--whether they are interest rates, metals or 
whatever the transaction may be--have to be cleared every day. The bank 
needs a huge amount of cash or the swap dealer needs a huge amount of 
cash in order to clear those trades.
  If they do not have access to the Fed discount window, then they are 
simply not going to be able to access the amount of cash they need to 
clear these transactions. The reason they need that cash is to ensure 
the parties to that transaction are going to, in fact, be able to have 
the assurance that the other party to the transaction is going to be 
able to live up to its rights and obligations. If they do not have 
access to the Fed discount window, then they are not going to be able 
to access that cash they are going to need to make sure these 
transactions are, in fact, cashed out at the end of every single day.
  We are going to have one amendment that will be a substitute, and 
then we

[[Page S3123]]

will have a series of additional amendments that will be more in the 
way of rifle shots to address the specific issues I have talked about.
  I talked with the chairman of the Banking Committee about these over 
a period of time. Obviously, I have talked with my friend Senator 
Lincoln about this. As we go through this debate, I want to make sure 
that at the end of the day, we do exactly what all of us want to do and 
certainly what the chairman and Senator Shelby set out to do from the 
start, which is to protect consumers, to protect people who lost a lot 
of money in the market because of transactions of greed that took place 
on Wall Street. We can do that in a bipartisan way because we all agree 
that has to be done.
  The thing we want to make sure of is that umbrella or that reaching 
out to accomplish that particular part of the problem that exists does 
not look for other problems that do not exist on Main Street and that 
we have the ability of our community banks, our Main Street banks, as 
well as our manufacturing sector, to have access to the swaps and 
derivatives markets that they have done in a commercially responsible 
way for decades. They are not part of the problem, but yet it is going 
to be of significant consequence to every manufacturer. Not every 
community bank engages in swaps and derivative transactions, but a lot 
of them do. We need to make sure we take into consideration the 
continued ability of those banks to operate in a normal commercial 
banking way. Under the base bill, they are simply not going to be able 
to do that.
  Again, I commend the chairman for his hard work. I know he and 
Senator Shelby are still trying to work out some agreements on the too-
big-to-fail issue. It is my understanding that some of the provisions 
in the hopeful agreement they are talking about are going to have a 
direct impact on some of the things I have talked about today. It will 
make our job a little bit easier trying to fix the derivatives title to 
this bill.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Burris). The Senator from Connecticut is 
recognized.
  Mr. DODD. Mr. President, before my friend leaves the floor, I wish to 
thank him for his hard work as the ranking member of the Agriculture 
Committee, with Senator Lincoln of Arkansas. I will quickly address a 
few points my friend has raised.
  One I think all of us acknowledge--I certainly acknowledge--is that 
the GSE issue needs to be addressed. We reached the conclusion that it 
is such a huge issue, and there are only so many issues we can take on 
in a bill of this magnitude. Clearly, some language that would allow 
for some studies to be done or other matters that would help address 
the issue--I am open to some ideas such as those. To me, for us to try 
to take on the whole issue of how we reform government-sponsored 
enterprises--we need to do it. It is clearly an issue that must be 
addressed. I was concerned about how much we can actually take on in 
one bill dealing with the entire financial reform structure. I assure 
my colleague that I am prepared to at least support some ideas to get 
us moving in the right direction on GSE reform.
  On the home mortgage area, underwriting standards, again, we are open 
to ideas. As the Senator may recall, a year or so ago we fought hard to 
include underwriting standards. The Federal Reserve has now actually 
written some. We are trying to get responsibility on both sides of that 
equation. We had lenders out there pushing a lot of stuff out the door, 
a sector of our economy--the shadow economy, as it is called--luring 
people in to take no-document loans, securitizing them and moving them 
along. And we saw the effects of that. I know there are people working 
on how we can manage to come up with good language that does not so 
restrain the ability of a lender to have some flexibility in those 
standards. Clearly, we want standards in place that everybody has to 
meet--the lender and the borrower--as we move forward to avoid the 
kinds of pitfalls that have occurred.
  On consumer protection, the last thing we want is asking the dentist, 
the butcher, so forth--I know people have talked about being subjected 
to what we are talking about in financial products and financial 
services. Again, not imposing any new laws at all, but how do we make 
sure the seven agencies today responsible for those laws can be 
consolidated in a thoughtful manner?
  Lastly, on derivatives, this is an area which is predominantly, 
although not exclusively, in the purview of the Agriculture Committee. 
As the Senator points out, when we are talking about futures contracts 
involving securities, there is clearly SEC involvement, and thus our 
committee has had some strong interest in the subject matter. Senator 
Judd Gregg, as well as Senator Jack Reed, has worked on that issue. 
There is work that needs to be done. We all understand that.
  My hope is, on the subject matter which the Senator has explained and 
talked about--and I appreciate his comments this morning that this is a 
big and important area--that there be an effort to try to develop a 
bipartisan approach to all of this as we look at it. It is a 
complicated area of law. It would be to everyone's advantage if there 
was communication back and forth to come up with some ideas on which we 
might be able to achieve some strong bipartisan support. I know he is 
trying to do that. I encourage him to keep that up as we look ahead so 
we can end up with good answers. I am very grateful for his interest in 
the subject matter. I am hopeful this morning that we can move along in 
the amendment process and do our job. I thank the Senator from Georgia 
very much.
  Mr. CHAMBLISS. I thank my colleague.
  Mr. DODD. Mr. President, I see our colleague from Wyoming. If he is 
ready to go, I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming is recognized.


                              Health Care

  Mr. BARRASSO. Mr. President, I first thank the chairman for the 
acknowledgement and thank him for the opportunity to take the floor.
  I come here because of new information that has come to light about 
the health care bill that has been signed into law. As a physician who 
has practiced medicine in Wyoming for 25 years, as an orthopedic 
surgeon, I come to offer a second opinion on this bill and now this 
law. I went into this focused on the sorts of things the President had 
talked about--lowering the cost of care, improving the quality of care, 
increasing the access to care. But I come to the Senate floor today 
with my second opinion because I think these things have not been 
accomplished by the bill that has been signed into law.
  For many years, I have been the medical director of the Wyoming 
health fairs--giving low-cost blood screening to people around the 
Cowboy State, giving them opportunities to learn about themselves, 
their health, and to focus on getting down the cost of care.
  Today, when I come with my second opinion, it is that this bill--this 
bill now signed into law--is going to be bad for patients, bad for 
providers--the nurses and doctors who take care of these patients--and 
bad for payers, the people who are going to be paying the bill for this 
new law, the taxpayers of the country. I believe fundamentally that in 
passing this law, this is going to result in higher costs for patients, 
not lower costs. It will result in less access for patients, not more 
access. This is going to result in unsustainable spending at a time 
when we are looking at record unemployment and record debt.

  I come today to talk about what I have seen in the new information 
that has been coming forth since the bill was signed into law. I have 
an editorial written in the Columbus Dispatch:

       Almost daily the ill effects of the health care overhaul 
     passed by Congress are becoming apparent.

  The editorial in the Columbus Dispatch goes on:

       As employees and government bureaucrats analyze the law's 
     effects on the bottom line for the private sector and for 
     government, the alarm bells are ringing. The tragedy is that 
     these ill effects could have been and should have been 
     calculated before the law was passed, not after.

  It goes on:

       In fact, many of them were prophesied before passage of the 
     bill, but the prophets were ignored by President Barack Obama 
     and the Democratic majority in Congress. That is because 
     their uppermost goal was

[[Page S3124]]

     not to pass the best health care bill possible but merely to 
     pass anything that could be called health care reform and 
     could be claimed as a political victory by a President 
     desperate for one.

  I come today with my second opinion on the high-risk pool which has 
been in the headlines the last couple of days. When the President and 
Democratic Members of Congress were pushing the health care bill, they 
promised that people with preexisting conditions would receive 
immediate relief. The bill has been signed into law, and Americans with 
preexisting conditions remain as confused as ever as to how this new 
law will impact them, will impact their lives and will impact their 
pocketbooks.
  Unfortunately, hundreds of thousands--that is right, hundreds of 
thousands--of Americans with preexisting conditions are going to end up 
getting the short end of the stick. In fact, even USA Today recently 
reported that the new law is going to trap 200,000 Americans in pricey, 
State-operated, high-risk plans. Here is the front page of USA Today 
from last Thursday: ``Health law traps some in pricey state plans; 
200,000 hard to insure can't get federal option.'' Mr. President, 
200,000 Americans trapped. These are the folks who have been paying for 
coverage through the State high-risk insurance programs that exist 
today.
  One might say: How can that be? What is the catch? These 200,000 
people are not eligible for the brandnew, low-cost, high-risk program 
that is created by the law. Are these not the people we were trying to 
help? The law requires that for people to get into this new plan, they 
have to have been without insurance for the last 6 months. We have 
200,000 Americans with preexisting conditions who have been playing by 
the rules, who have been doing what is right. What happens? They are 
not going to have any access to the benefit the President and the 
Democrats in this Congress promised would be available to them.
  Don't just take my word for it. Here is what the Kansas insurance 
commissioner had to say. She said that we have people who have 
struggled to stay in our existing pool and take care of their existing 
health needs. And then this new pool comes along, and it is more 
generous and they are not going to be eligible for it.
  What is the difference? With the new pool, the maximum amount someone 
is going to have to pay for an individual is $5,950; for a family, 
$11,900. That is 100 percent of the standard market rate. But many of 
these high-risk pools across the country are at a point where they are 
charging twice the standard market rate because these people are an 
increased risk because of their preexisting conditions.
  The people who have been playing by the rules, doing it right, and, 
as the insurance commissioner said, people who have struggled to stay 
in the existing pool, they are going to be left out, ignored, and 
rejected by this new law the President has signed into law.
  This week, all 50 States were given the opportunity to tell the 
administration whether they wanted to run their brandnew, high-risk 
pool for individuals with preexisting conditions. The answer has not 
been positive.
  Just yesterday, Tuesday, May 4, the Washington Post said: ``18 states 
decline to run `high-risk' insurance pools.'' Eighteen States said to 
Washington: No, thank you. Eighteen States have refused to participate. 
Why? Mainly, they do not know, if and when the Federal money runs out, 
how it is going to be paid for.
  One may say: What do you mean, the Fed money runs out? They just 
passed this health care bill that is going to cost almost $1 trillion. 
For this high-risk pool, the amount of money that was put in, $5 
billion--in the Chief Actuary report of Medicare and Medicaid, they 
said the money is likely to run out before 2012, even though it is 
supposed to last until 2014.
  What is going to happen to these States? No one knows, and the 
administration is not saying.
  The Governor of Wyoming, Dave Freudenthal, looked at this as a 
Governor and asked: What do I want to do? Do I want to participate or 
not? He is one of the Governors who looked at it very carefully, and he 
is one of the Governors representing the 18 States that said, ``No, 
thank you,'' to Washington.
  This is what he said in his letter to the Secretary of Health and 
Human Services, Kathleen Sebelius. He said:

       The State of Wyoming has operated a very successful high 
     risk health insurance pool for nearly 20 years, which has 
     served Wyoming citizens well.

  And we have. I was involved with this when I was in the State senate, 
where I served for 5 years. As he said, a very successful, high-risk 
health insurance pool for nearly 20 years, which has served the 
citizens of Wyoming very well. Then he goes on to say:

       . . . necessary requirements have not been set out and key 
     terms have not been defined. Without such guidance, I find it 
     unwise to further consume my staff and Department of 
     Insurance with the guesswork currently necessary to implement 
     this program.

  Mr. President, these Governors are just guessing--guessing if it will 
work, guessing if it would not work--and nobody knows. That is why, in 
an interview with the Associated Press yesterday, the Governor of 
Wyoming said:

       . . . the $8 million the federal government offered the 
     state to run the high-risk insurance program until 2014 
     wouldn't be enough.
       He also said he's concerned the state wouldn't have been 
     allowed to administer the federal pool together with its 
     existing state program.

  Sorry, States--this is what the Secretary is saying--we in Washington 
know better than you. You might have a program that has worked for 20 
years very successfully in your home State of Wyoming, but we don't 
want to know about it. We want you to either set up a new program and 
do it our way or forget about it. And that is what the people of 
Wyoming have decided because the Governor said: When I looked at it, it 
just didn't seem to make financial sense.
  So, once again, the administration is saying: Trust us. They want to 
act now and ask questions later. Well, Americans and Governors across 
our country have serious questions about this new high-risk insurance 
program--how much it will cost the States, how much it will cost the 
taxpayers, and why all American patients with preexisting conditions 
would not have access to the immediate benefits they were promised.
  Unfortunately, Washington's lack of answers clearly demonstrates that 
this administration doesn't have its act together. The administration 
has not delivered on the President's promise to help all Americans who 
have preexisting conditions have access to the same affordable health 
insurance coverage. That is why all across this country people are 
saying: This bill, rammed through the Congress, with all the sweetheart 
deals, and signed into law, wasn't passed for somebody like me. It was 
passed for somebody else.
  So I come to the floor of the Senate today to say it is time to 
repeal this legislation and replace it with legislation that delivers 
personal responsibility and opportunities for individual patients, that 
will get down the cost of care, that will improve the quality, and will 
improve the access to care. We need patient-centered health care--
something that will provide individual incentives, such as premium 
breaks for people by encouraging healthy behavior; that allows people 
to take their health insurance with them when they move from State to 
State or when they change jobs; that gives the uninsured and the self-
insured the same relief when they buy insurance that the big companies 
get; that allows people to buy insurance across State lines; that deals 
with lawsuit abuse; that allows small businesses to join together to 
get down the cost of their care. These are the things that will work to 
get down the cost of care, to deliver high-quality care, and improve 
access to care. Those things are not in the health care bill that was 
signed into law. They are not in the health care bill that passed this 
body and passed the House.
  So that is why I come to the Senate floor to once again offer my 
second opinion that it is time to repeal this bill and replace it--
replace it with something that will work well for the American people.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. CASEY. Mr. President, I rise this morning to speak about the 
issue that is before not only the Senate--and, thankfully, we are in 
the debating process, finally, after many days of discussion about 
debate--I think this is also an issue that is on the front burner, so 
to speak, around kitchen tables

[[Page S3125]]

or wherever families are gathered or small business owners and others. 
It is about reforming our financial system and making it more 
accountable.
  I want to back up a second and put this in the perspective of where 
our economy is. We have an economy which has resulted in a job loss 
that is a record of one kind or another. We have heard it over and over 
again: The recession we are living through right now--even though we 
are recovering--is the worst economic climate we have had since the 
1930s. There are lots of ways to measure that, but, of course, the most 
important data point or number is the unemployment rate and the number 
of Americans who are out of work--some 15 million.
  In Pennsylvania, over 582,000 people are out of work. Our rate is 9 
percent. A lot of States would rather a 9-percent rate than 11 or 12 or 
13 or 14. But in our State, 9 percent means 582,000 people out of work 
through no fault of their own. That is the reality with which we are 
living.
  One of the ways to dig out of that hole, so to speak, or get the car 
out of the ditch--pick your image or analogy--is not only to put in 
place the job creation strategies which we have put in place over the 
last year--and even more recently in the last couple of months--but 
also to reform our financial system to prevent the abuses that took 
place that led to the problems that so many Americans are experiencing 
right now.
  One of the problems we have had is the fact that we have not just big 
banks--that was always the case in America; we always had large 
institutions and small institutions--but we have gone beyond big to 
what you might call a megacategory--megabanks--that have too much power 
concentrated in them and too much impact on our system. So what 
developed was this too-big-to-fail problem. It is a big problem we have 
to make sure we prevent from happening again, where a bank is such a 
big institution that it has tentacles reaching far into the economy, 
and the failure of that one institution or the failure of two or three 
wrecks the economy for so many others. So one thing we are going to do 
in this legislation is to make sure that doesn't happen.
  So how do we hold Wall Street accountable and how do we put consumers 
in control at long last? Well, first of all, we have to have strict 
regulations to stop Wall Street from engaging in reckless activities. 
We have to stop the reckless gambling that Wall Street was engaged in 
for far too long. We have to end the taxpayer bailouts forever. That is 
one thing we have to achieve.
  I mentioned the too-big-to-fail problem. We have to end too big to 
fail as a problem for our system. We have to have a new cop on the 
beat. This isn't just a question of having a couple of tweaks in 
regulations, we need tough regulations and tough enforcement. Of 
course, the analogy we use is one of law enforcement and having a new 
cop, or a number of cops, on the street--on Wall Street in particular. 
We have to put consumers in control with information about transactions 
that are in plain English.

  One of the problems we are experiencing now is that we got away from 
the system we had in place. I am not just speaking of strong regulation 
and mechanisms to control powerful institutions so they can't wreck our 
economy because of their reckless behavior and the scheming artistry 
and the fraud that took place over far too many years, but the basic 
concept that people in a community knew the bankers and the bankers 
knew the customers, so to speak. So if you went to get a mortgage for 
your home, you actually knew who you were dealing with. One side was 
invested in the other. That worked very well for a long period of time. 
We have gotten away from that.
  I am not saying we can replicate the system we had 30 or 40 or 50 
years ago, but we have to borrow some of those concepts where there was 
more accountability and more sense of investment. We know that 15 years 
ago--not that long ago--the six largest banks in the United States had 
assets totaling 17 percent of the gross domestic product. Where are 
those six megabanks today? They control not the equivalent of 17 
percent of GDP, they control 63 percent. It changed from 17 percent to 
63 percent in 15 years, virtually unchecked.
  So instead of supporting a small business in a community or a Little 
League team or a family trying to borrow money or a small business, 
these megabanks gathered deposits from Wall Street. They sliced and 
diced them, they leveraged them to the hilt, and then used the hard-
earned wages and savings of Americans to make a handful--a very small, 
tiny number--of Americans incredibly wealthy. It is the kind of wealth 
that is staggering, almost incomprehensible and almost incalculable.
  Make no mistake about it, these megabanks profited tremendously from 
this new model. That is an understatement. Over the last 30 years, 
profits and compensation in the banking industry have skyrocketed. I 
don't think wages have skyrocketed. At best, they have been flat for a 
long time. When they have increased, it has been in very small numbers. 
So we have megabanks and a flawed system leading to megaprofits for a 
tiny percentage of the American people, even a small percentage of the 
business community, so to speak.
  American families have been living with this problem. The big guys 
got us in the ditch, and as we are trying to push the economy out of 
the ditch, the American taxpayers have had to pay the freight. Well, it 
is time we made some basic changes, and this legislation gives us this 
chance. Now is not the time to slow down and delay and wait and scratch 
our heads. We know it is wrong, we know what the problem is, and we 
know how to fix it.
  This morning, we have the continuation of debate on the bill. We had 
an example last week where Goldman Sachs came before the Senate, not in 
a situation where the Senate was a prosecutor or a law enforcement 
agency, but the Senate played an important role as it relates to 
Goldman Sachs. Chairman Carl Levin, chairman of the relevant 
investigative committee--said we were focused on policy and ethics, and 
I think that is an appropriate role for the Senate.
  Now, what happened in that Goldman situation? Well, there are a lot 
of ways to describe it, but one way to look at it is this way: Goldman 
sold investors a product--in this case a derivative product--and its 
value was tied to the performance of a big portfolio of subprime 
mortgages. That is where it started. But it appears that Goldman worked 
both sides of the deal. They would sell these products to investors on 
the one hand, while also plotting with a hedge fund manager who was 
betting against the performance of the very same mortgages. It gives 
``conflict of interest'' new meaning, and it is a disturbing, alarming 
image for a lot of Americans--selling on one side and then going over 
to the other side and plotting and scheming to make money, not worrying 
about what is downwind, what is downstream, the horrific consequences, 
such as a wrecking ball to a building, and just kind of laughing all 
the way to the bank.
  I know I am in overtime, so I will wrap up. I will be back to talk 
about an amendment I will be offering, but I do want to say how much I 
appreciate the work that has been done to date. We are at the beginning 
of the debate on the Restoring American Financial Stability Act of 
2010, which will establish an early warning system; enhance those 
protections for consumers and investors; strengthen the supervision of 
large, complex financial organizations; and finally regulate, at long 
last, in a much more aggressive way, the so-called over-the-counter 
derivatives market.
  I see our chairman of the Banking Committee, Chairman Dodd, is here. 
He has done great work in this area not only more recently but for many 
years, and we are grateful for his leadership. I know the debate is in 
the early stages, but I think we are going to have a good product by 
the end of it.
  Mr. President, I yield the floor.
  Mr. DODD. If the Senator will yield for 30 seconds--I see my friend 
from Louisiana. I wish to give him time. But I wish to say to Senator 
Casey how much I appreciate his work. We worked together on this 
committee before I moved on to, I wouldn't say greener pastures, but I 
was a member of the Banking Committee. I am very grateful to him for 
his involvement. We

[[Page S3126]]

dealt with the housing issues and credit card issues and the like as 
well. I appreciate his comments very much, and I look forward to 
working with him, along with my colleague, the Senator from Louisiana, 
Mr. Vitter, who is a member of the Banking Committee. I thank Senator 
Casey.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.


                           Louisiana Oilspill

  Mr. VITTER. Mr. President, representing Louisiana in the Senate, 
along with my colleague, Senator Landrieu, you can image I have been 
focused exclusively on the ongoing oilspill, the leak, the ongoing flow 
that we and the country are battling. Because it has been almost a week 
since I have been in Washington and on the Senate floor, I wish to use 
the opportunity to briefly give an update from my perspective.
  Along with many other officials, industry folks, interested citizens, 
I have been all through and up and down the coast as well as offshore. 
I had the pleasure of traveling with several Cabinet Secretaries and 
other Members of our congressional delegation last Friday, going 
offshore to look at the site of the former rig, the site of the ongoing 
spill or leak, very closely. I also took another helicopter tour later 
that day. I have been in all the effected coastal communities, St. 
Bernard Parish, Plaquemines Parish, which encompasses the mouth of the 
Mississippi River and beyond, lower Jefferson. I reached out to folks 
daily--local elected officials and leaders, the industry, Federal 
agencies, the Coast Guard and others working on this ongoing crisis and 
the Governor in the State--who were extremely proactively engaged.
  Having done that, again, I wish to give a brief report to my 
colleagues and my fellow citizens. Obviously, I think we need to start 
in remembering that this is a great human tragedy and that started with 
the apparent loss of 11 lives. I think it is very important to start 
all our discussions and recollections about this incident with that 
human tragedy and with those families. As the media and others cover 
the environmental danger which is great, the economic impact which is 
enormous, I think sometimes those families, that enormous human loss is 
a little glossed over. So I certainly want to stop and reflect on that 
again and continue to offer my heartfelt thoughts and prayers to those 
11 families who were the most impacted, who have suffered the most. I 
say a prayer for them every day, as do so many folks in Louisiana. We 
will continue to lift those families.
  Second, this is an ongoing challenge and crisis because, as I said a 
minute ago, this leak, this flow continues. It has not stopped yet. Of 
course, priority No. 1 of everyone involved is to stop the leak, to 
stop the flow. It is a little difficult to estimate exactly what that 
flow is, but the best guesstimate--and it is an art, not a science--is 
about 5,000 barrels a day.
  To put that in perspective, already, as of 4 or 5 days ago, that 
meant the product leaked surpassed all the spill, all the events 
combined from Hurricanes Katrina and Rita. That was a big event, so 
this has already surpassed it 4 or 5 days ago. If that leak rate is 
constant and continues, 5,000 barrels a day, then in about another 35 
days we will equal the volume leaked from the Exxon Valdez. That is a 
very real threat to equal or surpass that amount of oil. It is a huge 
event.
  There is lots of activity going on at the wellhead in that area to 
try to control and stop the leak. There are multiple plans. I guess 
plan A, if you will, is to close off the valves that should have been 
shut down automatically through the blowout preventer. Needless to say, 
there was a massive failure in terms of that automatic closedown, which 
is supposed to happen at multiple levels. But there is ongoing effort 
to send underwater robots down to the floor of the gulf and shut down 
those valves. Unfortunately, that has not worked yet.
  Plan B is to put out a large, constructed box or dome to cover the 
part of the gulf floor where the leak is coming from and then to pipe 
up the material, to vacuum the material in a controlled way from there 
to the surface and store it. That box or dome has been constructed. It 
will be sent out to the site in the next 48 hours. So that attempt will 
start. This technology has been used before in other spills but never 
in anything similar to this depth of water, 5,000 feet. It has been 
used in 400 feet, 500 feet, not 5,000. That is a big difference, which 
brings up all sorts of engineering challenges because of the enormous 
pressures at that depth of water.
  Plan C, if you will, is to drill a relief well--in fact, two relief 
wells. That work has already begun, to relieve the pressure on this 
well and to bottle it, to put mud and cement down there to stop the 
flow from the existing well. That can work and that will work. The 
problem is that will take 60-plus days, 60 to even 90 days. That work 
has begun.
  In addition to that work to stop the leak in the immediate area of 
the leak, the Coast Guard and BP and others in the industry are using 
dispersants and other methods of trying to mitigate the ongoing flow.
  That is one category of very important work. There is a second 
category of extremely important work; that is, all the work that is 
underway to protect the Louisiana coastline and marshes, as well as 
similar work in neighboring States: Mississippi, Alabama, and Florida.
  I have to say, last Friday, when I took that plane ride with the 
Cabinet Secretaries, I was extremely concerned that all that coastal 
protection planning and execution had to go through BP. It was very 
evident to me that challenge and that end of the endeavor was bigger 
than BP, and bigger than any single company. I was concerned that was a 
bottleneck. I was not arguing in any way that BP is the responsible 
party under Federal law, that BP had enormous monetary responsibility 
that flowed from that--nobody is arguing with that. But operationally, 
I didn't want all that crucial coastal protection, marsh protection 
activity to be stalled or delayed because it had to fit through that 
bottleneck.
  I think the good news from over the weekend is that old system was 
blown up and that bottleneck was relieved. I particularly wish to 
compliment and commend ADM Thad Allen, whom the President appointed on 
Saturday to be the Federal coordinator of this entire effort. I think 
he recognized, at my urging and that of many others, that having all 
that coastal planning and execution flow through BP was a problem and a 
mistake. So that has been corrected.
  As of Friday, detailed planning, in terms of coastal and marsh 
protection efforts, was not getting done by BP. Frankly, it was not 
getting done by the Federal authorities--the Coast Guard or anyone 
else. But local and State leaders stepped in, the folks who know that 
coastline and that marsh area the best stepped in and they have 
provided those detailed plans over the last several days. So over that 
time period, in particular from Friday on, individual parishes, in 
coordination with the State, in coordination with many experts, have 
developed parish-by-parish plans to protect the coastline and the 
marsh. That has been a very strong effort; again, pulling together many 
resources, many levels of leadership, folks who know the coast, the 
terrain and the marsh like the back of their hands. So that void has 
been filled, thanks to that leadership and vision by local leaders in 
strong coordination with Governor Jindal and the State.
  Now those individual parish-by-parish plans are ready. They are being 
tweaked, they are being improved, but they are ready. The next step is 
for the Coast Guard to formally approve those plans. That has been done 
on a preliminary basis, the first version of those plans, but most of 
those plans now have supplements. The Coast Guard needs to quickly and 
timely approve those supplemental plans. I talked to the Coast Guard 
leadership yesterday afternoon and urged them to do that in a very 
time-sensitive way, and they assured me that was happening. Once that 
happens, BP automatically is on the hook to pay for implementation of 
those plans. That takes no additional approval or signature from BP. 
That is automatic under Federal law. Then the plans need to be 
executed, either through BP or independently by using fishermen in the 
area, by using other contractors or otherwise. That is a decision of 
the locals and the State. I think that process is moving in a very good 
direction and is well underway.
  Let me close by focusing on another big category of concern that I 
share

[[Page S3127]]

with so many others; that is, the concern about economic impact 
starting with the folks who have been hit and affected the most, the 
fishermen of Louisiana, oystermen, shrimpers, and the fishery industry. 
Already, as of at least Sunday and Monday, this is having devastating 
economic impact on those folks. Our hearts go out to them. Our prayers 
go out to them as well. I have been working with many others to try to 
get them the help and relief they need, in particular focusing on four 
categories of activity. First of all, when I talk to local fishermen in 
Saint Bernard and lower Jefferson and Plaquemines, all through 
Louisiana, they all say the same thing. They don't want handouts. They 
don't want a big Federal program. They want a job. They want a paycheck 
for hard work. That is their lives, that is their tradition, that is 
their spirit. They just want that to continue. So, first of all, all 
efforts are being made to hire them, in what is called the Vessels of 
Opportunity Program, to be the backbone of this coastal and marsh 
protection response. I have talked to both local and State leaders and 
BP, and we are all in agreement that a hyperaggressive effort needs to 
happen to hire as many of those fishermen as possible to man that 
coastal marsh protection effort.

  Second, that is not going to take care of all the immediate need. I 
am pushing strongly to make sure BP holds to its promises of setting up 
a hotline and a program of getting quick compensation into the hands of 
affected families who are suffering economic loss. I talked directly 
with the CEO of BP yesterday about this. He assured me that was being 
done. That would mean quick checks to people and families who needed it 
without any requirement that those folks sign their lives away or cap 
their claims or sign away future claims. I am going to work very hard 
to enforce that personal promise. In fact, today, I am setting up a 
hotline in my office. It will be advertised on my Web site, 
www.vitter.senate.gov, to ensure that program is developing as 
promised. If anybody out there, fishermen or others who are applying 
into that program, is treated differently, I urge them to call this 
hotline and we will get all over that immediately and try to correct 
that situation with BP.
  Third, in terms of helping that local industry, of course we are 
looking medium and long term in terms of full economic damages. BP is 
the responsible party. They are responsible for those economic damages. 
In addition, we have an OPA trust fund under Federal law which, at 
present, has a $1.6 billion balance, funded since the Exxon Valdez 
incident specifically to cover these sorts of direct economic impacts 
and balances. So I am very focused on that.
  Fourth, additionally, there is an outpouring of citizen private 
support to help these families.
  I am not directly involved, but I know several organizations under 
the umbrella of the United Way are leading fundraising efforts to 
directly help these families.
  But as this ongoing challenge and crisis continues, that will 
continue to be a prime focus of mine: the families directly impacted, 
the fishermen, the oystermen, the shrimpers, their families who, after 
suffering through so much with the Katrina and Rita, were sort of hit 
below the belt yet again.
  I will continue obviously, with Senator Landrieu and others, to stay 
very focused on this ongoing crisis to do all the sort of work I have 
described. I would ask my colleagues to be sensitive to that and to be 
aware of that. In particular, there is going to be, and there has to 
be, enormous discussion about policy, Federal and other policy, coming 
out of this disaster.
  We need to look at mandated technology. We need to look at 
procedures. We need to look at the current liability cap and the OPA 
trust fund. All of that is important. But as we begin to do that, my 
first request would be that we all realize that down in Louisiana off 
our coast in the gulf, in the real world, there is an ongoing crisis 
that still continues. The leak is unabated. The flow is unabated.
  I would ask all of us to be sensitive to that so we are not diverting 
attention or resources away from that ongoing crisis. The work needs to 
be there right now to shut down the flow of oil and to protect our 
coastline. Many Members, Democrats and Republicans, have offered their 
support to me and Senator Landrieu. We both deeply appreciate that and 
we look forward to working with everyone in this body on this ongoing 
situation.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. KAUFMAN. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                  PUBLIC SERVICE RECOGNITION WEEK 2010

  Mr. KAUFMAN. This week, once again, we celebrate Public Service 
Recognition Week.
  Public Service Recognition Week provides us all a chance to reflect 
upon the contribution made by those who serve in government.
  All throughout the week, the Partnership for Public Service, a 
leading nonprofit, nonpartisan organization dedicated to honoring those 
who work in government, will be hosting informative programs across 
Washington.
  One of the most exciting moments during the week is the announcement 
of this year's finalists for the distinguished Service to America 
Medals, or ``Sammies.'' This year, once again, the crop of finalists is 
outstanding, and the winners will be announced at the Partnership's 
annual Service to America Gala in September.
  During last year's Public Service Recognition Week, I delivered the 
first in a series of weekly speeches from this desk honoring great 
Federal employees. Now, 1 year later, I am proud to continue this 
effort today by recognizing my sixtieth great Federal employee, along 
with a few others who have won Service to America Medals in the past.
  Anh Duong has worked for the Naval Surface Warfare Center, in Indian 
Head, MD, for 27 years. But her relationship with the U.S. Navy goes 
back farther. She came to this country after escaping Vietnam as a 
teenager, having fled by helicopter to a Navy vessel off-shore. After 
coming to the United States, Anh obtained a degree in chemical 
engineering and computer science from the University of Maryland.
  After graduation, Anh began working at the Naval Surface Warfare 
Center as a chemical engineer, and from 1991-1999, she oversaw the 
Center's advanced development programs in high explosives. From 1999-
2002, she worked as the head of its programs to develop undersea 
weapons.
  After the September 11 attacks, when our Armed Forces were given the 
mission to defeat the Taliban, it was Anh who was asked to develop a 
thermobaric bomb that could be used to reach deep into Afghanistan's 
mountain caves, where Taliban fighters were hiding. She and her team 
were only given 100 days to prepare such a weapon for use. They did it 
in 67 days.
  Since 2006, she has been working with the Naval Criminal 
Investigative Service to create mobile battlefield forensics labs to 
help quickly identify those behind terrorist attacks. Anh Duong was 
awarded the Service to America Medal for National Security in 2007.
  Another dedicated Federal employee, who won the Service to America 
National Security medal in 2005, is Alan Estevez. Alan is the Principle 
Deputy Assistant Secretary of Defense for Logistics and Military 
Readiness.
  The old adage says that ``an army runs on its stomach.'' In fact, a 
modern military runs on much more than that. There are thousands of 
pieces of equipment and supplies that need to be transported in and out 
of an area of operations. Alan has been working since 1981 to make our 
military logistics system more efficient.
  Over the past several years, Alan has overseen efforts to implement 
radio frequency identification, or ``RFID'' technology into our 
military supply chain. He saw that companies like Wal-Mart were using 
RFID to track products with a high degree of accuracy and to reduce 
waste.
  Alan's work over the past three decades has saved the military, and 
the taxpayers, countless dollars and has helped ensure that our troops 
have the supplies they need to fulfill their missions.
  Another Service to America medalist I want to highlight today is Riaz 
Awan. He served as the Energy Department's attache in the Ukraine when 
he won a Sammie for his work to secure the site of the 1986 Chernobyl 
meltdown.

[[Page S3128]]

  Riaz won the 2003 Service to America Medal for International Affairs, 
which recognized the several years he spent living near the site of the 
Chernobyl disaster and working with the local communities to mitigate 
its social and economic impact. As part of his work, Riaz oversaw the 
construction of a new concrete shelter over the former Chernobyl 
reactor, one of the largest and most complex engineering projects in 
the world at the time.
  Additionally, his work on nonproliferation in the Ukraine has helped 
prevent terrorists from getting their hands on nuclear materials 
leftover from the fall of the Soviet Union.
  In the same year that Riaz won his award, the Service to America 
Medal for Call to Service, which recognizes new Federal employees, was 
won by Alyson McFarland of the State Department.
  Alyson had only worked at the State Department for 3 years when she 
found herself in the middle of a tense diplomatic situation. She was 
working as a program development officer at our consulate in the 
northern Chinese city of Shenyang, near the North Korean border. One 
summer day, in 2002, three North Korean refugees jumped over the 
consulate wall, seeking asylum.
  Alyson was one of the only Korean-speakers working in the consulate, 
and she quickly became instrumental in communicating with the refugees 
and authorities from the Chinese and South Korean governments. By 
playing a key role in supporting the negotiations with the refugees and 
government officials, she helped enable the asylum-seekers to reach 
freedom in South Korea. At the time of the incident, she was only 28 
years old.
  The fifth and final story I want to share today is about the winner 
of the 2002 Service to America Medal for Justice and Law Enforcement. 
Special Agent Robert Rutherford won it for his work at the U.S. Customs 
Service, which has since been renamed as U.S. Customs and Border 
Protection.
  Robert served as the Group Supervisor for the Customs Service's Air-
Marine Investigations Group in Miami, and his primary job was to keep 
illegal drugs from reaching American shores.
  Starting in 1999, Robert began noticing a sharp rise in the amount of 
cocaine and other narcotics being smuggled into the country from Haiti, 
which was contributing to a rise in local crime.
  On his own initiative, Robert worked with his colleagues to form 
Operation River Sweep to block the Miami River as a trafficking route 
for drugs. As part of the operation, he led a first-of-its-kind intra-
agency task force under the direction of the Customs Service. Between 
1999 and 2001, Operation River Sweep made over 120 arrests and 
prevented over 13,000 pounds of cocaine from reaching Florida 
communities.
  As Robert's efforts met with success, the local crime rate dropped. 
In order to stay afloat, the drug traffickers adapted their methods, 
hoping to outsmart the Customs Service.
  However, in 2001, Robert launched a second task force, Operation 
River Walk, involving over 300 law enforcement personnel from local, 
State, and Federal agencies. This second task force arrested over 230 
trafficking suspects and seized over 15,000 pounds of cocaine and 
cannabis.
  Though the details are different in each case, all five of these 
stories about Service to America winners send the same message. It is a 
message of service above self, of motivation to carry out the people's 
work.
  When I first spoke about Federal employees a year ago, I noted the 
importance of the oath taken by all those who serve in Federal 
Government. The spirit of that oath, to ``support and defend the 
Constitution'' and ``faithfully discharge the duties of the office,'' 
undergirds the service of every man and woman who has worked as a 
Federal employee since 1789.
  Our work in Congress today is the drafting of a blueprint for 
recovery, security, and prosperity. The task of building and 
maintaining these edifices we design will belong to the dedicated and 
industrious civil servants upon whom all Americans daily rely.
  They are the regulators who will restore stability to our financial 
system.
  They are the lawyers who will prosecute terrorists detained overseas.
  They are the doctors and nurses who will care for our returning 
veterans.
  They are the aid workers who spread hope and healing around the 
world.
  They are the instruments by which we, the people, secure the 
``blessings of liberty.''
  As we mark Public Service Recognition Week, let us all make an effort 
to thank those who have chosen the path of public service. They are all 
truly great Federal employees.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. ENSIGN. Mr. President, the American people are tired. They are 
tired of the government spending money that it does not have while they 
are forced to make tough decisions about their own family's budgets.
  But more importantly, the American people are tired of the government 
stepping in, blank check in hand, to bail out giant Wall Street firms 
that were irresponsible with their money. The American people are sick 
and tired of seeing their hard-earned taxpayer dollars squandered in 
the name of too big to fail.
  One of the most important lessons that we learned from this financial 
crisis, hopefully we learned, is that the bailouts were unfair. They 
allowed the government to manipulate the market by picking winners and 
losers, and they used taxpayer dollars to do so.
  Republicans have made this point repeatedly during this debate. Those 
on the other side of the aisle have accused us of trying to hold up 
reform. But what we have been trying to do is to listen to the American 
people when they demand no more bailouts.
  This bill does not address the concerns of the American people. 
Despite the enormous size of this bill, and its complexity--and believe 
me, it is truly complex--I do not believe anybody in this Chamber--as a 
matter of fact, I do not believe anybody on Capitol Hill fully 
understands this bill.
  This bill makes more explicit the ability of the government to 
continue to pick winners and losers when bailing out irresponsible Wall 
Street firms. I come from a State where gambling is a big part of our 
economy. Yet a Las Vegas casino could not get away with half of the 
gambling that Wall Street does. When people walk into a casino to 
gamble, they do so knowing that the odds are against them.
  But Wall Street takes gambling to a whole new level. They do it 
because they actually manipulate the odds while someone is playing the 
game. What is more, Wall Street then asks the government to cover their 
bets when they can no longer afford to do so on their own.
  Can you imagine a casino booking a bad bet and losing money, and then 
asking the government to bail them out? That is basically what Wall 
Street did. And this bill continues that ability.
  The proof of this is self-evident because we are now debating an 
amendment that tries to fix that, the Boxer amendment. If this bill did 
what it claimed to do, we wouldn't be here debating this amendment 
which, although this amendment sounds very nice, it actually does very 
little to address the problem of preventing future bailouts. This bill 
still creates a new government bureaucracy for the purpose of managing 
bailed-out banks and their creditors. The language of this amendment 
does nothing to prevent taxpayer money from being used to pay off debts 
of failed financial institutions. For example, billions of dollars in 
taxpayer money were used to pay AIG's obligations to Goldman Sachs 
after the insurance giant collapsed. This amendment does nothing to 
stop the Federal Reserve from risking even more taxpayer money on these 
firms in the future. The language of this amendment does not even 
prevent the government from imposing fees on companies that can be 
spent to bail out firms.
  I regret this flawed bill is on the floor now instead of a bipartisan 
piece of legislation the American people have been asking for and, 
quite frankly, deserve. I hope in the process of debate, we can offer 
amendments that will fix this legislation, that will finally end this 
too-big-to-fail concept. Instead, the American people are left dealing 
with the reality that another partisan bill has come to the floor and 
will probably become law. Another government bureaucracy will be 
created as a result of this legislation with little regard to the will 
of the people.

[[Page S3129]]

  Here we go again. Unfortunately, too much partisanship has gone on in 
this body. There are several of us working on bipartisan amendments. I 
hope we can dramatically improve this bill. Both sides have the same 
objectives. We want to clean up Wall Street. We don't want to do that 
while hurting Main Street. We want to hold Wall Street accountable, but 
we don't want to do it in a way that harms people who had nothing to do 
with the financial crisis.
  I hope we actually can end up with a system that ends too big to 
fail. We already have several financial institutions that are already 
too big to fail. What to do about those firms is very difficult, very 
complex, and we have to do it in a way that doesn't mess up our entire 
financial system and system of credit. I believe we need to take our 
time, because the expertise to get this right is difficult to get. I 
don't believe necessarily the Senate or the House has that kind of 
expertise. We need to take our time on this bill to get it right, to 
make sure we are doing what we are intending to do.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I don't know if there has ever been a 
perfect law. Maybe the law that was written on stone tablets and 
brought down the mountain by Senator Moses was a perfect law. Ever 
since then, human beings have tried to write laws that are good and 
acknowledge that they are human. Maybe the laws will have to be 
revisited and changed and revised. That humility comes with this job, 
because you understand this is an imperfect process. We debate, try to 
reach compromises and make concessions. Virtually every time at the 
end, you say: That isn't what I would have written, but that is what 
the Senate decided to move forward with.
  Now we are in the midst of debating this law, 1,407 pages long, 
called the Financial Stability Act. Why are we doing a bill that looks 
like a telephone directory? We are doing it because of the recession, a 
recession which, frankly, hit America harder than anything since the 
Great Depression. Seventeen trillion dollars was taken out of the 
American economy. That is more than the value of all the goods and 
services produced in the United States in 1 year; $17 trillion yanked 
out of the economy, and most of us felt it. You felt it in your savings 
account, your 401(k). You saw it when the shop down the street laid 
somebody off or closed.
  We know this is a real recession that hit America hard, 8 million 
people unemployed, 6 million people sitting out there frustrated, not 
even looking for jobs. That is a real recession. How did we reach that? 
We reached that because of some very bad decisions in Washington and on 
Wall Street. The decisions in Washington related to the future of 
housing. Are we going to expand the opportunity to own homes to people 
who traditionally did not own them? We thought it was a good idea.
  I can remember when my wife and I bought our first home. Our lives 
changed. We were no longer renters. We were interested in that house 
and in our block and our neighborhood, our parish, and our community. 
It is a different look at life. Home ownership is a real American 
value. We also thought it was a pretty good investment. Stretch to make 
a house payment. Can we make it? Do you think we can make that monthly 
payment? If you can, you watch the value of that housing go up and say: 
Pretty good decision. Nice little house for the family and a good 
investment.
  So we thought in Washington, let's expand that model. There is 
nothing wrong with where we started. There was nothing selfish about it 
or outlandish that we would move in that direction. Then came Wall 
Street. Wall Street said: If this is a good thing, we can make money on 
it. They took the mortgages people used to enter into with the bank 
down the street or downtown and sold the mortgages downtown to some 
other bank. Pretty soon that mortgage went into the business atmosphere 
and was chopped up in pieces, sliced and diced into securities and 
derivatives, traded and sold at the highest levels of Wall Street. 
Unfortunately, it got out of hand. It got so far out of hand that at 
the end of the day, it collapsed. Home values started coming down; 
defaults and foreclosures started increasing. People making all the 
money on Wall Street were sitting in financial institutions that were 
crumbling around them.
  So where did they turn for help? They turned to taxpayers. They asked 
taxpayers: Bail us out. Come to our rescue. Keep our company in 
business even though we made some fundamental mistakes.
  And we did. There is a good argument as to whether we should have. 
But I can tell you, having sat in the room where the Secretary of the 
Treasury and the Chairman of the Federal Reserve said, Senators and 
Congressmen, if you don't move fast, the American economy is going to 
collapse, what do you do? I have an education and some experience, but 
I am not sure I am ready to save the American economy singlehandedly. I 
took their advice, as did others in bipartisan votes that led to the 
bailout that saved these institutions.
  They showed their gratitude to American taxpayers for saving them 
from their own malfeasance by declaring bonuses for one another, 
million dollar checks they gave to one another in congratulations for 
their economic failure. Naturally, Members of Congress and the American 
public said: It is disgusting that these people would make these 
mistakes. Ask the average mom-and-pop family to bail them out with 
their tax dollars and then give one another bonus checks to reward 
their misconduct.
  That is what brought us here today. That is what this bill is about. 
This bill is about changing financial institutions to guarantee there 
will never be another taxpayer bailout, period. Senator Barbara Boxer 
of California has the first amendment. It is a critically important 
amendment. It ought to have every vote in this Chamber. It says: No 
more taxpayer bailouts, period. That is a good starting point.
  But then let's proceed from there. What are we going to do about 
these institutions to make sure they are held accountable, that they 
don't get so big their failure jeopardizes the American economy? That 
is part of this as well, the amount of money they have to keep on hand, 
the leverage, the liquidity, how they can loan this money, rules of the 
road to make sure we never get into this recession mess again.

  There is another provision in here too, one that I think is equally 
important. It says we are finally going to create one agency of 
government that is going to look out for families and businesses across 
America who can be duped into legal agreements that can explode on them 
at the expense of their life's savings or their home. It is a consumer 
financial protection law, the strongest one ever passed in the history 
of the country.
  I heard the Senator from Nevada call it a massive bureaucracy. It is 
not that. In fact, it is a self-enforcing agency that has the power to 
make decisions independently of existing agencies of government with 
one goal in mind: Empower consumers across America to make the right 
choices. We can't make the final decision about whether you sign that 
mortgage paper. We shouldn't. But you ought to know when you sign it 
what you are getting into. What is the interest rate? What is the term 
of this mortgage? Can I prepay this mortgage without penalty? Those are 
basic questions people need to be asked and answered. That is what this 
bill is going to guarantee through the Consumer Financial Protection 
Agency.
  It took a long time to get to the point today where we will have our 
first vote on this bill. It took much longer than it should have. 
Senator Chris Dodd of Connecticut, who is chairman of the Banking 
Committee, sat down with Republicans, Senator Shelby of Alabama, over 3 
months ago and said: Let's work together. Let's make this a bipartisan 
bill. After 2 months of effort, they concluded they couldn't reach 
agreement. At that point Senator Dodd said: I will reach out to Senator 
Corker of Tennessee, a Republican, and see if I can reach agreement 
with him for a bipartisan bill. He is on my committee.
  They worked for a month. They could not reach agreement. So Senator 
Dodd said: There comes a point where we have to move this legislation. 
He called this bill before his Senate Banking Committee and invited 
Republicans and Democrats on the committee to

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give their best ideas. How would they change this, improve it? What 
would you do to this bill?
  Republicans filed over 400 amendments to this bill. That is a lot of 
work. Then came the day of the actual hearing on the bill. The decision 
was made on the other side of the aisle not to offer one single 
amendment, not one. Twenty minutes after it convened, it voted to pass 
the bill out and adjourned.
  So when Senators from the Republican side of the aisle come in and 
say: There is not enough bipartisanship in this bill, I have to tell 
you, it isn't because of a lack of effort by Senator Dodd and members 
of the Banking Committee. We have tried to engage our friends on the 
other side of the aisle to help us make this a better bill. We still 
offer that invitation. There will be bipartisan amendments. There 
should be bipartisan amendments. But at the end of the day, if we don't 
make a fundamental change in the economy and the way we manage 
financial institutions, we will invite another breakdown, and we can't 
let that happen. There have been too many victims of this recession to 
let that happen.
  President Obama has challenged us to get this done. We do so little 
around here. It is frustrating. We spent a whole week a few weeks ago, 
1 whole week, debating whether we would extend unemployment benefits 
for 4 weeks. One week of debate, four weeks of extension. The following 
week we spent an entire week on the Senate floor debating five nominees 
the President had sent to us out of the 100 sitting on the calendar. 
All of these nominees were noncontroversial, passed with strong votes. 
We ate up an entire week on these nominees.
  Then we wasted last week when the Republicans mounted a filibuster to 
try to stop debate on this bill. Three straight votes, Monday, Tuesday, 
and Wednesday of last week in favor of a filibuster. And finally, thank 
goodness, several Republican Senators went to their leadership and 
said: This is a bad idea. We ought to be on the right side of history 
for Wall Street reform, and we are not going along anymore with the 
filibuster. At which point it ended, and we started moving to the bill.
  Today we may take up the first amendment. I hope we do. There are a 
lot of things that need to be included in this. Let me tell you one 
thing I will offer an amendment on which most Americans are not aware 
of. If you have a credit card and you go to a local business, whether 
it is a restaurant or a flower shop or to get your oil changed, and you 
present your credit card to pay for the service or the goods you are 
buying, you are not only going to pay the shopkeeper, the shopkeeper is 
going to owe the bank that issued the credit card a percent of what you 
paid. It is called an interchange fee. It turns out to be a substantial 
amount of money for retailers. They end up paying these credit card 
companies a percentage of the bill for the use of the credit card. 
There is nothing wrong with that. There should be a fee associated with 
the use of credit cards by businesses. But it has reached a point of 
unreasonableness. It has reached a point of unfairness. Let me give an 
example.
  If I go to a restaurant in Chicago and pay for my dinner with a 
check, the restaurant turns the check in to the bank. The bank contacts 
my bank, the money transfers. There is no fee, no cost. However, if I 
go to the same restaurant and use a debit card, which takes the money 
directly out of my bank account just like a check, the company that 
issued the debit card and credit card will charge a percentage of that 
restaurant check to the owner of the restaurant. That money is coming 
directly out of my checking account just as a check is.
  Why is the credit card company taking as much in a fee from a 
restaurant as they do with a credit card, where there is at least some 
question as to whether ultimate payment will be made?
  So we are going to have an amendment which addresses the interchange 
fee and tries to bring some fairness to it. I think it is long overdue. 
I hope all of the Members of the Senate who believe in small businesses 
will call them and ask them about the Durbin amendment on interchange 
fees. You will find, as I have, this is one of the major concerns of 
retailers and businesses across the United States.
  I talked to a CEO of a major drugstore chain yesterday, and he told 
me his top four expenses for his nationwide chain of drug stores: No. 
1, salaries; No. 2, what he called mortgages and rent; No. 3, health 
care, No. 4, interchange fees--the amount of money his chain pays to 
credit card companies. It is a huge expense of small business.
  We are not saying there should not be an interchange fee. We are 
saying it should be reasonable, and if it does not involve effort, 
service, or liability on the part of the credit card company--such as 
the debit card--it ought to be reflected in the fee that is charged.
  The last amendment I submitted is one I think taxpayers across the 
country ought to pay attention to. More and more each year, the Federal 
Government is accepting payment by credit card. You can pay for your 
income tax with a credit card. What does that men? It means Uncle Sam--
the taxpayers--pays an interchange fee to the credit card companies, 
even though, ultimately, those credit card companies are all being 
paid.
  So in my estimation, it calls for an amendment which says the lowest 
interchange fee rate should be charged to the Federal Government, so 
the taxpayers are not subsidizing credit card companies, which they are 
currently doing with interchange fees that do not reflect the liability 
involved in the transaction.
  This is just one of the aspects of the bill. Some will say: Well, 
what does that have to do with the recession? I can tell you, consumer 
debt and personal debt had a lot to do with the recession. A lot of 
people, in desperation, turned to their credit cards. A lot of people 
found the interest rates on their credit cards going through the roof, 
and a lot of people did not understand why they were so expensive.
  We are going to bring this out for debate. Once again, I hope my 
colleagues who support small businesses, as I do, and believe they are 
a lifeline to bring us out of this recession will join me in supporting 
small businesses to make sure we bring some sense to the interchange 
fees charged on credit cards and debit cards across America.
  Mr. President, 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. DODD. 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. DODD. Mr. President, I just spoke with Senator Shelby on the 
phone. We have been working to reach agreement on the so-called too-
big-to-fail sections of the bill. I spoke with him, and while he will 
be coming over shortly and we will have a vote on this early this 
afternoon, the leaders have to set the time, I presume, that after the 
respective lunches we will be able to vote on this and the Boxer 
amendment. I will leave it to the leaders before I make a unanimous 
consent request.
  I want to describe briefly to my colleagues what we have agreed on 
to, hopefully, resolve this matter of too big to fail.
  For over a year, Senator Shelby and I have been working on ways to 
end bailouts. We agree that ought to be done. We have had differences 
in other areas, but we have shared a commitment to ensure that 
taxpayers would never again be forced to bail out giant Wall Street 
firms that fail.
  Last November, I asked our colleagues from Virginia and Tennessee, 
Senator Warner and Senator Corker, to produce an agreement on how best 
to resolve failed companies.
  They did a tremendous job. I commend both of our colleagues. They 
worked hard, as did their staffs, to draft language as part of the 
underlying bill. The package they produced would create effective 
oversight for large firms and make these firms pay for the risks they 
pose to our economy and country. Their agreement put a mechanism in 
place to guarantee that when large firms fail, they fail. The 
management is fired, creditors and shareholders take losses, the 
company is liquidated, and taxpayers aren't on the hook.
  This is a complicated area, and a number of my colleagues on the 
other side had raised some reservations. So I

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spent the last few months working with Senator Shelby to clear up any 
misconceptions people may have had and otherwise address the concerns.
  After weeks of negotiations--and, really, months if you consider all 
of the work that has gone on over the last year--I am proud to say the 
two of us have an agreement in this area. We intend to offer it as an 
amendment to the bill early this afternoon.
  Let me go over the amendment, if I can. First, most of the provisions 
stay intact because we agree on the fundamentals of this bill. There 
will be an orderly liquidation mechanism for FDIC to unwind failing 
systemically significant financial companies.
  Second, shareholders and unsecured creditors will still bear losses, 
and management will be removed.
  Third, regulators will still have the authority to break up a company 
if it poses a grave threat to the financial stability of the United 
States. That is important.
  Large bank holding companies that have received TARP funds will still 
not be able to avoid Federal Reserve supervision by simply dropping 
their banks.
  Most large financial companies are still expected to be resolved 
through the bankruptcy process. The bill will continue to eliminate the 
ability of the Federal Reserve to prop up failed institutions such as 
AIG.
  These measures represent a fundamental change in our country's 
ability to protect taxpayers from the economic fallout of having a 
large, interconnected firm collapse.
  These measures will end the idea that any one company is too big to 
fail.
  These measures will prevent large failing firms from holding our 
country hostage, extorting giant taxpayer-funded bailouts under the 
threat of economic disaster. So, today, we announce a few changes to 
the larger package.
  First, as I have said, one of the ideas proposed by some of our 
colleagues, including our friends on the other side, was to create a 
fund, paid for in advance by the largest financial firms, to cover the 
cost of liquidating failed companies. This was not in my initial draft 
offered in November and was opposed by the Obama administration. Other 
Republicans have now expressed concerns about that prepaid fund because 
whether they pay in advance or after the fact, these costs will be paid 
by Wall Street, not the taxpayers. So I have no objection to dropping 
that provision. In fact, I was rather agnostic on it, as many of my 
colleagues were. We have the common goal to make sure taxpayers would 
not bear any costs. That is what we tried to achieve. There are a 
variety of ways of doing it. There were those who raised concerns about 
the prepayment program and raised the possibility, or the specter, or 
the optics that somehow they could be getting a preferred status. That 
was never the intent, but because people are concerned about the optics 
of it, we agreed to have a postpayment responsibility, or fund, that 
would be borne by creditors or the industry itself, based on whether 
there were enough assets in the failed institution to pick up the costs 
of winding down that firm that was failing. So that is where this comes 
from.
  Creditors will be required to pay back the government any amounts 
they received above what they would have gotten in liquidation. Those 
who directly benefited from the orderly liquidation will be the first 
to pay back the government at a premium rate.
  Congress must approve the use of debt guarantees. The Federal Reserve 
can only use its 13(3) emergency lending authority to help solvent 
companies. Regulators can ban culpable management and directors of 
failed firms from working in the financial sector. That is an add-on. 
It makes sense that if someone has been involved in the mismanagement 
of a company and caused this kind of disruption in the economy, then it 
requires that they would be banned from engaging in further economic 
activities.
  With this agreement, there can be no doubt that the Senate is unified 
in its commitment to end taxpayer-funded bailouts.
  There are some other provisions that I will run down very briefly: 
clawbacks of excess payments to creditors. This will allow, from 
creditors or the failed company, any payments that exceed what 
creditors otherwise would have received in liquidation. There is 100 
percent taxpayer protection through assessments. It maintains the 
protections in the bill so if the assets in the failed company and 
clawbacks from creditors are not enough to pay back all the Treasury 
borrowing with interest, FDIC will charge assessments to large firms, a 
penalty interest rate. There is a time limit on receivership. 
Management gets paid last any salaries or other compensation owed 
executives. Failed companies are paid last after creditors. There is a 
ban on management from going to work in the financial sector. There is 
a judicial check in this amendment, IG review, which requires the 
inspector general and various agencies and Federal regulators to review 
actions taken under the orderly liquidation authority. Financial 
company definitions are included, reports and testimony on top of the 
requirements in the underlying bill, the FDIC will have additional 
reporting requirements and will have to testify before Congress.
  As I mentioned, the 13(3) lending restrictions are only applied to 
solvent companies, as well. A congressional approval of FDIC emergency 
debt guarantees is included in this package as well.
  So there are a number of provisions, all of which we think basically 
make sense. We never argued with these ideas at all and the idea of 
whether it is prepayment or postpayment was an argument that went back 
and forth without any strong objections. Many of us were trying to 
figure out the best way to do this so taxpayers would not be left on 
the hook. Obviously, I want to leave time for Senator Shelby who will 
come over to talk about it. I wanted to give my colleagues an idea of 
the agreement that I am prepared to support when Senator Shelby offers 
this as an amendment.
  I see my friend from New Hampshire on the Senate floor. I will be 
glad to share this information and the other parts of the bill with my 
colleagues.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, I rise to speak about another part of the 
bill. I congratulate the chairman for the work he and Senator Shelby 
did on reaching this resolution on too big to fail. It is an important 
step forward on a critical part of the legislation. I think it shows 
that there are a lot of places where we can reach a bipartisan 
consensus in this bill.
  It is my sense that the great and very positive work done on 
resolution authority will--I would hope it will carry over to things 
such as the derivatives issue, which needs to be worked on, and issues 
such as underwriting standards and how the regulatory structure is 
created and how the chairs are moved around in that area. I think all 
of these issues are fertile ground for reaching consensus. I know the 
Senator from Connecticut has been constructive in his efforts to reach 
across the aisle.
  This bill can be a very strong and positive piece of legislation. I 
hope it ends that way. I think this is a strong and good step in that 
direction, with the announcement by the chairman on the agreement of 
resolution authority.
  I want to speak about a part of the bill that has been ignored 
because there have been so many big issues. That is what happens when 
you bring a bill this large to the floor. It is 1,400 pages, and it has 
a lot of language in it. It had to be a large bill because it deals 
with a complex issue. Included in the bill is language that was sort of 
baggage thrown on the train--that is the way I describe it--in the area 
of corporate governance. To a large degree, by its own definition, it 
has virtually nothing to do with financial regulatory reform. This 
language does a series of things: It primarily federalizes corporate 
law relative to the manner in which stockholders and directors and 
executives of corporations are treated.
  It is not limited to financial institutions but to any publicly 
traded company. It guarantees what is known as proxy assets under 
Federal law. That is a right traditionally set up by States. It sets up 
standards for how directors are elected under Federal law for all 
companies. That is a right that has usually been reserved to the 
States. It even puts in place a requirement that corporations disclose 
certain information that has absolutely no relevance at all to 
financial reform because it deals with every company in America

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that is publicly held, such as the ratio of compensation between 
different workers within a company and the manner in which boards of 
directors are elected, whether it is all at once or under staggered 
terms.
  It is a major push by the Federal Government into an arena that has 
always, historically, been primarily the role of States. It steps all 
over States rights, in my opinion--the right of shareholders to have 
companies they are comfortable with and are being well managed for the 
purpose of returning a reasonable return to the shareholders. It will 
undermine shareholders' rights, in my opinion, not increase them.
  If we look at the proposal specifically, let's take proxy assets. 
This is a term of art that essentially says that any group of 
shareholders will be able to put on a proxy statement a proposal for 
how the company should be run. If someone wants to balkanize a company, 
there is probably no quicker way to do it than to have unilateral proxy 
assets for any issue that is of concern or interest to some group that 
buys shares. This type of language is essentially put in to promote 
special interest activity. We all hear about how terrible special 
interests are. This language is special interest language for the 
purpose of promoting special interest groups--starting with the trial 
lawyers, of course, but followed up by various people who have a social 
justice purpose relative to some corporation.
  Let's take a group or a company such as McDonald's. Say a group 
believes they are selling too much food that creates the opportunity 
for people to eat too much and causes obesity.
  You could have a special interest group that was concerned about that 
buy stock and force a proxy statement on what type of food McDonald's 
should sell. It does not stop there. Of course, there are all sorts of 
issues about which special interest groups want to promote and change 
corporate governance.
  How you manage a corporation is supposed to be primarily in the hands 
of the boards of directors who are answerable to the stockholders. The 
purpose, of course, is to increase the value of the stockholders as a 
whole and their return on their investment. In most instances, that is 
the primary purpose of a corporation. But this Federal access, this 
proxy access is all about the opposite. It is about pushing agendas 
onto the management of corporations, through the boards of directors, 
through the proxy process that is very special-interest oriented and 
very narrow in its purpose and is not necessarily directed at return on 
the investment for the stockholders. It has just the opposite effect.
  Short-term objectives become the standard of the day under this type 
of approach rather than a long-term view, which is what most of our 
boards of directors are supposed to take relative to these decisions. 
The cause of the day, the cause du jour, could be any number of things. 
If it happens to be the activist view of the day, it becomes the issue 
under corporate governance versus the purpose of managing the 
corporation well over the long term in order to get adequate return to 
the shareholders.
  It is an inappropriate idea, especially inappropriate for the Federal 
Government to bury it in this bill. This language applies to every 
publicly traded corporation in America, not just the financial 
institutions. Why is it buried in this bill? It should not be in there.
  The same can be said of the way this bill, this language approaches 
directors and what the shareholders' rights are relative to directors. 
These have historically been State decisions. In fact, the State of 
Delaware, which is obviously the leading State on the issue of 
corporate governance and has developed a uniform corporate governance 
structure which a lot of States have adopted, including my State of New 
Hampshire, which basically tracks Delaware to a large degree--that has 
been the law of the land for all intents and purposes, settled law, 
predictable law, the purpose of which is to have fair and adequate 
corporate governance, where the directors are responsible to the 
shareholders under a structure that everybody knows the rules and which 
is controlled by the States.
  Yet this bill comes in and does fundamental harm to that. For what 
purpose? Because there is an agenda in this Congress to usurp States 
rights to be able to manage corporate law and to put in place of it 
opinions and ideas which are only supported by a very narrow group of 
special interests that basically have gotten the ear of people in this 
Congress. That is the ultimate special interest legislation.
  The implications for these companies is, it is going to be darn 
expensive, if you are a small- or middle-sized company, to deal with 
this type of Federal interference with the management of the company 
and the proxy process. It is a very inappropriate initiative.
  Furthermore, this creates an atmosphere where nobody is going to know 
who is governing what because you are going to now have State law and 
you are going to have Federal law and you are going to have the SEC 
whose responsibility will increase dramatically. We already know the 
SEC is strained to do what we have asked them to do. They have some big 
responsibilities. They have big responsibilities in the financial 
reform area. They have big responsibilities in corporate governance, 
generally. To push this further burden on them is going to be very 
difficult for them to meet. I happen to be a very strong supporter of 
having a robust SEC, but we should not burden them unnecessarily with a 
whole new set of corporate governance rules, which are already 
adequately and appropriately addressed by State law, primarily Delaware 
State law but other States which have their own corporate rules.
  More important, we should not undermine the rights of stockholders 
across this country to be able to get a reasonable return on their 
investments by being reasonably assured that their management--
specifically, the directors of the company--are working for the 
purposes of the company's financial return and strength versus for the 
purpose of some special interest group that comes in and wants to put 
special interest legislation in the middle of the corporate governance 
effort, which is exactly for which this language is proposed. That is 
why it is here.
  The reason this language is put forward is because there are a lot of 
self-proclaimed social justice groups in this country that decided they 
want better access to corporate boards and have this Federal proxy 
access which will basically balkanize, as I said earlier, the process 
of governing and leading these businesses in which most Americans are 
invested.
  The vast majority of Americans in this country either have a pension 
fund, IRAs, 401(k)s or are personally invested in the stock market. Why 
do they invest? They invest to get a reasonable return on that 
investment, either in the way of appreciation or in the way of 
dividends or maybe a combination. That is what they do. Most of the 
savings--a lot of the savings in this country are tied up in that.
  Why would this language appear which will basically undermine those 
stockholders' rights and ability to presume and expect that their 
directors are going to be managing for the purposes of the 
stockholders-at-large versus for a single interest group within the 
stockholder group that happens to want to put a social justice agenda 
into the management of that corporation? It makes no sense at all, 
unless you happen to be a special interest group.
  We rail around here all the time. I hear, ironically, from a lot of 
groups that are sponsoring this language, such as Public Citizen, that 
they are against special interests. Yet here we have the most 
significant piece of special interest legislation in this whole bill, 
an attempt to bootstrap special interest groups' social agenda and 
force them on corporations and stockholders who would otherwise not 
pursue their agendas because they are interested in getting a return on 
their investment. It is going to, as I mentioned earlier, make it much 
more difficult for us to have a vibrant stock market and a corporate 
structure in this country which is rational, and it certainly will 
undermine significantly States rights in the area of corporate 
governance, which historically had primary responsibility for setting 
up the rules by which our corporations operate.
  I hope that as this bill moves down the road, this type of language, 
which is extraneous--totally extraneous--to the financial reform effort 
because it affects all public corporations and,

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ironically, the three financial corporations which are at the core of 
the problem we had in 2008 relative to visibility--AIG, Lehman, and I 
believe one other, maybe Citibank--had a couple of these rules in place 
anyway. Obviously, they had nothing to do with reducing the 
implications of the event. Rather, this language is simply put in 
because some group got somebody's ear. I hope it will be taken out 
before we get to the end of the day.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Hagan). The Senator from Illinois.
  Mr. BURRIS. Madam President, roughly 2 years ago, the American 
economy stood on the verge of collapse. After years of growth and 
seemingly endless prosperity, the honeymoon was suddenly over. The 
bubble burst. The world was plunged into recession. Banks began to 
fail, foreclosures skyrocketed, businesses struggled, and many 
Americans lost their jobs. Working families saw their hard-earned 
economic security evaporate almost overnight. Some of our largest and 
most respected financial institutions were forced to close their doors 
and others were in imminent danger.
  In Washington, policymakers found themselves face to face with the 
worst economic crisis since the Great Depression. They took action. 
They were forced to make some difficult decisions, but they stopped the 
bleeding and set America back on the road to recovery.
  It is well known that reckless actions by large Wall Street firms 
helped get us into this economic mess. These companies skirted rules 
and regulations. They gambled with the securities of the entire 
financial system, and they lost.
  But my colleagues knew that if these large institutions collapsed, 
they would bring down the rest of our economy with them. They had 
become, as we say on this floor, too big to fail.
  In the face of the potential catastrophe, many of my colleagues 
summoned the kind of political courage that is rare in this town. They 
bit the bullet and voted to bail out these large firms, not because the 
firms deserved government help but because it was the only way to stop 
this recession from turning into a depression.
  It must have been a painful decision, but it provided stability at a 
volatile moment. It propped up ailing markets all over the world and 
helped pull this country out of an economic tailspin.
  Today, our recovery remains fragile, but we are moving in the right 
direction. Too many Americans remain unemployed, but the economy is 
starting to grow again. Key indicators are finally turning around.
  As this Chamber considers Wall Street reform, I believe it is time to 
make sure this can never happen again. Let's protect our financial 
system from the kind of recklessness and abuse that has cost us so 
much. Let's make sure we never again will be forced to prop up big 
banks or risk total collapse. Let us end too big to fail.
  As a former banker, I have a deep understanding of the role our 
financial institutions play. Banks help direct investment to local 
communities. They provide credit to small businesses and security to 
working families. When they make bad decisions, they deserve to suffer 
the consequences of those decisions. That is how our free market system 
works.
  When big banks try to get around these responsibilities, when they 
package these risk investments and sell off the risk to someone else, 
that is not banking, that is gambling. Without commonsense regulations 
and vigorous oversight, Wall Street becomes a casino. I heard my 
distinguished colleague from Nevada mention that Nevada is the gambling 
capital of the world. But Nevada would not even buy some of these odds 
in which some of these banks are involved.
  Sometimes these companies get lucky and their bets may pay off. But 
other times they are not so lucky. That is when they look to working 
families to either bail them out or suffer a second Great Depression.
  We need to make sure Americans never have to face this choice again. 
We have to prevent firms from growing so large and reckless that they 
threaten our entire economy. That is why I support the bill introduced 
by Chairman Dodd and say that it is a good bill, it is a strong bill 
which will end taxpayer bailouts, restore oversight, and set basic 
rules of the road so we can make sure too big to fail is a thing of the 
past.
  This bill will institute the Volcker rule, which will both restore 
and modernize some of the key protections of the Glass-Steagall Act of 
1933. I am also cosponsor of an amendment that is coming forward in 
this regard. I really support us going back to Glass-Steagall, having 
been a banker during those days when you couldn't invest in insurance 
companies, you couldn't invest in mortgage banking activity, and you 
had to be a commercial bank that took in the lending and the security 
of people's assets and made loans in that regard. So this would help 
prevent fraud, discourage conflict of interest, and keep banks from 
growing so large they threaten our economic security.
  The bill would also give us the tools to monitor big banks for risky 
behavior so that we could crack down on the irresponsible practices 
that caused this mess in the first place.
  I urge my colleagues to pass this bill as it will be amended, and I 
call upon them to join my good friend Senator Boxer in passing her 
amendment, which will help us bring down large unstable institutions 
without taxpayer bailouts. Taxpayers aren't going to take it anymore. 
We aren't going to be bailing out these big institutions only to have 
them turn around and pay huge bonuses to their top officials.
  Over the past 2 years, we have made great strides in helping to turn 
our economy around. In the last Congress, Members of both parties did 
what was necessary to stop the recession from deepening. Then, a little 
more than a year ago, I was proud to join many Members of this body in 
passing the American Recovery and Reinvestment Act--a landmark bill 
that continues to bring prosperity back to communities all across this 
country. As a result of these bold actions, our economy is finally on 
the right track.
  So let us in this body, at this time, finish this job. Let's pass 
this Wall Street reform bill, as amended, so that we can establish the 
basic rules of the road and allow our free markets to thrive again. 
Let's end too big to fail so no large bank will be able to gamble away 
our economic security. Let's do it now because the time is now.
  I yield the floor.


                        Passing of Ernie Harwell

  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. Madam President, I wish to start with a poem in honor of 
Ernie Harwell, who passed away yesterday. This is the way, for decade 
after decade, the great broadcaster of the Detroit Tigers started when 
the first game of the season came along.

     For, lo, the winter is past,
     The rain is over and gone;
     The flowers appear on the Earth;
     The time of the singing of birds is come,
     And the voice of the turtle is heard in our land.

  Well, for four decades a man named Ernie Harwell would recite those 
words. He would recite them at the beginning of the first baseball 
broadcast of spring training, and those are the words that would tell 
our people the long, cold winter was over.
  Ernie was the radio voice of the Detroit Tigers for 42 years. During 
that time, there may have been no Michiganian more universally beloved. 
Our State mourns today at his passing yesterday evening, after a long 
battle with cancer. He fought that battle with the grace and good humor 
and the wisdom Michigan had come to expect and even depend on from a 
man we came to know and love.
  This gentlemanly Georgian adopted our team and he adopted our State 
as his own, as did his family. His career would have been worthy had he 
done nothing more than bring us the sound of summer over the radio, 
recounting the Tigers' ups and downs with professionalism and wit, as 
he did for all those years.
  Without making a show of it, Ernie Harwell taught us in his work and 
his life the value of kindness and respect. He taught us that in a city 
and a world too often divided, we could be united in joy at a great Al 
Kaline catch or a Lou Whitaker home run or a Mark Fidrych strikeout. He 
taught us not to let life pass us by, in his words, ``like the house by 
the side of the road.''
  In 1981, when he was inducted into the Hall of Fame, Ernie told the 
assembled fans what baseball meant to him, and these were his words:


[[Page S3134]]


       In baseball, democracy shines its clearest. The only race 
     that matters is the race to the bag. The creed is the 
     rulebook. Color merely something to distinguish one team's 
     uniform from another.

  The was a lesson he taught us so well in everything he did in his 
life.
  I will miss Ernie Harwell personally and deeply and fondly. All of us 
in Michigan will miss the sound of his voice telling us that the winter 
is past, that the Tigers had won a big game or that they would get 
another chance to win one tomorrow. We will miss his Georgia drawl, his 
humor, his humility, his quiet faith in God, and the goodness in the 
people he encountered. But we will carry in our hearts always our love 
for Ernie Harwell, our appreciation for his work, and the lessons that 
he gave us and left us and that we will pass on to our children and to 
our grandchildren.
  Madam President, I yield the floor, and I suggest the absence of a 
quorum.
  Ms. STABENOW. Madam President, today I pay tribute to an 
extraordinary man who passed away yesterday at the age of 92 years old: 
Ernie Harwell.
  For 42 years, families throughout Michigan tuned into their radios 
and welcomed Ernie's signature voice into their homes as they listened 
to him call Detroit Tigers games. When he retired in 2002, Senator 
Levin and I submitted a resolution, which the Senate passed, 
celebrating his achievements and congratulating him on his many years 
of service. Today, I join with millions of people in Michigan and 
around the Nation in wishing Ernie a final farewell.
  His accomplishments were many, and he will always hold a special 
place in our hearts and in our memories. He was the first active 
broadcaster inducted into the Baseball Hall of Fame, and for good 
reason. In 1948, when he was calling games for a Minor League team in 
Atlanta, they actually traded Ernie--their announcer!--for a backup 
catcher from the Brooklyn Dodgers. He joined the Detroit Tigers in 1960 
and during his tenure, he missed only two games--one for the funeral of 
his brother and another when he was inducted to the National 
Sportscasters and Sportswriters Association Hall of Fame.
  His most memorable broadcasts include the broadcasting debut of 
Willie Mays in 1951, Bobby Thomson's ``shot heard 'round the world'' 
that same year, and Hoyt Wilhelm's no-hitter against the New York 
Yankees in 1958. Ernie brought to life, through the medium of radio, 
the performances of some of baseball's greats, such as Sparky Anderson, 
Kirk Gibson, Al Kaline, Denny McLain, Alan Trammell, and so many 
others.
  He loved the people of Michigan, and we surely loved him back. In 
2009, he said, ``I deeply appreciate the people of Michigan. I love 
their grit, I love the way they face life, I love the family values. 
And you Tiger fans are the greatest fans of all. No question about 
that.''
  Today, Tigers fans everywhere mourn the loss of the great man who 
gave us so many wonderful memories over the years. I offer my deepest 
condolences to his beloved wife of 68 years, Lulu, his two sons and two 
daughters, and his many grandchildren and great-grandchildren. Although 
Ernie has left us in this world, I know that he will live on in the 
memories of every Tigers fan.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. NELSON of Florida. Madam President, I ask unanimous consent the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NELSON of Florida. I ask consent I be allowed to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Oilspill Threat

  Mr. NELSON of Florida. Madam President, we have a huge potential 
economic and environmental disaster in the Gulf of Mexico that is 
occurring as we speak. It was on an exploratory rig. It is almost 
unbelievable how far they can now drill beneath the surface of the 
water. In this case it was 5,000 feet, and then, at the ocean bottom, 
they were able to drill another 13,000 feet down to find a pocket of 
oil, all of which caused this explosion because of the pressure of the 
oil and the gas, the natural gas, creating such an overpressure that it 
exploded at the wellhead at the sea bottom. A device, a so-called 
blowout preventer, that had three safety mechanisms in order to stop 
the flow of oil in the case of a blowout--none of those three safety 
mechanisms have worked.
  The first was a mechanism that would be activated by a switch 5,000 
feet up from the sea bed on the surface of the Gulf of Mexico on the 
floating exploratory rig. There were actually two switches. One was 
flipped closer to the surface by workers on the rig, who unfortunately 
lost their lives and they have not been found. The second switch was at 
a higher level. I think they refer to it as the bridge. Those workers 
were rescued. They confirm that switch was flipped, which was to 
automatically cause the first safety device to go into activation, 
which was to drive metal plates like pistons together over the wellhead 
to cut off the flow of oil as it was gushing upwards from the pressure 
beneath. That activation mechanism did not work.
  The second safety mechanism was one called a dead-man switch; that 
is, whenever power was interrupted, automatically the second safety 
mechanism was to activate, driving those metal plates together to shut 
off the flow of oil. That did not work, as well.
  The third safety mechanism was to use robotic submersibles that are 
quite sophisticated, that have manipulator capability even at that 
depth, the depth of a mile, to go in and physically get hold of a 
handle, an actuating device that would literally pump a hydraulic pump 
to drive the plates together to shut off the well. That third safety 
device did not work either.
  This safety device, referred to as a blowout preventer, was designed 
and built by a company that was contracted to BP, British Petroleum, 
called Transocean. We now know from the Times of London, in a published 
article over the weekend, that as far back as 10 years ago, in the year 
2000, British Petroleum had been concerned with the safety devices 
working and had asked Transocean, which built the devices, about this. 
I asked the CEO yesterday, the CEO of British Petroleum, what occurred 
10 years ago. You were put on notice there was a safety mechanism that 
maybe was not working. He said that was raised and they worked it out.
  Apparently, 10 years later, these safety devices did not function--so 
that they worked it out.
  As you know, what is happening, the initial results provided by BP 
are that it was 1,000 barrels of oil a day. The Coast Guard has 
estimated that it is now five times that much and we are waiting for 
updates. So what is gushing from the ocean floor below is 5,000 barrels 
of oil a day. That is in excess of 220,000 gallons of oil a day that 
are coming into the waters of the Gulf of Mexico. It has created this 
slick that is now, because of the southeasterly winds, to start 
encountering the Barrier Islands off the southeast coast of Louisiana.
  Lord knows where this is going to go. So what do they do now? Right 
now, they are constructing a fancy dome. This is a multistory 
structure, probably 10 times my height, that has worked in other 
blowouts but only at depths of 300 and 400 feet.
  They have to try to place this dome 5,000 feet deep, over the 
wellhead, to see if they can then collect that escaping oil into this 
dome and then run it up a pipe to a transport and collect the oil 
there.
  But, by the way, we do not know that it is going to work at 5,000 
feet because of the pressure. We do not know if they can actually 
locate it 5,000 feet over the wellhead. What comes up if they do--and 
collect it--is not just oil, but there would be a rush of oil, then 
there would be a rush of natural gas, there would be a rush of 
seawater, and all along having sand corroding the inside of that pipe 
like sandpaper as it rushes up the pipe 5,000 feet to the surface 
tanker.
  Let's hope it works. Because if it does not, then we have to wait 3 
months for the rescue well that is presently being dug from the side, 
to go down 13,000 feet to the pocket of oil, to start sucking the oil 
out through the rescue well, thereby relieving the pressure up through 
the defective well that exploded. They will have to, in fact, drill not 
one but two rescue wells from the side.

[[Page S3135]]

  But the estimates are that will take 90 days. If this dome does not 
work, which they are to insert in the ocean in the next few days, then 
we are looking at the possibility of that oil continuing to gush for 3 
months. You can see after 2 weeks how much of an oil slick there is out 
there.
  You can imagine, if you go on for another 13 weeks, how that could 
start to cover the Gulf of Mexico and much worse as the prevailing 
winds from the south would carry it onto some of the world's most 
beautiful beaches, those along the northwest coast and the gulf coast 
of Florida.
  But, oh, by the way, there is another threat now. That is something 
Mother Nature has designed, known as the Loop Current. The Loop Current 
is a current of water that comes up the western side of Cuba, in 
between Cuba and the Yucatan Peninsula of Mexico, up into the northern 
Gulf of Mexico, loops and comes to the south, off the southwest coast 
of Florida, loops down around the Florida Keys and turns northeast and 
northward, hugs the Florida Keys, becomes the Gulf Stream, which hugs 
the Keys. Those delicate coral reefs, 85 percent of North America's 
coral reefs are in the Keys. And then it hugs the shore of Florida 
along the southeast coast all the way up to central Florida, to Fort 
Pierce, where it then leaves the coast of Florida, goes across the 
Atlantic Ocean and ends up over close to Scotland. That is the Gulf 
Stream. That was the stream that 500 years ago used to carry the 
Spanish Galleons, along with the wind, back from their discoveries of 
the New World as they went back to Europe.
  You can imagine, if the spill gets so big in the Gulf of Mexico that 
then it encounters the Loop Current and that spill then starts carrying 
that oil down the southwest coast of Florida, around the Florida Keys, 
hugging the Florida Keys and the coral reefs and up the east coast of 
Florida, we are looking at potential major economic and environmental 
loss.
  So the question is: What do we do? Well, first of all, I have not 
only requested but, in my kind of mild way, have strongly suggested 
that we stop all exploratory drilling, at least until the investigation 
that many of us in this Chamber have asked for, until that 
investigation is over, as to what went wrong and what we can do to 
prevent it in the future.
  Oh, by the way, that is not going to be a few weeks' investigation. 
By the time you get through with all this, it is going to be months. So 
we should not be doing any more exploration with the possibility of 
more explosions such as this. I did not say production wells; they need 
to keep producing.
  This risk, this blowout, was in an exploratory rig. That ought to be 
stopped. I asked the CEO of BP yesterday: Have you stopped exploratory 
drilling?
  He says: Yes.
  I said: Where?
  He said: In the Gulf of Mexico.
  I said: How about worldwide?
  He said: No; only in the Gulf of Mexico.
  Well, what should the President do, other than what he is doing; that 
is--and I give credit where certainly credit is due--the operation 
being taken over by the top four-star Admiral of the Coast Guard, since 
they have the lead. I have talked to the Chairman of the Joint Chiefs; 
the U.S. Navy is fully supporting the lead, which is the Coast Guard; 
all the agencies of Government; NOAA, Dr. Lubchenco; the Department of 
Interior, our former colleague from the Senate, Secretary Ken Salazar. 
I mean, you can go on down the list. They are all pouring in to try to 
help because we have a disaster of monumental proportions that is in 
the making and ruining peoples' lives, their livelihoods, their 
incomes, their way of life, their culture. We are talking about all of 
the above.
  So I strongly suggest to the President that he ought to abandon his 
5-year plan that was for offshore drilling in the Outer Continental 
Shelf, but which he proposed, at least in the Continental United 
States, he proposed it only in the Gulf of Mexico and off the mid-
Atlantic coast. I suggest he withdraw that. If he does not, I believe 
it is dead on arrival.
  Where do we go from here in the future? Potentially, we are looking 
at extraordinary financial loss. So I asked the chairman and CEO of 
British Petroleum yesterday afternoon, I said: You realize the existing 
law on liability says you handle the cleanup costs but that the 
existing law has a cap on your liability after $75 million. Do you 
agree that the economic loss is going to exceed $75 million?
  He said: Yes.
  I said to him: You have been saying on TV that you think British 
Petroleum will be the responsible party and take care of this. When it 
exceeds $75 million, are you going to accept all that liability?
  He said: We will work that out.
  I said: Well, if I understand that, as far back as 2000, your company 
had a problem with Transocean and their safety devices and the blowout 
preventer. Are you not going to have some considered lawsuit against 
Transocean for a defective piece of equipment?
  He said: We are going to work that out.
  So I suspect what we are going to see is some of the most enormous 
and complicated lawsuits you have ever seen, with a lot of finger-
pointing that is going to be going around many different circles, and 
the question of liability for all those people who are going to be 
losing their jobs and their livelihood and their cultures if this 
gusher, this underwater volcano, is not cut off. I suspect what we are 
going to see is an attempt to avoid that economic liability. Therefore, 
that is why Senator Menendez and Senator Lautenberg and I filed, Monday 
night, a bill that will lift that liability cap from a meager $75 
million to $10 billion, because you can see that $10 billion economic 
loss is not an unrealistic figure and is what could happen if this oil 
continues to gush for another 3 months.
  Well, let me complicate things a little bit. Because if the gusher 
continues for 3 months, you know what starts on June 1? Hurricane 
season. Do you know it has been historically a fact that several 
hurricanes brew in the month of June in the Gulf of Mexico? So can you 
imagine a big part of the Gulf of Mexico being polluted with oil and 
suddenly having that all stirred up with the complications of a 
hurricane.
  This is not a pretty picture. It is a major environmental and 
economic disaster of the most gargantuan proportions that we can ever 
imagine.
  For my final comments, let me say, I have, this Senator, often been 
derided, derided for standing for the economic and environmental 
interests of my State, my State of Florida, which has more coastline 
than any other State, save for Alaska, and certainly has more beaches 
than any other State, for trying to protect those interests as well as 
the interests of the U.S. military, since most of the Gulf of Mexico 
off Florida is the largest testing and training area for the U.S. 
military in the world.
  From two successive Department of Defense Secretaries, Rumsfeld and 
then Gates, I have in writing that the policy of the Defense Department 
is in place that oil activities and oil structures are incompatible 
with the testing and training necessities of the Department of Defense 
in preparation for our national security interests. This Senator will 
continue to protect all of those interests.

  It is my hope people will understand that the tradeoffs of drilling 
close to Florida are simply not worth the risk. Why is that? Because of 
the statistics of the Department of the Interior concerning 
undiscovered oil in the Gulf of Mexico. Ninety percent of that oil is 
not off of Florida; it is in the central and western gulf. From the 
statistics of the Department of the Interior, only 10 percent of that 
undiscovered oil is off Florida. Is it worth the risk for that de 
minimis oil to have future potential economic and environmental 
disasters? Clearly, the answer from this Senator is as it has been for 
over 30 years that I have been waging this battle, first as a young 
congressman and now in the position of representing all of Florida: The 
tradeoff risk is not worth it.
  I wanted to bring this to the attention of the Senate. Unfortunately, 
this story is a continuing one because although this story began over 
three decades ago, it is still a drama that continues to unfold with 
tragic consequences.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. SANDERS. Madam President, as soon as I possibly can, I intend to 
bring

[[Page S3136]]

up an amendment which calls for transparency at the Fed. I must tell my 
colleagues that this amendment is one of the more unusual amendments 
that has been brought up in the Senate, I suspect for many years, 
because of the rather strange coalition that has come together around 
it. How often do we have the AFL-CIO, a progressive organization, and 
Freedom Works, a very conservative organization, supporting the same 
effort? How often are the SEIU, the largest union in America; 
moveon.org, 5 million members as a progressive organization; and Public 
Citizen, another progressive organization, striving for the same goal 
as the National Taxpayers Union or the Eagle Forum or Americans for Tax 
Reform, very conservative organizations? How often do we have some of 
the most progressive Members in Congress--and I include myself within 
that fold--working with some of the more conservative Members? It 
doesn't happen every day, but that is what is happening on this 
amendment.
  I rise to talk about the amendment, what it does, and why so many 
diverse groups, representing tens of millions of Americans, are coming 
together in support of it. I also wish to suggest what it does not do 
and some of the ways it has been distorted by the Fed and other groups 
that are opposed. I have seen some of the statements made by the Fed 
which are absolutely untrue in terms of what this amendment does and 
does not do.
  For me, the origin of this amendment came on March 3, 2009, when, as 
a member of the Budget Committee, I asked the Chairman of the Fed, Ben 
Bernanke, a very simple question. I asked him if he would tell me, the 
committee, and the American people which financial institutions 
received over $2 trillion in zero interest or near zero interest loans 
during the start of the economic crisis. During the bailout period, 
some $2 trillion of taxpayer money was lent. My question was: Mr. 
Chairman, who received that money? I don't think that is an unfair 
question. We have heard great debates here on the Senate floor about $5 
million or $10 million. To ask who received over $2 trillion in zero or 
near zero interest loans is something I believe should be answered by 
the Fed, and they should make that information public. But Bernanke 
said no. He gave his reasons.
  On that very day, I introduced legislation that would require the Fed 
to put this information on its Web site, make it public, just as 
Congress required the Treasury Department to do with respect to the 
$700 billion TARP money. Some may like TARP; some may not. Some may 
have voted for it; some may not have. But the information about who 
received the money, when it was paid back, et cetera, is right there on 
the Web site of the Treasury Department.
  This $2 trillion in zero or near zero interest loans does not belong 
to the Fed. It belongs to the American people, and the American people 
have a right to know where trillions of their taxpayer dollars are 
going. It is not complicated. One doesn't need an MBA from Wharton to 
know that. That is why millions of Americans, whether conservative or 
progressive or in between, have come together to say we need 
transparency at the Fed.
  This amendment not only requires that the Fed tell us who has 
received the $2 trillion it lent out, but, similar to the language 
incorporated in the House bill, it calls for an audit of the Fed by the 
GAO. As we all know, the GAO is the nonpartisan Government 
Accountability Office that does a great job in trying to figure out 
where there is waste and fraud within the government. That is it. This 
is a very simple, short amendment. It is five pages. It calls for 
transparency at the Fed and a straightforward audit. Who got what? When 
did they get it? On what basis and on what terms? Who was at the 
meetings? Who made the decisions and were there conflicts of interest? 
Simple, factual questions the American people deserve answers to. That 
is what it is; it is not complicated.
  I understand this amendment will not be supported by everyone. Some 
may suggest, inaccurately--and I have heard these statements--that this 
amendment ``takes away the independence of the Federal Reserve and puts 
monetary policy into the hands of Congress.'' Let me address those 
concerns by simply reading exactly what is in the amendment. It is not 
complicated. I quote from page 4 of the amendment. This is what it 
says. I don't think I can be more straightforward than this:

       Nothing in this amendment shall be construed as 
     interference in or dictation of monetary policy by the 
     Federal Reserve system, by the Congress, or the Government 
     Accountability Office.

  It can't be more simple. It can't be more straightforward than the 
language in this amendment. So when people tell us this amendment is 
going to interfere and have Congress dictate monetary policy, it is 
simply not true. In other words, this amendment does not take away the 
``independence of the Fed'' and it does not put monetary policy into 
the hands of Congress. This amendment does not tell the Fed when to cut 
short-term interest rates or when to raise them. It does not tell the 
Fed what banks to lend money to and what banks not to lend money to. It 
does not tell the Fed which foreign central banks it can do business 
with and which ones it cannot. It does not impose any new regulations 
on the Fed, nor does it take any regulatory authority away from the 
Fed. It does none of those things, no matter what anybody coming to the 
floor may say.
  What the opponents of this amendment are doing is equating 
independence, which we support, with secrecy, which I do not support. 
At a time when our entire financial system almost collapsed, we cannot 
let the Fed continue to operate in the kind of secrecy they have 
operated in for years. The American people have a right to know.
  Very often, we see Senators coming down here to the floor to make the 
point that working people have to play by the rules. How often have we 
heard that rhetoric? What are the rules governing the Fed? Who makes 
those rules or do they just make them up as they go along?
  Let me list a few of the questions millions of Americans and Members 
of Congress are asking that a GAO audit might help to answer. I am sure 
there are many more.
  Question: Why was Lloyd Blankfein, the CEO of Goldman Sachs, invited 
to the New York Federal Reserve to meet with Federal officials in 
September of 2008 to determine whether AIG would be bailed out or 
allowed to go bankrupt? I wasn't invited to that meeting. Other 
Senators were not invited to that meeting. Lloyd Blankfein was invited 
to that meeting.
  When the Fed and Treasury decided to bail out AIG to the tune of $182 
billion, why did the Fed refuse to tell the American people where that 
money was going? Why did the Fed argue that this information needed to 
be kept secret ``as a matter of national security''?
  When AIG finally released the names of the counterparties receiving 
this assistance, how did it happen that Goldman Sachs received $13 
billion of this money, 100 cents on the dollar on what AIG owed them? 
How did that happen? I don't know. We don't know. The American people 
don't know. But I think we have a right to know.
  Did Goldman Sachs use this money to provide $16 billion in bonuses to 
its top executives the next year? All over this country, Americans have 
lost their jobs. They have lost their homes. They have lost their 
savings. They have lost their ability to send their kids to college 
because of this recession caused by Wall Street. Yet Goldman Sachs gets 
$13 billion--100 cents on the dollar--after AIG is bailed out at a 
meeting in which Lloyd Blankfein is in attendance.
  I think it is an interesting question. I don't know the answer, but I 
think the American people have a right to know. A GAO audit of the Fed 
might help explain to the American people if there were any conflicts 
of interest surrounding that deal. Who got what? On what basis? On what 
terms? Who was at the meetings? Who made the decisions? And were there 
conflicts of interests?

  In 2008, it seems to me--I did not go to Harvard Business School, but 
it does seem to me--there was an apparent conflict of interest at the 
Federal Reserve Bank of New York when Stephen Friedman, the head of the 
New York Fed--who also served on the board of directors of Goldman 
Sachs--let me repeat that: He was the head of the New York Fed; he also 
served on the board of directors of Goldman Sachs--and the New York Fed 
approved Goldman's application to become a bank holding

[[Page S3137]]

company, giving it access to cheap loans from the Federal Reserve.
  Let me quote from an article published in the Wall Street Journal on 
May 9, 2009, and let the American people determine whether this 
deserves a GAO audit. Quoting the Wall Street Journal:

       Goldman Sachs received speedy approval to become a bank 
     holding company in September of 2008. . . . During that time, 
     the New York Fed's chairman, Stephen Friedman, sat on 
     Goldman's board and had a large holding in Goldman stock, 
     which because of Goldman's new status as a bank holding 
     company was a violation of Federal Reserve policy. The New 
     York Fed asked for a waiver, which after about 2\1/2\ months, 
     the Fed granted. While it was weighing the request, Mr. 
     Friedman bought 37,300 more Goldman shares in December. They 
     have since risen $1.7 million in value. Mr. Friedman, who 
     once ran Goldman, says none of these events involved any 
     conflicts.

  That was from the Wall Street Journal of May 9, 2009.
  Well, maybe Mr. Friedman is right. Maybe there is not a conflict of 
interest. It seems to me there is a very apparent conflict of interest, 
but that is an issue that maybe a GAO audit might want to look at.
  As a result of the bailout of Bear Stearns and AIG, the Fed now 
owns--this is pretty amazing--now owns credit default swaps betting 
that California, Nevada, and Florida will default on their debt. Let me 
repeat that. Senators from California and Nevada and Florida might be 
interested in this. As a result of the bailout of Bear Stearns and AIG, 
the Fed now owns credit default swaps betting that California, Nevada, 
and Florida will default on their debt.
  So the Federal Reserve stands to make money if California, Nevada, 
and Florida go bankrupt. What can I tell you? This is the reality. I 
know it will seem strange to the American people that the Fed makes 
money and is betting that three of our great States go bankrupt. This 
may make sense to the Fed. It may make sense to some of my colleagues 
in the Senate. It does not make sense to me. Frankly, I do not believe 
it makes sense to the American people. But this is what an audit of the 
Fed will allow us to better understand: whether we want the Fed to be 
betting against some of our great States, that they will go bankrupt.
  It has been reported that the Federal Reserve pressured Bank of 
America into acquiring Merrill Lynch--making this financial institution 
even bigger and riskier--allegedly threatening to fire its CEO if Bank 
of America backed out of this merger. When the merger went through, 
Merrill Lynch's employees received $3.7 billion in bonuses. Was this a 
good deal or a bad deal for the American taxpayer? Perhaps a GAO audit 
can help us find out.
  When the Fed provided a $29 billion loan to JPMorgan Chase to acquire 
Bear Stearns, the CEO of JPMorgan Chase, Mr. Diamond, served on the 
board of directors at the New York Federal Reserve. Let me repeat that. 
When the Fed provided a $29 billion loan to JPMorgan Chase to acquire 
Bear Stearns, the CEO of JPMorgan Chase, Mr. Diamond, served on the 
board of directors at the New York Federal Reserve.
  Did this represent a conflict of interest? To my mind, it does. Maybe 
I am wrong. But that is what a GAO audit can help explain to the 
American people.
  Again, I know we are going to have Senators running down here saying: 
Oh, we are trying to break the independence of the Fed.
  We are not trying to do that. What we are trying to do is allow the 
American people to get a glimpse and an understanding of some of the 
actions of the Fed involving huge sums of money.
  Currently, some 35 members of the Federal Reserve's board of 
directors are executives at private financial institutions which have 
received nearly $120 billion in TARP funds, but we do not know how much 
these big banks received from the Fed. A GAO audit could answer that 
question.
  Here is a very interesting point I know a lot of Senators have raised 
in different context: If the goal of the huge amounts of money in Fed 
loans--trillions of dollars in Fed loans--to large financial 
institutions was to achieve the goal of getting credit flowing to 
small- and medium-sized businesses that were cash starved--they were 
crying out for credit--why is small business lending in freefall? What 
happened? We gave the large financial institutions trillions of 
dollars, presumably to get it out to the small- and medium-sized 
businesses. They have not gotten it. Question--I think it is a 
reasonable question, and I am not the only one who is asking it--how 
much of those zero interest or near zero interest loans that these huge 
financial institutions received from the Fed were simply invested in 
Federal Government bonds, earning an interest rate of 3 or 4 percent?
  In other words, are we looking at a huge scam? I cannot think of a 
better word. You give these large financial institutions trillions of 
dollars in zero interest loans in order to enable them to provide 
desperately needed loans to small- and medium-sized businesses, so 
those businesses can expand and create jobs. Yet that appears not to be 
happening.
  Question: How much of those--those several trillion dollars in 
loans--simply went from the Fed to the financial institutions in order 
to purchase government-backed obligations at 3 or 4 percent? If that is 
the case, that is just giving away money. You have zero interest coming 
in; you get 3 or 4 percent guaranteed by the faith and credit of the 
United States of America.
  Well, do you know what. I do not know. I do not know how much. I 
suspect, other people suspect, that was done. How much, I do not know. 
Maybe the GAO can tell us.
  This amendment is virtually identical to legislation I have 
introduced on this subject that has 33 cosponsors. Just as we have a 
very broad spectrum of political ideology from grassroots organizations 
on the left and the right--conservative, progressive; Democrat, 
Republican--supporting this amendment, so we have had widespread--
across ideology--support for this legislation.
  Let me mention who the 33 cosponsors are. You will see how people 
with very different political ideologies have come together. The names 
of those people are: Senators Barrasso, Bennett, Boxer, Brownback, 
Burr, Cardin, Chambliss, Coburn, Cochran, Cornyn, Crapo, DeMint, 
Dorgan, Feingold, Graham, Grassley, Harkin, Hatch, Hutchison, Inhofe, 
Isakson, Landrieu, Leahy, Lincoln, McCain, Murkowski, Risch, Sanders, 
Thune, Vitter, Webb, Wicker, and Wyden. Those are the people who have 
supported the legislation.
  This amendment coming to the floor has 20 cosponsors--Republicans and 
Democrats alike--and I want to thank all of those Senators for their 
support.
  In terms of progressive grassroots organizations, this amendment 
enjoys the strong support of the AFL-CIO; the SEIU, the largest union 
in America; the United Steelworkers of America; Public Citizen; the New 
America Foundation; the Center for Economic Policy and Research; the 
Roosevelt Institute; the U.S. Public Interest Research Group; and 
Americans for Financial Reform, which in itself is a coalition of over 
250 consumer, employee, investor, community, and civil rights groups.
  Let me read you a letter of support I received for this amendment 
from Bill Samuel, the legislative director of the AFL-CIO. This what 
the AFL-CIO said:

       On behalf of the AFL-CIO, I am writing to urge you to 
     support--

  This is a letter going out to other Senators--

     the Sanders, Feingold, DeMint, Leahy, McCain, Grassley, 
     Vitter, Brownback amendment to increase transparency at 
     the Federal Reserve. . . . Working people want to know who 
     benefitted from the liquidity provided by taxpayers during 
     the crisis and this amendment will ensure that we receive 
     this information.

  Let me also quote from a letter I received from Andy Stern, the 
president of the SEIU, the largest union in the country; and also from 
Leo Gerard, the president of the United Steelworkers of America; and a 
number of other academics and economists. This is what they write:

       Since the start of the financial crisis, the Federal 
     Reserve has dramatically changed its operating procedures. 
     Instead of simply setting interest rates to influence 
     macroeconomic conditions, it rapidly acquired a wide variety 
     of private assets and extended massive secret bailouts to 
     major financial institutions. There are still many questions 
     about the Fed's behavior in these new activities. The Federal 
     Reserve balance sheet expanded to more than $2 trillion, 
     along with implied and explicit backstops to Wall Street 
     firms that could cost even more. Who

[[Page S3138]]

     received the money? Against what collateral? On what terms 
     and conditions? The only way to find out is through a 
     complete audit of the Federal Reserve. That's why we support 
     the Sanders, Feingold, DeMint, Leahy, McCain, Grassley, 
     Vitter, Brownback amendment to increase transparency at the 
     Fed.

  That is what leading progressive economic and social justice 
organizations are saying about this amendment.
  Let me briefly, if I might, quote from some of the conservative 
organizations. One of the larger ones is the National Taxpayers Union. 
I do not usually quote from the National Taxpayers Union. I think I am 
not rated very highly on their chart. But this is what they say in 
support of this amendment:

       The National Taxpayers Union urges all Senators to vote 
     ``YES'' on S. AMDT 3738 to the financial regulatory reform 
     legislation. This amendment, introduced by Senators Sanders 
     and DeMint, would require the Government Accountability 
     Office to conduct an audit of the Federal Reserve. . . . 
     Transparency is not a Democrat or Republican issue, but 
     rather an issue of right or wrong. If the Senate insists on 
     further expanding the Fed's reach, Americans deserve to know 
     more about the workings of a government-sanctioned entity 
     whose decisions directly affect their economic livelihood. A 
     ``YES'' vote on S. AMDT 3738 will be significantly weighted 
     as a pro-taxpayer vote in our annual Rating of Congress.

  We also have support from other conservative organizations, including 
Americans for Tax Reform, the Campaign for Liberty, the Rutherford 
Institute, the Eagle Forum, FreedomWorks, and the Center for Fiscal 
Accountability. In a letter of support I received from them they write:

       We urge you to vote for Senators Sanders, Feingold, DeMint, 
     and Vitter's Federal Reserve Transparency Amendment . . . 
     This amendment does not take away the ``independence'' of the 
     Fed. It simply requires the GAO to conduct an independent 
     audit of the Fed and requires the Fed to release the names of 
     the recipients of more than $2 trillion in taxpayer-backed 
     assistance during this latest economic crisis. Any true 
     financial reform effort will start with requiring 
     accountability from our nation's central bank.

  Let me conclude by saying this amendment is not a radical idea. I 
have just indicated to you that we have progressive groups, 
representing millions of people, and we have conservative groups, 
representing millions of people. We have the AARP, the largest senior 
group, representing, I think, tens of million of Americans.
  I should also mention to you that as part of the budget resolution 
debate in April of 2009, the Senate voted overwhelmingly in support of 
this basic concept, by a vote of 59 to 39.
  In the House of Representatives, this concept passed the House 
Financial Services Committee by a vote of 43 to 26 and was incorporated 
into the House version of Wall Street reform that was approved by the 
House last December.
  In other words, a lot of what I am talking about is in the House 
bill--not a radical concept. This idea has the support of the Speaker 
of the House, Nancy Pelosi, who said Congress should ask the Fed to put 
this information ``on the Internet like they've done with the recovery 
package and the budget.'' That is what this amendment does.
  This concept has also been supported--and this is important. I know 
my friend from Texas wants to speak. I am winding down and I apologize 
for going on this long. But it is important to point out that this 
concept has also been supported by two Federal courts that have ordered 
the Fed to release all of the names and details of the recipients of 
more than $2 trillion in Federal Reserve loans since the financial 
crisis started as a result of a Freedom of Information Act lawsuit 
filed by Bloomberg News.
  The Fed has argued in court that it should not have to release this 
information citing, according to Reuters: ``an exemption that it said 
lets federal agencies keep secret various trade secrets and commercial 
or financial information.'' That is what the U.S. Appeals Court in New 
York said in disagreeing with the Fed. It was a unanimous three-judge 
appeals court. This is what they wrote in their opinion:

     to give the [Fed] power to deny disclosure because it thinks 
     it best to do so would undermine the basic policy that 
     disclosure, not secrecy, is the dominant objective. If the 
     board believes such an exemption would better serve the 
     national interests, it should ask Congress to amend the 
     statute.

  Let me conclude by saying this: We now have 59 Senators having voted 
for this transparency, 320 Members of the House, and 2 U.S. courts. All 
we want to know is who got trillions of dollars. That is what we want 
to know. We also want to know on what basis, on what terms, and who was 
at the meetings where key decisions were made.
  This is an important amendment, and it is an amendment that millions 
of people want to see pass. I hope we will have an opportunity to offer 
it as soon as possible, and I hope it is passed.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I appreciate hearing the Senator from 
Vermont describe his amendment. I haven't seen the text of the 
amendment, but I am a cosponsor of the bill that would do exactly what 
he says. I think transparency at the Fed is something we can agree on. 
So I look forward to seeing the rest of the amendment, and if it is 
just that, I will be very pleased to work with him for passage.
  I rise to speak today on the Hutchison-Klobuchar amendment. My 
colleague, Senator Klobuchar from Minnesota, is also on the floor. We 
wish to take a moment to talk about our amendment, which will assure 
that community banks have a more level playing field than could be the 
case if the bill that is before us, the Dodd bill, passes without our 
amendment.
  Our debate to reform our financial regulatory structure should focus 
first and foremost on filling the gaps in regulation that led to our 
financial crisis. I am encouraged by the good-faith efforts of Senators 
Dodd and Shelby to end too big to fail, and I certainly hope we will 
see language on that so it is put aside, because I think that is the 
most important area of this bill. We must end too big to fail. When 
Senator Dodd and Senator Shelby produce the language they have agreed 
on, I think that will open the rest of this bill for amendments such as 
the Hutchison-Klobuchar amendment we are discussing now that I think 
should be part of overall reform.
  We have to look at other areas of concern besides too big to fail 
such as the lax underwriting standards and the lack of transparency 
over our derivatives markets. Those are amendments that will also be 
coming to the floor to assure we address those key issues in financial 
reform. One area on which we can find agreement is that our Nation's 
community banks were not a cause of the financial collapse we have seen 
in the last 18 months. They didn't have risky loans and financing 
schemes that sent our economy into a downward spiral. Financial reform 
should not punish the financial institutions such as community banks 
for faults they did not commit. If anything, financial reform should 
reflect what we learned from the safe and sound practices that are used 
by community banks.
  We should learn from the example of Texas First Bank, Galveston 
County's largest locally owned family of community banks. On September 
13, 2008, Hurricane Ike made landfall over Galveston, TX, packing 
strong winds and a high storm surge that ravaged much of Texas's gulf 
coast. Two days later, on Monday, September 15, 2008, Texas First Bank 
was open for business and many of its locations provided ``Hurricane 
Ike Relief Loans'' and other services to area families and small 
businesses reeling from Ike's damage.
  Senator Mary Landrieu and I visited Galveston several weeks later. I 
was there a day or so after the surge that came over Galveston in a 
helicopter, but I couldn't get on the ground at that point. So we came 
several weeks later, Senator Landrieu and I, because we wanted to look 
at the recovery, because Senator Landrieu of course has had so much 
experience with Hurricane Katrina. We wanted to do everything we could 
to get help to people. We had a press event at a small neighborhood 
restaurant. The community banker from Hometown Bank was there and was 
applauded by the owner of the little Italian restaurant. He said: The 
banker was in there helping us clean up the restaurant and made sure 
that we had the liquidity to open our doors, because there was no food 
to be had on Galveston Island at that time. They wanted to serve their 
customers, and their community banker was right there with them.

[[Page S3139]]

  President Obama himself has said that community banks are intimately 
woven into the fabric of the community. Banks such as Texas First Bank 
and Hometown Bank in Galveston County are examples of this.
  In uncertain financial times, community banks worked hard to steady 
the financial hands at the wheel. Community banks provide depository 
and lending services critical to America's families and small 
businesses. Despite holding just 23 percent of the banking assets in 
our Nation, they make two-thirds of the loans to small businesses. 
Small businesses must have support from community banks to invest, to 
expand, and to create jobs.
  Despite the widespread recognition of the importance of community 
banks, the current bill imposes on them a regulatory structure that 
punishes them. I am particularly concerned about a provision in the 
current bill under which the Federal Reserve will only retain 
supervisory authority over bank holding companies that have over $50 
billion in assets. Republicans and Democrats agree that we don't want 
too big to fail anymore because too big to fail means taxpayer 
bailouts. So what does a bill say that says large banks over $50 
billion will have the implicit backing of the government? It means they 
will be too big to fail. Creditors expecting to be made whole through 
this backing will offer cheaper credit to the large banks, putting 
community banks at a competitive disadvantage through no fault of their 
own. That is the first reason we need to pass the Hutchison-Klobuchar 
amendment.
  The second reason is that this provision arbitrarily shifts many 
community banks out of their current prudential regulator: the Federal 
Reserve. The Federal Reserve supervises more than 6,500 banks of all 
sizes in all parts of the country. These banks include large bank 
holding companies such as Bank of America, Chase, and J.P. Morgan. The 
Fed also supervises smaller community banks: Citizens National Bank of 
Nacogdoches my bank--in addition to Texas First Bank in Galveston 
County, First State Bank of Mineral Wells, and 32 other State-chartered 
banks that are members of the Federal Reserve in Dallas.
  I have heard from the president of the Federal Reserve Bank in 
Dallas, Richard Fisher, as well as the presidents of Federal Reserve 
Banks of Kansas City, Minneapolis, Philadelphia, and Richmond, all of 
whom are in town today and all agree stripping the Fed of its 
supervisory authority will drastically reduce the Fed's ability to 
achieve its objective of maintaining sound monetary policy for our 
country. Under the Federal Reserve Act, the Fed is mandated to 
effectively promote goals of maximum employment, stable prices, and 
moderate long-term interest rates. Implicit to this mandate is a goal 
of fostering stable, long-term economic growth, which requires 
stability in the banking and financial system.
  For the Fed to have proper insight into the banking system, it must 
maintain supervision over a wide breadth of banks located across the 
country. In curtailing the scope of the Federal Reserve's supervisory 
authority, Senator Dodd's bill does the opposite. The Fed will lose its 
845 State member banks which are so vital in providing a good sense of 
underlying economic forces in their respective localities. This will 
leave the Fed to cull information about the state of our economy from--
where? From the banks with $50 billion and above in assets, meaning 
monetary policy going forward will be a reflection of our largest 
financial institutions.
  Well, monetary policy cannot and should not be geared toward the New 
York banks and the Washington policymakers. The Federal Reserve needs 
insight into the health of our banking system and economy as a whole. 
That is why we have regional Fed banks. It is important that they have 
the supervisory authority of banks of all sizes and in all parts of our 
Nation.
  I wish to ask my colleague Senator Klobuchar--who has stepped up to 
the plate to be a cosponsor of this amendment so we have bipartisan 
sponsors--to say a word. I wish to yield to the Senator from Minnesota 
for a few minutes to have the Minnesota perspective and to make sure 
the people know that the community banks of this country should not 
speak in a whisper to the ``on high'' in Washington and New York. No. 
They should be speaking in a loud voice to all of us through their 
Federal Reserve banks, which means the Hutchison-Klobuchar amendment 
should pass.
  I yield the remainder of my time to the Senator from Minnesota.
  The ACTING PRESIDENT pro tempore. The Senator from Minnesota.
  Ms. KLOBUCHAR. I say thank you so much to my friend from Texas. I 
wish to thank her for her leadership on this issue.
  As she mentioned, our amendment seeks simply to preserve the Federal 
Reserve's authority to supervise community banks and bank holding 
companies as well as to preserve a system that ensures the institution 
charged with our Nation's monetary policy has a connection to not just 
Wall Street but to Main Street.
  As the Presiding Officer knows, for the most part, our mid-sized 
banks, small banks in the States throughout this country--Texas and the 
Midwest--stayed out of these risky deals. They stayed away from these 
high-flying, way too risky deals of the past decade. They made meat-
and-potatoes loans to consumers and businesses in their communities. 
They did well for their customers.
  These Main Street banks did not dance down the yellow brick road to 
Wall Street dealmaking or Washington hobnobbing. When the pavement on 
Wall Street began to buckle and collapse, these community banks did not 
panic and run to Washington with tin cups in outstretched hands. They 
continued to conduct their business, behaving the way--well, the way 
banks are supposed to behave.
  The Federal Reserve Bank of Minneapolis, along with 11 other regional 
banks, provides a presence across this country that gives the Fed 
grassroots connections, insights into the local economies, as well as 
legitimacy when they have to make tough decisions that affect not just 
Wall Street but the small local banks that serve so many of our 
communities. Through their working relationships with community banks, 
the regional Federal Reserve banks also collect and analyze important 
information about the movements and trends in local economies. This 
relationship is a two-way street as it also provides a voice for 
community banks that would be lost if the Federal Reserve were to only 
supervise the largest banks.
  As the president of the Federal Reserve Bank of Minneapolis noted, it 
would be shortsighted to conclude that the Federal Reserve: ``can 
safely be stripped of its role as a supervisor of all banks.''
  As he noted, disruptions in the financial system can come from all 
sectors, and the connection the regional Federal Reserve banks provide 
to local economies can be vital in ensuring the stability of the entire 
financial system.
  I say to my friend from Texas, just this morning Noah Wilcox, 
president of the Grand Rapids State Bank in Grand Rapids, MN--a part of 
the country most hurt by this economic downturn caused by Wall Street--
wrote to me and said this:

       All Senators should be reminded that the Federal Reserve 
     System was created to serve all of America, not just Wall 
     Street.

  I thank the Senator from Texas for her leadership, and I look forward 
to working with her on this amendment. I was glad that Senator Murray 
joined us on our amendment, and we have a number of other cosponsors. 
Again, I thank the Senator.
  Mrs. HUTCHISON. Mr. President, I thank the Senator from Minnesota. I 
appreciate the bipartisan nature of the amendment. I think when people 
look at this amendment on both sides of the aisle, it will be clear 
that the community banks need this amendment to keep a level playing 
field and to assure that there is no concept left in this country of 
too big to fail. I thank my colleague from Minnesota, Senator 
Klobuchar, and I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Alabama is 
recognized.
  Mr. SHELBY. Mr. President, as drafted, the bill we are considering 
this week allows for bailouts. As a result, what my friends on the 
other side like to call Wall Street reform is actually a Wall Street 
dream and a Main Street nightmare for all of us.
  Over the last several weeks, I have clearly articulated what needs to 
be changed in the underlying bill because

[[Page S3140]]

we must do everything we can to create a credible resolution regime 
that protects not only our financial system but, more importantly, the 
American taxpayer.
  Fortunately, the chairman of the Banking Committee, Senator Chris 
Dodd, and I have worked through a number of issues and resolved to my 
satisfaction the concerns that some of us have expressed about 
government bailouts.
  I believe it is simply unacceptable to expose innocent taxpaying 
American families to the excessively risky practices of Wall Street 
gamblers who are happy to enjoy the upside but want to socialize the 
downside.
  Mr. President, taxpayers should not incur losses from the bad outcome 
of private risks they did not undertake. In order to achieve this, the 
Dodd-Shelby amendment that we will offer eliminates the $50 billion 
bailout fund--some people have called it the ``honey pot.'' It would 
significantly tighten up language in the bill dealing with the Federal 
Reserve's ability to provide liquidity to the financial system in times 
of severe market distress. It requires the approval of the Treasury 
Secretary before the Federal Reserve can undertake any emergency 
lending. It also establishes strict solvency and collateral 
requirements for any emergency Fed lending. It establishes strict 
accountability standards for any emergency Federal lending.
  All of this is something we didn't have 18 months ago when the 
financial crisis came upon us. Together, we have tightened the 
resolution language to ensure that the creditors of failing firms will 
receive bankruptcy-like treatment.
  A resolution regime for large failing financial institutions is 
simply not credible unless we make clear in language that backdoor 
bailouts are impossible. In this amendment we will be offering, we have 
significantly tightened up language in the bill dealing with the 
provision of debt guarantees by the FDIC and the Treasury. Any such 
guarantee will now require prior congressional approval.
  We have also clarified and tightened the language in the bill 
regarding resolution and the powers of the Fed, Federal Deposit 
Insurance Corporation, the Treasury, and others to prevent bailouts. We 
have included provisions requiring postresolution reviews to determine 
whether regulators did all they were supposed to do to prevent the 
failure of a systemically significant institution. Such a review, I 
believe, is essential to hold regulators accountable for their actions, 
or inaction, as the case may be.
  I believe we must put an end to the ad hoc responses of the Federal 
Government, which only lead to fear and panic. I believe these changes 
will help us do that.
  I thank the committee chairman, Senator Chris Dodd, for working with 
me to tighten the language in this part of the bill. I also thank our 
respective staffs who have worked day and night and weekend after 
weekend to get us where we are this afternoon.
  All of these changes are important and necessary to make bailouts a 
thing of the past. With these changes, I believe we have done what 
Congress can do to prevent any future bailouts. It will now be up to 
the regulators to follow the law and do what we expect them to do.
  I strongly support these changes, and I urge my colleagues to support 
them as well. However, I don't want to leave the impression that I 
support the entire bill at this time because we are making these 
necessary changes. We are not there yet.
  Beyond resolution and government powers in a crisis, this over 1,500-
page bill contains a broad reach into the global financial system and 
the American economy. Now that we are over this particular hurdle, we 
will be addressing many additional concerns we have in the coming days. 
For now, this afternoon, I am pleased to join with Chairman Dodd in 
supporting this amendment.
  The ACTING PRESIDENT pro tempore. The Senator from Connecticut.
  Mr. DODD. Mr. President, my colleague from Arkansas will speak soon. 
I want to say to the former chairman of the Banking Committee, my 
friend, I appreciate his comments. There are four major parts of this 
very large bill. They are too big to fail, the early warning system, 
consumer protection, and dealing with exotic instruments. There is a 
lot in the bill besides those major points, but those are the four 
major thrusts of the legislation.
  I hope our colleagues will support this amendment as we vote shortly 
on it, and that it will help us reach agreement on what I argue is a 
major part, which is that we never want to see taxpayers again 
confronted with having to underwrite a failed institution. There has 
been a lot of hard work and negotiation to get here, and not just over 
the last couple of days, but weeks.
  I particularly thank Senator Mark Warner of Virginia and Senator Bob 
Corker of Tennessee. They spent a lot of time on this issue, literally 
going back months on it. We would not be in this position today were it 
not for their labor and effort.
  My colleague from Virginia is on the Senate floor, and he will want 
to say a few words. I thank Senator Shelby and our staffs for their 
efforts. I thank Senator Boxer too. She will have an amendment that 
strengthens this issue on too big to fail and taxpayers. We have more 
work to do, but this is a good beginning. I thank Senator Shelby.
  The ACTING PRESIDENT pro tempore. The Senator from Arkansas is 
recognized.
  Mrs. LINCOLN. Mr. President, first, I rise to speak in support of the 
Boxer amendment, which sends a strong statement that no taxpayer funds 
will ever again be used to bail out the risky gambles that too many on 
Wall Street have conducted. It should pass with 100 votes.
  Also, I want to speak about the derivatives title, which is a 
bipartisan product that was reported out of the Agriculture Committee 2 
weeks ago. Specifically, there have been statements in the press and in 
the Senate Chamber that I believe need to be corrected regarding 
section 716.
  As chairman of the Agriculture Committee, I am proud to have included 
this provision in the Wall Street reform legislation approved on a 
bipartisan vote by our committee 2 weeks ago. I am also proud that it 
is included in the Dodd-Lincoln legislation that we are now considering 
today.
  This provision seeks to ensure that banks get back to the business of 
banking. Under our current system, there are a handful of big banks 
that are simply no longer acting like banks. By this time, surely every 
Member of this body is aware that the operation of risky swaps 
activities was the spark that lit the flame that very nearly destroyed 
our economy in this great country.
  In my view, banks were never intended to perform these activities, 
which have been the single largest factor to these institutions growing 
so large that taxpayers had no choice but to bail them out in order to 
prevent total economic ruin.
  My provision seeks to accomplish two goals: first, getting banks back 
to performing the duties they were meant to perform--taking deposits 
and making loans for mortgages, small businesses, and commercial 
enterprise; second, separating the activities that put these 
institutions in peril.

  This provision makes clear that engaging in risky derivatives dealing 
is not central to the business of banking. Under section 716, the 
Federal Reserve and FDIC will be prohibited from providing any Federal 
assistance and funds to bail out swap dealers and major swap 
participants.
  Currently, five of the largest commercial banks account for 97 
percent of the commercial bank national swap activity. That is a huge 
concentration of economic power, which is why I am in no way surprised 
that several individuals are seeking to remove it from the bill.
  This provision will ensure that our community banks on Main Street 
would not pay the price for reckless behavior on Wall Street. Community 
banks are the backbone of economic activity for cities and towns 
throughout this great land. They don't deal in risky swaps that put the 
whole financial institution in jeopardy. Instead, they perform the day-
to-day business of banking, making the smart, conservative decisions 
that banking institutions should be making.
  Unfortunately, we saw the five largest banks begin to fail in part 
because of that risky swap activity--activity

[[Page S3141]]

that should never have been part of their operation in the first place. 
Sadly, it was community bankers and their depositors who were left 
footing the bill.
  Community banks were forced to pay for a problem they didn't create. 
Small banks are still paying that price. In 2009, we saw 140 bank 
failures, and now the cost of the FDIC insurance premiums are 
skyrocketing for our community banks all across the country. Higher 
insurance rates means less lending.
  Less lending means that now individuals and small businesses are also 
paying the price. The FDIC reported that in 2009 the banking industry 
reduced lending by 7.4 percent, the biggest decrease since 1942.
  I am a strong believer that you build an economic recovery from the 
ground up. If small and medium-sized businesses aren't getting the 
capital they need to grow their businesses, something is wrong. The 
economy simply will not recover unless we free up lending.
  Unfortunately, Wall Street lobbyists are doing everything they can to 
distort this provision--spreading misinformation and untruths. The 
suggestion that this provision will force derivatives into the dark 
without oversight is absolutely false. The Dodd-Lincoln bill makes it 
abundantly clear all swaps activity will be vigorously regulated by the 
Fed, the Commodity Futures Trading Commission, and the Securities and 
Exchange Commission.
  My good friend from New Hampshire, Senator Gregg, my friend from 
Tennessee, Mr. Corker, Wall Street lobbyists, and others in recent days 
have somehow argued that by pushing out risky swaps from the Nation's 
largest banks, such as J.P. Morgan, Bank of America, Wells Fargo, 
Goldman Sachs, and Citigroup, somehow swaps will no longer be 
regulated. This is just plain wrong.
  Just because these swaps desks will no longer be overseen by the FDIC 
does not mean that they will not be subject to this bill's strong 
regulation by the market regulators--the SEC and the CFTC. In short, 
they ignore the strong provisions included in the rest of the 
underlying bill. That is convenient for their argument but not so 
convenient when seeking the truth.
  Let me reiterate: Every swaps dealer and major swaps participant will 
be subject to strong regulation.
  Wall Street lobbyists have also argued that this will prevent banks 
from using swaps to hedge their risks. Again, that is completely false. 
Banks that have been acting as banks will be able to continue doing 
business as they always have. Community banks using swaps to hedge 
their interest rate risk on their loan portfolio will continue to be 
able to do so. Most important, we want them to do so. Community banks 
offering a swap in connection with a loan to a commercial customer are 
also still in the business of banking and will not be impacted.
  Using these products to manage risk or designing exotic swaps which 
have led to the financial demise of places such as Jefferson County, 
Alabama; Orange County, California; and the country of Greece are two 
very different things. Hopefully, this is something my colleagues will 
understand.
  Wall Street lobbyists have also said this provision will move $300 
trillion worth of swap activities outside of the banks. My question is, 
Why is this activity there in the first place? I agree that regulated, 
transparent swap activity is a necessary part of our economy in 
managing risk. It just has no place inside a bank where too many 
innocent bystanders are put at risk.
  Despite what those on Wall Street may be saying, this provision is an 
important part of real Wall Street reform. It has broad support from 
the Independent Community Bankers of America, the Consumer Federation 
of America, the AARP, labor unions, and leading economists, such as 
Nobel Prize-winning Joseph Stiglitz, among others.
  Let me read what a few of these groups and individuals are saying 
about this provision.
  Americans for Financial Reform, which includes groups such as the 
AFL-CIO, NAACP, and Consumers Union, writes:

       The over 250 consumer, employee, investor, community and 
     civil rights groups who are members of the Americans for 
     Financial Reform write to express strong support for section 
     716 ("Prohibition Against Federal Government Bailouts of 
     Swaps Entities'') as part of the Dodd-Lincoln substitute to 
     the Restoring Financial Stability Act of 2010.

  It is now almost universally recognized that the fuse that lit the 
worldwide economic meltdown in the fall of 2008 was the $600 trillion 
severely undercapitalized and unregulated and opaque swaps market 
dominated by the world's largest banks. Section 716 is designed to 
ensure that the American taxpayer is not the banker of last resort, as 
was true in the bank bailouts in 2008 and 2009, for casino-like 
investments marketed by large Wall Street swap dealer-banks. Section 
716 is a flat ban on Federal Government assistance to ``any swap 
entity,'' especially in instances where that entity cannot fulfill 
obligations emanating from highly risky swaps transactions.
  By quarantining highly risky swaps trading from banking altogether, 
federally insured deposits will not be put at risk by toxic swaps 
transactions. Moreover, banks will be forced to behave like banks, 
focusing on extending credit in a manner that builds economic strength 
as opposed to fostering worldwide economic instability.
  The Nobel Prize-winning economist and former Chairman of the Council 
of Economic Advisers during the Clinton administration, Joseph 
Stiglitz, writes:

       One provision holds particular promise--and has the banks 
     especially riled up. This is the idea that the government 
     should not be responsible for the ``counterparty risk''--the 
     risk that a derivatives contract not be fulfilled. It was 
     AIG's inability to fulfill its obligations that led the U.S. 
     Government to step into the breach, to the tune of $182 
     billion.
       The modest proposal of the Agriculture Committee is that 
     the U.S. Government (the Federal Deposit Insurance 
     Corporation) stops underwriting these risks. If banks wish to 
     write those derivatives, they would have to do so through a 
     separate affiliate within the holding company. And if the 
     bank made bad gambles, the taxpayer wouldn't have to pick up 
     the tab.

  Here is another from the Independent Community Bankers of America:

       ICBA strongly supports section 106--

  Which is a section in our bill--

     of the derivatives bill. This section prohibits federal 
     assistance, including federal deposit insurance and access to 
     the Fed's discount window, to swaps entities in connection 
     with their trading in swaps or securities-based swaps.
       Main Street and community banks have suffered the brunt of 
     the financial crisis, a crisis caused by Wall Street players 
     and not community banks. Assessments to replenish the Deposit 
     Insurance Fund have increased dramatically for community 
     banks. Large financial players have received hundreds of 
     billions in financial assistance while community banks have 
     been allowed to fail.
       Section 106 of Senator Lincoln's derivatives legislation 
     would be an important provision to help ensure that taxpayers 
     and community banks are not on the chopping block should 
     another financial crisis occur. We strongly urge retention of 
     this provision during markup this week. Thank you for keeping 
     the views of the community bankers in mind.

  I ask unanimous consent to have printed in the Record these three 
letters from the Americans for Financial Reform, Professor Stiglitz, 
and the Independent Community Bankers.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                               Americans for Financial Reform,

                                      Washington, DC, May 3, 2010.
     U.S. Senate,
     Washington, DC.
     Re Letter of support for the Prohibition against Federal 
         Government Bailouts of Swaps Entities.

       Dear Senator: The over 250 consumer, employee, investor, 
     community and civil rights groups who are members of 
     Americans for Financial Reform (AFR) write to express strong 
     support for Section 716 (``Prohibition Against Federal 
     Government Bailouts of Swaps Entities'') as part of the Dodd-
     Lincoln substitute to the Restoring Financial Stability Act 
     of 2010. It, along with other structural reforms under 
     consideration such as a statutory Volcker Rule and limits on 
     bank size and leverage (the Merkley-Levin and Brown-Kaufman 
     amendments), will sharply reduce the possibility of taxpayer 
     bailouts for speculative activity that does not serve the 
     real economy.
       It is now almost universally recognized that the fuse that 
     lit the worldwide economic meltdown in the fall of 2008 was 
     the $600 trillion, severely under-capitalized and unregulated 
     and opaque swaps market, dominated by the world's largest 
     banks. Section 716 is designed to ensure that the American 
     taxpayer is not the banker of last resort, as was true in the 
     bank bailouts in 2008-2009, for casino-like investments 
     marketed by large Wall Street swap dealer-banks. Section 716 
     is a flat ban on federal government assistance to ``any swap 
     entity,'' especially in instances where that entity cannot 
     fulfill obligations

[[Page S3142]]

     emanating from highly risky swaps transactions. Specifically, 
     Section 716 bars ``advances from any Federal Reserve credit 
     facility, discount window . . . or [loan or debt guarantees 
     by the] Federal Deposit Insurance Corporation.''
       Section 716 will require, inter alia, the five largest 
     swaps dealer banks to sever their swaps desks from the bank 
     holding corporate structure. Those five banks are: Goldman 
     Sachs, Morgan Stanley, J.P. Morgan Chase, Citigroup, and Bank 
     of America, the institutions involved in well over 90 per 
     cent of swaps transactions. Under Section 716 a ``swap 
     entity'' and a banking entity could not be contained within 
     the same bank holding company, if the bank holding company 
     has access to federal assistance.
       By quarantining highly risky swaps trading from banking 
     altogether, federally insured deposits will not be put at 
     risk by toxic swaps transactions. Moreover, banks will be 
     forced to behave like banks, focusing on extending credit in 
     a manner that builds economic strength as opposed to 
     fostering worldwide economic instability. Finally, the 
     spun off swaps entity will be sufficiently isolated to 
     permit the kind of careful prudential oversight mandated 
     by Title VII of the Act as a whole. Title VII ensures that 
     the spun-off entities will both be regulated as 
     institutions under the most rigorous prudential standards, 
     and that almost all of the swaps instruments will be 
     subject to standards for capital adequacy, full 
     transparency, anti-fraud and anti-manipulation.
       We understand that the largest banks which are the major 
     dealers and their allies are arguing that taking swaps 
     trading out of the banks will raise the price of hedging for 
     customers and reduce market liquidity. They are wrong. Purely 
     speculative financial derivatives now represent $78 for every 
     $1 in true hedging by businesses and farmers. Regulation that 
     reduces de-stabilizing speculative hedging will actually 
     benefit legitimate commercial hedgers. The ``cost argument'' 
     promulgated by the ``Too Big to Fail'' banks begs the 
     question: why does attaching derivatives desks to our large 
     banks result in cheaper derivatives products? The co-mingling 
     of derivatives desks and other banking activities produces 
     the formerly implicit, and now all-too-explicit, guarantee of 
     the federal taxpayer. In the current high-risk environment, 
     availability and pricing for hundreds of trillions of dollars 
     in swaps can be maintained only if counterparties are assured 
     that the Fed's backup liquidity will continue. On their own, 
     these banks cannot create the liquidity that a market with 
     such high levels of risk would require to sustain a 
     disruption. That is why the banks must not be allowed to 
     continue to deal in risky transactions that threaten 
     deposits, the taxpayer backstop, and banks' core lending 
     function.
       Opponents of Sec. 716 also argue that it will force swaps 
     activity into non-regulated entities or into the overseas 
     market. The Europeans' experience with credit default swaps 
     on Greece's government debt suggests that no central bank 
     going forward will want to face this level of risk to its 
     banking systems. There is every indication that the G-20 
     countries and many other sovereigns are prepared to constrain 
     reckless and abusive swaps activity. The idea that 
     systemically risky swaps-trading will migrate abroad is 
     belied by the hostility to such trading by, for example, the 
     European Commission and other G-20 countries. In the wake of 
     the havoc on the Euro wrought by currency and credit default 
     swaps, the European Commission is not eager to leave these 
     instruments unregulated.
       Section 716 is critical to ending our ``too interconnected 
     to fail'' economy. We ask that you support the bill, and 
     oppose any attempts to weaken Section 716 or to widen any 
     loopholes in the derivatives title of the bill. Please 
     contact Lisa Lindsley, Director, Capital Strategies, AFSCME, 
     for more information.
           Sincerely,
     Americans for Financial Reform.
                                  ____

                                             Independent Community


                                           Bankers of America,

                                   Washington, DC, April 19, 2010.
     Hon. Christopher Dodd,
     Chairman, Committee on Banking, Housing and Urban Affairs, 
         Dirksen Senate Office Building, Washington, DC.
     Hon. Richard C. Shelby,
     Ranking Member, Committee on Banking, Housing and Urban 
         Affairs, Dirksen Senate Office Building, Washington, DC.
       Dear Chairman Dodd and Senator Shelby: I am writing to you 
     on behalf of the Independent Community Bankers of America, an 
     association of 5,000 community banks across the nation. We 
     believe that the recent financial crisis has demonstrated the 
     urgent need for a new system to resolve large, interconnected 
     financial firms before they create widespread damage to the 
     financial system. A robust resolution mechanism must include 
     an adequate resolution fund that would allow for the rapid, 
     orderly takeover and wind down of the largest financial 
     firms. Properly constructed, the fund would help shield both 
     the U.S. taxpayer and community banks from the consequences 
     of a large firm failure.
       Further, prefunding the fund is vitally important to the 
     speed with which resolution must be effected in order to 
     prevent contagion and to ensure that the cost of resolution 
     is borne by the Too-Big-To-Fail firms, including hedge funds 
     and insurers, that create risk for our financial system, not 
     by taxpayers or community banks.
       The resolutions facilitated by this fund should not be 
     characterized as ``bailouts''; rather, they would be orderly 
     liquidations in which management would be removed and 
     shareholders and unsecured creditors would be wiped out. The 
     fund would function in much the same way the FDIC's Deposit 
     Insurance Fund (DIF) has functioned since 1930s, allowing the 
     FDIC to regularly close banks and protect insured depositors 
     while terminating senior management without compensation and 
     imposing losses on stockholders and uninsured creditors.
       The DIF is funded by banks through deposit insurance 
     premiums, and has allowed the FDIC to weather financial 
     crises without resorting to a taxpayer bailout. Because the 
     DIF is prefunded, the failed banks as well as the survivors 
     share the costs. Without a fund, the survivors, the prudent 
     investors, pay for the profligate. This is not a model we 
     subscribe to.
       The Dodd bill would create a $50 billion prefunded 
     ``orderly liquidation fund'' and would prohibit any 
     assistance to stockholders or unsecured creditors of large 
     financial firms. Both of these elements are critical to 
     ending Too-Big-to-Fail. Without an obvious source of funds to 
     effect the orderly unwinding of these large firms, rational 
     investors and creditors will conclude that in a crisis the 
     government will blink and again guarantee large failing 
     firms. This will confer a competitive advantage on the large 
     firms in the form of cheaper debt and equity funding, which 
     they will use to steadily acquire more and more business 
     customers, to the detriment of small banks. Further, the lack 
     of effective resolution authority will undoubtedly encourage 
     these large firms to take on excessive risk once again, 
     without the pain that should accompany such risks.
       To level the financial and regulatory playing field we need 
     to have the ability impose losses on the stock and bond 
     holders of the giants of finance in ways similar to those 
     applied to ninety-nine percent of smaller banks.
       Every Friday, Community banks face the market discipline 
     imposed by an orderly wind down by the FDIC and its industry 
     funded deposit insurance fund. Let's level the playing field 
     and subject our biggest and riskiest institutions--the ones 
     that caused this economic catastrophe we are just now digging 
     out from--to the same discipline.
       As a further means of protecting taxpayers and community 
     banks from the risky activities of unregulated players, we 
     strongly support a provision of Chairman Lincoln's 
     derivatives bill that would protect the DIF. Section 106, the 
     ``Prohibition against Federal Government Bailouts of Swaps 
     Entities,'' prohibits federal assistance (including federal 
     deposit insurance, and access to the Federal Reserve discount 
     window) to swaps entities in connection with their trading in 
     swaps or securities-based swaps. This provision is targeted 
     at the AIGs of the world--both large and small--whose swaps 
     activities played a key role in triggering the credit crisis 
     and subsequent economic downturn and resulted in over $180 
     billion in taxpayer assistance. Our support for the Dodd 
     prefund and for Section 106 of the Lincoln bill are borne out 
     of the same concern.
       The cost of the financial crisis has been huge for Main 
     Street and community banks and our nation. Both the Dodd and 
     the Lincoln provisions will go a long way toward ensuring 
     that the costs of any future crisis--should we be so 
     unfortunate--are borne by the reckless parties who brought it 
     about.
           Sincerely,
                                                   Camden R. Fine,
     President & CEO.
                                  ____


                Protect Taxpayers From Wall Street Risk

                        (By Joseph E. Stiglitz)

       CNN.--As legislators continue to trade loud barbs over the 
     details of the bill that seeks to overhaul our financial 
     system, we risk losing a crucial aspect of reform in the din.
       We now have an important opportunity to fix the regulation 
     of derivatives--those controversial mechanisms that played a 
     central role in the downfall of insurance giant AIG, and 
     helped spark the Great Recession.
       The current finance bill contains reasonable proposals, 
     developed by the Senate agriculture committee, under the 
     leadership of Blanche Lincoln, that would rein in the most 
     egregious abuses of these instruments.
       The AIG experience should have made clear that derivatives 
     can create enormous risks--risks that ended up being borne by 
     taxpayers. In addition, derivatives have played an important 
     role in all kinds of nefarious activities--from trying to 
     obfuscate Greece's real financial position, to vast tax 
     evasion.
       Derivatives are not inherently bad. They can play a 
     positive role in risk management, but they are only likely to 
     do that if there is the right regulatory framework.
       Without the appropriate legal and regulatory framework, 
     they will almost surely contribute, on balance, to the 
     creation of risk--as they did in this crisis, and as they did 
     a decade ago in the infamous Long-Term Capital Management 
     bailout.
       The provisions reported out of the agriculture committee 
     are an important step in the right direction. But derivatives 
     have been an enormous profit center for a few big banks 
     (about $20 billion last year), so we should not be surprised 
     that there is resistance to anything that is a real change to 
     the status quo.

[[Page S3143]]

       Derivatives have been advertised as an ``insurance 
     product,'' insuring bondholders, for instance, against the 
     risk of a loss. But if they were really insurance products, 
     they should have been regulated as insurance, with insurance 
     regulators making sure that there was adequate capital to 
     meet their obligations.
       In reality, in many cases derivatives are more accurately 
     described as gambling instruments. But gambling should be 
     subject to gaming laws, and derivatives aren't.
       Remarkably, in fact, derivatives have been left totally 
     unregulated--a mistake that President Clinton, who failed to 
     introduce regulations when he had the chance, now 
     acknowledges. Congress's current proposal is the opportunity 
     to rectify that mistake.
       One provision holds particular promise--and has the banks 
     especially riled up. This is the idea that the government 
     should not be responsible for the ``counterparty risk''--the 
     risk that a derivatives contract not be fulfilled. It was 
     AIG's inability to fulfill its obligations that led the U.S. 
     government to step into the breach, to the tune of some $182 
     billion.
       The modest proposal of the agriculture committee is that 
     the U.S. government (the Federal Deposit Insurance 
     Corporation) stop underwriting these risks. If banks wish to 
     write derivatives, they would have to do so through a 
     separate affiliate within the holding company. And if the 
     bank made bad gambles, the taxpayer wouldn't have to pick up 
     the tab.
       This change would help fix the current system, where those 
     who buy this so-called ``insurance'' enjoy the subsidy of the 
     essential, free government guarantee; and where competition 
     among the few issuers of these risky products is sufficiently 
     weak that they enjoy high profits.
       This arrangement is economically inefficient--firms should 
     pay for the costs of their insurance. If the government 
     guarantee is removed, the banks might have to put more money 
     into their derivatives subsidiaries. This will reduce the 
     banks' profitability, and it might force up prices of this 
     ``insurance.'' But that is as it should be. The government 
     shouldn't be subsidizing ``insurance''--and it certainly 
     shouldn't be in the business of subsidizing gambling.
       The Fed and the Treasury seem to object to the agriculture 
     committee's proposals. These objections show once again the 
     extent to which the Fed and the Treasury have been captured 
     by the institutions that they are supposed to regulate, and 
     reemphasize the need for deeper governance reforms of the Fed 
     than those on the table.
       To be sure, banks' high profits from derivatives would help 
     with recapitalization, offsetting the losses they incurred 
     from the risky gambles of the past. But that doesn't mean 
     that the policy of allowing banks to issue derivatives--and 
     laying the risk of failure onto the taxpayer--is right.
       Bank recapitalization should be done in an open and 
     transparent way, consistent with sound economic principles. 
     Abusive credit card practices could also help recapitalize 
     the banks, but fortunately we have curtailed some of these. 
     We should now do the same for derivatives.
       We should recognize that the agriculture committee 
     provision is already a compromise. Many worry that if the 
     affiliate within the holding company that writes the 
     derivatives gets into trouble, Uncle Sam will still come to 
     the rescue.
       The bill, for instance, includes a ``strong presumption'' 
     of losses for creditors and shareholders. What should be 
     required is that creditors (other than depositors) and 
     shareholders bear all the losses before the government is 
     asked to pony up any money. But ultimately, in a crisis, 
     worries about the consequences of such strong medicine will 
     almost surely mean a bailout for the bank holding companies 
     as well as the banks--as happened in this crisis.
       In a crisis, the government will not only bail out the 
     banks, but also the bankers, their shareholders, and their 
     bondholders--if not totally, at least partially.
       So if we are to protect American taxpayers, we must also 
     bar any too-big-to-fail institutions from writing 
     derivatives.
       But right now, the institutions who write the vast majority 
     of these derivatives are too big to fail. Ideally, 
     responsibility for writing derivatives should be spun out to 
     a totally independent entity. The agriculture committee bill 
     does not go this far; rather, it strikes a reasoned 
     compromise between political expediency and economic good 
     sense.
       It would be a major mistake to walk away from this 
     compromise by allowing FDIC-insured institutions to continue 
     to write these risky products. To allow them to do so would 
     simply generate more political cynicism: It would show that 
     the big banks have succeeded in their ambition of returning 
     to the world nearly as it was before the crash.

  Mrs. LINCOLN. Mr. President, I look forward to working with my 
colleagues to ensure this legislation remains strong and new loopholes 
are not created on behalf of Wall Street.
  This is a legislative body. It is designed for debate, and I welcome 
that debate and welcome the debate of my colleagues in terms of what we 
are trying to do here.
  We have seen a historic economic crisis. Banks no longer look like 
banks, and for people in my hometowns across Arkansas, that is a 
frightening thing. The status quo is certainly not acceptable.
  We all have to look at what it is we can do to come together with 
some type of assurance and confidence for the people of our States that 
we are not going to let the status quo remain. I believe we need to 
take the necessary steps to create that confidence for investors and 
consumers that what we experienced will not be able to happen again; 
that these financial entities cannot become so big that they cannot 
fail or that we would not allow them to fail or, worst of all, that 
taxpayers will have to bail them out again.
  I say to my colleagues, I am a very pragmatic person, pretty 
simplistic in what it is I want to achieve and what we have worked to 
achieve. I hope all of my colleagues will continue to work together to 
find out what it is we can responsibly hand to the people of this great 
country and say to them: We not only have seen what has happened, but 
we are going to dare to produce something that will ensure it does not 
happen again. As I said, working in a pragmatic way, I think we can 
come up with a good, strong piece of legislation, that all of us--
Democrats and Republicans, no matter what regions of the country we 
come from--will actually say to the American people: We saw what 
happened, and we are going to make sure it does not happen again.
  The ACTING PRESIDENT pro tempore. The Senator from Connecticut.
  Mr. DODD. Mr. President, I thank our colleague, the chairperson of 
the Agriculture Committee, for her work and the work of her staff and 
others and for her statement today inviting all of us to be involved in 
this process. I commend her. I thank her for the fine work.
  I am going to propose a unanimous consent request that has been 
cleared by our respective leaders.
  Mr. President, I ask unanimous consent that at 2:45 p.m. today, the 
Senate proceed to executive session to consider the following calendar 
numbers: 728, 701, and 702; that prior to each vote, there be 2 minutes 
of debate equally divided and controlled in the usual form; that upon 
confirmation of the nominations, the motions to reconsider be 
considered made and laid upon the table en bloc; that the President be 
immediately notified of the Senate's action; that the Senate then 
resume legislative session; that upon resuming legislative session, 
there be 4 minutes of debate prior to a vote in relation to the Boxer 
amendment No. 3737; that upon disposition of the Boxer amendment, the 
Senate then proceed to a vote in relation to the Shelby-Dodd amendment, 
which is at the desk, with 4 minutes of debate prior to a vote in 
relation to the amendment, with all time divided in the usual form, 
with no amendments in order to the amendments covered in this 
agreement, prior to a vote in relation thereto; further, that the 
Senate then consider en bloc the Snowe amendments Nos. 3755 and 3757, 
with no further debate in order with respect to the Snowe amendments 
and with no amendments in order to the Snowe amendments; that the next 
amendments in order be one from the Republican leader or his designee 
regarding consumer protection, and the Tester-Hutchison amendment No. 
3749.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. DODD. Mr. President, I see two of my colleagues who have been 
deeply involved. I mentioned them earlier in their absence. I thank 
Senator Corker and Senator Warner for their hard work. As I said, this 
goes back months, title I and title II of the bill. I have thanked them 
a lot already. They put in a tremendous amount of time with an awful 
lot of people on how best to draft this legislation. Everybody always 
has ideas and thoughts about all of it. I am grateful to both of them 
for their tireless efforts, and their staffs.
  I yield the floor so each can comment.
  The ACTING PRESIDENT pro tempore. The Senator from Tennessee is 
recognized.
  Mr. CORKER. Mr. President, I thank the Senator from Connecticut. I 
will be brief.
  My friend from Virginia, Mark Warner, is here. Senator Dodd and 
Senator Shelby allowed us to work on this portion of the bill. I thank 
Senator Warner for being such a great partner.
  One of the things you learn around this body very quickly is you 
certainly

[[Page S3144]]

do not end up getting everything the way you would like. I thank both 
Senator Shelby and Senator Dodd for the way they have worked together 
over the last week or so to improve this bill.
  Look, I think Senator Warner and I--I will speak for myself. 
Obviously, there are pieces I wish were a little different. I wish the 
length of receivership was not 5 years but that it was a much shorter 
period to wind these companies down more quickly. I wish we had 
judicial review so if a company is placed into this type of resolution, 
they actually have the opportunity to have that reviewed in a much 
better way. We have a bankruptcy court title. I know Senator Shelby, 
Senator Warner, and others would like to see that happen. I am hoping 
over the course of the amendment process that will happen. Judicial 
review of claims--I wish that were occurring. I know that is not part 
of this title. I also wish there was judicial review of the valuation 
process. There are a number of provisions I wish were better, but I 
will say that I think the work Senator Dodd and Senator Shelby have 
done to date is good. I plan to support this.
  I say to my colleagues on this side of the aisle who want the 
bankruptcy process to be the process, I think they should still support 
what Senator Dodd and Senator Shelby have done because they have 
tightened this resolution title to make it much better.
  I defer to my friend from Virginia because I know he is going to talk 
about aspects of this bill that are not talked about much. They are 
preventive measures--at least of this title--to keep us from being in a 
situation where resolution is even necessary because of precautionary 
issues that are put in place.
  I thank Senator Dodd and Senator Shelby. I thank them for their 
involvement. I thank them for the way they have worked together to make 
this bill better with the process that has taken place over the last 
week.
  The ACTING PRESIDENT pro tempore. The Senator from Virginia is 
recognized.
  Mr. WARNER. Mr. President, let me follow on my colleague's comments. 
He is my colleague and my friend and my partner for the last year. I 
think we've both, as former business guys, said this is not an issue 
that should be partisan. We need to check our ``D'' and ``R'' hats at 
the door and find a way to sort through a new set of financial rules so 
we never have to face what we faced in 2008.
  I think some of the original approaches that we had might have been 
tighter. I know we talked a little bit off the floor about the notion 
that actually some of the borrowing authority that now exists might be 
larger than what we had initially proposed. But at the end of the day, 
what is important is that, one, the taxpayers are protected--and that 
is what the Shelby-Dodd approach has; it has no recoupment from the 
financial industry--and two, to make sure there is money to wind these 
firms down in an orderly fashion.
  We have seen with Lehman, a year and a half after the fact, literally 
hundreds of millions, close to billions of dollars, that are being used 
to unwind. That process takes time and money. I again share the concern 
of the Senator from Tennessee that we ought to do this in as limited 
time as possible.
  Let me take 2 more quick minutes and say that, if we have done our 
job right, we are never going to have to get to resolution because 
bankruptcy should always be the preferred process.
  We have put the appropriate speed bumps on these firms that become 
large and systemically important: higher capital requirements, better 
review of their leverage, making sure they have good risk management 
plans. And we have created two new tools that have not gotten any 
discussion but I know, in our hundreds of meetings we had, kept coming 
back time and again. One was the creation of a whole new set of capital 
that would convert from debt into equity if a firm ever gets into a 
problem. And second, a funeral plan that has to be blessed by the 
regulator that would show how these large firms, particularly firms 
with international operations all around the world, can wind themselves 
down through bankruptcy. If the plan is not approved, the regulators 
can take more dramatic action.
  I think the heart and soul of our challenge, which has been to end 
too big to fail and make sure taxpayers were not exposed, has been 
accomplished. I thank the chairman and Ranking Member Shelby for their 
work on this. I look forward to support this--and I look forward to 
support this amendment as well.
  I want to conclude with my thanks to my colleague and friend from 
Tennessee. I think we did check our hats and put a business approach on 
trying to get these titles right, and I agree with his comments that we 
appreciate any improvements made by both the chairman and the ranking 
member. I look forward to supporting this part of the legislation and I 
hope we can continue to work through on the balance of the titles in 
this same way.

  I thank the Chair.
  The ACTING PRESIDENT pro tempore. The majority leader is recognized.
  Mr. REID. Mr. President, I ask unanimous consent to use my leader 
time right now.
  First, I want to express my appreciation to Senators Warner and 
Corker for working to improve this bill. They are very fine Senators. 
My friend, the Senator from Virginia, Senator Warner, has been such a 
great addition to the caucus, the Senate, and the country. His 
experience as Governor of the State has served him well. He does a 
wonderful job for the people of Virginia and, of course, our country.

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