[Congressional Record Volume 156, Number 67 (Thursday, May 6, 2010)]
[Senate]
[Pages S3333-S3353]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

  But how much has been doled out and to whom is still a mystery. This 
amendment would allow the independent arm of Congress, the Government 
Accountability Office, to review the decisions made by the Federal 
Reserve. And the Government Accountability Office is nothing but a 
group of professional people without a political motive and the right 
group to get the job done and do it on an ongoing basis. An objective 
review of the Fed's actions will serve our country well in the future.
  We can learn from the mistakes that may have been made. We can 
determine if the losses or profits from the Fed's investments help 
serve the economy well. Did the Federal Reserve act in an appropriate 
and ethical manner? Was the relationship between regulators and the 
financial industry too cozy, hampering the ability to make an objective 
decision?
  Proponents of the Federal Reserve should not consider this as a 
threat to the independence of the Fed--an independence I support. They 
should embrace an independent evaluation as an opportunity to improve 
its operations and, most importantly, strengthen public trust for 
future generations who may be faced with similar financial crises.
  As the Senator from Vermont has made very clear, the intent of his 
amendment is not to interfere in monetary policy. I share that same 
feeling he has, and I would not support an amendment that went into 
monetary policy. But the Fed's extraordinary power outside of monetary 
policy should be subject to the light of day, transparency and 
accountability. The public's business ought to be public. We should 
allow the Government Accountability Office to audit the Fed since they 
have moved far beyond their traditional and primary mission of 
conducting monetary policy.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. SANDERS. I thank the Senator from Iowa not only for his support 
but for his long fight for transparency. It has been a pleasure working 
with the Senator.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. BROWNBACK. Madam President, I wish to thank my colleagues, 
Senators Sanders and DeMint, for putting forward, bringing this 
amendment to the floor. I am a cosponsor of this amendment, along with 
several of my other colleagues.
  I would say as well to my colleague from Vermont, my colleague from 
South Carolina, and others who are sponsors, this is an issue I hear a 
lot about when I am traveling around my State, which is often. When I 
am traveling around and listening to people, this is something people 
are concerned about. They are concerned about the monetary policy. They 
are concerned about the money system. They are concerned.
  I would note to people, and to my colleagues in particular, that the 
Congress created the Fed, the Fed didn't create the Congress. So the 
Congress does have control over this issue, and I think we need to look 
at it and say: Let's look at what is appropriate and what is proper. 
And this is clearly one piece of it.
  I think the Fed has done a number of things quite well and quite 
right. Yet I don't see any problem whatsoever with having a simple 
audit; that that is going to somehow reveal the genie in the bottle and 
let out all of these secrets that are going to be harmful to the 
development of monetary policy. There seems to me to be a fair amount 
of overstatement on the other side of the terrible damage this audit 
would do. That does not seem right to me. It does not seem right to my 
constituents. My constituents look at this and say: Well, I do not want 
to harm the development of monetary policy. I want it to be wise and 
good and sound. But I do not see how it is harmed by an audit of an 
entity that is created by the government, that is created by the 
Congress. So why shouldn't we do something like this?
  That is why I think this is a prudent amendment. It is a good 
commonsense amendment, and I think it will be well received by the 
constituents of this great country who I think are pretty wise on these 
and other decisions; that as we go around, if we will listen to what 
people are saying, I think there is a lot of wisdom in that. They are 
saying we ought to know more about what is taking place in the Fed.
  I know we would all like to move forward on financial regulatory 
reform legislation. I have some serious problems in this bill. I think 
the consumer financial product piece shouldn't penalize auto dealers 
and orthodontists and others who did not cause any of these problems.

[[Page S3334]]

  So I have an amendment. I have other amendments I am a part of as 
well, along with this one, that I think we need to consider before we 
move on forward, even though I have some problem with the basis of the 
bill. I think it hits more Main Street than it does Wall Street. The 
difficulty is that we just have different ideas and beliefs about the 
best way to move forward, and that is normal.
  This amendment is not just about the choices, though, that we have on 
reforming the financial sector. I believe it gets to the heart of a 
more fundamental issue: what the American people have a right to expect 
and know from their governmental institutions.
  The fact that this amendment is brought forward by the Senator from 
Vermont, Mr. Sanders, and the Senator from South Carolina, Mr. DeMint, 
two Members who could not be further apart on the ideological spectrum, 
should be a sufficient warning and measure to make everyone sit up and 
take notice of what it is that is here that is so troubling.
  This amendment isn't about whether the legislation will put an end to 
taxpayer-backed bailouts. It isn't about whether the legislation will 
end too big to fail. It isn't even about how to best protect the 
American people and taxpayer dollars. It is about something I believe 
is even more fundamental: the accountability of governmental 
institutions to the people of the United States and to the Congress.
  I think it is important, as I stated, to remember--I want to state 
this again--one single fundamental reality in this debate: Congress 
created the Federal Reserve, not the other way around. We created the 
Federal Reserve System to serve the interests of the citizens of this 
Nation, not to serve the interests of large financial institutions.
  In establishing the Federal Reserve, Congress recognized the 
importance of a central bank that could operate with independence to 
ensure the orderly functioning of the banking systems and to maintain 
price stability. That is the core function of the Fed. More recently, 
the Federal Reserve mandate was expanded to charge them with 
maintaining price stability and maximum employment. That was an 
expansion piece that was added.
  The Government Accountability Office is also a creation of Congress. 
GAO is an independent, nonpartisan agency that works for Congress. What 
is GAO's mission? GAO's mission is to support the Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and ensure the accountability of the Federal Government for the benefit 
of the American people.
  In my view, the real issue here is whether you believe the Congress 
has the right to ask GAO--in many respects, our auditor--to review 
actions and activities of an institution that we, the Congress, 
created.
  I certainly understand the importance of the Federal Reserve's 
independence in the execution of monetary policy. I understand and I 
support that. I understand the importance of not interfering with the 
operation of the FOMC. That is not what this amendment is attempting to 
do. That is not my intention. I am confident, as well, it is not the 
intention of the main sponsors of this amendment. But I do believe it 
is relevant to know whether the Federal Reserve is operating in a 
manner that is consistent with its statutory authority. It is relevant 
to know whether the Federal Reserve is following its own established 
rules and procedures or whether it is just making it up as it goes 
along. I do think it is relevant for Congress to know who was involved 
in decisions to take extraordinary measures by exercising emergency 
powers, as well as who was and was not consulted before those actions 
were taken. Those are prudent and proper things for us to know.
  I think it is equally important to know whether the policy statements 
and subsequent minutes of FOMC meetings accurately reflect what went on 
in those meetings.
  Recent news reports surrounding the release of transcripts from 2004 
meetings of the Fed contained some serious, distressing information. 
Those reports revealed that as far as back as 2004, there were 
significant concerns raised by regional Reserve Bank presidents about 
an emerging housing bubble that, indeed, did emerge and burst. Did we 
see any indication of that in the meeting minutes or the policy 
statements? We did not. And what that tells me is the minutes did not 
accurately--I will even say they did not directly portray what went on 
in the meetings. I do not believe that is right.

  Disturbingly, the transcripts reveal that the Federal Reserve Bank 
president from Atlanta warned that:

       A number of folks were expressing growing concern about 
     potential overbuilding and worrisome speculation in the real 
     estate markets, especially in Florida. Entire condo projects 
     and upscale residential lots are being pre-sold before any 
     construction, with buyers freely admitting that they have no 
     intention of occupying the units or building on the land but 
     rather are counting on ``flipping'' the properties--selling 
     them quickly at higher prices.

  That is a direct quote.
  Disconcertingly, at the same meeting, the former Chairman of the 
Board of Governors, Alan Greenspan, made the following statement:

       We run the risk, by laying out the pros and cons of a 
     particular argument, of inducing people to join in on the 
     debate, and in this regard it is possible to lose control of 
     a process that only we fully understand.

  Let me repeat that quote. This is from former Chairman Greenspan:

       We run the risk, by laying out the pros and cons of a 
     particular argument, of inducing people to join in on the 
     debate, and in this regard it is possible to lose control of 
     a process that only we [the Federal Reserve Board] fully 
     understand.

  Now, I serve as the ranking member of the Joint Economic Committee. 
Senator DeMint is also a member of our committee. We believe in free 
markets and a free enterprise system. We recognize the importance of a 
strong financial system. Yet a fundamental requirement for the orderly 
operation of free markets is transparency and accurate reporting--
information. I think the suggestion that only the Federal Reserve was 
capable of fully understanding is evidence enough that this amendment 
is necessary.
  Congress needs to demand change and greater accountability so people 
can have more information. What if the people had known about this 
debate going on at the Federal Reserve as the housing bubble was 
developing? How would people have acted? My guess is, they would have 
acted quite prudently, saying: The Federal Reserve is concerned about 
this. This is legitimate information. Maybe we should pull back on 
housing investments. Maybe we should be watching this as well.
  I think people can get it; they need the information, though.
  While this amendment does not address the issue of the time delay in 
releasing transcripts, I do believe the current 5 years, which amounts 
to almost 6 in many cases, is indefensible, between the actual minutes 
and them being released--5 years between the actual minutes and their 
being released to the public. In my judgment, that time limit should be 
reduced to no more than 2 years. Members of this body should have had 
access to these and other transcripts before we were asked to reconfirm 
the current Chairman of the Federal Reserve Board of Governors. I would 
suggest it would have been helpful to have had access to this 
information before the housing market collapsed and before it turned 
into a financial crisis.
  The American people are mad at Washington. They are mad at the 
governmental institutions that they view as increasingly unresponsive 
and unaccountable. Let's take this step in the direction of 
transparency, accountability, and disclosure of information. The 
American people have a right to know whether their interests were 
protected or simply placed on the back shelf. They have a right to know 
the information.
  I urge my colleagues to support this amendment, and I urge the 
Federal Reserve to work with us to address real concerns about this 
amendment, rather than trying to defeat it or amend it with the purpose 
of making it a symbolic and meaningless gesture. Let's remind the 
Federal Reserve Board of Governors that they are not the only people 
capable of fully understanding issues on which all of our economic 
future depends.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. SANDERS. I wish to thank the Senator from Kansas for his remarks 
and for his strong support from day one for this concept of 
transparency of the Fed.

[[Page S3335]]

  Mr. BROWNBACK. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. COBURN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Sanders). Without objection, it is so 
ordered.
  Mr. COBURN. Mr. President, as we have watched the debate the last 6 
days on the financial regulation reform bill, I thought it would be 
interesting just to raise a few questions. The Congress--both the House 
and the Senate--created what was called the Financial Inquiry 
Commission. As a matter of fact, they had a meeting today. The purpose 
of that Commission--that will turn in their report in December of this 
year--was to take a thorough and complete look at what happened to us 
in 2008--the causes, the regulatory failures, the poor incentives--and 
then make recommendations to the Congress on what we should do.
  The question I have for my colleagues is, we have a bill on the floor 
that has given no credence to the Commission we created, and we are 
actually, according to the majority leader, going to finish this bill 
next week without the benefit of that Commission's inquiry. So a couple 
questions I would ask are, No. 1: Why? Why are we doing that? And, No. 
2--by the way, the people on that Commission are learned people with 
great exposure and great experience in the areas of which we are 
discussing--Why are we allowing the Commission to continue spending 
money if we are not going to pay any attention to them? Why don't we 
just end the Commission, since we have obviously decided what they are 
going to have to give to us is not of value as we make the decision 
about what we need to change? I thought that is what we had the 
Commission for.
  So I find it peculiar that in our rush to blame somebody, our rush to 
take the focus off of where it belongs--by the way, that is right here 
in the U.S. Congress because 90 percent of what went wrong was our 
fault--our fault; that is where it lies--in our rush to shield and 
reflect that away from us, we are going to pass a bill with all sorts 
of unintended consequences of which we fully do not understand right 
now. It is a bill that is going to treat the symptoms, not the 
underlying disease of the financial problems we had. It rings well from 
a populist standpoint, but in the long run it does a disservice to our 
country. That does not mean this bill may not hit it 100 percent on 
what this Commission recommends, but we have no idea what they are 
going to recommend.
  So I think it is a great question for the public to be asking us: Why 
are we doing that? And why are we continuing a Commission that we 
obviously are not paying any attention to? One, it was created so we 
could offload the problem. That is why we created the Commission. We 
obviously did not care what they thought because we are not going to 
pay any attention to them. No. 2, we are going to continue to spend 
money on a Commission that we are not going to value. If we were going 
to value it, we would at least either give it a mandate to hurry up so 
we can make appropriate decisions and use their expertise or we would 
eliminate it.
  Now to the bill that is in front of us. What really happened to us. 
This is my opinion of what happened to us. The Congress created 
incentives to increase with ease the ability to own a home in this 
country. Then we created incentives through Fannie Mae and Freddie Mac 
to do that even greater. Then we created the ability to package and 
offload what Fannie Mae and Freddie Mac had taken and securitized it.
  We wonder why people would take advantage of that. There was not one 
oversight hearing on the Office of Thrift Supervision, which absolutely 
failed in terms of loan originators. There was one hearing in 4 years 
at the SEC that had nothing to do with their oversight of the packaging 
of these incentives before they became a problem. There was no 
oversight--significant oversight--on the explosive nature of 
derivatives trading in this country and around the world. We are so 
quick to point the finger at the people who took advantage of the 
incentives we set in motion.
  So now what do we have? We have $6 trillion or $8 trillion worth of 
exposure for the U.S. taxpayer in terms of guaranteed mortgages by the 
Federal Government through Fannie Mae, Freddie Mac, and FHA, and we are 
hustling along so none of that ends up getting focused on us. We have a 
bill on the floor that does not address the core problem of what went 
wrong.
  Here is the core problem of what went wrong: There were no mortgage 
origination standards that were enforced by the Federal Government, as 
they took American taxpayers, to guarantee what was going to be an 
asset. What did we find at the Permanent Subcommittee on 
Investigations? That in the last year before this, for one company 
alone that originated a vast majority of the loans in California--Long 
Beach Mortgage--90 percent of the mortgages were based on fraudulent 
data.
  OTS knew it and did not do anything about it. Why did they not do it? 
Because they got 16 percent of their revenue from Washington Mutual, 
who owned Long Beach Mortgage.
  So we set up all these systems, we incentivized this system, and now 
that it blew up in our faces--because we did not look at it, we did not 
oversight it, we did not do our fiduciary responsibility--we want to be 
quick and get rid of that blame from us by pointing the finger 
somewhere else.
  We have minimal leverage requirements in this bill. If we are going 
to create an incentive for people to act badly, at least we ought to 
put a block somewhere else that will limit the exposure of financial 
institutions based on capital ratios. We have not done that. We have 
not accomplished that in this bill. That is something that has to be 
there. We had companies leveraging to 40 and 50 times their net worth. 
Yet we are not addressing that issue to a significant extent. It is one 
small portion of the bill.
  Then we are going to take a consumer protection agency--which we 
created the problems for--and create a massive government bureaucracy 
that is going to filter all the way down to every small business in 
this country and isolate that power within one individual who is not 
accountable to the Congress and not accountable to the President, and 
we are going to say: You fix it. There will be an unlimited funding 
stream that is going to be totally out of control that is going to 
impede and impact the freedom of Americans' ability to make a living in 
the name of consumer protection.
  If you think I am giving a speech to protect the banks, you are 
wrong. I like them about as much as I like insurance companies. But we 
have to think about what we are doing, and we ought to be about fixing 
the real disease. That real disease is us--us not doing oversight, us 
not being responsible for the legislation we created, and setting up 
incentives, and then yawn as it goes awry and point our fingers 
somewhere else.
  There is no question we need to change the regulatory structure in 
this country. But there is something we need to change more than the 
regulatory structure; that is, the demand on the Congress to start 
doing its job in terms of oversight. We are quick to whip a bill out 
when it is politically expedient to do it and create a whipping boy, or 
several whipping boys, and say we are addressing things. But it is kind 
of like the pea under the three walnut shells. You never know where the 
pea is. The reason you never know is because there is not really even a 
pea there. There was when it started, but it went away. Then it gets 
put back.
  So we are playing the game. We are playing the American people that 
what we are doing is substantive, and that, in fact, it is going to 
enhance capital formation, when what we are doing is going to decrease 
capital formation.
  We have one section in this bill that says every small bank in 
Oklahoma--if they write a mortgage and sell it, forever they have to 
keep 5 percent of it. Well, if they are a small capitalized bank, guess 
what they are going to do. They are never going to create another 
mortgage in Oklahoma. So we are going to concentrate all the mortgages 
in the big banks in the country. That is why Goldman Sachs loves this 
bill. That is why Citibank loves the bill. We are not making the big 
banks smaller; we are making the big banks bigger. We are going to 
undercut the small and

[[Page S3336]]

medium-sized banks in the country because we are going to put a 5-
percent retention on every mortgage they write, when, in fact, all we 
would have to say is: If you write a mortgage and you package it and 
sell it, there is recourse back to you, the originator of the loan; 
that mortgage, when it becomes nonperforming, comes back to you. That 
is all we have to do. That does not tie up their capital. That does not 
limit their incentive to create housing in our own regional markets 
that is made available with capital in those regional markets.
  No, we are going to make the big boys bigger. All the regulation that 
is in this bill none of the big banks will ever have a problem with. 
They already have thousands and thousands of staff to handle government 
regulation. They will not add a person. But every small community bank 
in this country, every small financial institution in this country, is 
going to drown in the requirements of this bill.
  I know the chairman of the Banking Committee has worked hard to try 
to bring a forth bill. I know there have been great deliberations with 
many from our side of the aisle on the bill. But I think we have thrown 
common sense out the window. The motives are good. The goal--fix the 
problem--is good. But if we treat the symptoms of this and convince the 
American people we have fixed it when, in fact, we have not, when we 
have not eliminated too big to fail--because we are going to make the 
big banks bigger--what we are going to see is a further decline in 
confidence.
  In the name of fixing things, we are going to be taking massive 
amounts of freedom away from small businesses in this country. We are 
going to take discretion away from capital risk that has minimal risk 
to the country but has every bit of risk to the person lending the 
capital. We are even going to take away ``sugar daddy'' investors who 
are the only hope for some ideas--not venture capitalists. We are going 
to take away the ability for somebody to come in and say: I will invest 
in 40 percent of your business and give you the capital to try 
something. We have actually created requirements for that.
  As we look at what we are about to do, the American people ought to 
ask three questions, three very important questions: No. 1, does it fix 
the problem? No. 2, does it grow the government and require increased 
spending? And, No. 3, is there anything to make you think--since we 
were regulating all these industries already--the Congress might 
oversight the next set of regulations we put out there to fix this 
problem? I think the answer to that--all three of those questions--is 
no. I am in a minority, I understand that.
  I said previously, I think we ought to change the regulations in this 
country. I think we also ought to eliminate too big to fail by making 
those that are too big become so small they won't make a difference if 
they do fail. We ought to create the market circumstances that would 
force that to happen. But this bill doesn't do that. This bill won't do 
that.

  So as we go through this rather large bill, which I think has had 
three or four accepted amendments thus far and which is 1,409 pages 
long, one of the other questions we ought to be asking is how many 
Members have read the entire bill. How many Members understand what is 
in the bill? How many Members can have the capability to anticipate the 
unintended consequences of what is in the bill? I think we will find 
the answer to that is zero. Yet we are in a hurry to do this for a 
political reason.
  So I will go back to what I started on. We created the Financial 
Inquiry Commission. What are we going to do with it? What happens if 
they come out in December and say everything we did was wrong? Why did 
we create it? I would love to read back some of the speeches that were 
given on this floor about why we were creating it, because we had to 
know what went wrong. Now we have a commission that has been charged to 
tell us what went wrong, but we are going to ignore them. We are going 
to pass a bill before they have even completed their hearings.
  I think it is no wonder the country has a low level of confidence in 
our deliberations, because they don't make sense to the average 
American. They understand the political spin. They understand pinning 
the tail on the donkey. They understand placing blame so you can 
deflect it from yourself. They get all that. They see it and they see 
right through it. But we are creatures of habit.
  There are good things in this bill. Let me end on that. The 
elimination of the Office of Thrift Supervision had to happen. The 
reason they were ineffective is they got their money from the very 
people they were supervising and when their biggest customer is doing 
something wrong, rather than lose some of their revenue, they turn 
their eye the other way. Consequently, billions and billions and 
billions of dollars out of Washington Mutual became junk. Most of it 
was junk to begin with. It is the concept of greed.
  Other good things: Changing the rating agencies and what they are 
accountable for. This bill goes in a direction different than I would 
have gone, but the point is there needs to be a change. They need to 
not get paid by the very people who are asking them to rate something 
they are getting ready to sell, and they ought to be paid by the person 
who is getting ready to buy what they are getting ready to sell, so the 
accountability will be there. But we haven't done that.
  We recovered, and our recovery from this financial fiasco is because 
of the resilience of the American people. The price is enormous, with 
having 14 million people unemployed. That is a tremendous price to pay. 
The loss in terms of dignity, the loss in terms of the ability to 
provide for your family, the loss of losing the skill set you had and 
no longer can find a job to do it is a tremendous price that has been 
paid. But the American people are resilient. What they don't want to 
tolerate, however, is a Congress that fails to recognize and continues 
to repeat mistakes of the past.
  We can say, Well, we have been working on this for 6 months. We have. 
There have been negotiations going on for a long time. My question is, 
Do we have the answers? Do we know what the answers are? And if the 
answer to that question is yes, then let's disband the Financial 
Inquiry Commission right now. Let's not waste those folks' time. Let's 
not spend another penny of Federal taxpayers' money if we think we 
already have the answers. We are going to do just as we do on every 
other program: We are going to create another one and we are going to 
keep spending on the first one.
  Needless to say, I think this bill is fixable. I think we ought to 
address the real key issues: Fannie Mae and Freddie Mac. Why are we not 
addressing them? Because we don't want to put out the bucks, the cost 
to do that. That is why. That is why we are not addressing it. We know 
the issues.
  We have taken an unlimited amount of our kids' money and put it in 
exposure and we have given an absolute implicit and implied guarantee 
to both of those organizations. The President in late December took 
office, and they are now buying back close to $400 billion worth of 
mortgages from the Treasury--nonperforming mortgages--and our kids are 
going to pay all that back. It will be 20 or 30 years before any of 
that property actually reaches the level at which it was sold.
  So what is coming next? What is coming next is we are going to 
mandate principal reduction on mortgages across this country. Who does 
that impact? What that says is that everybody who paid their mortgage 
on time and kept up with their payments by making tremendous sacrifices 
other places, guess what. You are going to get to pay for the mortgage 
of everybody who didn't through your taxes and through your kids' 
taxes. You acted responsibly, but what is coming down the pike is we 
are going to lift the load for those who didn't. You met your 
obligations. You signed the contract on the bottom line, and those who 
were less fortunate than you, you now are going to get to pay for them 
too. That is what is coming. Mark my words. You will hear it before 
November. That is what is coming through the HAMP, through the 40-
percent reduction in the principal amount on many of these mortgages.
  So what is going on? We are rushing the financial reform bill that 
doesn't attack the three major underlying diseases of the financial 
system, and then right after we pass that, we are going to force 
principal reductions on hundreds of thousands, if not millions, of

[[Page S3337]]

mortgages, on which you, the taxpayer, are going to pick up the bill. 
That is what is coming. We are going to hear that it is not. That is 
what is coming.
  Watch carefully what we do. Watch how we spin things. Watch how we 
create demons when, in fact, we are the source of the problem. Watch 
how we point our fingers at others whom we incentivized to take 
advantage of systems we created and say, Oh, no, we are not culpable at 
all. Oh, it wasn't us. We did all the oversight hearings. We changed 
it.
  When we saw the writing on the wall, we didn't do any of that. The 
Congress created this mess, and we are going to continue to act in the 
same way that is going to create more. Because we are going to create a 
whole new set of regulations and then we are not going to have the 
oversight hearings: Are you doing it? Where is the metrics? How do we 
measure whether you are doing it? Are you, Mr. Bureaucrat, doing what 
the Congress directed? As a matter of fact, we don't even put in the 
regulations. We let somebody else write the regulations. We are so 
knowledgeable that we are getting ready to fix this problem, and 
besides the fact the Financial Inquiry Commission hasn't said anything 
to us yet about what the causes are and the potential solutions, but we 
are not even going to write the regulations, just as we didn't in the 
health care bill. The Department of HHS is going to write 1,690 
regulations on the health care industry in this country. The same thing 
is going to happen in this bill.
  As I say, I hope we can fix the bill because I think we need to make 
major changes. There are some good things in this bill.
  We are in danger of losing what confidence is left of the American 
people in our actions. We ought to be asking the right questions for 
the right reasons that shouldn't have anything to do with politics, 
shouldn't have anything to do with partisanship, and ought to have 
everything to do with what is the best, right solution for our country 
in the long run.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I have come to speak in support of the 
Sanders amendment. I am intrigued by my colleague's presentation, so I 
will respond to a bit of it. There are a couple of areas where we agree 
and some where I profoundly disagree, but let me start with the 
agreement.
  When my colleague says, If you are too big to fail, you are too big 
and you ought to get smaller, I fully agree with that. I have an 
amendment that says if you are too big to fail--judged by the council 
in this bill that you are too big to fail, at that point you require 
the breaking up or the paring back of whatever is necessary of that 
institution to bring it below the level at which its failure would 
cause a moral jeopardy or an unacceptable risk to this country's entire 
economy. If we end this process and too big to fail still exists--that 
is, we have companies that are, in fact, too big to fail--then we will 
have failed, in my judgment.
  Too big to fail means you are too big. We have broken up Standard Oil 
into 23 pieces and it turns out that 23 pieces are more valuable than 
the whole. AT&T was broken up. I am not interested in breaking up 
companies for the sake of it, but I am saying this: We know what has 
happened.
  This chart shows what has happened to the largest financial 
institutions in this country. It shows that with respect to assets and 
liabilities, the top six commercial financial institutions in this 
country have gotten bigger, bigger, bigger, and much, much, much 
bigger. Does that cause jeopardy to this country? Well, if you have 
been awake the last few years to watch $700 billion be pledged to avoid 
a calamitous event to this economy, then you understand that this is 
too big and something has to be done about it. Create early warnings? 
No, I don't think so. Stop signs? How about deciding that if you are 
too big, you are too big, and you have to pare back those portions of 
your institution that make you too big to fail and a moral hazard to 
this country that is an unacceptable risk to the future of this 
economy.
  Here is another chart that shows about the same thing. It shows the 
growth of these institutions going back to 1995. It is relentless, 
aggressive growth. If we end this without having addressed it, we will 
not have been able--we won't be able to tell the American people: We 
took care of too big to fail. So I agree with the Senator from Oklahoma 
on that point.
  Where we disagree is the notion that the problem here is us. Well, I 
will tell my colleagues what. The ``us'' bears plenty of 
responsibility, but let me talk about the ``us.'' It wasn't the ``us'' 
who decided in Countrywide Mortgage, which was the largest single 
mortgage company in this country, to write liars' loans, to decide to 
say to people, Hey, you want to get some money from us? We are a big 
company. We are making a lot of fees. We are paying a lot of money to 
our executives and we want you to come to us. In fact, I have an ad 
they ran, Countrywide, the biggest mortgage company in the country. 
Here is the ad: Do you have less than perfect credit? Do you have late 
mortgage payments? Have you been denied by other lenders? Call us. We 
have money for you. Are you a bad risk? Are you a bad person? You can't 
pay your bills? Come to us.
  It wasn't the Congress that did that, I would say to my friend. This 
was Countrywide Mortgage. By the way, the guy who ran this organization 
got off with $200 million. So he is now under criminal investigation. 
But don't suggest to me that somehow that was the responsibility of 
somebody other than the guy running the company that puts up ads such 
as: Zoom Credit. It says: You have been bankrupt, slow credit, no 
credit, can't pay? Who cares? That is what was advertised to the 
American people. That wasn't somebody in this Chamber going out and 
saying, Hey, how about letting us give you a loan if you have bad 
credit. Was it somebody in this Chamber who decided we are going to 
create credit default swaps? That is like saying ``the devil made me do 
it'' from the old TV show. No, no, no. It was a group of people who are 
high fliers, hotshots, wearing silk shirts and monogrammed sleeves, and 
they go out and create all of these exotic instruments such as credit 
default swaps, and they weren't enough; they have to do synthetic or 
naked default swaps with no insurable interest on the other side of the 
transaction. It was simply wagering. It had nothing to do with 
investment. It wasn't somebody in this Chamber who said please do this. 
It was the most unbelievable greed and avarice I have ever seen in the 
history of this country by a lot of folks. It created big 
institutions--I am not saying everybody did it, but enough did it to 
imperil this country's economy and to require emergency action to, as 
the Treasury Secretary then said, ``save the American economy.''

  All this was going on. Everybody was having a carnival and making 
lots of money. In 2008, Wall Street had a net loss of $35 billion and 
paid bonuses of $16 billion. I got a master's degree in business. I 
went to business school. There is no place that teaches that--to go 
lose a bunch of money and then pay huge bonuses. This was a carnival of 
greed that went on in this country and steered this country right into 
a ditch.
  When my colleagues say it is government that did that, I am sorry, 
that is flatout wrong. What government did--and they did it for a 
number of years in the last decade--is they hired a bunch--and the 
previous administration is especially responsible--of regulators who 
didn't like government and didn't want to regulate. One of the key 
people who came to this town in a key position of regulatory 
responsibility said: Hey, this is a new day. This is a business-
friendly place. Understand that. We are going to be willfully blind 
here for a number of years. So do what you want; we won't watch and we 
don't care.
  So the responsibility for regulatory authority is not in this 
Chamber.
  I am not somebody who comes here to blame previous administrations 
very often, but when the Bush administration came to office--about the 
same time that Gramm-Leach-Bliley, by the way, with the support of the 
Clinton administration, repealed Glass-Steagall and said you can create 
big financial holding companies as big as you want and you can merge 
investment banks with commercial banks and security sales, and you can 
do it all--a one-stop financial shop. It will be great, and we will 
call it modern. About the time that passed--over my

[[Page S3338]]

objections, as I was one of eight Senators who voted no, and I was out 
here six, eight times opposing it--about that time, we had a new 
administration come in and say: We are going to put regulators in place 
who have no interest in watching what you do, so do what you want. They 
put out naked credit default swaps and trillions of dollars for them. 
Who cares? If you want to increase your leverage from 12 times, to 20 
times, to 30 times your capital, fine. We will have a meeting in the 
basement of the SEC, and we will, just like that, approve you to be 
able to increase your leverage to 30 times your capital. And it will 
hardly be reported by anybody because we are not watching anything. 
They were blind regulators--dead blind. Unbelievable.
  Don't blame this on someone else. We can blame it on bad legislation 
a decade ago. That is fair. Those who were making bad loans and taking 
big checks to the bank and filling it with millions of dollars were 
doing it because they were greedy and nobody was willing to stop them. 
That avalanche of greed built into a bubble of speculation that really 
injured this country and nearly ran it off a cliff.
  By the way, at the same time all of this was happening in the last 15 
years or so, the financial institutions decided they were going to 
securitize everything. Doesn't matter; find some debt, and we have 
people who can roll it into a security. Once they do that, they can 
sell it three, four times, to an investment bank, to a hedge fund, you 
name it, and they can get a rating agency--because the investment banks 
pay the costs of the rating agencies that rate their securities, which 
is a pretty big conflict of interest--to help roll these forward, and 
nobody has any skin in the game.
  My colleague talks about how unfair it would be to ask somebody to 
save at least a portion of a loan they are providing. Do you know what? 
The only way you have proper underwriting of loans in this country is 
if you sit across the table from somebody who wants to get a loan and 
look at their credit reports and determine if they are eligible. The 
only way you ever ensure that happens the right way is to have that 
kind of underwriting, and you would do that if you are going to have 
some continuing risk.
  But if you are going to give a $750,000 loan to somebody who makes 
$17,000 a year--and it happened, by the way--a liar's loan, requiring 
no documentation, with no interest or principal paid because he put it 
all on the back side--if you can sell that in a security to somebody 
else and you have no further risk, you get your money free and clear. 
That is what was going on at every single level. It was just the most 
unbelievable, irresponsible lack of regulation, perhaps, in the history 
of this country.
  I want to say that the government has made plenty of mistakes, but 
don't blame this Chamber or people who were elected to the Senate for 
the bad behavior of somebody who takes $200 million away from the 
biggest mortgage finance company in this country and was selling liar's 
loans and advertising that if you have bad credit, no credit, slow 
credit, and bankruptcy, come to us, we are going to give you money. 
Don't blame that on somebody else. Put that blame where it rests--the 
unbelievable greed among the people who should have known better and 
should not have been able to do it in the first place because the 
regulators should have been all over them in a moment, saying: You 
cannot do it. That didn't happen.
  This demonstrates the need for effective regulation. The free market 
system works, but when people try to subvert it, when people commit 
fouls in the free market system, it needs a referee with a whistle and 
a striped shirt. That was missing in the last decade.
  Mr. President, one final point. Part of this argument is excusing 
criminal behavior because there wasn't a cop on the beat. Don't excuse 
the criminal behavior. We need cops on the beat. We need legislation 
that will make sure we close the loopholes that exist. We need to 
legislate soberly and thoughtfully and give the American people some 
notion that this behavior cannot happen again.
  By the way, I think the way we do that is to make certain you cannot 
be too big to fail. By what justification should the major financial 
companies of this country continue this kind of concentration and 
escalation of size in a manner that jeopardizes this country should 
they fail? By what justification should we allow that to continue? The 
answer is that it should not.
  There are two amendments to address that I am aware of--one by 
Senators Brown and Kaufman, which creates a numerical limit on size, 
and I fully support. The other one, which I prefer because it has my 
name on it, is to flatout break up firms that have gotten too big to 
fail to the point where they are not too big to fail. That is the most 
effective way, in my judgment, to do this.
  I will speak ever so briefly about the Sanders amendment. I got 
sidetracked by my colleague from Oklahoma, as is so often the case.
  My colleague from Vermont has offered a piece of legislation that I 
think has great merit. Let me tell you what it doesn't do. It does not, 
as those who fear the amendment say, invoke the tentacles of the U.S. 
Congress in the construction of monetary policy. That area belongs to 
the Federal Reserve Board.
  The Federal Reserve Board is a creature of legislation that Congress 
created. If you went back and read the debate, the country was assured 
that this was not creating a strong central bank. There were just lead 
pipe assurances to that, but, of course, that turned out not to be the 
case. Nonetheless, the Federal Reserve Board creates monetary policy, 
and there is a thought--and I agree with it--that we don't want 
monetary policy created on the floor of the Senate. We don't want to 
intrude on the creation or development of monetary policy. We do fiscal 
policy, the taxing and spending side. The monetary side is the Federal 
Reserve Board's terrain.
  But the Federal Reserve Board ought not be unaccountable to anybody 
for anything. The Federal Reserve Board, it seems to me, deserves, No. 
1, to be audited properly--a Government Accountability Office audit--
which the Sanders amendment would require. And I know the Fed is having 
an apoplectic seizure thinking that maybe this amendment will pass. You 
know what. It is the right thing to do, to say at long, long last, 
there should be an audit of the Federal Reserve Board. I am not talking 
about auditing monetary policy but what it does generally. It is 
necessary, and I support this and think it is the right policy.
  No. 2, this legislation does what I and many others have been pushing 
the Fed for, for some while. Last July of 2009, I had a letter signed 
by 10 of my colleagues to Chairman Bernanke saying: You have now used 
your emergency powers for the first time in U.S. history to open your 
loan window to investment banks, as never before in the history of our 
country. Serious financial problems, you say? Open the loan window and 
come and get some money. So we write and say: OK, you did that on an 
emergency basis for the first time in our history. What was the result? 
Who got the money? What were the terms and the conditions?

  The American people deserved to have that information. I wrote again 
on March 19 of this year. On both occasions, we received letters from 
Chairman Bernanke that were polite, thoughtful, but that said: You know 
what. We don't intend to provide you or the American people information 
about what happened at our loan window. We don't intend to talk about 
the loans we gave to investment banks for the first time in history.
  I wonder--and this is idle curiosity--did we have investment banks 
show up at this window and get near zero interest rate loans and then 
invest them back into Treasury bonds? How much money did they make on 
that transaction? I know many of these organizations--the largest 
investment banks--are now making record profits. But it is not as a 
result of loaning money to businesses in this country that need the 
lending; it is by trading securities--once again, right back in the 
same trench.
  This legislation that my colleague, Senator Sanders, has offered is 
legislation that will put in law a requirement that the Federal Reserve 
Board disclose the activities, in a certain period of time, of who 
received the lending from the Federal Reserve Board, what the 
conditions were, and what the amounts of funding were.

[[Page S3339]]

  The Chairman of the Fed, who said this might make it very difficult 
and it will undermine this and that, undermine these programs, publicly 
releasing names--look, two Federal courts have required the Federal 
Reserve Board to do this. Two Federal courts--the district court and 
the appellate court--have said the Federal Reserve Board does not have 
the authority to withhold this information. The Federal Reserve Board 
has once again said: It doesn't matter, we intend to appeal again. 
They, apparently, intend to keep this tied up in the court system as 
long as they can. This amendment in this piece of legislation will say 
to the Federal Reserve Board: You cannot do that. The law requires you 
to disclose to the American people what you have done.
  I come here to say I think this is a good bill. I had introduced a 
separate amendment on the disclosure by the Fed, but if we pass the 
Sanders amendment, that will take care of my amendment. Some people 
talked earlier about duplicates. Mine will be taken care of if we pass 
the larger amendment offered by Senator Sanders.
  I support the amendment. I know a good many of my colleagues will 
too. It has been a long time to try to get an audit of the Federal 
Reserve Board--not an audit of the monetary policy but an audit of the 
Federal Reserve Board. But if we do that, this will be a significant 
step forward for those of us who believe that is necessary and 
important for the country.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Kaufman). The Senator from South Carolina.
  Mr. DeMINT. Mr. President, I join Senator Dorgan and Senator Sanders 
in the amendment to audit the Federal Reserve.
  Let me begin with a perspective on what happened in the stock market 
today. Clearly, someone got it wrong, and it created a domino effect of 
one thing falling after another, and before we knew it, the stock 
market was down 1,000 points. Fortunately, it climbed back up before it 
closed today.
  It reminds us how volatile, how vulnerable we are in a world where so 
many systems are involved with our financial system.
  It is good Congress is looking at financial reform. I only regret we 
are not dealing with the real causes of our financial crisis.
  Wall Street is clearly jittery. We can see that from the stock market 
today. Everyone is waiting for the dominos to fall. We see what is 
happening in Greece, one country that continued to spend more than it 
was bringing in until it went bankrupt. Unfortunately, the American 
people are on the hook for yet another bailout, not even a bailout in 
this country but billions of American tax dollars are headed for Greece 
right now.
  As other European countries head toward bankruptcy, last year in this 
Congress we created another credit line for the International Monetary 
Fund to be drawn down. The real irony is, we are borrowing money from 
countries such as China in order to bail out other countries in the 
world at a time when the United States is carrying $13 trillion of debt 
and projections of tens of trillions of more dollars in the future. It 
is clearly unsustainable.
  The stock market and investors have a reason to be jittery, and 
Americans have a reason to be angry. We saw what the failure of large 
government organizations such as Fannie Mae did and how it cost 
Americans trillions of dollars. People who had been saving and 
investing all their lives found out almost overnight that the system 
they counted on and that we were supposed to oversee was not what they 
thought it was, and suddenly wealth was gone.
  If Fannie Mae could do that much damage to our country, that is small 
in comparison to what would happen if the Federal Reserve does it 
wrong.
  The Constitution gives Congress the responsibility for our monetary 
policy. Congress, years ago, delegated that to an independent agency we 
call the Federal Reserve. But we are still responsible for monetary 
policy. If something is done wrong with that policy, all we worked for 
in this country, everyone's savings and investments, everyone's wealth, 
not only in this country but because we are the reserve currency for 
the world, the whole economic system of the world is resting on top of 
what the Federal Reserve does.
  The fact is, while it is our responsibility to oversee monetary 
policy, we do not know what the Federal Reserve is doing. Keep in mind, 
we were assured only months before Fannie Mae and Freddie Mac 
collapsed--and, by the way, we bailed them out and Freddie Mac for 
another $10 billion this week--only months before they collapsed, we 
were told by Chairman Bernanke at the Federal Reserve and many other 
economic experts that there was no problem. But there was a problem. 
The real problem was we did not know it, and that was a company created 
by this Congress. It was our responsibility to oversee it, and we did 
not carry out our responsibility.
  We need an independent Federal Reserve. We do not need political 
manipulation and second-guessing of our monetary policy. But we do not 
need a secret Federal Reserve. We have to know what they are doing if 
we are going to be responsible for what they are doing. It is not going 
to be enough if they do something wrong and we point our finger at them 
and say it was their fault because it is our responsibility.
  For years, the Federal Reserve has been avoiding any kind of audit, 
any kind of accountability, any kind of transparency. Every time we ask 
for any type of disclosure, they say we are violating their 
independence. We are not violating their independence by this amendment 
proposed by Senator Sanders. All we are doing is uncloaking the secrecy 
that exists within the Federal Reserve.
  It is important to know what we do know. We know the Federal Reserve 
has bailed out Bear Stearns and AIG. The taxpayers are stuck holding 
failed bets on everything from toxic subprime mortgages to strip malls 
and hotels. Thanks to the bailouts, taxpayers now own stakes in 
bankrupt Hilton hotels in Malaysia, Russia, and Singapore. I am not 
sure that is what the Congress had in mind when they started the 
Federal Reserve.
  The Federal Reserve owns part of the Civic Opera building in Chicago 
and the Crossroads Mall in Oklahoma City. I thought it was bad when the 
Fed was printing money to keep up the government's shopping spree, but 
I never expected they would buy a mall to go shopping in.
  They say it is over when the fat lady sings. Well, now the Fed has an 
opera house ready for her singing.
  Americans deserve to know if the Federal Reserve is being honest with 
the Congress and with the American people. We know what they say behind 
closed doors does not square with what they say publicly.
  Recently released transcripts show, in 2004, members of the Federal 
Reserve publicly downplayed specific concerns they discussed internally 
about the coming housing crisis. They knew we had a problem. At that 
time, Chairman Alan Greenspan said, if they were to encourage the 
public to talk about it ``it's possible to lose control of a process 
that only we fully understand.'' Meanwhile, they were telling the 
Congress and the public everything was fine.
  By doing that, they cost millions of Americans a lifetime of savings, 
and they are still struggling. Millions of people are out of work 
because of mismanagement by the Federal Reserve. Yet they seem to think 
they require no supervision, no accountability, no transparency. We 
need to end that with this amendment today.
  Within 30 days of the President signing this amendment that has been 
proposed, the Federal Reserve will have to tell us who got all this 
bailout money, how much they got and the reasoning for giving it and 
what terms of repayment there are. It is a pretty simple request. True 
financial reform must include a full audit of the Federal Reserve and a 
breakup and a winddown of Freddie Mac and Fannie Mae. But the people 
who run the government are not willing to hold the government 
institutions responsible.
  Those who understand what happened in this financial crisis know that 
the easy money policy of the Federal Reserve, Fannie Mae and Freddie 
Mac buying subprime mortgages and securitizing them and selling them 
all over the world were a large part of the meltdown of our financial 
system. Yet this financial reform bill we are talking about does not 
even address the real causes of our financial meltdown.

[[Page S3340]]

One thing we can do if we adopt this amendment is make sure there is 
more transparency, more accountability at the Federal Reserve.
  As I already mentioned yesterday, Freddie Mac posted an $8 billion 
loss. That is now fully owned by the Federal Government. The Federal 
Government is clearly mismanaging Freddie Mac, and they asked for 
another $10 billion bailout from the taxpayers. This time that does not 
have to go through Congress. President Obama has taken the caps off 
anything that can go to these bankrupt companies. Billions of dollars 
are going to flow from taxpayers directly to these government-owned 
entities.
  Freddie Mac and Fannie Mae together have lost at least $126.9 billion 
so far. It is pretty amazing in a time when this country is overcome 
with debt. There is no end in sight. There is no cap on how much 
taxpayers can bail them out. Yet they are not even mentioned in this 
financial reform bill. We heard about greed on Wall Street, but we have 
not even addressed the greed within the government and within the 
government agencies.
  The Democratic House Financial Services chairman, Barney Frank, does 
not think these government-run institutions are good candidates for 
reform. He wrote a memo to the White House saying they were ``being 
managed responsibly and aren't doing any further economic damage.'' 
Fortunately, Senator McCain has an amendment to address this issue, and 
I hope it is adopted. But if there is one place the blame can be placed 
for this financial meltdown, it comes back to Fannie Mae and Freddie 
Mac.
  Wall Street certainly deserves a lot of the blame for the financial 
crisis because they took advantage of a lot of the mismanagement in 
government to their own benefit. But the Federal Reserve, Freddie Mac, 
and Fannie Mae also deserve a lot of the blame, and they should be 
addressed as well.
  The Sanders amendment at least begins the process in letting us know 
what the Federal Reserve is doing. The audit-the-Fed amendment has more 
than 300 cosponsors in the House and 32 in the Senate. It is supported 
by a broad spectrum of political groups from FreedomWorks all the way 
to very liberal groups. Within the Senate, if America wants bipartisan 
activity, it could not be more bipartisan than Bernie Sanders and Jim 
DeMint.
  I encourage my colleagues to support this amendment. Let's reform not 
only the financial system but our own house, and that includes the 
Federal Reserve.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Shaheen). The Senator from Virginia.
  Mr. WARNER. Madam President, I rise to speak very briefly, following 
the comments of my colleague from South Carolina on the pending 
amendment that I know has received broad bipartisan support. I also 
wish to comment on what happened in the market today.
  The stock market was down about 347 points. But what was more telling 
was the stock market, at one point today, approached a loss of 1,000 
points which, if it had held, would have been the largest single-day 
loss in modern history.
  There were a number of causes. My colleague mentioned some clear 
concerns about the crisis in Greece. What it appears to be in terms of 
real-time reporting going on right now is that part of this precipitous 
drop took place because it appears there was a technology glitch on an 
order put in that had no backguard or safeguards to stop it.
  I am going to quickly go into an area that is actually the expertise 
of Senator Kaufman. I know Senator McCain's amendment will be up in a 
moment.
  I have heard, while sitting in that chair, my friend, the Senator 
from Delaware, come to this floor time and again to talk about the 
challenges that have been created in the marketplace with the increased 
use of high-speed trading, flash trading, colocation, sponsored 
access--a whole series of technical terms but terms that we may have 
seen the first inkling today with what happens when these tools of 
technology do not work the way they are supposed to.
  I ask my friend, the Senator from Delaware, who has spent time on 
this issue much more than I, today we saw--and I have become a believer 
and I know the SEC has started moving forward on the flash trading 
issue, but there is a series of other activities that as we go through 
this financial reform bill, we at least need to have more facts. I 
believe the SEC needs to have the resources to keep up with the 
marketplace. We saw a living, breathing real-time example of the 
potential catastrophe that could take place if we do not have the 
ability to adequately use the technology and have safeguards and 
realize how some of these firms are using this technology to get an 
advantage over the everyday Main Street investor.
  Mr. KAUFMAN. Madam President, the Senator from Virginia right from 
the beginning has been sympathetic. Because of his great knowledge on 
Wall Street and finance, he has been a great source of encouragement to 
me. I have spoken on this floor repeatedly, and this is not a surprise. 
If this turns out to be the worst case of what we are talking about--we 
do not know.
  What happened over the years is that we basically went from a market 
that was a floor-based market to a market that was digitalized and 
decimalized, where we began to have tenths using decimals as opposed to 
eighths. What happened is that markets, computer firms--if you want to 
read a great story, a book called ``The Quants,'' by Scott Patterson. 
People came into the market and began to develop these high-speed 
computers. Human beings were no longer doing the trading, computers 
were. They developed these algorithms. It ran automatically. It grew 
and grew, and now it is something like--they went from 30 percent to 70 
percent of all the trades on our markets are in this high-frequency 
trading, using these high speed computers. There is no way to know what 
is going on. They trade 2,000 to 3,000 shares in a second. No one knows 
what is happening in the exchanges when this trading is going on. No 
one knows.

  The Securities and Exchange Commission has said--after repeated 
requests--that we are going to go look at market structure. This is 
months ago. They say we are going to look into this. Now they are 
having a group look into it. Right now, there is no way to know what is 
happening in this marketplace. All we have been requesting from the 
Securities and Exchange Commission is that they take a look at what is 
happening.
  Remember, you have 2,000 to 3,000 trades a second. The only records 
that are kept are of the actual trades. But 90 percent--to let you know 
how complicated this is--90 percent of the trades are canceled. Why are 
they doing that? There are a lot of allegations about why they are 
doing this and what is going on, but right now we have this gigantic 
business--70 percent of our trading--and we have no idea what is going 
on.
  I will say one final thing, because it reflects on this bill. What 
will happen if we allow our banks to be mingled with our investment 
banks and don't put some kind of cap on it? That is my big concern. 
Investment banks are into high risk things, and that is where most of 
these things are taking place. If you go back and look at derivatives, 
what we had under derivatives is a whole lot of money. Nobody argues, 
derivatives are gigantic. This is now gigantic. You had a lot of 
change. We went from very few derivatives to massive numbers of them. 
We went from 30 to 70 percent of all our trades being high frequency 
trading. We have no transparency as we have with derivatives. We didn't 
know what was going on in the derivatives market. We had no regulation, 
because you don't know what the trades are. And what happened? We had 
this gigantic meltdown.
  I am saying that I totally agree with the Senator from Virginia. We 
have a very dangerous situation.
  Mr. WARNER. I will wrap up very quickly.
  We saw today, for example, in a matter of a moment or two, Procter & 
Gamble--one of America's premier companies--fall from $60 to $39. We 
saw another company fall from around $30 to a penny stock. This was not 
the result of a market, this was the result of, I believe, some lack of 
oversight. There is nobody in this Chamber who is more of an advocate 
of technology and the powerful tool that technology can be, but we are 
seeing what the Senator from Delaware has been an early leader on. I 
have listened to his speeches for

[[Page S3341]]

months, and everything in my gut says he is onto something here.
  I have asked the chairman of the Banking Committee to make sure as 
this piece of legislation proceeds that we make sure that whether it is 
a study, whether it is an appropriate question of the SEC, this high 
speed, high frequency trading, colocation, sponsored access, all of 
these series of tools that seem to give the big guys a slightly bigger 
advantage over the everyday investor, be an appropriate subject of some 
additional study.
  We may disagree about how we go into the last crisis, but I believe 
the Senator from Delaware is potentially on to what could be the next 
crisis. I think we perhaps saw a little window into that possibility 
today when the stock market got close, for moments in time--based on 
what appeared to be technology errors and high speed trading--to 
perhaps the single biggest loss in modern American history--a thousand 
point loss for a moment in time this afternoon.
  I know the Senator from Arizona wants to talk about his issues as 
well. But there was a warning sign shot across the bow today, and if we 
don't deal with this as part of the mix, I think we are not acting 
appropriately.
  Mr. KAUFMAN. I will yield, but this is a case where I think we have 
to look into this and see what is going on.
  I yield for the Senator from Arizona.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Madam President, I want to discuss amendment No. 3839. 
This amendment is designed to end the taxpayer-backed conservatorship 
of Fannie Mae and Freddie Mac by putting in place an orderly transition 
period and eventually requiring them to operate without government 
subsidies on a level playing field with their private sector 
competitors.
  Events of the last 2 years have made it clear that never again can we 
allow the taxpayer to be responsible for poorly managed financial 
entities which gamble away billions of dollars. Fannie Mae and Freddie 
Mac are synonomous with mismanagement and waste and have become the 
face of too big to fail. The time has come to end Fannie Mae and 
Freddie Mac's taxpayer-backed free ride and require them to operate on 
a level playing field.
  I want to quote from an AP story yesterday entitled: ``Freddie Mac 
seeks $10.6B in aid after 1Q loss.'' Freddie Mac is asking for $10.6 
billion in additional Federal aid after posting a big loss in the first 
3 months of the year. It is another sign that the taxpayer bill for 
stabilizing the housing market will keep mounting. The McLean, VA-based 
mortgage finance company has been effectively owned by the government 
after nearly collapsing in September of 2008. The new request will 
bring the total tab for rescuing Freddie Mac to $61.3 billion. Freddie 
Mac says it lost $8 billion, or $2.45 a share, in the January-March 
period. That takes into account $1.3 billion in dividends paid to the 
Treasury Department. It compares with the loss of $10.4 billion or 
$3.18 a share, in the year-ago period.
  So the beat goes on and the drainage goes on. Here on this chart we 
have the money yet to be repaid by institutions that received $10 
billion or more in taxpayer bailouts. Obviously, these organizations 
have paid back. GMAC still has $16 billion they owe the taxpayer; 
Citigroup, $25 billion; GM--despite their PR stunt the other day, where 
they say they paid back, with TARP money, they paid the taxpayers with 
taxpayer money--$43.7 billion; AIG, $69.8 billion; and, of course, 
Fannie and Freddie, $125.9 billion plus.
  I wish to begin today by calling my colleagues' attention to an 
editorial in this morning's Wall Street Journal, which states:

       Fan and Fred owned or guaranteed $5 trillion in mortgages 
     and mortgage-backed securities when they collapsed in 
     September of 2008. Reforming the financial system without 
     fixing Fannie and Freddie is like declaring a war on terror 
     and ignoring al-Qaida.

  I want to repeat that sentence for the benefit of my colleagues. This 
is from the Wall Street Journal this morning.

       Reforming the financial system without fixing Fannie and 
     Freddie is like declaring war on terror and ignoring al-
     Qaida.
       Unreformed, they are sure to kill taxpayers again. Only 
     yesterday, Freddie said it lost $8 billion in the first 
     quarter, requested another $10.6 billion from Uncle Sam, and 
     warned that it would need more in the future. This comes on 
     top of the $126.9 billion that Fan and Fred had already lost 
     through the end of 2009. The duo are by far the biggest 
     losers of the entire financial panic--bigger than AIG, 
     Citigroup and the rest.
       From the 2008 meltdown through 2020, the toxic twins will 
     cost taxpayers close to $380 billion, according to the 
     Congressional Budget Office's cautious estimate.

  The numbers, I say to my colleagues, are staggering--staggering.

       The Obama administration won't even put the companies on 
     budget for fear of the deficit impact, but it realizes the 
     problem because last Christmas Eve--

  Strangely enough on Christmas Eve--

     . . . it raised the $400 billion cap on their potential 
     taxpayer losses to . . . infinity. Moreover, these taxpayer 
     losses understate the financial destruction wrought by Fan 
     and Fred. By concealing how much they were gambling on risky 
     subprime and Alt-A mortgages, the companies sent bogus 
     signals on the size of these markets and distorted decision-
     making throughout the system. Their implicit government 
     guarantee also let them sell mortgage-backed securities 
     around the world, attracting capital to U.S. housing and thus 
     turbocharging the mania.

  Specifically, this amendment does several things:
  It provides for a finite end to the current conservatorship period 
for both government-sponsored enterprises--GSEs--at 2 years of date 
from the enactment. The Federal Housing Finance Agency has an option to 
extend conservatorship for 6 months if the FHFA Director determines and 
notifies Congress that adverse market conditions exist. If at the end 
of conservatorship a GSE is not financially viable, the FHFA must place 
that GSE in receivership. If the GSE is financially viable, then 
it would be allowed to reenter the market under new operating 
restrictions.

  It provides for the following changes to existing operating 
structure:
  It calls for the repeal of the affordable housing goals mandates for 
the GSEs.
  It calls for new limits for mortgage assets held on its books of no 
more than 95 percent of mortgage assets owned on December 31 of the 
prior year, reduced an additional 25 percent by the end of year 1, 
reduced an additional 25 percent by the end of year 2, and reduced to 
$250 billion by the end of year 3.
  It strengthens capital standards and allows them to be increased by 
the FHFA as necessary.
  It calls for the repeal of the temporary increases in conforming loan 
limit and high cost area increases, and a return to the $417,000 
conforming loan limit for the first year, subject to annual adjustments 
by FHFA.
  It provides for a prohibition on the purchase of mortgages exceeding 
the median home price for that area.
  It calls for a minimum downpayment requirement of at least 5 percent 
for all new loans purchased by the GSE, increasing to 7.5 percent in 
the second year, and 10 percent in the third year.
  It repeals the GSE exemption from having to pay State and local 
taxes.
  I wonder how many of my colleagues and fellow citizens knew that 
Fannie and Freddie did not have to pay State and local taxes.
  It calls for a repeal of the exemption allowing GSE securities to 
avoid full SEC registration.
  In other words, given their enormous clout here in the Congress, 
Fannie and Freddie were able to have an exemption from their securities 
falling under SEC registration.
  It calls for an assessment of fees on GSEs to recoup full value of 
the benefit due to guarantee provided by the Federal Government. And 
GAO will conduct a study to determine current value of government 
guarantee.
  The amendment establishes a 3-year period after the end of 
conservatorship for GSEs to operate under new operating restrictions 
until their government charter expires. Upon charter expiration, it 
provides for a 10-year period with the creation of a separate holding 
corporation and a dissolution trust fund for any remaining mortgages or 
debt obligations held by the GSE.
  It establishes a Senate-confirmed special inspector general within 
the Government Accountability Office with responsibility for 
investigating and reporting to Congress on decisions made with respect 
to the conservatorships of Fannie Mae and Freddie Mac. The SIG would 
provide quarterly reports to Congress.
  While GSEs remain in conservatorship, it reestablishes the Federal 
funding limit of $200 billion per institution

[[Page S3342]]

for the GSEs and requires the GSEs to reduce their portfolio holdings 
by 10 percent of the prior year's holdings. It also establishes an 
approval process for any further agreements that put the taxpayers at 
risk.
  It places Fannie Mae and Freddie Mac as part of the Federal budget as 
long as either institution is under a conservatorship or receivership.
  Again, my colleagues might be interested that Fannie Mae and Freddie 
Mac, and what we are doing with them now, is not part of the Federal 
budget--remarkable.
  It requires the FHFA to establish minimum prudent underwriting 
standards for mortgage loans eligible for government-sponsored entities 
purchase. Minimum requirements will include verification and 
documentation of income and assets relied upon to qualify the borrower 
for the mortgage loan and determination of borrower's ability to repay 
the mortgage loan.
  I might add that the Congressional Budget Office has indicated this 
amendment would save the taxpayers several billions of dollars 
annually. I repeat, the Congressional Budget Office states--and, by the 
way, it has not been given any phony assumptions such as a doc fix--
this amendment would save the taxpayers several billions of dollars 
annually.
  During the debate on this financial reform bill, we will continue to 
hear a lot about how the U.S. Government will never again allow a 
financial institution to become too big to fail. We will hear 
continuous calls for more regulation to ensure that taxpayers are never 
again placed at such tremendous risk.
  Sadly, and I say very sadly, the underlying bill completely ignores 
the elephant in the room because no other entity's failure would be as 
disastrous to our economy as Fannie Mae's and Freddie Mac's. Yet this 
bill does not address them at all.
  In a recent Opinion Piece in the Wall Street Journal, Robert Wilmers 
wrote:

       Congress may be making progress crafting new regulations 
     for the financial-services industry, but it has yet to begin 
     reforming two institutions that played a key role in the 2008 
     credit crisis--Fannie Mae and Freddie Mac.
       We cannot reform these government-sponsored enterprises 
     unless we fully confront the extent to which their outrageous 
     behavior and reckless business practices have affected the 
     entire commercial banking sector and the U.S. economy as a 
     whole.
       At the end of 2009, their total debt outstanding--either 
     held directly on their balance sheets or as guarantees on 
     mortgage securities they'd sold to investors--was $8.1 
     trillion. That compares to $7.8 trillion in total marketable 
     debt outstanding for the entire U.S. government. The debt has 
     the implicit guarantee of the federal government but is not 
     reflected on the national balance sheet.
       The public has focused more on taxpayer bailouts of banks, 
     auto makers and insurance companies. But the scale of the 
     rescue required in September 2008 when Fannie and Freddie 
     were forced into conservatorship--their version of 
     bankruptcy--was staggering. To date, the federal government 
     has been forced to pump $126 billion into Fannie and Freddie. 
     That's far more than AIG, which absorbed $70 billion of 
     government largess, and General Motors and Chrysler, which 
     shared $77 billion. Banks received $205 billion, of which 
     $136 billion has been repaid.
       Fannie and Freddie continue to operate deeply in the red, 
     with no end in sight. The Congressional Budget Office 
     estimated that if their operating costs and subsidies were 
     included in our accounting of the overall federal deficit--as 
     properly they should be--the 2009 deficit would be greater by 
     $291 billion.

  The op-ed continues:

       All this happened in the name of the ``American Dream'' of 
     home ownership. But there's no evidence Fannie and Freddie 
     helped much, if at all, to make this dream come true. Despite 
     all their initiatives since the early 1970s, shortly after 
     they were incorporated as private corporations protected by 
     government charters, the percentage of American households 
     owning homes has increased by merely four percentage points 
     to 67%.
       According to a 2004 Congressional Budget Office study, the 
     two GSEs enjoyed $23 billion in subsidies in 2003--primarily 
     in the form of lower borrowing costs and exemption from state 
     and local taxation. But they passed on only $13 billion to 
     home buyers. Nevertheless, one former Fannie Mae CEO, 
     Franklin Raines, received $91 million in compensation from 
     1998 through 2003.

  Amazing.

       In 2006, the top five Fannie Mae executives shared $34 
     million in compensation, while their counterparts at Freddie 
     Mac shared $35 million. In 2009, even after the financial 
     crash and as these two GSEs fell deeper into the red, the top 
     five executives at Fannie Mae received $19 million in 
     compensation and the CEO earned $6 million.
       This is not private enterprise--it's crony capitalism, in 
     which public subsidies are turned into private riches. From 
     2001 through 2006, Fannie and Freddie spent $123 million to 
     lobby Congress--the second-highest lobbying total in the 
     country. That lobbying was complemented by sizable direct 
     political contributions to members of Congress.
       Changing this terrible situation will not be easy. The 
     mortgage market has come to be structured around Fannie and 
     Freddie and powerful interests are allied with the status 
     quo.
       Nonetheless, Congress must get to work on the reform of 
     Fannie Mae and Freddie Mac. A healthy housing market, a 
     healthy financial system and even the bond rating of the 
     federal government depend on it.

  There have been countless warnings about the mismanagement of both 
Fannie and Freddie over the years. In May of 2006, after a 27-month 
investigation into the corrupt corporate culture and accounting 
practices at Fannie Mae, the Office of Federal Housing Enterprise 
Oversight--OFHEO--the Federal regulator charged with overseeing Fannie 
Mae--issued a blistering, 348-page report which stated that:

       Fannie Mae senior management promoted an image of the 
     Enterprise as one of the lowest-risk financial institutions 
     in the world and as ``best in class'' in terms of risk 
     management, financial reporting, internal control, and 
     corporate governance. The findings in this report show that 
     risks at Fannie Mae were greatly understated and that the 
     image was false.
       During the period covered by this report--1998 to mid-
     2004--Fannie Mae reported extremely smooth profit growth and 
     hit announced targets for earnings per share precisely each 
     quarter. Those achievements were illusions deliberately and 
     systematically created by the Enterprise's senior management 
     with the aid of inappropriate accounting and improper 
     earnings management.
       A large number of Fannie Mae's accounting policies and 
     practices did not comply with Generally Accepted Accounting 
     Principles (GAAP). The Enterprise also had serious problems 
     of internal control, financial reporting, and corporate 
     governance. Those errors resulted in Fannie Mae overstating 
     reported income and capital by a currently estimated $10.6 
     billion.
       By deliberately and intentionally manipulating accounting 
     to hit earnings targets, senior management maximized the 
     bonuses and other executive compensation they received, at 
     the expense of shareholders. Earnings management made a 
     significant contribution to the compensation of Fannie Mae 
     Chairman and CEO Franklin Raines, which totaled over $90 
     million from 1998 through 2003. Of that total, over $52 
     million was directly tied to achieving earnings per share 
     targets.
       Fannie Mae consistently took a significant amount of 
     interest rate risk and, when interest rates fell in 2002, 
     incurred billions of dollars in economic losses. The 
     Enterprise also had large operational and reputational risk 
     exposures.
       Fannie Mae's Board of Directors contributed to those 
     problems by failing to be sufficiently informed and to act 
     independently of its chairman, Franklin Raines, and other 
     senior executives; by failing to exercise the requisite 
     oversight over the Enterprise's operations; and by failing to 
     discover or ensure the correction of a wide variety of unsafe 
     and unsound practices.
       The Board's failures continued in the wake of revelations 
     of accounting problems and improper earnings management at 
     Freddie Mac and other high profile firms, the initiation of 
     OFHEO's special examination, and credible allegations of 
     improper earnings management made by an employee of the 
     Enterprise's Office of the Controller.
       Senior management did not make investments in accounting 
     systems, computer systems, other infrastructure, and staffing 
     needed to support a sound internal control system, proper 
     accounting, and GAAP-consistent financial reporting. Those 
     failures came at a time when Fannie Mae faced many 
     operational challenges related to its rapid growth and 
     changing accounting and legal requirements.
       Fannie Mae senior management sought to interfere with 
     OFHEO's special examination by diretstOg the Enterprise's 
     lobbyists to use their ties to Congressional staff to No. 1, 
     generate a Congressional request for the Inspector General of 
     the Department of Housing and Urban Development (HUD) to 
     investigate OFHEO's conduct of that examination and No. 2, 
     insert into an appropriations bill language that would reduce 
     the agency's appropriations until the Director of OFHEO was 
     replaced.
       OFHEO has directed and will continue to direct Fannie Mae 
     to take remedial actions to enhance the safe and sound 
     operation of the Enterprise going forward. OFHEO staff 
     recommends actions to enhance the goal of maintaining the 
     safety and soundness of Fannie Mae.

  A remarkable report.
  So what steps were taken by the Congress to punish Fannie Mae for 
such deliberate manipulation and outright corruption? Basically: NONE. 
According to published reports--including

[[Page S3343]]

Fannie Mae's own news release--Daniel Mudd, the president and CEO of 
Fannie Mae at the time, was awarded over $14.4 million in 2006--the 
year this report was issued, and over $12.2 million in 2007 in salary, 
bonuses and stock. And Fannie Mae continued their risky behavior--
successfully posting profits of $4.1 billion in 2006.
  The blatant corruption reported by the OFHEO led me to come to the 
Senate floor back in 2006 and call for the immediate consideration of 
GSE regulatory reform legislation. At the time I said:

       For years I have been concerned about the regulatory 
     structure that governs Fannie Mae and Freddie Mac and the 
     sheer magnitude of these companies and the role they play in 
     the housing market. OFHEO's report this week does nothing to 
     ease these concerns. In fact, the report does quite the 
     contrary. OFHEO's report solidifies my view that the GSEs 
     need to be reformed without delay.
       If Congress does not act, American taxpayers will continue 
     to be exposed to the enormous risk that Fannie Mae and 
     Freddie Mac pose to the housing market, the overall financial 
     system, and the economy as a whole.

  Additionally, also in May, 2006, I joined 19 of my colleagues in 
writing to the majority leader urging him to bring the Federal Housing 
Enterprise Regulatory Reform Act to the floor for debate.
  I ask unanimous consent this letter be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                  U.S. Senate,

                                      Washington, DC, May 5, 2006.
     Hon. William H. Frist, MD,
     Majority Leader, U.S. Senate,
     Washington, DC.
     Hon. Richard C. Shelby,
     Chairman, Banking, Housing and Urban Affairs Committee, U.S. 
         Senate,
     Washington, DC.
       Dear Majority Leader Frist and Chairman Shelby, We are 
     concerned that if effective regulatory reform legislation for 
     the housing-finance government sponsored enterprises (GSEs) 
     is not enacted this year, American taxpayers will continue to 
     be exposed to the enormous risk that Fannie Mae and Freddie 
     Mac pose to the housing market, the overall financial system, 
     and the economy as a whole. Therefore, we offer you our 
     support in bringing the Federal Housing Enterprise Regulatory 
     Reform Act (S. 190) to the floor and allowing the Senate to 
     debate the merits of this bill, which was passed by the 
     Senate Banking Committee.
       Congress chartered Fannie and Freddie to provide access to 
     home financing by maintaining liquidity in the secondary 
     mortgage market. Today, almost half of all mortgages in the 
     U.S. are owned or guaranteed by these GSEs. They are mammoth 
     financial institutions with almost $1.5 trillion of debt 
     outstanding between them. With the fiscal challenges facing 
     us today (deficits, entitlements, pensions and flood 
     insurance), Congress must ask itself who would actually pay 
     this debt if Fannie or Freddie could not?
       Substantial testimony calling for improved regulation of 
     the GSEs has been provided to the Senate by the Treasury, 
     Federal Reserve, HUD, GAO, CBO, and others. Congress has the 
     opportunity to recommit itself to the housing mission of the 
     GSEs while at the same time making sure the GSEs operate in a 
     manner that does not expose our financial system, or 
     taxpayers, to unnecessary risk. It is vitally important that 
     Congress take the necessary steps to ensure that these 
     institutions benefit from strong and independent regulatory 
     supervision, operate in a safe and sound manner, and are 
     primarily focused on their statutory mission. More 
     importantly, Congress must ensure that the American taxpayer 
     is protected in the event either GSE should fail. We strongly 
     support an effort to schedule floor time this year to debate 
     GSE regulatory reform.
           Sincerely,
         Chuck Hagel; John E. Sununu; John McCain; Elizabeth Dole; 
           Lindsey Graham; Jeff Sessions; Wayne Allard; Mike 
           Crapo; Jim Bunning; Jon Kyl; Rick Santorum; Mel 
           Martinez; Judd Gregg; John Thune; Richard Burr; John 
           Ensign; Larry Craig; Jim DeMint; James M. Inhofe; Tom 
           Coburn.

  Mr. McCAIN. The letter stated in part:

       Substantial testimony calling for improved regulation of 
     the GSEs has been provided to the Senate by the Treasury, 
     Federal Reserve, HUD, GAO, CBO, and others. Congress has the 
     opportunity to recommit itself to the housing mission of the 
     GSEs while at the same time making sure the GSEs operate in a 
     manner that does not expose our financial system, or 
     taxpayers, to unnecessary risk. It is vitally important that 
     Congress take the necessary steps to ensure that these 
     institutions benefit from strong and independent regulatory 
     supervision, operate in a safe and sound manner, and are 
     primarily focused on their statutory mission.
       More importantly, Congress must ensure that the American 
     taxpayer is protected in the event either GSE should fail.

  Sadly, the bill which had passed the Senate Banking Committee under 
the leadership of then-Chairman Shelby, with the support of all the 
committee's Republicans and none of the Democrats, was not brought up 
for consideration before this body.
  It is critical to note, it was in 2005 that the GSEs, which had been 
acquiring increasing numbers of subprime loans for many years in order 
to meet their HUD-imposed affordable housing requirements, accelerated 
the purchases that led to their 2008 insolvency.
  If legislation along the lines of the Senate Banking Committee's bill 
had been enacted that year, many if not all the losses Fannie Mae and 
Freddie Mac suffered, and will suffer in the future, may have been 
avoided. I wish to make it clear to my colleagues: Failure of Congress 
to act could have prevented--if they had acted--many of the failures we 
are now facing.
  Any criticism leveled at Congress for the failures in Fannie Mae and 
Freddie Mac is very well placed. On October 3, 2008, the Wall Street 
Journal reported on how Congress pushed Fannie Mae and Freddie Mac to 
increase the purchases of low- and moderate-income borrowers. They 
wrote:

       Beginning in 1992, Congress pushed Fannie Mae and Freddie 
     Mac to increase their purchases of mortgages going to low- 
     and moderate-income borrowers. For 1996, the Department of 
     Housing and Urban Development (HUD) gave Fannie and Freddie 
     an explicit target--42 percent of their mortgage financing 
     had to go to borrowers with income below the median in their 
     area. The target increased to 50 percent in 2000 and 52 
     percent in 2005.

  For 1996, HUD required that 12 percent of all mortgages purchased by 
Fannie Mae and Freddie Mac be ``special, affordable'' loans, typically 
to borrowers with income less than 60 percent of their area's median 
income. That number was increased to 20 percent in 2000 and 22 percent 
in 2005. The 2008 goal was to be 28 percent.
  Between 2000 and 2005, Fannie Mae and Freddie Mac met these goals 
every year, funding hundreds of billions of dollars' worth of loans, 
many of them subprime and adjustable rate loans made to borrowers who 
bought houses with less than 10 percent down.
  Fannie Mae and Freddie Mac also purchased hundreds of billions of 
subprime securities for their own portfolios to make money and help 
satisfy HUD affordable housing goals. Fannie Mae and Freddie Mac were 
important contributors to the demand for subprime securities. Congress 
designed Fannie Mae and Freddie Mac to serve both their investors and 
the political class.
  Demanding that Fannie Mae and Freddie do more to increase home 
ownership among poor people allowed Congress and the White House to 
subsidize low-income housing outside the budget, at least in the short 
run. It was a political free lunch. The Community Reinvestment Act, 
CRA, did the same thing with traditional banks. It encouraged banks to 
serve two masters, their bottom line and the so-called common good.
  First passed in 1977, the CRA was ``strengthened'' in 1995, causing 
an increase of 80 percent in the number of bank loans going to low- and 
moderate-income families. By the way, there is nothing wrong with that 
as long as they meet the fundamental criteria, that they are borrowing 
money they can pay back.
  Fannie Mae and Freddie Mac were part of the CRA story too. In 1997, 
Bear Stearns did the first securitization of CRA loans, a $384 million 
offering guaranteed by Freddie Mac. Over the next 10 months, Bear 
Sterns issued $1.9 billion of CRA mortgages backed by Fannie Mae or 
Freddie Mac.
  Between 2000 and 2002, Fannie Mae securitized $394 billion in CRA 
loans, with $20 billion going to securitize the mortgages. Fannie Mae 
and Freddie Mac played a significant role in the explosion of subprime 
mortgages and subprime mortgage-backed securities.
  Without Fannie Mae and Freddie Mac's implicit guarantee of government 
support, which turned out to be all too real, would the mortgage-backed 
securities market and the subprime part of it have expanded the way 
they did? Perhaps. But before we conclude that markets failed, we need 
a careful analysis of public policy's role in creating this mess. 
Greedy investors obviously played a part, but investors have always 
been greedy, and

[[Page S3344]]

some inevitably overreach and destroy themselves.
  Why did they take so many down with them this time? Part of the 
answer is, a political class greedy to push home ownership rates to 
historic highs, from 64 percent in 1994 to 69 percent in 2004. This was 
mostly the result of loans to low-income, higher risk borrowers. Both 
Bill Clinton and George W. Bush, abetted by Congress, trumpeted this 
rise as it occurred.
  The consequence, on top of putting the entire financial system at 
risk, the hidden cost has been hundreds of billions of dollars funneled 
into the housing market instead of more productive assets. Beware of 
trying to do good with other people's money.
  Unfortunately, that strategy remains at the heart of the political 
process and a proposed solution to this crisis. Congress had the 
responsibility to ensure that Fannie Mae and Freddie Mac were properly 
supervised and adequately regulated. Congress failed. The devastation 
caused by that failure continues to reverberate across the Nation as 
more and more families face foreclosures every day.
  In September 2008, the Washington Post published an in-depth article 
titled: ``How Washington Failed to Rein in Fannie, Freddie. As Profits 
Grew, Firms Used Their Power To Mask Peril.'' It is extremely 
informative and raised many troubling questions about the culture of 
corruption which is evident in the operations of both enterprises.
  The Post piece begins:

       Gary Gensler, an undersecretary of the Treasury, went to 
     Capitol Hill in March 2000 to testify in favor of a bill 
     everyone knew would fail.
       Fannie Mae and Freddie Mac were ascendent, giants of the 
     mortgage finance business and key players in the Clinton 
     administration's drive to expand home ownership. But Gensler 
     and other Treasury officials feared the companies had grown 
     so large that, if they stumbled, the damage to the U.S. 
     economy could be staggering. Few officials had ever publicly 
     criticized Fannie Mae and Freddie Mac, but Gensler concluded 
     it was time to rein them in.
       ``We thought this was a hand-on-the-Bible moment,'' he 
     recalled.
       The bill failed.
       The companies kept growing, the dangers posed by their 
     scale and financial practices kept mounting, critics kept 
     warning of the consequences. Yet across official Washington, 
     those who might have acted repeatedly failed to do so until 
     it was too late.
       Blessed with the advantages of a government agency and a 
     private company ``at the same time, Fannie Mae and Freddie 
     Mac used their windfall profits to co-opt the politicians who 
     were supposed to control them. The companies fought 
     successfully against increased regulation by cultivating 
     their friends and hounding their enemies.
       The agencies that regulated the companies were outmatched: 
     They lacked the money, the staff, the sophistication and the 
     political support to serve as an effective check.
       But most of all, the companies were protected by the belief 
     widespread in Washington--and aggressively promoted by Fannie 
     Mae and Freddie Mac--that their success was inseparable from 
     the expansion of homeownership in America. That conviction 
     was so strong that many lawmakers and regulators ignored the 
     peril posed to that ideal by the failure of either company.
       In October 1992, a brief debate unfolded on the floor of 
     the House of Representatives over a bill to create a new 
     regulator for Fannie Mae and Freddie Mac. On one side stood 
     Jim Leach, an Iowa Republican concerned that Congress was 
     ``hamstringing'' this new regulator at the behest of the 
     companies.
       He warned that the two companies were changing ``from being 
     agencies of the public at large to money machines for the 
     stockholding few.''
       On the other side stood Barney Frank, a Massachusetts 
     Democrat, who said the companies served a public purpose. 
     They were in the business of lowering the price of mortgage 
     loans.
       Congress chose to create a weak regulator, the Office of 
     Federal Housing Enterprise Oversight. The agency was required 
     to get its budget approved by Congress, while agencies that 
     regulated the banks set their own budgets. That gave 
     Congressional allies an easy way to exert pressure.
       ``Fannie Mae's lobbyists worked to ensure that [the] agency 
     was poorly funded and its budget remained subject to approval 
     in the annual appropriations process,'' OFHEO said more than 
     a decade later in a report on Fannie Mae. ``The goal of 
     senior management was straightforward: to force OFHEO to rely 
     on the [Fannie] for information and expertise to the degree 
     that Fannie Mae would essentially regulate itself.''
       Congress also wanted to free up money for Fannie Mae and 
     Freddie Mac to buy mortgage loans and specified that the pair 
     would be required to keep a much smaller share of their funds 
     on hand than other financial institutions. Where banks that 
     held $100 could spend $90 buying mortgage loans, Fannie Mae 
     and Freddie Mac could spend $97.50 buying loans.
       Finally, Congress ordered that the companies be required to 
     keep more capital as a cushion against losses if they 
     invested in riskier securities. But the rule was never set 
     during the Clinton administration, which came to office that 
     winter, and was only put in place nine years later.
       The Clinton administration wanted to expand the share of 
     Americans who owned homes, which had stagnated below 65 
     percent throughout the 1980s. Encouraging the growth of the 
     two companies was a key part of that plan.
       ``We began to stress homeownership as an explicit goal for 
     this period of American history,'' said Henry Cisneros, then 
     Secretary of Housing and Urban Development. ``Fannie Mae and 
     Freddie Mac became part of that equation.''
       The result was a period of unrestrained growth for the 
     companies. They had pioneered the business of selling bundled 
     mortgage loans to investors and now, as demand for investors 
     soared, so did their profits.
       Near the end of the Clinton administration, some of its 
     officials had concluded the companies were so large that 
     their sheer size posed a risk to the financial system.
       In the fall of 1999, Treasury Secretary Lawrence Summers 
     issued a warning, saying, ``Debates about systemic risk 
     should also now include government-sponsored enterprises, 
     which are large and growing rapidly.''
       It was a signal moment. An administration official had said 
     in public that Fannie Mae and Freddie Mac could be a hazard.
       The next spring, seeking to limit the companies' growth, 
     Treasury official Gensler testified before Congress in favor 
     of a bill that would have suspended the Treasury's right to 
     buy $2.25 billion of each company's debt--basically, a $4.5 
     billion lifeline for the companies.
       A Fannie Mae spokesman announced that Gensler's remarks had 
     just cost 206,000 Americans the chance to buy a home because 
     the market now saw the companies as a riskier investment.
       The Treasury Department folded in the face of public 
     pressure.
       There was an emerging consensus among politicians and even 
     critics of the two companies that Fannie Mae might be right. 
     The companies increasingly were seen as the engine of the 
     housing boom. They were increasingly impervious to calls for 
     even modest reforms.
       As early as 1996, the Congressional Budget Office had 
     reported that the two companies were using government support 
     to goose profits, rather than reducing mortgage rates as much 
     as possible.
       But the report concluded that severing government ties with 
     Fannie Mae and Freddie Mac would harm the housing market. In 
     unusually colorful language, the budget office wrote, ``Once 
     one agrees to share a canoe with a bear, it is hard to get 
     him out without obtaining his agreement or getting wet.''
       Fannie Mae and Freddie Mac enjoyed the nearest thing to a 
     license to print money. The companies borrowed money at 
     below-market interest rates based on the perception that the 
     government guaranteed repayment, and then they used the money 
     to buy mortgages that paid market interest rates. Federal 
     Reserve Chairman Alan Greenspan called the difference between 
     the interest rates a ``big, fat gap.'' The budget office 
     study found that it was worth $3.9 billion in 1995. By 2004, 
     the office would estimate it was worth $20 billion.
       As a result, the great risk to the profitability of Fannie 
     Mae and Freddie Mac was not the movement of interest rates or 
     defaults by borrowers, the concerns of normal financial 
     institution. Fannie Mae's risk was political, the concern 
     that the government would end its special status.
       So the companies increasingly used their windfall for a 
     massive campaign to protect that status.
       ``We manage our political risk with the same intensity that 
     we manage our credit and interest rate risks,'' Fannie Mae 
     chief executive Franklin Raines said in a 1999 meeting with 
     investors.
       Fannie Mae, and to a lesser extent Freddie Mac, became 
     enmeshed in the fabric of political Washington. They were 
     places former government officials went to get wealthy--and 
     to wait for new federal appointments. At Fannie Mae, chief 
     executives had clauses written into their contracts spelling 
     out the severance benefits they would receive if they left 
     for a government post.
       The companies also donated generously to the campaigns of 
     favored politicians.
       But Fannie Mae wasn't just buying influence. It was selling 
     government officials on an idea by making its brand 
     synonymous with homeownership. The company spent tens of 
     millions of dollars each year on advertising.
       In tying itself to politicians and wrapping itself in the 
     American flag, Fannie Mae went out of its way to share credit 
     with politicians for investments in their communities.
       ``They have always done everything in their power to 
     massage Congress,'' Leach said.
       And when they couldn't massage, they intimidated. In 2003, 
     Richard H. Baker (R-La.), chairman of the House Financial 
     Services subcommittee with oversight over Fannie Mae and 
     Freddie Mac, got information from OFHEO on the salaries paid 
     to executives at both companies. Fannie Mae threatened to

[[Page S3345]]

     sue Baker if he released it, he recalled. Fearing the expense 
     of a court battle, he kept the data secret for a year.
       Baker, who left office in February, 2008, said he had never 
     received a comparable threat from another company in 21 years 
     in Congress. ``The political arrogance exhibited in their 
     heyday, there has never been before or since a private entity 
     that exerted that kind of political power,'' he said.
       In June 2003, Freddie Mac dropped a bombshell: It had 
     understated its profits over the previous three years by as 
     much as $6.9 billion in an effort to smooth out earnings.
       OFHEO seemed blind. Months earlier, the regulator had 
     pronounced Freddie's accounting controls ``accurate and 
     reliable.''
       Humiliated by the scandal, then-OFHEO director Armando 
     Falcon Jr. persuaded the White House to pay for an outside 
     accountant to review the books of Fannie Mae. The agency 
     reported in September 2004 that Fannie Mae also had 
     manipulated its accounting, in this case to inflate its 
     profits.
       The companies soon faced new bills in both the House and 
     the Senate seeking increased regulation. The Bush 
     administration took the hardest line, insisting on a strong 
     new regulator and seeking the power to put the companies into 
     receivership if they foundered. That suggested the government 
     might not stand behind the companies' debt.
       Fannie Mae and Freddie Mac succeeded in escaping once more, 
     by pounding every available button.
       The companies orchestrated a letter-writing campaign by 
     traditional allies including real estate agents, home 
     builders and mortgage lenders. Fannie Mae ran radio and 
     television ads ahead of a key Senate committee meeting, 
     depicting a Latino couple who fretted that if the bill 
     passed, mortgage rates would go up.
       The wife lamented: ``But that could mean we won't be able 
     to afford the new house.''
       Most of all, the company leaned on its Congressional 
     supporters.
       Fannie Mae even persuaded the New York Stock Exchange to 
     allow its shares to keep trading. The company had not issued 
     a required report on its financial condition in a year. The 
     rules of the exchange required delisting. So the exchange 
     created an exception when ``delisting would be significantly 
     contrary to the national interest.''
       The amendment was approved by the Securities and Exchange 
     Commission. Fannie Mae would remain on the New York Stock 
     Exchange.
       As Fannie Mae and Freddie Mac were trying to recover from 
     their accounting scandals, a new and ultimately mortal threat 
     emerged. Yet again, the warnings went unheeded for too long.
       The companies had begun buying loans made to borrowers with 
     credit problems.
       Fannie Mae and Freddie Mac had been losing market share to 
     Wall Street banks, which were doing boomtown business 
     packaging these riskier loans. The mortgage finance giants 
     wanted a share of the profits.
       Soon, the firms' own reports were noting the growing risk 
     of their portfolios. Dense monthly summaries of the 
     companies' mortgage purchases were piling up at OFHEO.
       An employee at one of the companies said it was already a 
     constant discussion around the office in 2004: When would the 
     regulators notice?
       ``It didn't take a lot of sophistication to notice what was 
     happening to the quality of the loans. Anybody could have 
     seen it,'' the staffer said. ``But nobody on the outside was 
     even questioning us about it.''
       President Bush had pledged to create an ``ownership 
     society,'' and the companies were helping the administration 
     achieve its goal of putting more than 10 million Americans 
     into their first homes.
       Fannie Mae and Freddie Mac's appetite for risky loans was 
     growing ever more voracious. By the time OFHEO began raising 
     red flags in January 2007, many borrowers were defaulting on 
     loans and within months Fannie Mae and Freddie Mac would be 
     running out of money to cover the losses.
       Finally, as the credit crisis escalated, Congress passed a 
     bill in July of 2008 that established a tough, new regulator 
     for Fannie Mae and Freddie Mac. It was too late.

  Americans are hurting. The economic situation remains depressed in my 
State. Unemployment is at record levels. The time has come to end the 
taxpayer-funded free ride of the gambling institutions. We cannot 
afford it anymore.
  Mr. President, for us to somehow say we are going to enact 
significant and meaningful financial regulatory reform without 
addressing this situation--these hundreds of billions of dollars of 
toxic assets that still have not been resolved; two government-
supported enterprises that have been propped up by the taxpayers of 
America for too long, while they engaged in the riskiest of 
enterprises, paying obscene profits to their executives and CEOs, their 
boards of directors derelict in their duties, criminally so.
  We must enact reform of Freddie and Fannie if we are going to perform 
our duties, albeit too late--too late because of the terrible losses we 
have inflicted on the American taxpayers. But it is not too late to fix 
it.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Burris). The Senator from Rhode Island is 
recognized.
  Mr. WHITEHOUSE. Thank you, Mr. President.
  I rise to speak for a moment again about my amendment No. 3746, of 
which I am delighted that the distinguished Presiding Officer is a 
cosponsor. I ask unanimous consent that Chairman Patrick Leahy, Senator 
Jim Webb, and Senator Bob Casey all be added as cosponsors to the 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WHITEHOUSE. Just to recap it briefly, if you go around the 
country--
  Mr. DODD. Mr. President, will the Senator yield for a moment?
  Mr. WHITEHOUSE. I will be glad to yield to the chairman.
  Mr. DODD. Mr. President, I see my friend from Arizona.
  Can I ask the Senator, did he lay down his amendment? I am unclear.
  Mr. McCAIN. I have not laid down the amendment because I understand 
the Senator from Connecticut would move to table, and there are 
numerous Members who want to talk on this issue--this multitrillion-
dollar issue. So, no, I have not. But I can also assure the Senator 
from Connecticut, if I propose the amendment, and it is tabled without 
proper debate, there will be another amendment just like it.
  Mr. DODD. Let me say to my friend from Arizona--and he is my friend--
I have no intention of immediately tabling anyone's amendment. I have 
not done that at all in the process. I think most Members appreciate I 
have been trying to make sure everybody has a chance to be heard and to 
work out amendments where we can so we can move along.
  You can also understand my dilemma, in a sense. We have 100 Members 
here who basically all have amendments on which they want to get heard. 
Everyone thinks their amendment is pretty important, and I respect 
that. All I am trying to look for are some time agreements so we can 
say: How long do we need? So we can then set up a schedule whereby, 
with some predictability--Members want to go home tomorrow. Are we 
going to have votes tomorrow? Are we going to have votes on Monday?
  I am just trying to have a schedule so I can accommodate as many 
people as I can so they can be heard on their matters. That is all I am 
seeking. I am not trying to shortcut anybody, although I would ask for 
reasonableness on time so everybody gets a crack at what they would 
like to do. That is all I am inquiring.
  Mr. McCAIN. In the words of Humphrey Bogart in Casablanca, I was 
misinformed because I was told by several different individuals that 
you would be moving to table the amendment if it was proposed. I am 
glad to hear that is not the case. I know of at least 20 Members on 
this side who want to speak on this issue. I will try to compile that 
and try to come to the Senator with a list and the time they want to 
discuss.
  With all due respect to all the other amendments--and I do not say 
this very often--when we are talking about trillions of dollars--
trillions of dollars--this is a very important amendment. So I will try 
to get to the distinguished chairman--I say with sympathy and respect--
a list of speakers and the amount of time they may consume as soon as 
possible.
  Mr. DURBIN. Mr. President, will the Senator from Arizona yield for a 
question?
  Can I ask the Senator from Arizona, while he is working out his list 
and speakers and time, can we move some other amendments?
  Mr. McCAIN. Sure. Absolutely.
  Mr. DURBIN. Bring them to a vote on the floor this evening?
  Mr. McCAIN. Absolutely.
  Mr. DURBIN. Does the Senator have any objection to that?
  Mr. McCAIN. I have no objection to moving other amendments while I am 
doing that. None whatsoever.
  Mr. DURBIN. On both sides of the aisle I hope we can work to 
accomplish that.
  Mr. McCAIN. We have to ask our leader but, yes, that is fine. Our two 
leaders say it is fine. I thank you.
  Mr. DODD. I thank the Senator from Arizona.
  We have Senator Sanders' pending amendment, on which I think we have 
reached a lot of consensus. I would like

[[Page S3346]]

to see us get a vote on it. I know there are some issues that are--I 
will not mention them at all, but my hope is my colleagues might let us 
go to this. Is there any chance of that at all? Would someone get back 
to me and let me know it we can--
  I urge a vote on the Sanders amendment and ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  Mr. DODD. Is there a sufficient second?
  The PRESIDING OFFICER. There is not a sufficient second.
  Mr. SANDERS. Point of order: How many hands do you need up?
  The PRESIDING OFFICER. Twenty.
  Ordering the yeas and nays does not force a vote on the amendment.
  Mr. REID. Mr. President, I note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant bill clerk called the roll, and the following Senators 
entered the Chamber and answered to their names.

                          [Quorum No. 3 Leg.]

     Alexander
     Bennett (CO)
     Brown (OH)
     Burris
     Dodd
     Durbin
     Gregg
     Hagan
     Isakson
     McCain
     Murray
     Reid (NV)
     Sanders
     Schumer
     Shelby
     Udall (CO)
     Warner
     Whitehouse
  The PRESIDING OFFICER. A quorum is not present.
  The majority leader is recognized.
  Mr. REID. Mr. President, I enter a motion to instruct the Sergeant at 
Arms to request the presence of absent Senators.
  The PRESIDING OFFICER. The question is on agreeing to the motion.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. Byrd) 
is necessarily absent.
  Mr. McCONNELL. The following Senators are necessarily absent: the 
Senator from Utah (Mr. Bennett), the Senator from South Carolina (Mr. 
DeMint), the Senator from Arizona (Mr. Kyl), the Senator from Indiana 
(Mr. Lugar), and the Senator from Ohio (Mr. Voinovich).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 61, nays 33, as follows:

                      [Rollcall Vote No. 134 Leg.]

                                YEAS--61

     Akaka
     Baucus
     Bayh
     Begich
     Bennet
     Bingaman
     Boxer
     Brown (MA)
     Brown (OH)
     Burris
     Cantwell
     Cardin
     Carper
     Casey
     Conrad
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Franken
     Gillibrand
     Graham
     Hagan
     Harkin
     Hatch
     Inouye
     Johnson
     Kaufman
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Sanders
     Schumer
     Shaheen
     Specter
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--33

     Alexander
     Barrasso
     Bond
     Brownback
     Bunning
     Burr
     Chambliss
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     Ensign
     Enzi
     Grassley
     Gregg
     Hutchison
     Inhofe
     Isakson
     Johanns
     LeMieux
     McCain
     McConnell
     Murkowski
     Risch
     Roberts
     Sessions
     Shelby
     Snowe
     Thune
     Vitter
     Wicker

                             NOT VOTING--6

     Bennett
     Byrd
     DeMint
     Kyl
     Lugar
     Voinovich
  The motion was agreed to.
  The PRESIDING OFFICER. A quorum is present.
  The majority leader is recognized.
  Mr. REID. 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. REID. 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. REID. Mr. President, I am sometimes a patient person. I am really 
doing my best to be patient. I am going into this with good faith, as I 
hope my Republican colleagues are. We have not gotten a lot done. The 
issue we are working on is very important. But I just tell my friends 
on the other side of the aisle, we do not need a filibuster by some 
other name. I am approaching this in good faith.
  People have worked very hard. We have a lot to do. I think it goes 
without saying that we were at a meeting today, and we were told we 
have to complete the supplemental for the war spending by the time we 
leave here. That came from Secretary Gates. We have a lot to do.
  My suggestion is that people who want to offer amendments work 
tomorrow, they work Saturday and Sunday. The Banking staff will be 
available and the Agriculture staff will be available. If you have 
amendments, bring them together. We have a lot of amendments, but many 
of them are on the same subject. Work with the Banking staff and the 
Agriculture staff to come up with the amendments we can move through as 
quickly as possible. I want people, if they have something to say, to 
say it, but we don't need hours and hours to say it.
  One of the most important amendments we are trying to do is one that 
has been talked about by Senators Kaufman and Brown for weeks. And he 
has agreed to take 5 minutes on it. It has been talked about. We have 
read it. Senator Brown has agreed to take 5 minutes. We have read about 
it in the press. Everybody knows what he is trying to do. So I 
appreciate very much the Republicans allowing us to move forward on 
this amendment tonight. But, please, over the next few days we have a 
lot of amendments that are important, and I understand that, but when 
it comes time to offer these amendments, you need a lot of work on 
them. It always happens because it is a complicated bill. And we only 
need one amendment. We do not need the same amendment offered by five 
different Senators.
  I appreciate everyone's patience tonight. We are trying to work 
through this. We are not going to have votes tomorrow. We are going to 
have votes tonight. And it has been hard to get here.
  I appreciate the conversation I had with the Republican leader 
earlier today, and I know how hard this has been for the two managers 
of this part of the bill, Senators Dodd and Shelby.
  Senator Shelby has been especially gracious during the whole day. 
This is his birthday. His wonderful wife is waiting for him for dinner. 
She has been waiting for an hour now, and she is going to have to wait 
a little while longer, as she has waited for him a long time on other 
occasions. So we wish him a happy birthday.
  I ask unanimous consent that the following be the next amendments in 
order: Cantwell amendment No. 3786, to be modified with the changes at 
the desk, and it is my understanding that is going to go by voice; 
Brown amendment No. 3733, with a second-degree amendment by Senator 
Ensign, amendment No. 3869; that Senator Brown will have 5 minutes, 
Senator Ensign will have 5 minutes, and Senator Dodd will have 5 
minutes, and then we will proceed to a vote on that matter. I further 
ask consent that it be in order for a Democratic side-by-side to the 
McCain GSE amendment and that the Cardin amendment No. 3840 be 
considered tonight, and it is my understanding that amendment will be 
decided by a voice vote; that after the Cantwell amendment is called 
and modified, there be 10 minutes of debate with respect to that 
amendment, with the time equally divided and controlled in the usual 
form; that upon the use or yielding back of the time, the amendment be 
agreed to, and that there be no amendments in order to the amendments 
in this agreement prior to a vote except as we have stated.
  The PRESIDING OFFICER (Mr. Merkley.) Is there objection?
  Mr. McCONNELL. Mr. President, reserving the right to object--I am 
certainly not going to object; I just wanted to make sure everyone 
understands. So tomorrow would be debate only?
  Mr. REID. Yes, debate only, and the same on Monday.
  Mr. McCONNELL. I want to echo the comments of the majority leader 
with regard to getting amendments prepared. It is to our advantage to 
have amendment votes. We are going to work hard to get them in the 
queue and to get them voted on.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Washington is recognized.

[[Page S3347]]

         Amendment No. 3786, as modified, to Amendment No. 3739

  Ms. CANTWELL. Mr. President, I ask unanimous consent that the pending 
amendment be set aside and call up my amendment No. 3786, as modified.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Washington [Ms. Cantwell], for herself, 
     Mr. Whitehouse, and Mr. Sanders, proposes an amendment 
     numbered 3786, as modified, to amendment No. 3739.

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

       On page 762, between lines 5 and 6, insert the following:

     SEC. ___. ANTIMARKET MANIPULATION AUTHORITY.

       (a) Prohibition Regarding Manipulation and False 
     Information.--Subsection (c) of section 6 of the Commodity 
     Exchange Act (7 U.S.C. 9, 15) is amended to read as follows:
       ``(c) Prohibition Regarding Manipulation and False 
     Information.--
       ``(1) Prohibition against manipulation.--It shall be 
     unlawful for any person, directly or indirectly, to use or 
     employ, or attempt to use or employ, in connection with any 
     swap, or a contract of sale of any commodity in interstate 
     commerce, or for future delivery on or subject to the rules 
     of any registered entity, any manipulative or deceptive 
     device or contrivance, in contravention of such rules and 
     regulations as the Commission shall promulgate by not later 
     than 1 year after the date of enactment of the Restoring 
     American Financial Stability Act of 2010.
       ``(A) Special provision for manipulation by false 
     reporting.--Unlawful manipulation for purposes of this 
     paragraph shall include, but not be limited to, delivering, 
     or causing to be delivered for transmission through the mails 
     or interstate commerce, by any means of communication 
     whatsoever, a false or misleading or inaccurate report 
     concerning crop or market information or conditions that 
     affect or tend to affect the price of any commodity in 
     interstate commerce, knowing, or acting in reckless disregard 
     of the fact, that such report is false, misleading or 
     inaccurate.
       ``(B) Effect on other law.--Nothing in this paragraph shall 
     affect, or be construed to affect, the applicability of 
     section 9(a)(2).
       ``(2) Prohibition regarding false information.--It shall be 
     unlawful for any person to make any false or misleading 
     statement of a material fact to the Commission, including in 
     any registration application or any report filed with the 
     Commission under this Act, or any other information relating 
     to a swap, or a contract of sale of a commodity, in 
     interstate commerce, or for future delivery on or subject to 
     the rules of any registered entity, or to omit to state in 
     any such statement any material fact that is necessary to 
     make any statement of a material fact made not misleading in 
     any material respect, if the person knew, or reasonably 
     should have known, the statement to be false or misleading.
       ``(3) Other manipulation.--In addition to the prohibition 
     in paragraph (1), it shall be unlawful for any person, 
     directly or indirectly, to manipulate or attempt to 
     manipulate the price of any swap, or of any commodity in 
     interstate commerce, or for future delivery on or subject to 
     the rules of any registered entity.
       ``(4) Enforcement.--
       ``(A) Authority of commission.--If the Commission has 
     reason to believe that any person (other than a registered 
     entity) is violating or has violated this subsection, or any 
     other provision of this Act (including any rule, regulation, 
     or order of the Commission promulgated in accordance with 
     this subsection or any other provision of this Act), the 
     Commission may serve upon the person a complaint.
       ``(B) Contents of complaint.--A complaint under 
     subparagraph (A) shall--
       ``(i) contain a description of the charges against the 
     person that is the subject of the complaint; and
       ``(ii) have attached or contain a notice of hearing that 
     specifies the date and location of the hearing regarding the 
     complaint.
       ``(C) Hearing.--A hearing described in subparagraph 
     (B)(ii)--
       ``(i) shall be held not later than 3 days after service of 
     the complaint described in subparagraph (A);
       ``(ii) shall require the person to show cause regarding 
     why--

       ``(I) an order should not be made--

       ``(aa) to prohibit the person from trading on, or subject 
     to the rules of, any registered entity; and
       ``(bb) to direct all registered entities to refuse all 
     privileges to the person until further notice of the 
     Commission; and

       ``(II) the registration of the person, if registered with 
     the Commission in any capacity, should not be suspended or 
     revoked; and

       ``(iii) may be held before--

       ``(I) the Commission; or
       ``(II) an administrative law judge designated by the 
     Commission, under which the administrative law judge shall 
     ensure that all evidence is recorded in written form and 
     submitted to the Commission.

       ``(5) Subpoena.--For the purpose of securing effective 
     enforcement of the provisions of this Act, for the purpose of 
     any investigation or proceeding under this Act, and for the 
     purpose of any action taken under section 12(f) of this Act, 
     any member of the Commission or any Administrative Law Judge 
     or other officer designated by the Commission (except as 
     provided in paragraph (7)) may administer oaths and 
     affirmations, subpoena witnesses, compel their attendance, 
     take evidence, and require the production of any books, 
     papers, correspondence, memoranda, or other records that the 
     Commission deems relevant or material to the inquiry.
       ``(6) Witnesses.--The attendance of witnesses and the 
     production of any such records may be required from any place 
     in the United States, any State, or any foreign country or 
     jurisdiction at any designated place of hearing.
       ``(7) Service.--A subpoena issued under this section may be 
     served upon any person who is not to be found within the 
     territorial jurisdiction of any court of the United States in 
     such manner as the Federal Rules of Civil Procedure prescribe 
     for service of process in a foreign country, except that a 
     subpoena to be served on a person who is not to be found 
     within the territorial jurisdiction of any court of the 
     United States may be issued only on the prior approval of the 
     Commission.
       ``(8) Refusal to obey.--In case of contumacy by, or refusal 
     to obey a subpoena issued to, any person, the Commission may 
     invoke the aid of any court of the United States within the 
     jurisdiction in which the investigation or proceeding is 
     conducted, or where such person resides or transacts 
     business, in requiring the attendance and testimony of 
     witnesses and the production of books, papers, 
     correspondence, memoranda, and other records. Such court may 
     issue an order requiring such person to appear before the 
     Commission or member or Administrative Law Judge or other 
     officer designated by the Commission, there to produce 
     records, if so ordered, or to give testimony touching the 
     matter under investigation or in question.
       ``(9) Failure to obey.--Any failure to obey such order of 
     the court may be punished by the court as a contempt thereof. 
     All process in any such case may be served in the judicial 
     district wherein such person is an inhabitant or transacts 
     business or wherever such person may be found.
       ``(10) Evidence.--On the receipt of evidence under 
     paragraph (4)(C)(iii), the Commission may--
       ``(A) prohibit the person that is the subject of the 
     hearing from trading on, or subject to the rules of, any 
     registered entity and require all registered entities to 
     refuse the person all privileges on the registered entities 
     for such period as the Commission may require in the order;
       ``(B) if the person is registered with the Commission in 
     any capacity, suspend, for a period not to exceed 180 days, 
     or revoke, the registration of the person;
       ``(C) assess such person--
       ``(i) a civil penalty of not more than an amount equal to 
     the greater of--

       ``(I) $140,000; or
       ``(II) triple the monetary gain to such person for each 
     such violation; or

       ``(ii) in any case of manipulation or attempted 
     manipulation in violation of this subsection or section 
     9(a)(2), a civil penalty of not more than an amount equal to 
     the greater of--

       ``(I) $1,000,000; or
       ``(II) triple the monetary gain to the person for each such 
     violation; and

       ``(D) require restitution to customers of damages 
     proximately caused by violations of the person.
       ``(11) Orders.--
       ``(A) Notice.--The Commission shall provide to a person 
     described in paragraph (10) and the appropriate governing 
     board of the registered entity notice of the order described 
     in paragraph (10) by--
       ``(i) registered mail;
       ``(ii) certified mail; or
       ``(iii) personal delivery.
       ``(B) Review.--
       ``(i) In general.--A person described in paragraph (10) may 
     obtain a review of the order or such other equitable relief 
     as determined to be appropriate by a court described in 
     clause (ii).
       ``(ii) Petition.--To obtain a review or other relief under 
     clause (i), a person may, not later than 15 days after notice 
     is given to the person under clause (i), file a written 
     petition to set aside the order with the United States Court 
     of Appeals--

       ``(I) for the circuit in which the petitioner carries out 
     the business of the petitioner; or
       ``(II) in the case of an order denying registration, the 
     circuit in which the principal place of business of the 
     petitioner is located, as listed on the application for 
     registration of the petitioner.

       ``(C) Procedure.--
       ``(i) Duty of clerk of appropriate court.--The clerk of the 
     appropriate court under subparagraph (B)(ii) shall transmit 
     to the Commission a copy of a petition filed under 
     subparagraph (B)(ii).
       ``(ii) Duty of commission.--In accordance with section 2112 
     of title 28, United States Code, the Commission shall file in 
     the appropriate court described in subparagraph (B)(ii) the 
     record theretofore made.
       ``(iii) Jurisdiction of appropriate court.--Upon the filing 
     of a petition under subparagraph (B)(ii), the appropriate 
     court described in subparagraph (B)(ii) shall have 
     jurisdiction to affirm, set aside, or modify

[[Page S3348]]

     the order of the Commission, and the findings of the 
     Commission as to the facts, if supported by the weight of 
     evidence, shall in like manner be conclusive.''.
       (b) Cease and Desist Orders, Fines.--Section 6(d) of the 
     Commodity Exchange Act (7 U.S.C. 13b) is amended to read as 
     follows:
       ``(d) If any person (other than a registered entity), is 
     violating or has violated subsection (c) or any other 
     provisions of this Act or of the rules, regulations, or 
     orders of the Commission thereunder, the Commission may, upon 
     notice and hearing, and subject to appeal as in other cases 
     provided for in subsection (c), make and enter an order 
     directing that such person shall cease and desist therefrom 
     and, if such person thereafter and after the lapse of the 
     period allowed for appeal of such order or after the 
     affirmance of such order, shall fail or refuse to obey or 
     comply with such order, such person shall be guilty of a 
     misdemeanor and, upon conviction thereof, shall be fined not 
     more than the higher of $140,000 or triple the monetary gain 
     to such person, or imprisoned for not less than six months 
     nor more than one year, or both, except that if such failure 
     or refusal to obey or comply with such order involves any 
     offense within subsection (a) or (b) of section 9 of this 
     Act, such person shall be guilty of a felony and, upon 
     conviction thereof, shall be subject to the penalties of said 
     subsection (a) or (b): Provided, That any such cease and 
     desist order under this subsection against any respondent in 
     any case of manipulation shall be issued only in conjunction 
     with an order issued against such respondent under subsection 
     (c). Each day during which such failure or refusal to obey or 
     comply with such order continues shall be deemed a separate 
     offense.''.
       (c) Manipulations; Private Rights of Action.--Section 
     22(a)(1) of the Commodity Exchange Act (7 U.S.C. 25(a)(1)) is 
     amended by striking subparagraph (D) and inserting the 
     following:
       ``(D) who purchased or sold a contract referred to in 
     subparagraph (B) hereof or swap if the violation 
     constitutes--
       ``(i) the use or employment of, or an attempt to use or 
     employ, in connection with a swap, or a contract of sale of a 
     commodity, in interstate commerce, or for future delivery on 
     or subject to the rules of any registered entity, any 
     manipulative device or contrivance in contravention of such 
     rules and regulations as the Commission shall promulgate by 
     not later than 1 year after the date of enactment of the 
     Restoring American Financial Stability Act of 2010; or
       ``(ii) a manipulation of the price of any such contract or 
     swap or the price of the commodity underlying such contract 
     or swap.''.
       (d) Effective Date.--
       (1) The amendments made by this section shall take effect 
     on the date on which the final rule promulgated by the 
     Commodity Futures Trading Commission pursuant to this Act 
     takes effect.
       (2) Paragraph (1) shall not preclude the Commission from 
     undertaking prior to the effective date any rulemaking 
     necessary to implement the amendments contained in this 
     section.

  Ms. CANTWELL. I further ask unanimous consent that Senators Merkley, 
Brown of Ohio, and Shaheen be added as cosponsors.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. I would like to be added as a cosponsor.
  Ms. CANTWELL. I ask unanimous consent that Senator Dodd also be added 
as a cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. CANTWELL. My amendment strengthens the Commodity Futures Trading 
Commission's authority to go after manipulation and attempted 
manipulation in the swaps and commodities markets. It makes it unlawful 
to manipulate or attempt to manipulate the price of a swap or commodity 
using any manipulative device or contrivance.
  Some people might be thinking: Why do we need legislation like that? 
Don't we already have something in place? Unfortunately, current law 
does not have enough protections for our consumers, and we have found 
in other areas that it is very important to have a strong bright line, 
a law on the books against manipulation. We want the CFTC to have 
strong tools to go after this kind of behavior. This amendment is about 
protecting the integrity of markets for people who rely on them for 
their business.
  Current law makes it very difficult for the Commodity Futures Trading 
Commission to prove market manipulation. The CFTC has to prove that 
someone had specific intent to manipulate, and that is a very difficult 
standard to prove. Most individuals don't write an e-mail, for example, 
saying they intend to manipulated prices, but that is currently what 
the law requires the Commodity Futures Trading Commission to prove: 
``specific intent'' to manipulate. As a result of this, the Federal 
courts have recognized that with the CFTC's weaker anti-manipulation 
standard, market ``manipulation cases generally have not fared so 
well.'' In fact, the law is so weak that in the CFTC's 35-year history, 
it has only had one successfully prosecuted case of market 
manipulation, and that case is currently on appeal in Federal court. I 
am going to say that again. In the 35 years of its history, the CFTC 
has only successfully prosecuted one single case of manipulation.
  This language in this amendment is patterned after the law that the 
SEC uses to go after fraud and manipulation; that there can be no 
manipulative devices or contrivances. It is a strong and clear legal 
standard that allows regulators to successfully go after reckless and 
manipulative behavior.

  This legislation tracks the Securities Act in part because Federal 
case law is clear that when the Congress uses language identical to 
that used in another statute, Congress intended for the courts and the 
Commission to interpret the new authority in a similar manner, and 
Congress has made sure that its intention is clear.
  In the 75 years since the enactment of the Securities and Exchange 
Act of 1934, a substantial body of case law has developed around the 
words ``manipulative or deceptive devices or contrivances.''
  The Supreme Court has compared this body of law to ``a judicial oak 
which has grown from little more than a legislative acorn.'' It is 
worth noting that the courts have held that the SEC's manipulation 
authority is not intended to catch sellers who take advantage of the 
natural market forces of supply and demand, only those who attempt to 
affect the market or prices by artificial means unrelated to the 
natural forces of supply and demand.
  Mr. President, Congress granted the same antimanipulation authority 
to the Federal Energy Regulatory Commission in 2005 in the Energy 
Policy Act. We did this as a result of the Enron market manipulation. I 
am very proud of this legislation and its ban on manipulation in 
electricity and natural gas markets. I say that because there was a 
similar issue of deregulation of energy markets that led to the Federal 
regulators not doing their job.
  Since we have implemented this language in the electricity markets, 
the Federal Energy Regulatory Commission, since 2005, has used its 
authority to conduct 135 investigations. Of those 135 investigations, 
41 have resulted in settlements involving civil penalties or other 
monetary remedies totaling over $49 million.
  Two investigations brought about enforcement actions against 
manipulation, one against Amaranth for $291 million----
  The PRESIDING OFFICER (Mr. Udall of Colorado). The Senator has used 5 
minutes.
  Ms. CANTWELL. Mr. President, I ask unanimous consent for an 
additional 1 minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. CANTWELL. The alleged market manipulation brought enforcement 
action against Amaranth for $291 million in civil penalties and Energy 
Trading Partners for $167 million in civil penalties. That is just an 
example of what a statute with teeth and a regulatory entity can do to 
actually stop manipulation when given that authority.
  So, Mr. President, I hope my colleagues will support this strong 
antimanipulation standard being inserted into the Commodity Exchange 
Act. It will truly put a policeman on the beat and stop the kind of 
manipulation that has occurred in these commodities markets.
  I thank the Presiding Officer and yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mrs. LINCOLN addressed the Chair.
  The PRESIDING OFFICER. Who yields time in opposition?
  Mr. DODD. Mr. President, as I recall the unanimous consent agreement, 
there were 5 minutes. Is there time allocated? I do not believe there 
is any opposition to this amendment; therefore, if there is any, we 
yield back the time.
  I say to the Senator, did you want to be heard on the Cantwell 
amendment?
  Mrs. LINCOLN. Yes.
  Mr. DODD. I am sorry.
  The PRESIDING OFFICER. There is 5 minutes remaining for debate.

[[Page S3349]]

  The Senator from Arkansas.
  Mrs. LINCOLN. Mr. President, I rise this evening in support of my 
good friend, Senator Cantwell, and her amendment. I would like to thank 
the Senator from Washington who has for years been a leader in the 
Senate on the complicated issue of derivatives and who has been 
particularly effective at strengthening manipulation standards. There 
has not been a more effective champion of consumers and efficient 
markets than Senator Cantwell.
  This amendment comes as a result of hours of thoughtful hard work 
from Senator Cantwell and her staff. While the Dodd-Lincoln bill 
contains a strong antimanipulation authority, Senator Cantwell came to 
me and my staff with ideas on how to strengthen the provision, and I 
was pleased to have listened. We worked through our concerns and built 
on each other's strengths and, in the end, came up with an improved 
product. That is the amendment we are accepting here today.
  Market manipulation is an ever-present danger in derivatives trading. 
Derivatives are leveraged transactions, and it is well known that in 
these markets there are numerous opportunities for traders to abuse 
their positions in order to game the market to their advantage. This is 
unacceptable. These markets are a fundamental part of our economy. They 
are used to manage risk and for price discovery, and their integrity 
must be preserved.
  The Dodd-Lincoln bill strengthens existing law to target specific 
market abuses that have arisen in recent years. These abuses are 
outlawed as disruptive practices in section 747 of the underlying bill.
  I wholeheartedly support Senator Cantwell's amendment, which takes 
the significant step of adding a new and versatile standard for 
deceptive and manipulative practices under the Commodity Exchange Act. 
It addresses false reporting and authorizes private rights of action 
that will aid the CFTC in its enforcement effort. Senator Cantwell's 
amendment will supplement the CFTC's existing standards as the 
Commission and the SEC work together to regulate derivatives.
  The Commodity Exchange Act is a complex statute that covers many 
trading venues. Senator Cantwell's amendment will give the CFTC a very 
important new weapon in its arsenal to combat ever-evolving forms of 
manipulative trading schemes that undermine public confidence in the 
proper functioning of these markets.
  I am very proud to be a supporter of what Senator Cantwell has done 
with this amendment, and I urge all of our colleagues to take a look at 
it and realize she has really helped to improve the bill, the 
underlying bill, in her actions.
  I yield the floor.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 3786), as modified, was agreed to.
  Mr. DODD. I move to reconsider the vote and I move to lay that motion 
on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Maryland is recognized.


                Amendment No. 3840 to Amendment No. 3739

  Mr. CARDIN. Mr. President, under the unanimous consent agreement, I 
call up amendment No. 3840.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Maryland [Mr. Cardin], for himself and Mr. 
     Grassley, proposes an amendment numbered 3840 to amendment 
     No. 3739.

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

    (Purpose: To provide whistleblower protections for employees of 
        nationally recognized statistical rating organizations)

       On page 977, line 19, strike ``The Securities'' and insert 
     the following:
       (a) In General.--The Securities
       On page 994, between lines 2 and 3, insert the following:
       (b) Protection for Employees of Nationally Recognized 
     Statistical Rating Organizations.--Section 1514A(a) of title 
     18, United States Code, is amended--
       (1) by inserting ``or nationally recognized statistical 
     rating organization (as defined in section 3(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c),'' after 
     ``78o(d)),''; and
       (2) by inserting ``or nationally recognized statistical 
     rating organization'' after ``such company''.

  Mr. CARDIN. Mr. President, the Cardin-Grassley amendment extends 
whistleblower protections to employees of nationally recognized 
statistical rating organizations, NRSROs. NRSROs are the companies--
such as Moody's and Standard & Poor's--which issue credit ratings that 
the U.S. Securities and Exchange Commission permits other financial 
firms to use for certain regulatory purposes.
  There are 10 NRSROs at present, including some privately held firms. 
The NRSROs played a large role--by overestimating the safety of 
residential mortgage-backed securities and collateralized debt 
obligations--in creating the housing bubble and making it bigger.
  Then, by marking tardy but massive simultaneous downgrades of these 
securities, they contributed to the collapse of the subprime secondary 
market and the ``fire sale'' of assets, exacerbating the financial 
crisis.
  In the wake of the Enron, WorldCom, and Tyco corporate scandals, 
Congress passed the Sarbanes-Oxley Act in July of 2002. One of the 
provisions in the act was extended whistleblower protections to 
employees of any company that is registered under the SEC Act of 1934 
or that is required to file reports under section 15(d) of the same 
act. The whistleblower provisions of the Sarbanes-Oxley Act protect 
employees of the publicly traded companies from retaliation by giving 
victims of such treatment a cause of action which can be brought in 
Federal court.
  Section 1514(a) delineates which companies are covered by that act 
and what actions are prohibited. The Cardin-Grassley amendment expands 
the provision to include employees of the rating companies.
  I think it is important we have the whistleblower protection. S. 3217 
contains several provisions to improve SEC and congressional oversight 
of the functioning of the NRSROs. So the underlying bill does provide 
for the regulatory framework for the rating agencies.
  What the Cardin-Grassley amendment does is extend the whistleblowing 
provisions--that protect employees--to all of the rating agencies. I 
would urge my colleagues to support the amendment.
  With that, Mr. President, I yield back the remainder of my time.
  The PRESIDING OFFICER. Is there further debate on the amendment?
  The Senator from Connecticut.
  Mr. DODD. Mr. President, I rise in strong support of the amendment 
offered by our colleague from Maryland, which would protect 
whistleblowers.
  We have all learned, over the many months of discussions since the 
collapse and fall in 2008, of the culpability of the credit rating 
agencies--in terms of what was sold in the market place, relying on the 
reputation of the credit rating agencies and their classification of 
these bundled mortgages. We have had a lot of discussion about how best 
to do this, to rein in the credit rating agencies so we get far greater 
reliability and due diligence out of them.
  One thing for certain that would clearly help is the Cardin 
amendment. It may not solve all the problems with the credit rating 
agencies, but it is going to be a major opportunity for us to be able 
to break down the bales that exist.
  A significant part of our bill improves, we think, regulation. This 
bill contains several provisions that will make rating agencies more 
transparent, accountable, and accurate. That will increase the SEC's 
regulatory performance, and that will reduce investors' reliance on 
ratings issued by nationally recognized statistical rating 
organizations.
  Senator Cardin's amendment complements this provision in the bill, 
and I commend him for it. It adds employees of nationally recognized 
statistical rating organizations to a list of already protected 
whistleblowers. It is a valuable contribution to this bill, and I thank 
him for it.
  The PRESIDING OFFICER. Is there further debate?
  If not, the question is on agreeing to the amendment.
  The amendment (No. 3840) was agreed to.
  Mr. DODD. I move to reconsider the vote and I move to lay that motion 
on the table.

[[Page S3350]]

  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Ohio is recognized.


                Amendment No. 3733 To Amendment No. 3739

   (Purpose: To impose leverage and liability limits on bank holding 
                   companies and financial companies)

  Mr. BROWN of Ohio. Mr. President, I call up amendment No. 3733.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Ohio [Mr. Brown], for himself, Mr. 
     Kaufman, Mr. Casey, Mr. Whitehouse, Mr. Merkley, Mr. Harkin, 
     Mr. Sanders, and Mr. Burris, proposes an amendment numbered 
     3733 to amendment No. 3739.

  Mr. BROWN of Ohio. Mr. President, I ask unanimous consent that 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in the Record of Wednesday, April 28, 2010, 
under ``Text of Amendments.'')
  Mr. BROWN of Ohio. Mr. President, the Kaufman-Brown amendment, with 
14 cosponsors, would scale back the six largest banks in the Nation, 
requiring them to spin off into smaller more manageable banks and 
maintain sufficient capital to cover their debts.
  These six banks' assets total $9 trillion. Our amendment ends 
bailouts by ensuring that no Wall Street firm is so big or so reckless 
that it fails, and then so does our economy. The bill we are 
considering today is strong, but it needs to be stronger. It focuses on 
monitoring risk--risk is the biggest problem--and takes action once 
there are signs of trouble.
  But size is also a huge problem. Everyone, from consumer groups, to 
small business owners, to former directors, Governors of the Fed, 
Chairmen of the Federal Reserve--two of them--understand what is at 
stake if we do not pass this amendment.
  They have understood because we see it for ourselves that when a few 
megabanks dominate our financial system, the downfall of any of them 
can mark the downfall of our entire economy. We have seen millions of 
jobs lost. We have seen millions of homes lost. We have seen trillions 
of dollars in savings and wealth drained.
  Just 15 years ago--just 15 years ago--the six largest U.S. banks had 
assets equal to 17 percent of our GDP. Today, the six largest banks 
have total assets estimated to be in excess of 63 percent. From 17 
percent of GDP to 63 percent of GDP--these six largest banks.
  Alan Greenspan said too big to fail is too big. Too big to fail is 
too big. These six banks, in addition to the fact they already have 
such dominance in our economy, when borrowing money when going into the 
capital markets, enjoy an 80-basis point advantage over banks in Denver 
and Cleveland, regional banks in our States, and community banks that 
are even smaller. They have an 80-basis points advantage ensuring that 
if we don't pass the Brown-Kaufman amendment, their advantage will only 
grow because these banks will grow larger, because the playing field is 
tilted toward them, because they have this interest rate advantage when 
they borrow money--another reason to understand that too big to fail is 
too big.
  I yield the last 2 or 3 minutes to Senator Kaufman.
  Mr. KAUFMAN. Mr. President, I want to say to those who say this is 
Draconian, think of one thing: Citigroup under this will be the size 
they were in 2002. They competed internationally. Everything was the 
same.
  In terms of risk, James Cayne said today, after he spoke before the 
Financial Crisis Inquiry, that Bear Stearns failed because their ratio 
of assets to capital was 40 to 1. This bill would cap it at 16. Bear 
Stearns would not have failed. We should not leave this for the 
regulators. In 1933 our forbears before us made tough decisions after 
the Great Depression and put in Glass-Steagall. We should do no less. 
We should be legislating for generations here tonight and support this 
amendment.
  Thank you.
  The PRESIDING OFFICER. The Senator from Nevada.


                Amendment No. 3898 to Amendment No. 3733

  Mr. ENSIGN. Mr. President, I have a second-degree amendment to the 
Brown amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Ensign] proposes an amendment 
     numbered 3898 to amendment No. 3733.

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

(Purpose: To amend the definition of the term ``financial company'' for 
         purposes of imposing limits on nondeposit liabilities)

       On page 2 of the amendment, strike lines 11 through 15 and 
     insert the following:
       (1) Financial company.--The term ``financial company'' 
     means--
       (A) any nonbank financial company supervised by the Board;
       (B) the Federal National Mortgage Association; and
       (C) the Federal Home Loan Mortgage Corporation.

  Mr. ENSIGN. Mr. President, I have a very simple second-degree 
amendment actually supporting the underlying amendment. But what my 
second degree does is it simply says that Fannie Mae and Freddie Mac 
will be subject to the same limits. Everybody has been talking about 
too big to fail. That is one of the problems. All of this 
interconnectedness of our financial markets, when one is too big to 
fail, draws the entire market down. That is why TARP was needed. That 
is why people have justified a lot of bailouts. I don't think there is 
anybody who can legitimately argue that Fannie and Freddie aren't too 
big to fail.
  What this second-degree amendment says, very simply, is the 3 percent 
of GDP that we are limiting the banks to, we limit Freddie Mac and 
Fannie Mae to those same limits.
  We saw yesterday afternoon that Freddie Mac said they needed another 
$10 million in taxpayer bailouts. There is no question it is too big. 
There is no question that if we actually put their debt on our balance 
sheets, we look much worse, the deficits on our balance sheet, we look 
much worse. What we are seeing over in Greece with the rioting and how 
that is affecting our financial markets, we need to be honest in our 
accounting, but we also need to make sure these things don't continue 
to get larger and larger.
  Back in December the President took the limits off of Fannie and 
Freddie--took the limits off. That is saying they can grow and keep 
borrowing and keep doing the irresponsible things they did in the past.
  When we look at the root causes of the financial crisis, people took 
risks they never should have taken because there were implicit 
guarantees not only in the banks being too big to fail but especially 
in Fannie and Freddie being too big to fail. It skewed the markets. 
People took risks they never should have taken.
  There are other things I believe that need to be done with Fannie and 
Freddie, but certainly we can't allow them to get as large as they are 
now. So the reasonable limits that have been put on the large banks I 
think need to be put on these GSEs, the government-sponsored entities, 
and if we do that, I think we will be in better shape in the future for 
not having another financial collapse.
  It is a very simple amendment and I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  Mr. ENSIGN. Madam President, I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. DODD. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator from Connecticut has 5 minutes.
  Mr. DODD. I yield 2 minutes to my colleague from Virginia, Senator 
Warner, a member of the Banking Committee.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. WARNER. Mr. President, I rise in opposition to both the second-
degree amendment and the initial Brown-Kaufman amendment. I understand 
their goals. I believe the chairman's bill addresses those goals. We 
have 10 percent total liabilities in the United States in the existing 
bill right now.

[[Page S3351]]

We only have 4 of the largest 50 banks in the world that are American 
domiciled. I believe this arbitrary asset cap size is not the 
appropriate restriction. The real question should be the level of 
interconnectedness and the risk taking. We saw in the crisis of 2008 
the character of the firms was not simply the largest firms but firms 
that did undue risk taking.
  We have put forward in this legislation two very important ways so 
that if these firms do take undue risk or if their size is a 
contributing factor, the Dodd bill does provide the ability for these 
banks to be broken up, one through the funeral plans, to make sure 
these large institutions have to show how they can do an orderly 
unwinding process through bankruptcy. If they can't show that, whether 
it is due to the international holdings or the domestic holdings, the 
systemic risk council can break up these institutions.
  In addition, there are other parts of the bill that also allow it. If 
these institutions continue to pose a systemic risk, they can be broken 
up, so I rise in opposition to both amendments.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, I join the Senator in opposition to the 
Brown amendment, but I wish to speak about the Ensign amendment.
  We talk about rushing things through around here. I have heard that 
mentioned a lot over the last couple of days. This is going beyond 
rushing through. The entire 97 percent of all mortgages--97 percent of 
all mortgages in the country today--are going through the GSEs, Fannie 
and Freddie. Without them, there is no housing market in the country. 
So before we decide to do this without any alternative in place--and 
clearly one is needed. I take a backseat to no one on the idea we need 
to reform how the GSEs are functioning.
  As I think my friend Judd Gregg mentioned the other day, this is far 
too complex an issue to include in this bill. We already have 1,500 
pages. We never intended to deal with every financial issue in the 
United States, and particularly one where the housing market today is 
completely dependent on this. Adopt this amendment and, believe me, by 
tomorrow we will have an economic reaction in the country we won't want 
to believe.
  So with all due respect, we will deal with this. I will have language 
in this bill that will absolutely guarantee we are going to take up 
this issue in the coming Congress. It has to be done. But to grapple 
with that and all of these other matters in the same bill is asking too 
much. It doesn't minimize the importance of the issue, but this 
evening, without any other kind of alternative in place, to adopt this 
amendment and then have the implications--97 percent of all mortgages 
in the United States go through the GSEs and without them there is no 
housing market--I urge my colleagues to reject the Ensign amendment.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. ENSIGN. Mr. President, I think the case has been made that Fannie 
and Freddie are too big. There is no question they are too big. We have 
also had almost 2 years to deal with it, but we haven't done anything.
  Mr. DODD. If my colleague would yield, that is untrue. We passed 
legislation only last year on the GSEs.
  Mr. ENSIGN. We have not reformed the GSEs the way we needed to. We 
haven't done what needs to be done on the GSEs. This is one large step 
to doing that, and I believe we should. They are too big and they can 
take this entire economy down, and that is why we have to limit the 
size of them. I would encourage my colleagues to support this 
amendment.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Has all the time been used in opposition?
  The PRESIDING OFFICER. The Senator from Connecticut has 2 minutes 
remaining. The Senator from Ohio has 1 minute 45 seconds, as does the 
Senator from Nevada.
  The Senator from New Hampshire.
  Mr. GREGG. Mr. President, I don't understand this Brown amendment. 
Basically what it says is if you are successful--we are not talking 
about too big to fail here, we are talking about entities, businesses 
that are big, yes. They are actually not as big as a lot of the 
international banks they compete with, and that we as a Nation compete 
with, but they are large and they are successful. You are going to 
break them up. Where does this stop? Do we take on McDonald's? Do we 
take on Wal-Mart? Do we take on Microsoft? Do we take on Google? Should 
we set a standard that we as a body can step in and unilaterally decide 
that some company has gotten too large and deserves to be broken up, 
even if it is healthy?
  If it is a systemic risk because it has overextended itself and put 
itself into a situation where we have a question of whether it can 
survive, then we have the resolution authority to take care of that. 
But why would we--we 100 people--think we know enough to start breaking 
up businesses in this Nation which are profitable and which make us 
competitive as a Nation? It doesn't make any sense to me.
  The PRESIDING OFFICER. Who yields time?
  Mr. ENSIGN. I yield back the remaining time.
  Mr. DODD. I don't think I have any time left, do I?
  The PRESIDING OFFICER. The Senator has 45 seconds remaining.
  Mr. DODD. I yield it back.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. BROWN of Ohio. Mr. President, I would only say that Alan 
Greenspan, not someone who has been on a crusade to break up America's 
businesses, talking about these banks, said too big to fail is too big. 
I think that sums it up pretty well.
  I yield the remainder of my time, and I ask for the yeas and nays on 
the Brown amendment.
  The PRESIDING OFFICER. Is there objection to ordering the yeas and 
nays on the Brown amendment?
  Without objection, it is so ordered.
  Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  Mr. DODD. Parliamentary inquiry, Mr. President: We are voting first 
on the Ensign amendment, is that correct?
  The PRESIDING OFFICER. That is correct.
  The yeas and nays have been ordered.
  The question is on agreeing to the amendment.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. Byrd) 
is necessarily absent.
  Mr. KYL. The following Senators are necessarily absent: the Senator 
from Utah (Mr. Bennett), the Senator from Kentucky (Mr. Bunning), the 
Senator from South Carolina (Mr. DeMint), the Senator from Indiana (Mr. 
Lugar), and the Senator from Louisiana (Mr. Vitter).
  Further, if present and voting, the Senator from Kentucky (Mr. 
Bunning) would have voted ``yea.''
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 35, nays 59, as follows:

                      [Rollcall Vote No. 135 Leg.]

                                YEAS--35

     Barrasso
     Bingaman
     Bond
     Brownback
     Burr
     Cantwell
     Chambliss
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     Ensign
     Enzi
     Feingold
     Grassley
     Hatch
     Hutchison
     Inhofe
     Kohl
     Kyl
     Lincoln
     McCain
     McConnell
     Merkley
     Murkowski
     Risch
     Roberts
     Sessions
     Shelby
     Snowe
     Thune
     Wicker
     Wyden

                                NAYS--59

     Akaka
     Alexander
     Baucus
     Bayh
     Begich
     Bennet
     Boxer
     Brown (MA)
     Brown (OH)
     Burris
     Cardin
     Carper
     Casey
     Conrad
     Dodd
     Dorgan
     Durbin
     Feinstein
     Franken
     Gillibrand
     Graham
     Gregg
     Hagan
     Harkin
     Inouye
     Isakson
     Johanns
     Johnson
     Kaufman
     Kerry
     Klobuchar
     Landrieu
     Lautenberg
     Leahy
     LeMieux
     Levin
     Lieberman
     McCaskill
     Menendez
     Mikulski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Sanders
     Schumer
     Shaheen
     Specter
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Voinovich
     Warner
     Webb
     Whitehouse

                             NOT VOTING--6

     Bennett
     Bunning
     Byrd
     DeMint
     Lugar
     Vitter
  The amendment (No. 3898) was rejected.

[[Page S3352]]

  Mr. DODD. Mr. President, I move to reconsider the vote, and I move to 
lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 3733

  The PRESIDING OFFICER. The question is on agreeing to the Brown 
amendment No. 3733.
  The yeas and nays have been ordered.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. Byrd) 
is necessarily absent.
  Mr. KYL. The following Senators are necessarily absent: the Senator 
from Utah (Mr. Bennett), the Sentor from Kentucky (Mr. Bunning), the 
Senator from South Carolina (Mr. DeMint), the Senator from Indiana (Mr. 
Lugar), and the Senator from Louisiana (Mr. Vitter).
  Further, if present and voting, the Senator from Kentucky (Mr. 
Bunning) would have voted ``yea.''
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 33, nays 61, as follows:

                      [Rollcall Vote No. 136 Leg.]

                                YEAS--33

     Begich
     Bingaman
     Boxer
     Brown (OH)
     Burris
     Cantwell
     Cardin
     Casey
     Coburn
     Dorgan
     Durbin
     Ensign
     Feingold
     Franken
     Harkin
     Kaufman
     Leahy
     Levin
     Lincoln
     Merkley
     Mikulski
     Murray
     Pryor
     Reid
     Rockefeller
     Sanders
     Shelby
     Specter
     Stabenow
     Udall (NM)
     Webb
     Whitehouse
     Wyden

                                NAYS--61

     Akaka
     Alexander
     Barrasso
     Baucus
     Bayh
     Bennet
     Bond
     Brown (MA)
     Brownback
     Burr
     Carper
     Chambliss
     Cochran
     Collins
     Conrad
     Corker
     Cornyn
     Crapo
     Dodd
     Enzi
     Feinstein
     Gillibrand
     Graham
     Grassley
     Gregg
     Hagan
     Hatch
     Hutchison
     Inhofe
     Inouye
     Isakson
     Johanns
     Johnson
     Kerry
     Klobuchar
     Kohl
     Kyl
     Landrieu
     Lautenberg
     LeMieux
     Lieberman
     McCain
     McCaskill
     McConnell
     Menendez
     Murkowski
     Nelson (NE)
     Nelson (FL)
     Reed
     Risch
     Roberts
     Schumer
     Sessions
     Shaheen
     Snowe
     Tester
     Thune
     Udall (CO)
     Voinovich
     Warner
     Wicker

                             NOT VOTING--6

     Bennett
     Bunning
     Byrd
     DeMint
     Lugar
     Vitter
  The amendent (No. 3733) was rejected.
  Mr. DODD. I move to reconsider the vote and to lay that motion on the 
table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, there are no further votes today. As I 
understand it, there will be no votes tomorrow. But there will be a 
session tomorrow for Members to come and to be heard on the remaining 
parts of the bill or amendments we still have to consider.
  I think we all heard the majority leader, Senator Reid, make the 
point that I made earlier; that is, I intend to be here all weekend. My 
staff and Senator Shelby's staff will be as well. So for those Members 
who still have amendments, we are more than happy to sit down and try 
to resolve and work together on those amendments to see if we can't 
reach agreement on some or at least to work with the authors of the 
amendments or their staffs. So we will be here to do that.
  Let me just thank all Members again. Mr. President, it is Richard 
Shelby's birthday today--my seatmate on the Banking Committee, the 
former chairman of the Banking Committee--and I would just note that, 
even though he was late for his dinner with Annette, his lovely wife, 
we stepped aside around 4 p.m. this afternoon--the members of the 
Banking Committee, his staff, and I--and we brought out a nice cake for 
Senator Shelby. So we celebrated in the midst of the debate.
  It is important for the people of the country to know that we have 
very strong differences--I had strong objections to the Shelby 
amendment today, and we debated that. Yet despite those very strong 
differences, and while we disagree with each other on substantive 
issues, we can enjoy each other's company on a personal level, on a 
civil level.
  So let me, on behalf of all of us today, wish Richard Shelby a very 
happy birthday on this day. Again, I thank him for his cooperation and 
that of his staff.
  I thank our floor staff today as well, working hard every day. They 
are here every day early in the morning and they stay here with us 
until late in the evening. So I want to thank them all for their 
tremendous work.
  With that, Mr. President, I am all done, and I yield the floor.
  Ms. COLLINS. Mr. President, I wish to discuss an amendment that would 
expand the Financial Stability Council established in S. 3217 to 
include the Chairman of the National Credit Union Administration. It is 
important that the council incorporate a Federal credit union regulator 
to ensure consumer regulation protections. Ninety-two million Americans 
are members of credit unions.
  Insofar as S. 3217, section 1023 provides that any member agency of 
the council may set aside a final regulation or provision prescribed by 
the bureau, a national credit union representative should sit on the 
council to ensure fairness for its members.
  Moreover, similar legislation passed by the House included the 
Chairman of the National Credit Union Administration in its Financial 
Services Oversight Council, so this amendment would make the 
composition of the council in both the House and Senate consistent.
  Finally, given their size, no single credit union poses a systemic 
risk to the overall U.S. financial system.
  I ask unanimous consent to have printed in the Record this statement 
and the supporting letters from the Credit Union National Association, 
the largest credit union advocacy organization representing nearly 90 
percent of America's 8,700 State and federally chartered credit unions, 
National Credit Union Administration, and the National Association of 
Federal Credit Unions.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                             Credit Union National


                                                  Association,

                                      Washington, DC, May 5, 2010.
     Hon. Susan Collins,
     U.S. Senate,
     Washington, DC.
       Dear Senator Collins: On behalf of the Credit Union 
     National Association, I am writing in support of your 
     amendment to S. 3217 which would add the National Credit 
     Union Administration (NCUA) to the Financial Stability 
     Oversight Council (the Council). CUNA is the largest credit 
     union advocacy organization representing nearly 90 percent of 
     America's 8,700 state and federally chartered credit unions 
     and their 92 million members.
       Because of the relative size of credit unions, we believe 
     no single credit union is large enough to impose any systemic 
     risk on the overall financial system. Nevertheless, we 
     believe there would be value in having the federal credit 
     union regulator on the Council if for no other reason than 
     Section 1023 of the underlying bill gives the members of the 
     Council the authority to petition to stay or set aside rules 
     promulgated by the Bureau under limited circumstances when 
     the rules may put the safety and soundness of the banking 
     system or the stability of the financial sector of the United 
     States at risk. Your amendment would ensure that the credit 
     union regulator has a voice in the review of the consumer 
     regulations.
       The House-passed version of this legislation includes the 
     NCUA Chairman on the Financial Services Oversight Council; 
     therefore, your amendment would eliminate a difference 
     between the House-passed version and the Senate bill under 
     consideration and ensure that all of the federal financial 
     regulators are part of the Council.
       On behalf of America's credit unions, thank you very much 
     for introducing this amendment. We look forward to working 
     with you to secure its inclusion in S. 3217.
           Sincerely,
                                                   Daniel A. Mica,
     President & CEO.
                                  ____

                                                   National Credit


                                         Union Administration,

                                      Alexandria, VA, May 5, 2010.
     Hon. Susan M. Collins,
     Ranking Member, Committee on Homeland Security and 
         Governmental Affairs, U.S. Senate, Washington, DC.
       Dear Senator Collins:
       Thank you for your leadership in drafting an amendment to 
     S. 3217, the Restoring American Financial Stability Act of 
     2010, to add the Chairman of the National Credit Union 
     Administration (NCUA) as a voting member of the Financial 
     Stability Oversight Council (the Council).
       I have had the opportunity to review the proposed 
     amendment. I wish to express my strong support for both the 
     amendment and the underlying bill.
       As you know, the NCUA was not included as a member of the 
     Council in the legislation as reported by the Senate 
     Committee on

[[Page S3353]]

     Banking, Housing and Urban Affairs. Among other duties and 
     responsibilities, members of the Council may petition the 
     full Council to set aside a rule (or a part thereof) issued 
     by the Bureau of Consumer Financial Protection if that rule 
     threatens the safety and soundness of the U.S. financial 
     sector or our system of depository institutions.
       It bears noting that the NCUA Chairman is a designated 
     member of the Consumer Financial Protection Oversight Board 
     in the House-passed measure. If adopted, I believe your 
     amendment would help harmonize the House and Senate bills 
     with respect to oversight of the Consumer Financial 
     Protection Agency or Bureau, particularly in regard to the 
     credit union system.
       Thank you again for your leadership on this important 
     matter and for the opportunity to review and comment on your 
     amendment.
           Sincerely,
                                                      Debbie Matz,
     Chairman.
                                  ____

                                           National Association of


                                        Federal Credit Unions,

                                       Arlington, VA, May 5, 2010.
     Hon. Susan Collins,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Collins: I am writing on behalf of the 
     National Association of Federal Credit Unions (NAFCU), the 
     only trade organization exclusively representing the 
     interests of our nation's federal credit unions, in support 
     of your amendment to the Restoring American Financial 
     Stability Act of 2010 (S. 3217) that would add the Chairman 
     of the National Credit Union Administration (NCUA) to the 
     Financial Stability Oversight Council established in the 
     underlying bill.
       We applaud your efforts to ensure that the voices of credit 
     unions are heard by placing NCUA on the oversight council. As 
     you know, this is an issue of fairness and will enable the 
     NCUA to petition for the review of a rule issued by the 
     Bureau of Consumer Financial Protection. Without passage of 
     this amendment, credit unions would not have the ability to 
     appeal rule making that could have a detrimental effect on 
     the credit union industry.
       We thank you and your staff for your work on this amendment 
     as the Senate takes up comprehensive financial regulatory 
     reform. If we can answer any questions or provide you with 
     further information on this matter, please do not hesitate to 
     contact me or NAFCU's Director of Legislative Affairs Brad 
     Thaler at (703) 522-4770.
           Sincerely,

                                                B. Dan Berger,

                                         Executive Vice President,
     Government Affairs.

                          ____________________