[Congressional Record Volume 156, Number 103 (Tuesday, July 13, 2010)]
[Senate]
[Pages S5774-S5777]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WALL STREET REFORM AND CONSUMER PROTECTION ACT--CONFERENCE REPORT
Mr. REID. I now move to proceed to consideration of the conference
report to accompany H.R. 4173.
The PRESIDING OFFICER. The question is on agreeing to the motion.
The motion was agreed to.
The PRESIDING OFFICER. The report will be stated.
The legislative clerk read as follows:
The committee of conference on the disagreeing votes of the
two Houses on the amendments of the Senate to the bill (H.R.
4173) to provide for financial regulatory reform, to protect
consumers and investors, to enhance Federal understanding of
insurance issues, to regulate the over-the-counter
derivatives markets, and for other purposes, having met,
after full and free conference, have agreed that the House
recede from its disagreement to the amendment of the Senate
to the text of the bill and agree to the same with an
amendment, and the Senate agree to the same, that the House
recede from its disagreement to the amendment of the Senate
to the title and agree to the same, signed by a majority of
the conferees on the part of both Houses.
(The conference report is printed in the House proceedings of the
Record of June 29, 2010, book II.)
Cloture Motion
Mr. REID. I have a cloture motion at the desk.
The PRESIDING OFFICER. Pursuant to rule XXII, the clerk will report
the motion to invoke cloture.
The assistant bill clerk read as follows:
Cloture Motion
We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
hereby move to bring to a close debate on the conference
report to accompany H.R. 4173, the Wall Street Reform and
Consumer Protection Act.
Harry Reid, Christopher J. Dodd, Charles E. Schumer,
Sheldon Whitehouse, Amy Klobuchar, Thomas R. Carper,
Benjamin L. Cardin, Jeff Merkley, Kay R. Hagan, John F.
Kerry, Tom Harkin, Jack Reed, Frank R. Lautenberg, Mark
Begich, Barbara Boxer, Mark R. Warner, Joseph I.
Lieberman.
Mr. REID. Mr. President, I ask unanimous consent that the mandatory
quorum be waived.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Connecticut is recognized.
Mr. DODD. Mr. President, very briefly, because the hour is late and
we will have a longer time to engage in a debate about the conference
report, I wish to begin this evening, as I will try to repeat during
the next 2 days, with my deep appreciation to the majority leader,
Harry Reid. While there were a lot of people involved in this process
over the last several years who have brought us to this moment for us
to consider this very important landmark piece of legislation regarding
reform of our financial services, none of this ever happens unless you
have a leader who makes it possible to happen.
While that is a simple enough sentence to say, there is so much that
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goes into that sentence--the organization, bringing people together,
seeing to it that the time is available, making sure the procedures
that we will work under allow us to have a full-throated debate, as we
were able to on this bill.
This bill went through almost a month of consideration on the Senate
floor. We considered almost 60 different amendments offered by both
parties, many of which were adopted to change the bill, added value to
it. It then proceeded to a conference with the other body in which we
spent another 2 weeks, well into the all-night session until June 25 in
which another 60 or 70 amendments were considered, and then came back
to this Chamber where we are now in the position of adopting the
conference report. None of that happens without having leadership in a
body that makes it possible for those events to unfold.
While there will be a lot of talk over the coming days about how this
happened and what is in the bill, it is important that as we begin the
conversation over the next several days, before we vote whether to
accept this conference report, that I begin by expressing my gratitude
to the majority leader and his staff and others who made it possible
for us to arrive at this historic moment as to whether we will change
the status quo and set up a regulatory structure that makes it possible
for us to address future economic crises, as certain as they will
occur, with the ability to deal with them early on, to avoid them
becoming larger problems as this one did because we failed to have the
regulatory process in place, we failed to have the kind of oversight,
we failed to have the kind of protections for consumers that this bill
drafts and provides for.
I thank the majority leader for his leadership. While he was not
directly involved day to day, there wasn't a single occasion when I
could not pick up that phone or walk into his office, cite a problem I
had on how to get from point A to point B in which he didn't stop
everything he was doing to make sure we could work our way through
those difficulties. A lot goes on unseen on how we operate in this
Chamber. But, again, when this bill is adopted, as I hope it will be,
there are many people who deserve gratitude and expressions of thanks.
We ought to begin by thanking the majority leader for making it
possible. To him and to his staff and others, I say thank you. I look
forward over the next 2 days to the debate.
I yield the floor.
The PRESIDING OFFICER. The majority leader is recognized.
Mr. REID. Mr. President, I hope the distinguished Senator from
Connecticut and I have an opportunity, which we will, to sit down and
talk about what we have been through the last 2 years. We had a
difficult situation with the banks, financial institutions going
bankrupt, going to close, and we worked our way through that. We had
credit card legislation that was so very difficult. We had the housing
legislation that was so extremely difficult. And, of course, we have
had this.
This piece of legislation is really a masterpiece. To think that we
have been able to get as for as we have--for example, in today's
newspaper, it did not go unnoticed by me that Secretary Paulson said
some extremely nice things about this piece of legislation. He did not
have to do that. He did it because he thought it was the right thing to
do. Here is a man who came to Washington inexperienced in government in
any way and was given this plate of a really bad situation that
developed. So we have the present Secretary of Treasury and the past
Secretary of Treasury saying this is an extremely fine piece of
legislation, which it is.
I have been around not as long as my friend from Connecticut in the
Congress of the United States, but I have been around a long time and
this really, I repeat, is a masterpiece. I think it is appropriate to
acknowledge the work he has done in this legislation. He was saying
nice things about me--I appreciate that--but that is really not very
meaningful for someone who was watching him work his way through this
legislation.
The vote is not complete yet, and we hope it will all turn out well.
But there are a number of people who have been very courageous in
allowing us to move forward. We will talk more about them later. They
are three or four in number and we will talk about them later. But my
friend and I have developed a forever friendship based on the crisis we
have gone through together, and I so admire him. There will be another
time for talking about his more complete service, but I can say this
without any hesitation or reservation, I will so miss this man who has
done such a remarkably good job for the State of Connecticut and our
country in his long service. He has been an exemplary Senator to me,
and I am so fortunate I have gotten to know him as well as I have.
Small Business Lending Fund Act
Mr. President, we have been on the small business jobs bill trying to
work our way through, and there are a lot of issues we could work our
way through, but my friends on the other side of the aisle made a
decision today--maybe not tomorrow but today--to not let us move
forward. I had a conversation with the Republican leader an hour or so
ago and he said he wants to do some legislating on the bill tomorrow. I
hope that, in fact, is the case because we are ready to do that.
This small business jobs bill is extremely important. It is a
bipartisan bill and I hope we can get it completed. Having said that, I
sadly report there will be no votes tonight.
Mr. DODD. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. WHITEHOUSE. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Regulatory Capture
Mr. WHITEHOUSE. Mr. President, the majority leader indicated today
that he would be preparing legislation on energy to deal with a number
of different issues, among them the response we should make to the
terrible spill, geyser of oil gushing into the Gulf of Mexico and all
the damage that has ensued in the gulf States as a result.
I come to the floor this evening to say a few words about a problem I
believe we need to address in the context of this catastrophe. That
problem is the problem of regulatory capture of the captive regulator.
Although it comes up in the context of the failure of the Minerals
Management Service to do its job to see that the private sector
deepwater drilling in the gulf was done properly, it is a problem that
is not limited just to the geyser of oil gushing into the Gulf of
Mexico and the failure of MMS to have taken adequate steps to prevent
it. It occurs in other areas as well.
One that leaps to mind is the Securities and Exchange Commission, the
so-called securities watchdog which was sound asleep at the switch as
the economy careened towards the huge financial meltdown with
repercussions we are still seeing today.
The Senator from Michigan, Ms. Stabenow, was just talking about the
catastrophes in her State and the pain that the lack of unemployment
insurance is creating. That goes back to the original Wall Street
meltdown, and that launched a tsunami of misery across the country that
we are still dealing with today.
So if you take a look at those two catastrophes--the giant financial
meltdown catastrophe, the consequences of which we are still living,
that families in Rhode Island, families in Illinois, families in
Michigan are still dealing with; and the disaster in the gulf that has
created a catastrophe throughout Louisiana, Alabama, Florida--they have
a common theme. The common theme is this issue of regulatory capture.
My hometown paper editorialized pretty trenchantly about the gulf
problem. They said:
The Deepwater Horizon accident has made it painfully clear
that, in its current form, MMS is a pathetic public guardian.
Neither it nor BP was prepared for a disaster of this
magnitude, and MMS' cozy relationship with industry is a big
reason why.
The issue of regulatory capture has been written about for a long
time. In 1913, Woodrow Wilson wrote:
If the government is to tell big business men how to run
their business, then don't you see that big business men have
to get closer to the government even than they are now? Don't
you see that they must capture the government, in order not
to be restrained too much by it?
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`` . . . they must capture the government, in order not to be
restrained too much by it.''
The first dean of the Woodrow Wilson School, Marver Bernstein, wrote,
55 years ago, that regulators tend over time to ``become more concerned
with the general health of the industry'' and that they try ``to
prevent changes which will adversely affect'' the industry. He said, it
``is a problem of ethics and morality as well as administrative
method.'' He called it ``a blow to democratic government and
responsible political institutions.'' And ultimately he said it leads
to what he called ``surrender.'' He said, ``The commission finally
becomes a captive of the regulated groups.''
Even recently, the Wall Street Journal editorial page contained an
article by a senior fellow at the Cato Institute, saying:
By all accounts, MMS operated as a rubber stamp for BP. It
is a striking example of regulatory capture: Agencies tasked
with protecting the public interest come to identify with the
regulated industry and protect its interests against that of
the public. The result: Government fails to protect the
public.
So from Woodrow Wilson, in 1913, through Marver Bernstein, 55 years
ago, to the Wall Street Journal editorial page just this month, the
identification of the problem at MMS with the doctrine of regulatory
capture I think is clear.
So the question is, What are we going to do about that? It has been a
recurring problem, and the difficulty is that for the regulatory
agency, they are constantly engaged with the regulated industry. The
industry is there all the time. The industry is pushing on them all the
time. The industry is on the other side of the revolving door of jobs,
often. The industry has lawyers and lobbyists working the agency. The
industry threatens lawsuits if it gets regulations it does not like,
and is accommodating and friendly when it gets regulations it does
like. In some cases, such as MMS, the relationship gets completely
toxic and you get social events with industry representatives,
including illegal drug use and sex. You get staff failing to collect
millions of dollars in royalties owed to the American people. You get
senior executives steering contracts to an outside company created by
those executives. You get district managers telling investigators: Hey,
obviously we are all oil industry. You get employees accepting gifts
from the companies regulated by MMS, trips to the Peach Bowl on a
private airplane, skeet shooting contests, hunting and fishing trips,
golf tournaments.
You get an MMS inspector inspecting the oil drilling platforms of a
company that he has a job application in with. While they are
considering whether to hire him, he is inspecting their oil drilling
rigs. I guess it comes as no surprise that in those oil rig inspections
he found no violations. But that is an environment in which the
regulatory agency has yielded to this long recognized problem of
regulatory capture. So I think it is time we did something about it.
It is a doctrine that has been known for many years, and clearly both
at the Securities and Exchange Commission and at MMS it has been
realized, and it has been realized in ways that are extraordinarily
painful and damaging for America. It has been realized in ways that are
truly catastrophic--in one case, for our economy, in another case, for
the environment of the gulf area.
What I have proposed is that we authorize the Attorney General of the
United States, at the direction of the President or upon the invitation
of a Cabinet official who senses a concern about that agency, to make a
determination whether that agency is still truly independent of the
industry it is supposed to regulate. If the President or the Cabinet
official deemed that component no longer credibly independent of the
corporation or the industry it is supposed to regulate, then the
Attorney General is allowed to step in and clean up.
It is as simple as that. They would be charged to hire and fire and
take personnel actions; to ensure the integrity of the personnel within
the component; to establish interim regulations and procedures; to
ensure the integrity of a process in the component of government. They
would be charged to audit the permits and the contracts and ensure that
the component of government has signed off on them legitimately, and if
it appears that the permits or contracts have been affected by improper
corporate influence, to recall them and renegotiate them so that they
are done fairly and squarely and not a friendly negotiation in which
both sides of the negotiation are, in effect, working for the industry
and no one is representing the public interest. They would be charged
to establish an integrity plan for that component and then to clear out
once his or her job is done.
We have known about regulatory capture now for a century. We have
seen it in action throughout that period. We have had two of the most
catastrophic examples of regulatory capture happen just now on our
watch, and in all this time we have never really come up with a
mechanism for addressing it, because the pressure on these regulatory
agencies is systemic, because it is constant and persistent, because it
is done quietly. The industry doesn't come in and say: We are taking
over. News flash to the world: This isn't going to be an independent
agency any longer.
No. Quietly, as quietly as they can, they slip their tentacles deeper
and deeper and deeper into the agency until they quietly control it--
surreptitiously, stealthily, but they own it--and the interest that
agency wants to serve is now the corporate interest and not the public
interest.
So if we are going to face up to a problem that is that persistent,
that constant, which has been recognized for a century and has recently
yielded the two biggest disasters, economic and environmental, this
country has recently seen, we have to create a persistent
counterpressure. I think the threat of the Attorney General of the
United States, our top law enforcement officer, coming in and cleaning
house is that kind of persistent counterpressure we need.
So I urge my colleagues, as we discuss the different provisions we
are going to bring to bear that are going to be our lessons learned
from the gulf catastrophe, that we not overlook what is probably the
biggest lesson of all: the lesson we have known for a long time about
the problem of regulatory capture and the incidence of regulatory
capture in these particular cases bearing such painful, damaging fruit,
such bitter harvest for the American people.
I will continue to push. If colleagues have ideas they think would
improve it, I would be delighted to discuss those ideas. I think we
will have failed in our duty to the public if we do not take away from
the financial disaster caused by the deliberately blind eye of the
Securities and Exchange Commission and the catastrophe caused by the
complete co-opt of MMS--if we don't take away from those the lesson
that this can't be tolerated anymore.
Regulatory capture is no longer a theory; it has been proven to be a
disastrous practice in at least those two agencies, and we don't know
how many more agencies are in a similar position. The disaster may not
yet have happened, but they may be just as captive. When you think of
the billions and billions of dollars of taxpayer value in Federal land,
in timber leases, in mining leases within the continental United
States, in contrast with giant corporations; when you think of that
huge pile of public wealth from which the giant corporations feed, it
is hard to imagine they are not working just as hard to co-opt the
regulators who protect that wealth as they work to successfully co-opt
the regulators who are supposed to be watching the Wall Street
financiers and who are supposed to be watching big oil as it drilled in
the gulf.
So let's not overlook this lesson. I am willing to consider a lot of
ideas that will help get us there. I put this out because it is the
best one I have come up with yet, and I look forward to working with
folks. It is too important that we don't go away from this having
failed in our duty to protect the American public from the next
disaster.
I thank the Presiding Officer.
I yield the floor, and I note the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. WHITEHOUSE. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
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The PRESIDING OFFICER. Without objection, it is so ordered.
____________________