[Congressional Record (Bound Edition), Volume 155 (2009), Part 18]
[Senate]
[Pages 24932-24934]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              WALL STREET

  Mr. DORGAN. Madam President, I came to the floor to talk about 
something else today. On the way to the Capitol this morning, I was 
thinking of this: a quote by Will Rogers. I heard on the radio again 
today that we have a couple things going on. No. 1, we have a whole lot 
of folks who have lost their home in the last quarter, with a record 
number of home foreclosures in our country--and then, in the same 
newscast, $140 billion in bonuses to be paid by the major firms on Wall 
Street. I am thinking maybe these are two different countries or at 
least two different economies. Here is what Will Rogers said many 
decades ago. He said:

       The unemployed here ain't eating regular, but we'll get 
     around to them as soon as everybody else gets fixed up OK.

  The unemployed ``ain't'' eating regular, but we will get around to 
them when everybody else gets fixed up.
  Well, last year we watched some big shots steer this economy into the 
ditch. It caused an unbelievable financial wreck. It has had an impact 
on everything in this country. The fact is, we need to reform the 
system that allowed that to happen. But--do you

[[Page 24933]]

know what?--as to the story I heard this morning about $140 billion of 
expected bonuses to be paid by the top 23 firms on Wall Street, the 
fact is, less than a year later, after the economic collapse in this 
country, we see these stories:

       The U.S. has lent, spent or guaranteed $11.6 trillion to 
     bolster banks and fight the longest recession in 70 years.

  By the way, ``banks'' here mean the biggest financial institutions in 
the country.
  The Wall Street Journal, August 31 of this year:

       Wall Street is suiting up for a battle to protect one of it 
     richest fiefdoms, the $592 trillion over-the-counter 
     derivatives market. . . . Five U.S. commercial banks, 
     including JPMorgan Chase & Co., Goldman Sachs Group Inc. and 
     Bank of America Corp., are on track to earn more than $35 
     billion this year trading unregulated derivatives contracts.

  This story is what we have been reading day after day.
  Steven Pearlstein: ``The Dust Hasn't Settled on Wall Street, but 
History's Already Repeating Itself.''

       The Wall Street herd is at it again. Even as the cleanup 
     crew is carting away the debris left by the last financial 
     crisis, the investment banks, hedge funds and exchanges are 
     busy working on the next one.

  I will go through these in a hurry because there is a narrative here 
that is pretty easy to see.
  The New York Times: ``A Year Later, Little Change on Wall St.''

       One year after the collapse of Lehman Brothers, the 
     surprise is not how much has changed in the financial 
     industry, but how little.
       . . . banks still sell and trade unregulated derivatives, 
     despite their role in last fall's chaos.

  The Washington Post, September 15: ``The Wall Street Casino, Back in 
Business.''

       Wall Street's actual role is more like that of a giant 
     casino where the gamblers are rewarded for taking outrageous, 
     unconscionable risks with other people's money. If the bets 
     pay off, the gamblers win. If the long-shot bets turn out to 
     have been foolish, we're the ones who lose.

  The Washington Post, September 8: ``A year after Lehman, Wall 
Street's Acting Like Wall Street Again.''

       [Wall Street] still operates on the principle of taking 
     care of itself first, really big and [most] important 
     customers second, everyone else last.

  The Wall Street Journal, August 22: ``Bankers Play Dress Up With Old 
Deals.''

       Irresponsible securitization helped bring the financial 
     system to its knees. Yet, as banks start to heal, little 
     seems to have changed. Wall Street has quickly fallen back on 
     old habits.

  The Washington Post, September 11: ``Wall Street's Mania for Short-
Term Results Hurts Economy.''

       It's been a year since the onset of a financial crisis that 
     wiped out $15 trillion of wealth from the balance sheet of 
     American households, and more than two years since serious 
     cracks in the financial system became apparent. Yet while the 
     system has been stabilized and the worst of the crisis has 
     passed, little has been done to keep another meltdown from 
     happening.

  The Los Angeles Times: ``The Financial Meltdown: Crisis has not 
altered Wall Street.''

       Bellwether firms led by Goldman Sachs Group are churning 
     out mouth-watering profits. Risk-taking and aggressive 
     securities trading are mounting a comeback. And 
     compensation--the lifeblood of Wall Street--is pushing back 
     toward pre-crisis levels.

  The Wall Street Journal, October 14: ``Wall Street On Track To Award 
Record Pay.'' That was yesterday.

       Major U.S. banks and securities firms are on pace to pay 
     their employees about $140 billion this year--a record high. 
     . . .
       Total compensation and benefits at . . . firms analyzed by 
     the Journal are on track to increase 20% from last year's 
     $117 billion--and to top 2007's $130 billion payout.

  Total compensation and benefits at 23 major Wall Street firms--this, 
from the Wall Street Journal--you can see what has happened--2009--a 
record in the last 3 years. Nothing has changed.
  CNN news:

       . . . there really is . . . this disconnect still between 
     what's happening on Wall Street . . . and what's happening 
     with the every day Joe. We talked about record home 
     foreclosures once again, as we said these problems with 
     employment, worries about whether benefits, jobless benefits 
     are going to continue.
       On the flip side, . . . major banks and security firms are 
     on pace to pay employees $140 billion this year . . . a 
     record high.

  And so it is. It was said once that investment banks are to 
productive enterprise like mud wrestling is to the performing arts. 
Well, I don't know, I guess that was tongue in cheek. We need 
investment banking in this country. It is essential for the creation of 
capital. It can, working properly, assist this country, and has 
assisted this country in lifting our economic opportunities.
  But we have all too often, in recent years, seen the creation of 
exotic financial instruments that have almost nothing to do with 
creating wealth, except for those who trade them and those who created 
them. That is what steered this country into the ditch. CDOs, credit 
default swaps, unregulated derivatives, dark money--a lot of people got 
wealthy trading it. The fact is, it created an unbelievable bubble of 
risk that began to wind this economy down and finally steered this 
economy into a serious wreck last fall. The question is, What do we do 
about that? Well, when you hear on the same newscasts that we reached a 
record number of home foreclosures and people are still losing their 
jobs, and then, on the other hand, we see the very same interests that 
have been at the trough of the Federal Reserve Board for at least $8 
trillion, at risk by the taxpayer, in loans and commitments to some of 
the biggest financial enterprises in the country and then you see $140 
billion in compensation and bonuses from those firms? There is 
something disconnected here.
  I want our financial system to work. I am not someone who comes to 
the floor of the Senate who says investment banks are worthless. That 
is not my point. We need investment banking. But we also need to 
understand we cannot take FDIC insured banks, those that are insured by 
the Federal Government, and decide it is OK if you trade on your own 
proprietary accounts on risky enterprises such as derivatives. That is 
all right. That is not all right. They may just as well put a keno pit 
or a craps table right in the middle of the bank lobby. Just call it 
what it is. It is simply flatout gambling with the taxpayers' money.
  As we end this issue of financial reform, there are a lot of ideas 
around. What do you do to make sure this does not happen again? I wish 
to make this point: There is a doctrine called too big to fail. We have 
seen it in practice in the last year: interests that are too big, 
banks, investment banks especially, that are too big to fail, and so it 
is no-fault capitalism. Whatever risks they have taken, whatever losses 
they have had, the taxpayer picks that up to the tune of $11 trillion 
in exposure from Federal programs.
  Well--do you know what?--when the dust is settled, and whatever is 
done on financial reform, if we do not address this issue of too big to 
fail, shame on us. In fact, the very firms that are declared too big to 
fail are now getting bigger, supported by the Federal government, and 
that is flat wrong.
  Let me quote Professor Joseph Stiglitz:

       . . . our bail-outs run the risk of transferring large 
     amounts of money . . . to those banks that did the worst job 
     in risk management. . . . In effect, the government is 
     tilting the playing field--towards the losers. . . .

  Paul Volcker says:

       I do not think it reasonable that public money--taxpayer 
     money--be indirectly available to support risk-prone capital 
     market activities simply because they are housed within a 
     commercial banking organization.

  The question at the end of the day is, Are we going to address these 
things, such as too big to fail and get rid of no-fault capitalism and 
see if we cannot push investment banking to that which it used to be? I 
hope so. But on today, a day in which we hear of record home 
foreclosures and $140 billion in bonuses and compensation on Wall 
Street, I just say there is some huge disconnection in this economy of 
ours and it is something we ought to care about and something we ought 
to do something about.
  This country works best when we lift the country, when we expand the 
middle class, when we have jobs available

[[Page 24934]]

to people who want to work. There is no social program in this country 
as important as a good job that pays well. That is what makes 
everything else possible.
  But this question of financial healing--when, first, the healing 
occurs to those who caused the problem, and the healing occurs in 
record compensation, $140 billion, at a time when other people are 
struggling to pay their grocery bills, struggling to buy the medicine 
they need, struggling to make their house payment because they have 
lost their job, there is something missing in this country.
  My hope is, when I see all these stories about Wall Street--the same 
old Wall Street, nothing has changed, going right back to the same old 
risk, right back to the same old risk because they know, they have 
learned in the last year, whatever they lose, the American people will 
pick up the tab--this Congress had better say to them: No more, no 
longer, never again. Too big to fail is a doctrine that cannot continue 
to live at the Federal Reserve Board or in this government. It is time 
those at the top at the biggest institutions who take the biggest 
risks, when they lose--it is time they lose, not the American people.
  So we are headed toward financial reform. When that happens, I will 
be on the floor of the Senate talking about the too-big-to-fail 
doctrine and how we are going to end it, and quickly.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Whitehouse). The Senator from South Dakota 
is recognized.
  Mr. THUNE. Mr. President, I ask unanimous consent to speak as in 
morning business for up to 20 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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