[Congressional Record (Bound Edition), Volume 155 (2009), Part 23]
[House]
[Pages 30835-30861]
[From the U.S. Government Publishing Office, www.gpo.gov]




         WALL STREET REFORM AND CONSUMER PROTECTION ACT OF 2009

  The SPEAKER pro tempore. Pursuant to House Resolution 956 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the further consideration of the bill, 
H.R. 4173.

                              {time}  2200


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the further consideration of 
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, with Mr. Teague in the chair.
  The Clerk read the title of the bill.
  The CHAIR. When the Committee of the Whole rose earlier today, 108\1/
4\ minutes remained in general debate.
  The gentleman from Massachusetts (Mr. Frank) has 46\3/4\ minutes 
remaining, the gentleman from Alabama (Mr. Bachus) has 56\1/2\ minutes 
remaining, and the gentleman from Oklahoma (Mr. Lucas) has 5 minutes 
remaining.
  Who yields time?
  Mr. FRANK of Massachusetts. I will yield 4 minutes to the gentleman 
from Illinois (Mr. Gutierrez), the chairman of the Subcommittee on 
Financial Institutions, who's done a great deal to help small banks in 
this bill.

[[Page 30836]]


  Mr. GUTIERREZ. Mr. Chairman, in spite of the words of the other side 
of the aisle, I rise in strong support of H.R. 4173, the Wall Street 
Reform and Consumer Protection Act of 2009. This is legislation that is 
vital to making our financial institutions better capitalized, our 
consumers safe from predatory practices, and our economy stronger so 
that we can emerge from the recession that was caused by the very 
financial institutions that we are now fighting tooth and nail to 
defeat this legislation.
  I was proud to work with the chairman to include my amendment. And I 
understand that my parents came to this country and they didn't speak 
English, and so the first 5 years before they sent me to school I spoke 
another language other than English. But I've had the bill thoroughly 
examined by those who do speak the English language and have only 
spoken the English language all of their lives, and they cannot find 
the bailout fund in the bill.
  Now, I've worked with the chairman, I wrote the dissolution fund, I 
wrote the fund and I put it in the bill. It's my amendment. Now, the 
ex-ante fund means that firms that could ultimately be dissolved by 
this fund would have to pay at least.
  But what my friends on the other side said, they said, and they 
finally used it, Mr. Chairman, in all of the committee hearings, they 
didn't call us socialists. They waited to get to the House floor before 
they used the dreaded word of socialism. And what did they say? They 
said, the socialists, that means us, the Democrats, created a bill in 
which, and this is Mr. Bachus, and he can go and check his words, he 
said, they created a bill and they made all the institutions pay into 
it. And he said, that's socialism. And then when one of them fails and 
doesn't do something right, all of those people that paid into the 
funds have to pay for the wrongs of that person.
  Well, I guess Geico is socialist. State Farm is socialist. Allstate 
is socialist. Indeed, any insurance fund is socialist, because when I 
drive my car and never have an accident, I pay into the insurance fund 
so that maybe when some Member on the other side of the aisle gets into 
an accident, I pay with my funds for his mistakes. That's insurance. 
Now, what they won't tell you is that, unlike everybody in this room 
who has to go out and take out an insurance policy to drive a car, they 
want Wall Street and Goldman Sachs to be able to drive our economy into 
the ground without paying a cent of insurance in case they act 
recklessly.
  And all we're saying, as Democrats, is it's simple: if you want to do 
business in America, and you threaten the economic stability of our 
country, then you've got to pay into an insurance fund. But let me tell 
you, it's not the kind of insurance fund that you get into an accident 
and you take your car and they fix and they give it kind of back to you 
new. No, no. In our insurance fund, you know what happens? We chop up 
your car into pieces and sell it, and then we pay back the fund with 
the pieces. That's our fund. Read the bill. It's a funeral fund.
  You guys loved to talk about the death and death and death when it 
came to health care insurance. Why don't you talk about our death 
panels now? Oh, you don't want to talk about our death panels now, 
because you want to know why? Because yesterday they had 100 lobbyists 
out here in Washington, DC meeting with them. One hundred.
  How many of those lobbyists do you think met with the other side of 
the aisle and said, we're here to make sure that our small farm is 
protected against Goldman Sachs? How many of those lobbyists do you 
think came here and said to my friends on the other side of the aisle, 
tomorrow can you make sure that that bill protects my 401(k)? How many 
of those lobbyists do you think they met with yesterday said, make sure 
it protects my home, make sure it protects my small business. I don't 
think any of those lobbyists came to ask my friends on the other side--
--
  The CHAIR. The time of the gentleman has expired.
  Mr. FRANK of Massachusetts. I yield the gentleman another minute.
  Mr. GUTIERREZ. So let's be clear. This side of the aisle wants to 
make sure there are no longer situations of ``too big to fail.'' Now, 
if you believe that the men and women at Goldman Sachs tonight and 
tomorrow and into the future, when they make an economic decision, they 
say to themselves, well, this might harm homeowners and put them on the 
street, we shouldn't do that--I'm sure Goldman Sachs they're really 
worried about that. Let me see, these kids not be able to go to college 
if we make this economic decision. Oh, Goldman Sachs is really worried 
about whether our kids can go to college in America. Let me see. You 
mean, small businesses may suffer. Banks may go under if we make those 
decisions? I'm sure the men and women at Goldman Sachs, they think 
every day about the poor American public and the risk they put us to.
  If you believe that, then you can follow my friends on the other side 
of the aisle and do nothing. But if you believe, as I do, and many of 
us, that we should protect the American worker each and every day, make 
sure the kids go to college, make sure there's a pension for him, make 
sure his home is there for him, then I say support this bill.
  Mr. LUCAS. Mr. Chairman, I yield 3\1/2\ minutes to the distinguished 
gentleman from Indiana (Mr. Burton).
  Mr. BURTON of Indiana. I get such a big kick out of that hollering 
and yelling over there. Maybe I should get my voice up here real quick. 
You know, Shakespeare said, a rose by any other name would smell as 
sweet. And when we talk about socialism, I just suggest you go look in 
the dictionary and read what it says as far as the definition is 
concerned.
  My Democrat colleagues have moved to take over the auto industry, the 
health industry, the energy industry, and now they're trying do it 
through the bureaucracy, and now they're doing it with the banking 
industry and the financial institutions of this country. Now, when the 
government takes over the private sector, that's socialism. And if you 
don't believe it, look it up in the dictionary.
  You know, this was tried back in the 1930s when Roosevelt was 
President. He passed what was called the National Recovery Act, and he 
tried to do it in one fell swoop. You guys are doing it incrementally, 
but you're doing the same thing they tried to do back then. There were 
two guys that came over from Europe who sold chickens, and they had 
these chickens in a crate. And they let people pick out the chickens 
they wanted to buy because the people could pick the fat ones or 
whatever ones they wanted. And the National Recovery Act officials came 
in and said, you can't do that; you have to take the first chicken you 
grab because you might leave some of the skinny ones for the people 
that come later. That case went all the way to the United States 
Supreme Court, and Justice Brandeis, who was not a conservative, he was 
a liberal judge, he wrote the opinion. And the vote was 9-0 saying that 
it was unconstitutional to have the National Recovery Act because it 
was socialism. And that's what you're doing right now to this economy.
  And I think everybody in America that's paying attention really 
understands it. You're running us in the ground financially, and you're 
putting all the control you can under the government. And the future 
generations are going to suffer because of that.
  And so I'd just like to say to my colleagues tonight on the other 
side of the aisle, we believe we should solve these problems--and there 
are problems. But we believe we should do it the way Ronald Reagan did, 
instead of taxing the people to death, putting more control in 
government and putting us in a debt that we'll never get out of, and 
saddle our kids and posterity with something that they'll curse us for 
down the road.
  So what I say to my colleagues, and I hope my colleague who just 
spoke is still around here, he probably left, go to the dictionary, and 
if you need one, I'll get it for you, and look up ``socialism,'' and 
you'll see what you're doing is socialism.

[[Page 30837]]



                              {time}  2210

  Mr. FRANK of Massachusetts. Mr. Chairman, I would yield myself 15 
seconds to say I wish we had the Consumer Financial Protection Agency 
already in place, because then the gentleman could get a refund on his 
dictionary because someone sold him a bum dictionary.
  I now yield 4 minutes to the gentleman from Georgia (Mr. Scott).
  Mr. SCOTT of Georgia. Thank you very much, Mr. Chairman.
  I rise in strong support of this legislation, very much needed. When 
you talk of socialism, these are the same arguments that were held when 
Franklin Delano Roosevelt and members on the same body on the 
Democratic side of the aisle came forward to respond to the crisis in 
that generation. And there is no difference here today.
  Oftentimes, when we've had great debates and when people get heated 
up in the call of the debate, when there's nothing else to argue, when 
there is no other point, you can always rely on ``it's socialism'' or 
``it's communism.'' No. What this is is good ol' Americanism.
  This is the most severe financial crisis since the Depression, and it 
requires this Congress to step forward with the intelligence and the 
sober mindedness to respond. This isn't socialism. This is good old-
fashioned, good ol' free enterprise Americanism.
  Let us talk for one second about one of the major issues that's been 
debated here, that this is not an end to bailout. This is an end of 
taxpayer bailouts to protect the American economy and American 
taxpayers from ever, ever again having to pay for a bailout. We don't 
know what the future holds in terms of ups and downs. This is not a 
socialist system. This is a free enterprise system. And that means 
we're going to be governed by the rigors of the markets, by supply and 
demand, by all of those things that are unforeseen.
  But one thing we do know, that never again will the taxpayers have to 
foot the bill. That is what this does. It has worked well for us with 
FDIC.
  There is nothing more we're doing with the system here for these 
large firms that are above $50 billion in assets or hedge funds that 
are above $10 billion then assessing them a simple insurance fee. If 
situations arise in which they become a systemic risk in which they 
have to be dismantled, then the taxpayers shouldn't have to pay for 
that. Let the financial services do it in that industry that is causing 
that problem. That is the American way.
  Let us go to the issue of executive compensation. We know that one of 
the major reasons why we're in the situation we're in is because of 
incentives that require risk and encourage executives to take awesome 
risks as a feature for their bonuses or their compensation packages.
  Are we saying the government now would determine these salaries and 
bonuses? No. We're incorporating the plan of resolution for this 
problem within the free private enterprise concepts, by telling the 
shareholders, allowing them to have a say in that pay. They own the 
company. Why shouldn't they be able to have a say-so in that pay so 
they will know what these risky behaviors are? And that is what we're 
doing in the executive pay and the compensation package.
  And in the derivatives, we know what happened with Lehman Brothers. 
We know that was a derivative problem. That's a new, unregulated area, 
and so we move to govern and regulate over-the-counter derivatives by 
making them clear and standardized and putting them in exchanges for 
electronic platforms.
  And finally, I want to add one other point. There has been a 
disproportionate impact on this crisis, and in this bill are some very 
important things for those people who have lost their jobs and are on 
the verge of losing their homes. And we put $3 billion in here for that 
and to help with economic stabilization and to address their concern.
  What a fantastic bill. I urge my colleagues to support it.
  Mr. LUCAS. Can I inquire of the Chair how much time I have remaining, 
please?
  The Acting CHAIR (Ms. Titus). The gentleman has 3\1/2\ minutes 
remaining.
  Mr. LUCAS. Madam Chairman, I yield myself as much time as I might 
consume.
  In my concluding remarks, I'd like to observe to my colleagues you 
can pass a 1,200-page bill, you can set up the process to generate tens 
of thousands of pages of rules and regulations, you can hire an army of 
faceless bureaucrats to enforce all of that stuff, to make decisions 
for the economy, to make decisions for business, to make decisions for 
people, but you can't repeal the laws of supply and demand.
  If you add enough fees and enough rules and regulations to the 
process of delivering credit, you will drive away the sources of 
credit, reduce the supply of credit. At the same time, we hope to 
reinvigorate this economy, to start it growing again. Demand for credit 
will go up. What happens when you lower the supply of credit and you 
raise the demand for credit? Through pieces of legislation like this, 
ultimately you drive up the cost of credit for everyone. The laws of 
supply and demand.
  I know my friends believe they're sincerely doing the right thing, 
but the right thing in this scenario will drive down the availability 
of credit while at the same time demand goes up; and costs will go up, 
too, and that will affect every business, every person, every entity 
that needs credit.
  I come from a capital-starved district in Oklahoma. Credit's 
important to every farmer, rancher, businessperson, every person 
engaged in the industry of energy production, every individual with a 
family trying to send their kids to school. Let's not make everything 
they do cost more.
  I would now yield the balance of my time to the gentleman from the 
Financial Services Committee, Mr. Bachus of Alabama.
  Mr. BACHUS. I thank the gentleman.
  Mr. Gutierrez came to the floor, and he made a point that we want to 
avoid what happened in AIG, but, in fact, I think he reminded the body 
of a very important thing, and that is what did happen in AIG. Large 
counterparties and creditors were bailed out. And whether you call it a 
permanent bailout authority--as we do--of $150 billion, or as the 
gentleman of Illinois says, a funeral fund of $150 billion, and it is 
used to bail out creditors and counterparties, now, isn't that what 
happened in AIG? Isn't that what the gentleman from Illinois and the 
chairman of the committee say they want to avoid? Yet they create a 
fund to bail out large counterparties and creditors. And in AIG, they 
bailed out 12 large counterparties, 10 of them foreign banks, 2 of them 
Wall Street firms.

                              {time}  2220

  They didn't bail out any cities. They didn't bail out any counties. 
They didn't bail out any community banks. And over 1,000 were owed 
money. And they are creating another fund to do exactly that.
  I see my time has expired.
  Madam Chair, I yield 5 minutes to the gentleman from Texas (Mr. 
Smith).
  Mr. SMITH of Texas. Madam Chair, I thank the gentleman from Alabama, 
the ranking member of the Financial Services Committee, for yielding me 
time.
  Madam Chair, Congress today faces a once-in-a-generation decision. To 
respond to the financial meltdown of 2008, Congress can enact reforms 
that respond to the true causes of the calamity. Or Congress can pass 
legislation that flies in the face of the facts.
  The first course will protect America from the same fate we suffered 
last fall. The second will only pave the way for our next potentially 
worse crisis. That's what the Wall Street Reform and Consumer 
Protection Act does. Why? Because as we have investigated the causes of 
the financial crisis, one conclusion has become clear. What caused the 
financial crisis of 2008 was government intervention in the economy. 
That intervention swept from the Community Reinvestment Act to Fannie 
Mae and Freddie Mac, to the Bear Stearns and AIG bailouts and beyond. 
It destroyed financial incentives, promoted dangerous risk-taking, and 
ultimately provoked full-blown market panic.
  Yet what does this legislation do? It provides super-sized tools for 
ever more

[[Page 30838]]

invasive government control of the economy. It further entrenches the 
Community Reinvestment Act. It fails to reform Fannie Mae and Freddie 
Mac. And it institutionalizes billion-dollar bailouts. For example, 
take the act's provisions that allow the Federal Government to take 
over and wind down the liabilities of financial institutions. This 
empowers the Federal Government to determine which of our biggest 
financial institutions live and die. It is backed by a $200 billion 
bailout fund. It has never before existed. And it should not be created 
now.
  For over 100 years, the bankruptcy code has been America's trusted 
means for dissolving or reorganizing failed or failing firms. The 
administration and this bill's sponsors send the Bankruptcy Code's 
remedies to the trash heap. They do so on the theory that Lehman 
Brothers' bankruptcy triggered the financial panic of September 2008. 
If bankruptcy triggered the panic, goes the argument, we have to look 
beyond the bankruptcy code to reform the financial system. The problem 
is that the so-called Lehman Brothers theory is a myth. The market took 
Lehman Brothers' bankruptcy more or less in stride.
  What triggered systemic financial panic was subsequent action by the 
Treasury and the Federal Reserve. These agencies' actions signaled to 
investors that the government anticipated a market collapse, but did 
not have an adequate plan of action. In a self-fulfilling prophecy, it 
was only after the Treasury and the Fed ratcheted everyone up into a 
panic that the market itself collapsed and not after their earlier 
decision to let Lehman Brothers go into bankruptcy.
  Other government actions also contributed to the panic. These 
included the government's inconsistent treatment of Bear Stearns and 
AIG, which it bailed out, and Lehman Brothers, which it did not.
  Yet what does today's bill do? It expands and then cements into place 
the government's authority to engage in wave after wave of ad-hoc 
bailouts. It sews the Community Reinvestment Act into the very fabric 
of the new consumer financial protection agency. It fails to reform 
Fannie Mae and Freddie Mac, and it throws out the one tool that has 
worked to resolve a giant, failing financial company. That tool is the 
bankruptcy code, which was used successfully to wind down Lehman 
Brothers.
  Madam Chair, we have no reason to avoid the bankruptcy code and other 
sound measures that can avert future financial distress. What America 
should renounce is the super-charged government control of our economy 
that the bill represents.
  We do not need government control that lets Federal agencies and 
government employees distort who gets credit, displace private 
enterprise, and determine behind closed doors what companies live and 
die. We have tried that before. It brought us the meltdown of 2008.
  Mr. FRANK of Massachusetts. I believe there is an imbalance of time, 
so I will reserve.
  Mr. GARRETT of New Jersey. I yield 3 minutes to the gentleman from 
New York (Mr. Lee).
  Mr. LEE of New York. Madam Chairman, with unemployment currently in 
the double digits and a Federal deficit of over $12 trillion, Congress 
should be focused on creating jobs and keeping taxes low. Instead, 
before us today is another staggering bill, 1,300 pages in all, which 
will add to the deficit and shift thousands of jobs overseas.
  This bill creates yet another new government agency which will be 
headed up by yet another new czar, in this case a new credit czar, who 
will limit consumer choices, ration credit and increase the cost of 
doing business.
  It's outrageous that we want to give this new credit czar virtually 
unchecked authority to restrict financial product choices for 
businesses and consumers at a time when this economy is in dire 
straits. Studies suggest that this agency will reduce new job creation 
by at least 4.3 percent and worsen the credit crunch that businesses of 
all sizes are currently facing.
  This bill also establishes a permanent bailout fund for financial 
institutions. Washington should finally abandon this notion of ``too 
big too fail.'' I can tell you my constituents are surely sick and 
tired of the bailouts of Wall Street firms.
  One thing I know: There is no such thing as a free lunch. And 
unfortunately, the $150 billion cost of this new permanent bailout fund 
will rest on the shoulders of consumers and investors in the form of 
higher interest rates and increased fees.
  The financial crisis showed us that reforms are needed. But this bill 
will do far more harm than good. This bill is simply the wrong approach 
at absolutely the wrong time, and I urge all of my colleagues to oppose 
it.
  Mr. FRANK of Massachusetts. I yield 4 minutes to the gentleman from 
Minnesota (Mr. Ellison).
  Mr. ELLISON. Madam Chair, let me thank the chairman and ranking 
member, but also let me remind our colleagues that we are not here by 
accident. We are here because over the course of several years, lax 
regulation and failure, and inadequacy of law landed us at a point 
where we have seen over 2 million homes in foreclosure in this year 
alone. By September 2008, the average housing price had declined by 
over 20 percent since 2006. That's real wealth from families. More than 
60 percent of subprime loans went to people who could have qualified 
for lower cost. And nearly one in four U.S. borrowers currently owes 
more on their mortgage than their home is worth.
  This, in large measure, happened, Madam Chair, because mortgage 
brokers, unregulated, lured families with low teaser-rate interest 
rates that later skyrocketed to unaffordable levels, hidden fees, and 
charges in incomprehensible terms and conditions that brought on the 
housing crisis and undermined the financial system.
  I want to rise in favor of the Wall Street Reform and Consumer 
Protection Act, which includes a strong consumer financial protection 
regulation. One of the most important causes of the financial crisis, 
as I mentioned, is the utter failure of consumer protection. The most 
abusive and predatory lenders were not federally regulated, were not 
regulated at all in some cases, while regulation was overly lax for 
banks and other institutions that were covered.
  To address this problem, I believe we need a new agency dedicated to 
consumer financial protection, a consumer financial protection agency, 
one agency, not a bunch, one, one that takes the interests of the 
consumer and puts them first. Not, let's work in the consumer. Not 
let's see what we can do for the consumer when we get to it, but the 
interests of the consumer up front.
  Such an agency, as contemplated in this legislation, would have the 
power to stop unfair, deceptive, and abusive financial products and 
services. It would also require financial institutions to provide 
concise, clear and easy-to-understand disclosures on the terms and 
conditions of consumer credit products.
  Of course, there are some who would like to keep the same regulators 
on the job and thereby piece together shards of a broken system. But 
what we need is real reform to protect not only the individual consumer 
but our economy as a whole.
  Right now, many people are fighting tooth-and-nail to weaken and 
eliminate the consumer financial protection proposal, spending millions 
of dollars on a scare campaign that spreads false claims about the 
agency. But how can they do this in light of the over 2 million 
foreclosures we have seen? Consumers all across America can't afford 
what these lobbyists are selling to certain Members of our body.
  The sale of risky and irresponsible credit products has cost over 10 
million jobs and 2 million homes. We can't afford to lose any more, and 
that is why we need a consumer financial protection agency that is the 
cornerstone of any real regulatory reform.
  Now this bill, Madam Chair, is comprehensive. It talks about 
derivatives, credit rating agencies, and executive compensation, and it 
ends bailouts.

                              {time}  2230

  Make no mistake about it: it is protection of the consumer, the 
average

[[Page 30839]]

person purchasing a financial product that is the cornerstone of this 
financial legislation; and it is why I urge my colleagues to support 
it.
  Mr. GARRETT of New Jersey. Madam Chair, can you advise the time 
remaining on both sides.
  The Acting CHAIR. The gentleman from New Jersey has 50\1/4\ minutes 
remaining, and the gentleman from Massachusetts has 33\1/2\ minutes 
remaining.
  Mr. GARRETT of New Jersey. I now yield 2 minutes to a gentleman who 
is leading the fight against this bill, which perpetuates taxpayer-
funded bailouts and the loss of millions of jobs, the gentleman from 
Illinois (Mr. Manzullo).
  Mr. MANZULLO. Madam Chair, I have great concerns about this bill, 
especially title IV of the so-called Consumer Financial Protection 
Agency. It creates yet another czar, and look at the groups that will 
be impacted by this bill:
  Financial advisers, anybody providing financial advice, educational 
courses or instructional materials to customers, credit counselors, 
debt management services, anybody acting as a custodian of money, trust 
accounts, tax planning services, private pools of capital, 
municipalities who issue bills on utilities, water, sewer, electricity, 
waste collection, et cetera, courts dealing with fees, fines, taxes 
paid on an installment basis for counties and municipalities, schools, 
tuition installment, room and board, third-party agencies handling fee 
processing, banks, credits, unions, thrifts merchants, layaway plans, 
any installment plan, financing option, real estate activities, 
brokers, appraisers, title companies, title insurers, auctioneers, 
inspectors, surveyors of real estate settlement, cockroach inspectors 
for homes are covered under this bill.
  What's financial about that unless you are counting cockroaches? 
Doctors, issuance of credit, rarely do people pay a bill at the ``point 
of sale'' in a doctor's office, lawyers, disbursing money through a 
trust account, the closing of a real estate transaction.
  Madam Chair, this bill is so pervasive that the term ``anybody 
involved in a financial action'' literally covers somebody writing 
checks on behalf of his mother who is in a nursing home. That's why 
this bill is dangerous.
  We can't proceed on a bill like this and have all these different 
groups that are impacted. Most of these groups will have no idea that 
they will be governed by the so-called financial czar. We don't need 
another czar. We need a lot more freedom in this country.
  Mr. FRANK of Massachusetts. I reserve the balance of my time.
  Mr. GARRETT of New Jersey. Madam Chair, I now yield 3 minutes to 
another leader in the fight against this bill which perpetuates the 
idea of continued taxpayer-funded bailouts, the gentleman from Florida 
(Mr. Posey).
  Mr. POSEY. Madam Chair, unfortunately this well-intentioned 
legislation misses the mark when it comes to taking steps to prevent 
future financial sector meltdowns. The well-intentioned authors of this 
bill have failed to fully acknowledge the reasons behind the current 
meltdown. They point primarily to Wall Street as the cause of the 
meltdown and direct most of their efforts in this bill at further 
regulating the private marketplace.
  Certainly, the actions taken by some on Wall Street were responsible, 
at least in large part, for the financial meltdown. Efforts to address 
some of these excesses are warranted and should be part of the reform. 
However, there are many factors that contributed to the meltdown; and 
by assigning a disproportionate share of the blame to any one party, 
they leave in place many of the practices that contributed to the 
meltdown.
  If we base our actions upon the mistaken notion that the financial 
meltdown was principally caused by the private sector and that the 
regulators lacked the necessary tools to oversee the private sector, 
then we are bound to repeat the mistakes of the past.
  The crafters of this legislation have failed to objectively assign 
blame. History will bear out that a major culprit of the financial 
meltdown was the government itself, and the government's policies, 
including many such policies that were advocated by Members of the 
Congress.
  The government-sponsored enterprises, Fannie Mae and Freddie Mac, 
were key players in the mortgage marketplace, and they were largely 
responsible for proliferating subprime loans. Freddie and Fannie were 
heavily regulated by the Federal Government. They carried an implied 
government guarantee.
  Yet, what did they do? They purchased over $1.9 trillion in subprime 
loans between 2002 and 2007. That, according to a report by the 
Government Oversight and Reform Committee, represented 54 percent of 
all such mortgages purchased in those years. In purchasing these 
subprime loans, they were encouraging lenders to make more of them.
  Had Fannie and Freddie not been such ready buyers of subprime loans, 
many of the loans likely would not have been made. That is not to say 
that some of the private sector would not have made such loans; but had 
they done it, it certainly would not have been of the grand magnitude, 
since Fannie and Freddie would not have been standing there ready to 
buy the loans from the lenders.
  We must also consider the actions of the Federal Reserve. The Fed and 
other central banks around the world kept interest rates at very low 
levels between 2002 and 2006, making credit easy and cheap. Making 
access to money so easy and so cheap intensified and inflated the boom 
in the early to mid-2000s as well as the resulting burst in 2008.
  Common sense would suggest that we would learn from these mistakes. 
Unfortunately, H.R. 4173 significantly expands the power of the Federal 
Reserve, the very entity that was responsible for, but failed to 
identify, systemic risk in what have become some of the recipients of 
taxpayer bailouts.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. GARRETT of New Jersey. I yield the gentleman 1 additional minute.
  Mr. POSEY. Even worse is that H.R. 4173 creates a permanent TARP-like 
bailout authority. This is likely to promote systemic risk and 
undermine systemic financial stability.
  Another blatant failure of the Federal regulators is the Securities 
and Exchange Commission's failure to pursue the investigation of Bernie 
Madoff's Ponzi scheme. In 1999 Charles Markopolos presented the SEC 
with an extensive report alleging fraud by Bernie Madoff. In 2001 
Barrons ran an article outlining the alleged fraud.
  While they had the necessary tools to investigate Madoff, the SEC's 
failure to use these tools at their disposal and launch a full 
investigation enabled Madoff to perpetuate his $50 billion-plus Ponzi 
scheme. As further evidence it is wrong to further empower bureaucrats, 
note that today not one SEC employee has been terminated, disciplined, 
furloughed or even had their wrist slapped for their colossal failures 
with regard to the Madoff scandal.
  We have also heard concerns of small businesses that this bill will 
further restrict their access to credit.
  Not only is this particular development troubling, but when you 
consider the cumulative effects of legislation under consideration in 
the Congress that would adversely affect them, it is very 
disconcerting.
  The taxes that would be imposed by the health care bill, the proposed 
national energy tax, the resulting carbon regulations coming forward 
from the Environmental Protection Agency, and the higher taxes that 
will be imposed by expiring tax reductions point to a perfect storm for 
killing America's economic engine--our small businesses.
  There is plenty of blame to go around for the financial meltdown. The 
failure of the H.R. 4173 to acknowledge this, will only put us on the 
path to repeating such costly mistakes in the future.
  I urge my colleagues to vote against H.R. 4173. Let's send this bill 
back to committee and get it right.
  Mr. FRANK of Massachusetts. I yield to the gentlewoman from Ohio (Ms. 
Kilroy), who I understand wants to engage in a colloquy.
  Ms. KILROY. Thank you, Mr. Chairman. I would like to address the 
provisions of section 1103, which specifies

[[Page 30840]]

the criteria to be considered in determining whether a financial 
company might be subject to stricter standards. It is my understanding 
that nondepository captive finance companies do not pose the types of 
risks that warrant such treatment.
  Nondepository captive finance companies typically provide financing 
on a nonrevolving basis only to customers and to dealers who sell and 
lease the products of their parent or affiliate. As such, they are 
involved in only a narrow scope of financial activity.
  Equally important, their loans are made on a depreciating asset, a 
fact taken into account when the loans are entered into. If they are 
not a depository institution, they therefore have no access to the 
Federal deposit insurance safety net. It is my understanding that it is 
the intent of the committee that nondepository captive finance 
companies are not the types of finance companies that should be 
subjected to stricter standards under section 1103 of this legislation; 
is that correct?
  Mr. FRANK of Massachusetts. The gentlewoman is correct. She has been 
very diligent in trying to protect this very important type of 
financing. Financing companies are not depository institutions. They 
provide financing for the sale of that particular product in that 
company.
  It is again inconceivable to me that somehow they would rise to the 
level of risk that would justify the Systemic Risk Council stepping in.
  Ms. KILROY. Thank you, Mr. Chairman.

                              {time}  2240

  Mr. GARRETT of New Jersey. Madam Chair, I yield 3 minutes to the 
gentlewoman from Minnesota (Mrs. Bachmann).
  Mrs. BACHMANN. Madam Chair, last July an economist from Arizona State 
University had determined that since the inception of ``Bailout 
Nation'' in September of 2008, the Federal Government has taken 
ownership or control of 18 percent of our economy, and if President 
Obama gets his way and takes over the health care industry, that's 
another 18 percent of our economy, or 48 percent. Then, if President 
Obama and former Vice President Al Gore have their way and cause 
electricity rates to necessarily skyrocket by taking over the energy 
industry and imposing a national energy tax, that would mean the 
government takeover of another 8 percent of the economy for a total of 
54 percent.
  As harmful to freedom as these bills are, they don't hold a candle to 
the government takeover and control of every financial transaction of 
the financial industry. And why? Because when government controls 
credit, when government rations credit and bails out its politically 
well-connected friends, that's gangster government at its worst, and 
that throws a net of government control over every financial 
transaction entered into in this country. Some experts say that is 
government control of another 15 percent of the economy for a total of 
69 percent. This is stunning, nothing less than stunning.
  Could it be that not in our lifetime but in less than 18 months' time 
the Federal Government will take over or control nearly 70 percent of 
the American economy? And the majority has the audacity to berate this 
side of the aisle for suggesting the word ``socialism''?
  Heaven help the American taxpayer. Heaven help the American 
entrepreneur. Heaven help the maintenance of freedom for the sake not 
only of our people but for the sake of the continuance of the 
Constitution of these great United States.
  Mr. GARRETT of New Jersey. Madam Chair, I yield 2 minutes to the 
gentleman from Minnesota (Mr. Paulsen).
  Mr. PAULSEN. I thank my colleague for yielding.
  Madam Chair, unfortunately this bill only continues the culture of 
bailouts and encourages firms to engage in risky behavior. As far I'm 
concerned, all it will do is remove the element of surprise that we saw 
last fall with the first amount of selected bailouts we had, and this 
is not the right way to go.
  Just look at what this bill would do to the availability of credit. 
The bill before us, this 1,300-page bill, has provisions that actually 
take away capital needed by firms to help expand businesses, increase 
investments, and ultimately create jobs. Estimates show that the size 
of the fund could be more than $200 billion as a part of this fund. 
Now, this money has to come from somewhere, and this will place a 
significant burden not only on these firms but also on credit that will 
get dried up.
  During these tough economic times with record unemployment, 10 
percent unemployment, why do we make it more difficult for getting 
credit for small businesses and job creation? Why should a company who 
is not deemed to be systemically risky have to pay for those companies 
that have been engaging in excessively risky behavior?
  Madam Chair, it's also worth mentioning the danger that's posed when 
we create institutions that are ``too big to fail.'' That's been a 
problem with Washington, the ``too big to fail'' doctrine. In doing so, 
we will also define those businesses, unfortunately, that are too small 
to save, and we're not helping those too-small-to-save businesses.
  It's unacceptable, unacceptable to have an economy, a two-tiered 
economy, economic system where the government is going to be picking 
winners and losers and it's codified into law. This bill does nothing 
to shelter companies from being swayed by the political winds like we 
saw in the previous round of bailouts. We've heard in testimony in 
committee that this bill will harm consumers from access to credit. 
It's going to make services even harder to get. In a time when 
businesses can't access credit, why would we further stunt jobs and 
hurt economic growth? But as studies have shown, that's exactly what 
this bill will do.
  The bottom line is, between the restrictions on capital, the jobs 
that would be lost, and the continued bailouts, this legislation is 
unacceptable.
  Mr. FRANK of Massachusetts. Madam Chair, I yield 3 minutes to the 
gentlewoman from California (Ms. Speier).
  Ms. SPEIER. Madam Chair, there are a couple of things I have asked 
Santa for Christmas. One of them is that our colleagues on the other 
side might tell the truth once in a while.
  The words we have heard tonight, ``overregulation,'' ``government 
control,'' ``job loss,'' ``government takeover,'' ``bailout funds,'' 
couldn't be further from the truth. Let's go back in history.
  For over 60 years, the Glass-Steagall Act worked in this country. It 
worked because the banks, the investment banks, the commercial banks, 
the insurance companies had to be separate. And then the financial 
institutions came in 1999 and we offered them, on a silver platter, 
what is called the Gramm-Leach-Bliley Act which allowed them all to 
merge, which allowed them to become too big to fail.
  So what this particular bill is going to do is reverse that in many 
respects. It is going to create accountability. That fund that we're 
talking about is not going to be paid for by the taxpayers; it's going 
to be paid for by the companies themselves. It means that we are not 
going to see the kind of job loss we've had over the last few years 
because that all came under a period of time where there was no 
regulation, where the SEC was allowed to reduce the number of 
enforcement actions by 80 percent and disgorgement actions were reduced 
by some 60 percent.
  So, Madam Chair, there's only one other thing I ask Santa for 
Christmas, and I think we're going to get it, and that is that the Wall 
Street firms are going to find something new in their Christmas 
stockings, and it's called accountability.
  Mr. GARRETT of New Jersey. Madam Chair, I yield 2 minutes to the 
gentleman from Florida (Mr. Putnam) who recognizes that Glass-Steagall 
had absolutely nothing to do with the bailout of Bear Sterns and Lehman 
and the S and L crisis, and the gentleman who also recognizes that the 
American public is tired of the bailout mentality which would be 
sustained by this bill.

[[Page 30841]]


  Mr. PUTNAM. I thank my friend for yielding.
  Tonight my Democratic colleagues have brought forth for taxpayers' 
consideration legislation that will not only cost America more jobs but 
will make recovery more illusive, particularly for small businesses.
  The bill creates a permanent bailout fund totaling $200 billion for 
Washington to prop up failing institutions, assuming, that is, that the 
$150 billion tax proves insufficient. That tax will contract lending 
and cause the loss of hundreds of thousands of jobs. The legislation 
would create a new burden on end users of derivatives in every sector 
of our economy: commercial real estate, energy production, 
manufacturing, agriculture, utilities, even health care. These types of 
businesses depend on hedging to protect themselves from price 
volatility.
  What's more, businesses that had nothing to do with the financial 
collapse will now be saddled by a complex new regime of regulations. 
This will force businesses all across America to use their working 
capital against a risk they never posed instead of creating new jobs, 
replacing equipment, or expanding their business.
  The legislation also welcomes a new bureaucrat, the credit czar, to 
our Nation's Capital in the form of a Washington-knows-best agency. The 
credit czar's mission is to dictate which financial products can and 
cannot be made available to consumers. The credit czar is required to 
assess fees on entities so the new government bureaucracy can meet its 
expenses. Such attacks mean less money for small businesses to create 
jobs, more fees passed on to consumers, and less access to credit for 
small business. What this assessment does guarantee is a bigger 
Washington bureaucracy.
  If you're serious about lowering the deficit and creating jobs, 
oppose this big government expansion and support the Republican 
substitute.
  Mr. FRANK of Massachusetts. Madam Chair, I yield 3 minutes to the 
gentleman from Ohio (Mr. Wilson).
  Mr. WILSON of Ohio. Madam Chair, I come to the floor tonight to 
support H.R. 4173, the Wall Street Reform and Consumer Protection Act 
of 2009.
  I have often said it's hard to play a fair game without a referee, 
and I believe that this bill will help us put the appropriate referees 
in place in our financial markets. It's a big step forward for more 
oversight, transparency, and consumer protection.
  Before coming to Congress, I served for many years on a small bank 
board back home in Ohio. I know that small banks like the one in our 
community were not the problem that we're having today and they were 
not a part of the problem that led our financial markets to the edge of 
collapse this last fall.

                              {time}  2250

  I am proud that this legislation acknowledges that by not putting 
unfair burdens on banking institutions that have shown themselves to be 
good corporate citizens.
  While the bill is not perfect, I support commonsense regulation of 
our financial markets. We must put an end to the ``too big to fail'' 
phenomenon. We must finally give consumers the long-overdue protection 
that will be provided by consumer protection. And we have to continue 
making significant improvements on mortgage lending standards so that 
we never again suffer from predatory lending and practices that we have 
in the past.
  I urge my colleagues to support this important legislation.
  Mr. GARRETT of New Jersey. May I inquire of the Chair the amount of 
time remaining on both sides?
  The Acting CHAIR. The gentleman from New Jersey has 38 minutes 
remaining; the gentleman from Massachusetts has 30\1/4\ minutes 
remaining.
  Mr. GARRETT of New Jersey. Madam Chairman, I yield 4 minutes to the 
gentleman from Texas (Mr. Neugebauer).
  Mr. NEUGEBAUER. I thank the gentleman.
  Sometimes we think that government's role is to save the world. When 
I was in small business, there was a joke: People would say, I'm from 
the government, I'm here to help you. And you know, what I hear from 
small business men and women all across the country right now is, 
Please don't help us anymore. Why are they saying that? Because over 
the years, Congress has amassed a huge amount of regulations, and those 
regulations have been put on the backs of businesses all across our 
country.
  Today, we are here to put another huge mountain on top of the 
financial markets, the capital markets, the very markets that our small 
businesses depend on for capital, in the name of trying to help them. 
And I will tell you tonight we're going to hurt them. We are going to 
cause people to lose their jobs because of this bill. In fact, a recent 
study at the University of Chicago and George Mason University 
estimated that passing this piece of legislation would reduce job 
growth by 4.3 percent. And you say, well, how can a consumer 
protection, how can a regulatory bill hurt small businesses, how can it 
cause job losses? Well, let's look at some of the predictions in here.
  We are going to have this new regulator that is going to determine 
what kind of financial products banks and people that provide loans can 
hand out. So if I need a specialized loan that maybe has a little bit 
different terms than normal, my lender is concerned that the regulator 
is going to look at that loan and say, you know what, you shouldn't be 
making those kinds of loans.
  At a time when the President of the United States is even trying to 
look and wait to find some jobs--and we are all looking for all of 
those jobs that supposedly the stimulus package created, but the truth 
of the matter is this will kill jobs. It will also hurt small 
businesses' ability to get capital.
  Right now, we already hear that banks across the country are a little 
reluctant to loan money. Why are they reluctant to loan money? Because 
the regulators are clamping down on them. And now we're going to say to 
the regulators, you know what? You didn't clamp down hard enough, you 
didn't regulate enough, so we're going to give you some new marching 
orders and put this new massive legislation in place. And everybody 
thinks that that is going to free up credit for small businesses to 
create jobs in America? It's not going to do that.
  The concern I have is that if we continue down this road of 
regulation in the financial markets, we are going to begin to limit the 
choices for these banks to provide financial products.
  The other thing that this bill does is it picks winners and losers 
again. Now, the distinguished chairman of the committee, who I have 
great respect for, says the taxpayers' money isn't involved in here. 
Maybe it's not tax money, but the consumers are going to pay for these 
bailouts. If you have an assessment, and you assess an entity for 
bailing out its competitor--and how that makes sense, I don't know--who 
do you think is going to pay the additional cost that that company is 
going to have to pay the assessment? The consumer is.
  So what is this going to do to small businesses? It's going to raise 
the cost of capital. In fact, there is an estimate out there that the 
U.S. Chamber of Commerce, and others, say this will raise borrowing 
costs almost 1.5 percent for people and small businesses and consumers. 
Now, how does that help the economy? It doesn't help the economy; in 
fact, it puts a weight on the economy and, again, is going to cause 
jobs to be lost in this country.
  So the question is, why are we here tonight? Why are we debating this 
bill? It's got a fancy title that says it's going to protect consumers, 
and it's going to punish Wall Street. Well, really, the issue is it 
doesn't punish Wall Street, because if you're a big company, this bill 
says we've got a way to prop you up because we're going to get the 
Federal Reserve to imply that you are too big to fail, picking winners 
and losers. And then that gives an unfair competitive advantage to 
these banks and other entities that aren't on the ``too big to fail'' 
list.
  So I encourage my colleagues to vote ``no'' on this piece of 
legislation.
  Mr. FRANK of Massachusetts. I yield 4 minutes to the gentleman from 
Texas (Mr. Al Green).

[[Page 30842]]


  Mr. AL GREEN of Texas. Madam Chair, it is said that a politician will 
always rise to the occasion; many have tonight, and many will. But it 
is also said that it takes a statesman to make the occasion. And I can 
say to you without reservation, hesitation, or equivocation, there is 
one great statesman among us tonight, and that is the honorable Chair 
of the Financial Services Committee who has made this occasion. And it 
should be intuitively obvious to the most casual observer that he has 
made this occasion because of a mandate from the American public, but 
also in spite of the efforts of many.
  I would have us note that this newfound theory of ``less is best,'' 
this newfound theory of 170 pages is better than 1,279 pages, that this 
newfound theory can be improved upon. Rather than have 170 pages, why 
not have just one page, one page with nothing on it, or because we are 
all educated, let's just have one page with laissez faire, because 
that's what got us here, laissez faire, invidious laissez faire. This 
is what produced 327s; mortgages with 3 years of a fixed rate and 27 
years of a variable rate; 228s, 2 years of a fixed rate--many people 
are very much aware of what I speak because they have suffered from 
these insidious products--2 years of a fixed rate and 28 years of a 
variable rate.
  And then we had these teaser rates that coincided with prepayment 
penalties, such that if you wanted to get out of the teaser rate before 
it's set to an adjusted rate you had to pay an enormous prepayment 
penalty that locked people into these teaser rates. And of course we 
had the naked shorts. People were actually betting that the market 
would go down without money to cover the bets. And of course we had 
what we called the credit default swaps, the whole notion that you can 
bet that something won't fail and not have the money to cover your bet. 
Even in Vegas you have to have the money to cover your bet. AIG was 
engaging in a gambling racket that at any other time and place could 
have been declared unlawful and people could have gone to jail.
  And of course this laissez faire, hands-off attitude gave us the so-
called ``too big to fail''; too big to fail, which is just the right 
size to regulate, just the right size to separate into smaller pieces, 
and just the right size to eliminate, which is what this bill, H.R. 
4173, does. It puts ``too big to fail'' in a position such that it will 
not only be regulated, but it will be eliminated. And it will be done 
in an orderly process, very much akin to the way we move in when banks 
are failing, and on one Friday it closes, and on Monday a new bank 
opens, perhaps not as fast, but the concept is the same.

                              {time}  2300

  ``Too big to fail'' will no longer exist.
  So, Mr. Chairman, I want to commend you, and I want to thank you for 
allowing me to be a part of this process and a part of this 
legislation. I want to thank you because I want you to know that there 
would be no H.R. 4173 without your leadership. Your leadership has 
clearly made a difference in the lives of people in this country.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. FRANK of Massachusetts. I yield the gentleman an additional 
minute.
  Mr. AL GREEN of Texas. And it is my absolute belief that when 
historians look back through the vista of time, they will say that the 
chairperson of this committee left big tracks in the sands of time, and 
that he made a difference in our lives for all time.
  Mr. GARRETT of New Jersey. Madam Chairman, I now yield 6 minutes to 
the gentleman from Texas (Mr. Hensarling), who has been probably one of 
the most outspoken leaders in our committee to try to end the 
continuation of taxpayer-funded bailouts.
  Mr. HENSARLING. Madam Chairman, I rise tonight to oppose the 
Permanent Wall Street Bailout and Increase Job Losses Through Credit 
Rationing Act of 2009. If Congress had to abide by the truth-in-
advertising laws that they impose on the rest of the Nation, surely 
this would be the official title of, indeed, this 1,279-page piece of 
legislation.
  Madam Chairman, it is section 1609(n), for those who may have written 
the legislation and forgotten it, that creates a permanent $200 billion 
bailout fund. To paraphrase a line from the famous Kevin Costner movie 
``Field of Dreams,'' if you build it, they will come. The only reason 
to create a Wall Street bailout fund is to bail out Wall Street 
permanently.
  Now, the Democrats claim, Madam Chairman, that the bailout fund will 
not be paid for by taxpayers; but, Madam Chairman, these are the very 
same people who told us that the GSEs, the government sponsored 
enterprises, would never, never receive a dime of taxpayer money. And I 
guess, in a sense, they were literally correct. Instead, it's $1 
trillion, $1 trillion of taxpayer money now committed to the failed 
government-sponsored enterprises.
  These are the very same people who told us that, hey, don't worry 
about the Social Security trust fund; it'll get paid back. Medicare is 
financially sound. The National Federal Flood Insurance Program will 
never need a taxpayer infusion.
  Madam Chairman, they were wrong then and they are wrong now. Besides 
creating a permanent Wall Street bailout fund, Madam Chairman, this 
bill represents the fourth piece of the Democrats' failing economic 
agenda. First was the $1 trillion stimulus, next the $600 billion 
national energy tax. After that, the $1 trillion government takeover of 
our health care plan.
  Now, we all remember the stimulus plan. The President told us if it 
was enacted that unemployment would never rise above 8 percent. Yet our 
unemployment rate is at double digits, the worst in a generation; and 
the legislation before us will cause even more job losses. In sections 
4301, 4304, 4308, it will do this by empowering an unelected czar to 
unilaterally--give the power to unilaterally ban and ration consumer 
credit products, and then finance itself through hidden taxes on 
consumer credit and successful American companies.
  You heard the study alluded to earlier: interest rates paid by 
consumers would rise 1\1/2\ percent; new jobs would be reduced by 
almost 5 percent in our economy. More jobs would be lost, Madam 
Chairman, under the bailout authority which assesses $150 billion of 
taxes on large financial firms.
  Now, maybe those on the other side of the aisle wish to engage in the 
myth that somehow that won't be passed on to consumers, that somehow 
this won't impact credit lines at small businesses; but they are wrong. 
Increased interest rates. Increased fees, fewer loans to small 
businesses. Madam Chairman, once again, more jobs will be lost under 
the Permanent Wall Street Bailout and Increase Job Losses Through 
Credit Rationing Act of 2009. The United States Chamber of Commerce has 
said that if this act is passed, it would have a significant adverse 
effect on small businesses by restricting their access to credit. Some 
would lose credit altogether.
  Madam Chairman, I talk to a lot of good community bankers in my part 
of Texas. I have heard the chairman allude to the ICBA, and I certainly 
respect those who have Washington ZIP codes. Frankly, I respect those 
who have Texas ZIP codes a little bit more. I talked to a man who helps 
build Palestine, Texas, Kev Williams, East Texas National Bank. And he 
said, Congressman, if I have more compliance costs and the Federal 
Government in going to limit the types of customized credit products I 
can offer, we will lose jobs in Anderson County, Texas, that I have the 
privilege of representing in Congress.
  I heard from a small businessman in my district, from Jacksonville, 
Texas, ``As a small businessman the restriction on credit may very well 
mean the end of my company.'' Madam Chairman, why should we pass any 
legislation that will harm the ability of small businesses to access 
credit in the midst of a credit contraction? After 3.6 million of our 
fellow countrymen have lost their jobs since President Obama took 
office, I ask my Democratic colleagues, how many more jobs have to be 
lost? How many more?

[[Page 30843]]

  And, Madam Chairman, next the government takeover. Again, after 
proposing the $600 billion tax on our energy sector, a $1 trillion 
takeover of our health care system, the Democrats now bring us the next 
chapter in the narrative, and that is the takeover of huge portions of 
our consumer credit and finance markets. They will create a huge new, 
complex government bureaucracy and grant it sweeping draconian powers.
  Section 1104 will allow it to break up successful companies like Dell 
Computer or American Airlines. Section 204 and 4306 will allow it to 
dictate the pay structure, all the way down to a bank teller in east 
Texas making $25,000 a year.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. GARRETT of New Jersey. I will yield the gentleman another 2 
minutes.
  Mr. HENSARLING. Madam Chairman, section 4301 will allow it to decide, 
again, which credit cards, which home mortgages, and which car loans we 
are allowed to receive, and the list goes on and on and on. Madam 
Chairman, what this really leads us to is a bailout and job loss bill 
where the big get bigger, the small get smaller, the taxpayer gets 
poorer and the economy gets more political.
  Madam Chairman, what does a political economy look like? Well, we've 
seen it. We've seen it in the government-sponsored enterprises of 
Fannie Mae and Freddie Mac, where we give them these monopoly powers. 
They're allowed to grow these profits, but then they do a deal with 
Congress, oh, but you have to have an affordable housing mission. You 
have to have this political mission. And $1 trillion of taxpayer 
liability exposure later, we know how that turned out. That's what a 
political economy is about.
  How about GM and Chrysler? When they went bankrupt, all of a sudden, 
allies of the administration, the United Auto Workers, they end up with 
a sweetheart deal. And Chrysler, senior secured creditors received 29 
cents on the dollars; but the United Auto Workers received 43 cents on 
the dollar, and they ended up owning the company. How convenient. 
That's what a political economy looks like.
  And look at individual Members of Congress, including the 
distinguished chairman of this committee. From The Wall Street Journal, 
dated June 5, 2009, quote, ``The latest self-appointed car czar is 
Massachusetts' own Barney Frank, who intervened this week to save a GM 
distribution center in Norton, Massachusetts. The warehouse, which 
employs some 90 people, was slated for closure by the end of the year 
under GM's restructuring plan. But Mr. Frank put in a call to GM's CEO, 
Fritz Henderson, and secured a new lease on life for the facility.'' 
Now, I respect our chairman. I'm not here to suggest----
  The Acting CHAIR. The time of the gentleman has again expired.
  Mr. GARRETT of New Jersey. I yield the gentleman an additional 1 
minute.
  Mr. FRANK of Massachusetts. I will give him a minute because they're 
listening in Norton.
  Mr. HENSARLING. I know that the distinguished chairman relishes this. 
And, again, I'm not here to suggest that the activity is illegal, was 
immoral, was even fattening. I'm here to suggest it is what a political 
economy is all about. I would suggest anyone else besides the chairman 
of the Financial Services Committee making that telephone call, that 
facility wouldn't be open today. Under this bill, Madam Chairman, 
Americans' job security will depend less on how well you perform your 
job at home and more upon who you know in Washington.

                              {time}  2310

  That is what the political economy is all about.
  This bill represents an assault on the fundamental economic liberties 
of the American citizen. You want a home mortgage, you now have to get 
the approval of the Federal Government. You want to offer a credit 
product? The Federal Government. If you build a successful business, it 
can be torn down unless you go to the Federal Government on bended 
knee.
  Fewer jobs, more bailouts, more government control, less personal 
freedom. It is time to reject this bill.
  Mr. FRANK of Massachusetts. I yield 4 minutes to the gentleman from 
Illinois (Mr. Foster).
  Mr. FOSTER. I want to thank the chairman for yielding.
  I rise in strong support of H.R. 4173, The Wall Street Reform and 
Consumer Protection Act of 2009. As a member of the House Financial 
Services Committee that drafted this landmark bill, I'm proud of our 
chairman's work, and I want to especially thank the chairman for his 
diligent efforts over the last many months in shepherding this complex 
piece of legislation to the floor this week.
  This historic comprehensive legislation has dozens of moving parts 
designed to prevent future bailouts and restore financial stability to 
the marketplace. I make no apologies for its complexity. It is the 
simplistic view of financial markets that has brought us to this place.
  I want, however, to take a moment to highlight a few of the possibly 
underappreciated aspects of this bill which may ultimately prove to be 
among the most beneficial.
  First, this bill has language authorizing requirements for the 
inclusion of something called contingent capital into the capital 
structure of large financial holding companies. Contingent capital is a 
special form of debt which, when a company gets into trouble, will 
immediately convert into equity on previously negotiated terms, thus 
causing the firm to be recapitalized without requiring a penny from the 
taxpayer. In this sense, a requirement for large firms to carry 
contingent capital amounts to a requirement that they carry privately 
funded bailout insurance. The elegance of this solution is that it is 
market based and privately funded.
  For large financial firms that are poorly run, the market-imposed 
terms on which they could receive contingent capital could be more 
onerous than their better-run competitors. And while not eliminating 
the need for a systemic dissolution fund, I firmly believe that 
contingent capital will become the first best line of defense against 
financial contagion and will serve to mitigate the effects of future 
crises.
  Secondly, this bill significantly reforms the credit rating agencies 
which played a central role in the crisis last fall by giving inflated 
ratings to mortgage-backed securities and other financial instruments. 
In the wake of the Enron accounting scandal, Congress established an 
independent Public Company Accounting Oversight Board, PCAOB. This 
board, dominated by users of accounting reports, was designed and 
effectively regulates the accounting industry. And this bill, in 
addition to mandating that the rating agencies establish internal 
controls to resolve conflicts of interest and institute better 
corporate governance, also has language which creates a prototype 
independent committee to oversee the SEC regulation and enforcement of 
the rating agencies. Like the PCAOB, this oversight committee will be 
dominated by end users of credit ratings and will serve as a template 
for future, stronger oversight if the SEC enforcement proves 
inadequate.
  Finally, the last issue that I'd like to highlight is the greater 
investor protection this bill provides. In particular, this bill 
contains a provision that makes investment adviser fraud--like that 
perpetrated by Bernie Madoff--virtually impossible. Specifically, the 
bill contains language which requires those who advise and manage large 
amounts of money on behalf of others either to employ an independent 
custodian to hold those assets or to have an independent set of eyes 
verifying the accuracy of statements to investors. This simple 
requirement should give investors peace of mind that what is on their 
statements each month actually exists.
  I have touched on only a few of the historic and beneficial changes 
in this bill designed to restore market confidence, ensure the end of 
taxpayer-funded bailouts, and modernize the rules governing our 21st 
century economy. I hope my colleagues can support this important bill.

[[Page 30844]]


  Mr. HENSARLING. Madam Chair, at this time I would like to yield 5 
minutes to the distinguished ranking member of the Capital Markets 
Subcommittee and one of the true champions of economic liberty in 
Congress, the gentleman from New Jersey (Mr. Garrett).
  Mr. GARRETT of New Jersey. I thank the gentleman from Texas.
  You know, the American public has spoken. They are opposed to more 
taxpayer-funded bailouts, they are opposed to more loss of jobs in this 
country, and they are opposed to bigger and larger and more expensive 
government. The American public has spoken. Obviously, the majority has 
failed to listen to them, because we've come to the floor tonight with 
a major 1,300-page piece of legislation which goes in the exact 
opposite direction that the American public has asked for.
  The bill before us has in it taxpayer-funded bailouts. The bill 
before us has in it the loss of additional millions of jobs, and of 
course, with the 1,300 pages that we see here before us, the bill 
before us has in it an expansive growth of the Federal Government and 
cost that we have never seen the likes of which during our 200-plus 
history.
  You know, at the beginning of this 2- or 3-hour debate that we've had 
here on the floor, the chairman of the committee began his remarks by 
saying that we will have--we will be hearing fantasy tonight, and then 
he proceeded to give us some of that fantasy, for much of what we've 
heard from the other side of the aisle is fantasy, whether it's 
describing their legislation that we're about to vote on later tomorrow 
or whether describing legislation that we have offered as an 
alternative to it.
  You know, I've heard the chairman say there is nothing in this bill, 
in the Republican's alternative, dealing with 13(3) and the Federal 
Reserve powers. I guess the chairman has never taken a look at the 
Republican substitute.
  Mr. FRANK of Massachusetts. Will the gentleman yield?
  Mr. GARRETT of New Jersey. I will.
  Mr. FRANK of Massachusetts. The gentleman stated the exact opposite 
of what I said. He's quoting another Member.
  I said, in fact, that on 13(3) our bills are very similar. So the 
gentleman has just put words in my mouth that was the exact opposite of 
what I said. It was another Member who talked about 13(3). I talked 
about the similarity of our approach as you had offered it in committee 
and ours on 13(3).
  Mr. GARRETT of New Jersey. I remember in committee that we had 
similarity, but I remember, because I wrote it down, that there was 
nothing in our bill with regard to this.
  Mr. FRANK of Massachusetts. Another Member said that, yes.
  Mr. GARRETT of New Jersey. I thought I heard it from you, just as I 
thought I heard it from you saying that there was nothing in our bill 
with regard to executive compensation, and I know that we do have 
language in our bill which also was discussed in committee with regard 
to executive compensation. So at least in that area I know I heard this 
from the chairman, and it is in our bill. I thought I heard the 
chairman say that there's nothing in here with regard to Federal 
powers.
  Regardless, if it's just one issue or two, I would just ask the 
chairman to refer back to my earlier comments, the reason we're 
concerned with the extensive nature of the largeness of the bill is 
because when it gets so large, 1,300 pages, your side of the aisle is 
not familiar with what's in your bill, and even our bill, which pales 
in comparison by size, you fail to know exactly what's in ours as well.
  The American public has spoken out and says they're opposed to more 
taxpayer-funded bailouts. This was one point where we were in 
discussion just a moment ago, an hour ago, where I did have to point 
out to the chairman that in your bill, in the Judiciary Committee self-
executing amendment, there is language in there which basically 
perpetuates what has occurred already in this year that the American 
people are opposed to is taxpayer-funded bailouts.
  Let me explain it very quickly.
  What happens is the Federal Government is able to set up a taxing 
mechanism on businesses in this country to the tune of $150 or $200 
billion, and until we establish that, you can--the Treasury Secretary 
can draw on the taxpayer dollar to help fund this mechanism. And even 
after that is set up, under this provision on page 3, the corporation 
may, as I said before, convert what is called a receivership--which 
basically would be putting the business out of business, which is 
something that the chairman says would occur--but then would allow it 
to proceed to a chapter 7 or a chapter 11 bankruptcy, and, of course, 
that basically means that the business is reorganized.
  So what's occurring here is we are allowing the Treasury Secretary, a 
political appointee, to make the decision, the life-and-death decisions 
of businesses of this country.

                              {time}  2320

  And they will say that this company is going to survive, and this 
company is not going to survive, and this company over here is going to 
survive on the backs of American taxpayers. This company is going to 
survive even though it made bad decisions, risky decisions, but for 
whatever political purposes or otherwise, the Treasury Secretary can 
sign off and say, take taxpayer dollars, funnel it into that company 
for a while under the corporations act, under the bridge loans and 
bridge proposals and what have you, and then under section B on page 3 
convert it back into a reorganization and allow it to flourish once 
again with the blessing of the Treasury Secretary and of this 
administration and of the American taxpayer as well.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. HENSARLING. I yield the gentleman an additional 2 minutes.
  Mr. GARRETT of New Jersey. So the bill does have what the American 
taxpayer does not want to have, which is a continuation of bailouts at 
their expense.
  What else does the bill have that the American public is asking not 
to have? And that is the loss of jobs. I remember being on this floor, 
and I do remember this conversation very well standing right over there 
when the majority leader was standing over here at the beginning of the 
year, and he was predicting, he was promising that if we only passed 
the $700 billion or $800 billion stimulus package, as the gentleman 
from Texas said earlier, that we would see the results immediately, not 
by the summer, not by the end of the year, not by next year, but we 
would see immediate job growth in this country. We would never see 8 or 
8\1/2\ percent unemployment, and we would see the results immediately.
  Well, that tune changed when unemployment went up to 8, then 8\1/2\ 
percent, then 9, then 9\1/2\, then 10, then 10.2 percent. Then, all of 
a sudden, their tune changed to say, well, you won't see it 
immediately. We will see it some time next year. And now, of course, 
we're coming to the floor with the majority leader saying that we will 
see job growth some time next year, but we just need another stimulus 
package. However many dollars from the American taxpayer pockets that's 
going to cost, I'm not sure.
  Mr. HENSARLING. If the gentleman would just yield on that one point, 
I would say the results were seen immediately, and that is an 
additional 3.6 million of our countrymen lost their jobs under this 
program.
  I yield back to the gentleman.
  Mr. GARRETT of New Jersey. Thank you. Actually, you're right. We saw 
two things immediately. We saw the loss of 3\1/2\ million jobs during 
that period of time, and, of course, we saw more borrowing from the 
American taxpayer and also actually from overseas, China and elsewhere, 
to the tune of $700 billion or $800 billion. So those are the 
predictions, those are the promises there.
  What do we see in this bill? What we see in the bill is the creation 
of a number of entities, a number of pieces in this bill that will 
result in losses of even greater numbers of jobs. Just like we saw the 
studies showing that if we ever passed cap-and-trade we will be seeing 
millions of jobs lost there, just as we saw the documentation coming

[[Page 30845]]

out with the health care bill saying we would lose millions of jobs 
because of that. Here too studies have looked at the CFPA and said that 
provision alone would raise the interest rates for businesses.
  The Acting CHAIR. The time of the gentleman has again expired.
  Mr. HENSARLING. I yield the gentleman 2 additional minutes.
  Mr. GARRETT of New Jersey. That provision alone will raise interest 
rates between 1.4 or 1.6, but say 1.5 percentage points, that means 
that businesses and individuals trying to get loans will see their 
loans go from 6 percent up to 7\1/2\ percent. That will mean less jobs 
today and in the future. How many jobs? Well, one study points out 
roughly over 1 million jobs under that provision alone.
  Where else will we be losing jobs? We will be losing jobs due to this 
whole bailout proposal in this bill. If you put a tax on anything, 
you're meaning that those businesses can't spend the money here when 
they have to send it over to the government to be stored over here for 
some other purposes. So if we are going to ask businesses to spend $150 
billion, $200 billion on this new bailout tax, well, some studies have 
looked at that and said that will result in higher costs for those 
businesses naturally, less ability for them to invest. If they can't 
invest it in new plants, materials, and employees, they will be putting 
it over here. The numbers there we are seeing is around some 450,000 
less jobs because of that provision.
  You're talking between those two provisions alone in the over 
millions range of jobs not being created or lost because of this 
legislation.
  So I will leave to later on my last point, which is that this bill 
obviously also creates bigger government, more expansive growth of 
government, more expansive takeover of the private sector and private 
individuals' lives as well, their decisionmaking lives, as Ranking 
Member Bachus said at the very beginning comments, all things the 
American taxpayer has spoken out against.
  The American taxpayer has spoken out against taxpayer-funded 
bailouts. They said we want less job destruction. We want less big 
government. This bill gives us taxpayer-funded bailouts. This bill 
gives us destruction of more jobs. And this bill gives us a bigger 
government. All things the American public is opposed to. And that's 
why I come to the floor tonight and oppose this piece of legislation.
  Mr. FRANK of Massachusetts. I yield 5 minutes to the gentleman from 
North Carolina (Mr. Watt), a leading member of the committee who has 
done a great deal on this bill.
  Mr. WATT. Madam Chair, I have endured the entire debate this evening, 
which is now approaching 3 hours, and I've been absolutely fascinated 
by it. Before I came to the body, I practiced law for 22 years. I've 
now been in this body 17 years. When I was practicing law, quite often, 
I had cases in which the facts and the law were on my side, and I would 
go to court, and I would argue the facts and the law and deal with what 
was before us.
  Sometimes I would have some cases where neither the facts nor the law 
were on my side. And I would show up in court, and I would argue 
everything other than what the case was about. Now, that's what my 
friends on the opposite side of the aisle have been doing tonight, 
because neither the facts nor the law is on their side this time.
  So we've heard about health care. I've been making notes. I was here 
the whole time. We've heard about socialism. We've heard about supply 
and demand. We've heard about energy and electricity rates. We've heard 
that the government intervention caused the economic meltdown, that the 
Fed ratcheted up the panic and that other government agencies 
contributed to the panic, and that's how we got into this economic 
mess.
  We've heard almost every speaker talk about the size of the bill. 
We've heard something about cockroaches. I have no idea what that has 
to do with this bill. We've heard a lot about czars. We've heard about 
the 2003 and 2007 Fannie and Freddie purchase of subprime loans, and 
made it sound like somehow that was our fault rather than your 
President who was out there pushing home ownership when we were trying 
to get him to push to provide decent housing for people.
  We've heard about credit czars, and we've had our colleagues just 
pull figures out of the sky. I have no idea where they came from. This 
bill is going to increase interest rates by a point and a half. I don't 
know how anybody would ever be able to know that. It's going to 
decrease jobs by 5 percent. I don't know where that figure came from. 
It's going to break up Dell. My goodness. I didn't know Dell was a 
financial entity at all. It's in the computer business, it's not in the 
financial services business. And we've heard our friends say that they 
don't want taxpayer bailouts, but they also don't want us to set up a 
fund that's paid for by the industry to take care of the dissolution of 
these failing companies.
  So what's the solution here? I don't know what their solution is, to 
be honest with you. The truth of the matter is the private market 
failed, and we had an economic meltdown. And I think we need some 
reasonable regulation, which is what this bill does.
  We need somebody who is going to show up at work every single morning 
saying, my primary obligation is to at least think about what is in the 
interests of consumers. And that's what the consumer financial 
protection agency's charge and responsibility will be.
  And that is what this bill does.

                              {time}  2330

  We need to do something about all these predatory loans that were 
made that are now being foreclosed and have gotten us into the 
financial mess that we are in, and that's what this bill does. We need 
to make the derivatives market more transparent and put them on a 
platform so that the whole world can see what's going on back there in 
the derivative room, and that's what this bill does.
  Now, what do you all want to talk about? You can talk about health 
care or energy or electricity or cockroaches or whatever you want to 
talk about. We want to fix this economic system in our financial 
services industry. That's what this bill does. It is long, it is 
complex, it is a complex undertaking. Our Chair has done it admirably; 
he has led this.
  What is your proposal? That we just do nothing and let the market 
take care of itself?
  That is not an option, my friend. That is not an option, my friends. 
That time has passed for a while.


                    Announcement by the Acting Chair

  The Acting CHAIR. Members are reminded to direct their remarks to the 
Chair.
  Mr. HENSARLING. Before yielding to the other gentleman from Texas, I 
will yield myself 1 minute.
  I heard the gentleman from North Carolina in a spate of candor say he 
didn't know what the solution was. I do know what the solution is. It's 
the Republican substitute. I would commend the gentleman to read it. It 
ends bailouts. Your bill will increase bailouts. It reforms the Federal 
Reserve.
  Your bill increases the powers of the Federal Reserve. This bill 
protects consumer rights. Your bill constricts consumer rights.
  Your bill was stone-cold silent with respect to the government-
sponsored enterprises, but now you protect them. Clearly the GSEs are 
too big to fail.
  Our bill goes to the source of the problem. If the gentleman needs to 
know what the solution is, I would be happy to provide him with a copy 
of the Republican substitute.
  It is now my privilege, Madam Chair, to yield 5 minutes to the 
gentleman from Texas (Mr. Neugebauer).
  Mr. NEUGEBAUER. I thank the gentleman.
  I think I want to go back to what really is at stake here and that's 
choices for the people that borrow money in this country. Back in the 
fall of last year and in the spring of this year, we were working on 
legislation that the other side brought forward for credit cards, and 
everybody has got a credit card story that they have had a bad 
experience. We passed this big credit card bill.
  When we were talking and debating that bill on this very floor, we 
told the

[[Page 30846]]

American people be careful here, because what they are saying is they 
don't trust you to make your own choices, and they are going to tinker 
with the credit card industry. We said, you know what's going to 
happen? Interest rates are going to go up. Credit limits are going to 
go down, payments are going to go up. And what happened?
  Rates went up, credit limits went down, and payments went up. Who did 
that affect? Well, it affected families. More importantly, we said it's 
going to hurt small businesses because a number of small businesses 
across this country use credit cards to help with their cash-flow needs 
of their company.
  Now we are here tonight talking about the rest of the credit market. 
What's going to happen here, one of the gentlemen, several gentlemen 
have brought up predatory lending.
  Well, let me talk about a predatory loan. How about this young 
businessman that needs to buy another truck and some tools for his 
plumbing company, and he goes to his banker and he says, you know what, 
I need an interest-only loan for 12 months until I get my business up 
and going and I get my new employee generating the revenue, and then I 
want to convert over to another payment plan at the end of 12 months.
  The banker says, well, I would love to do that; I have done that for 
you in the past. But you know what, we have got this new czar, or 
czarina, who is in charge of determining what kinds of financial 
products I can offer, so I can't do that.
  So what happens? That plumber can't expand, can't buy another truck, 
can't hire another employee. Those are the consequences of this.
  Where we are headed in this is that we are going to let the Federal 
Government tell you, because you are not smart enough, according to my 
colleagues on the other side, to determine what kind of mortgage is 
appropriate for your family; that you are not smart enough to determine 
what kind of car loan is appropriate; what kind of student loan is 
appropriate for you and your family as you are trying to send your 
daughter or your son to school; that the overdraft privileges that your 
bank has been extending to you in the past, but because of these new 
regulations and the interference of government, you may not be extended 
those, or those charges may go up.
  How about that person that wants to experience the American Dream and 
wants to go start their own business and needs a specialized financing 
package to be able to get that business off the ground and so initially 
has a small amount of capital.
  The banker is going to take a larger risk, and so he is going to have 
to price the cost of that loan higher, and he is reluctant to do that 
because he might be making a predatory loan according to this new czar, 
this new agency that's going to determine what kind of financial 
products the American people get to have access to in the future.
  You know what, Madam Chairman, I still have faith in the American 
people because this Nation wasn't built because of its government. This 
Nation was built because of its people, people that took risks and 
chances and worked hard and went out and did different things in 
different ways and made things happen, and they didn't conform to what 
was the standard.
  You see, when we start standardizing everything, we begin to limit 
the potential for success, and we limit failure, and there is no reward 
for those who do the extra and do special. That's not what this Nation 
was built on.
  I just recently over the weekend came back from Afghanistan, where 
our young men and women are doing remarkable things in the name of 
security, peace, and liberty for our country. You would have thought 
they would want to talk about, you know, thank you for the President's 
commitment to additional troops; but this sergeant came up to me as I 
was about to walk out and go get on a plane. He said, Congressman, you 
know what really scares me? It's not these Afghani Taliban people. What 
really scares me is what you all are doing to our country. Every time I 
turn around you are spending money we don't have. The government is 
getting into the car business. The government is buying banks. The 
government is limiting my choices.
  You are leaving a legacy, and I am over here fighting for a country. 
Quite honestly, I look back home and I am not sure the Congress is not 
destroying our country by taking away the liberties and the freedoms 
that I am fighting for.
  That's the reason tonight and tomorrow, whenever we vote on this, we 
need to defeat this so that we can preserve liberty and freedom for 
this country and trust the American people because the American people 
are smart enough to make their own decisions.
  Mr. FRANK of Massachusetts. I have only one speaker left.
  I reserve the balance of my time.
  Mr. HENSARLING. Madam Chair, might I inquire how much time remains on 
both sides.
  The Acting CHAIR. The gentleman from Texas has 10 minutes remaining, 
and the gentleman from Massachusetts has 14\1/2\ minutes remaining.
  Mr. HENSARLING. At this time, Madam Chair, I would like to yield 5 
minutes to the distinguished ranking member of the Capital Markets 
Subcommittee, the gentleman from New Jersey (Mr. Garrett).
  Mr. GARRETT of New Jersey. I thank the Chair, and I thank the 
gentleman from Texas. Just to go back to a comment--the gentleman from 
North Carolina made two comments--what is the solution?
  Well, the gentleman from Texas said here is our solution, and I leave 
a copy here in case he has not had an opportunity to read it. It is by 
size a lot less than what you have before you.
  The gentleman from North Carolina also asked about our studies; and 
where we say this will hurt jobs because you will be raising credit 
interest rates by 1.4 or 1.6, I average it out to about 1.5 percent. It 
translates into X number of jobs, millions of jobs lost. The questions 
are studies before we implement this.
  My question to the gentleman is before we pass this legislation today 
and implement it and impose this burden onto the American business 
sector and the American public in general, can you tell me which study 
you are referring to that will not cause a loss of jobs?
  Mr. WATT. The gentleman is yielding to me for the purpose of 
responding to that?
  Mr. GARRETT of New Jersey. Yes.
  Mr. WATT. I haven't referred to any study because I haven't said that 
it wasn't going to cost jobs or increase or decrease jobs.
  Mr. GARRETT of New Jersey. Reclaiming my time, and there is the 
point. We have this 1,300-page bill that I would hazard the great guess 
that the vast majority of this body here tonight has not ever had the 
opportunity to, nor the inclination to, nor, in fact, did read.

                              {time}  2340

  And now we seem to hear that when it comes to what the impact, the 
vast impact that this will have on our economy, where is there 
information as to what they inquired that it would do? It is absent.
  I spoke before about the point that this bill goes contrary to the 
American public's claim that they do not want any more bailouts, and I 
raised reference to one section of the bill which in perpetuity it 
allows for the creation of switching from receivership into bankruptcy 
and makes it basically a political decision. Another provision of the 
bill on page 408 basically says that the Treasury Secretary has 
unlimited authority to borrow an unlimited amount of money from the 
Federal Treasury, which means from the American taxpayer.
  How do we see this? Page 408 of the bill, section 3, ``Borrowing 
authority when fund assets are less than $150 billion.'' Section (B), 
``The corporation may borrow, and the Secretary may lend, any amount of 
funds that, when added to the amount available in the fund on the date 
the corporation makes a request to borrow funds, would not exceed $150 
billion.''
  What does that mean? That means today, as we start this program out,

[[Page 30847]]

there are zero dollars in the fund. The Treasury Secretary can go to 
the Treasury, meaning the American taxpayer, and ask for $150 billion 
from the American public, and they could bail out some company, maybe 
AIG again, as this past administration helped facilitate. And then 
after that, there's no money in the fund again, so they go back to 
Treasury and say, We need another $150 billion, because, under the 
terms of the bill as written right now, there's no money in the fund 
and they can borrow up to $150 billion. They ask for another $150 
billion. And then a company akin to Lehman or something goes under, or 
another company over here or the auto companies go under, and they pay 
it all out the next day. How much is in the fund then? Zero. At which 
point the Treasury Secretary can go back to the American taxpayer a 
third time and ask for an additional $150 billion.
  When does it end? This bill puts absolutely no limit on it 
whatsoever. It could be $150 billion. It can be $1 trillion. It could 
be $10 trillion. It's all in the hands of the political appointee, 
Secretary Geithner, for him to decide where this money goes and how 
much it goes to, and it can be a political decision because, as we have 
seen before, he can prop up favorite companies and allow them then to 
go into receivership and then allow them to come back out of it after 
he has asked the American public to spend $10 billion, $100 billion, $1 
trillion in order to do so. Where is the limitation in this bill? There 
is absolutely none.
  So when the other side of the aisle looks chagrined when we say the 
American taxpayer is on the hook for bailouts, they need only to look 
at their own bill, page 408 or page 3 over here in the Judiciary 
Committee, to see that is an unlimited drain on the American taxpayer, 
that this will allow perpetual bailouts that are never ending and will 
be made by political appointees for their favorite companies that they 
want to prop up to the end of the Earth. That, I think, is reason one 
why we should be opposed to this bill.
  If there's nothing else in this bill besides those few pages, we 
should all be voting ``no.'' If there's nothing else in this bill, 
every American listening to this floor debate tonight should be calling 
up their Member of Congress and saying, Why are you putting us on the 
hook to bail out bad businesses and bad business decisions? Why are you 
putting us on the hook to bail out your political favorite companies 
that you want to bail out, and why do you want to do so without 
limitation?
  Mr. FRANK of Massachusetts. Madam Chair, I reserve the balance of my 
time.
  Mr. HENSARLING. Madam Chair, I yield myself the balance of my time.
  Madam Chair, again, what we have before us is the ``Perpetual Wall 
Street Bailout and Increased Job Losses Through Credit Rationing Act of 
2009.''
  No matter how much our friends on the other side of the aisle wish to 
deny it, the only reason to create a bailout fund is to bail someone 
out. The American people are sick and tired of paying for the bailouts.
  Now, my friends on the other side of the aisle say we're not really 
going to use this bailout fund, which kind of begs the question: Why 
are you creating it in the first place? Well, it's just going to be 
used for wind-down cost. Well, in bankruptcy, typically you use the 
assets of the bankrupt company to do that. So this $150 billion plus 
the $50 billion line of credit from the Treasury, what's the $200 
billion being used for? Well, ultimately it's going to be used to bail 
out other Wall Street parties, the creditors, the shareholders, the 
counterparties, just like what was done in AIG.
  Now, again the distinguished chairman of the Financial Services 
Committee says, Well, our bailout fund is like a death penalty. Well, 
it may be a death penalty, but the death sentence has been commuted for 
up to 3 years. And, by the way, as it's commuted, just like in the AIG 
bailout, Societe Generale could walk away with $16.5 billion, a French 
concern, like they did in AIG. Goldman Sachs could walk away with $14 
billion in the bailout like they did in AIG. Merrill Lynch could walk 
away with $6.2 billion. Deutsche Bank, a German concern, could walk 
away with $8.5 billion. UBS, a Swiss concern, could walk away with $3.8 
billion. These are the counterparties on credit default swaps to AIG, 
and their legislation would replicate it, Madam Chair.
  There's nothing in their legislation that would prevent the entire 
AIG fiasco from repeating itself, and, if anything, they would triple 
it, up to 3 years, up to 3 years of bailout authority there.
  So not only is the death sentence commuted in their so-called bailout 
fund, but not unlike the GM and Chrysler cases, we could have a 
Lazarus-like resurrection. Not unlike old GM and old Chrysler, well, 
you flip a switch and all of a sudden you take care of your political 
allies, the United Auto Workers, and you've got new GM and you've got 
new Chrysler, and all of a sudden they just keep on trucking along. So 
it's an interesting metaphor to call this a death penalty. What it is 
is it is a bailout.
  Here we all are, Madam Chair, at a very tough time in our Nation's 
economy and 3.6 million of our fellow citizens have lost their jobs 
since the President told us if we passed his plan, his government 
stimulus plan, we'd only have 8 percent unemployment. Still, we know we 
have 10 percent unemployment. And yet here we have a piece of 
legislation that's ultimate impact is to make credit more expensive, 
less available when small businesses are losing jobs by the tens of 
thousands and thousands. Why, in the middle of one of the great credit 
contractions in our Nation's economy, would you want to make credit 
more expensive and less available? It's beyond me, Madam Chair. It is 
beyond me.
  Again, my fear is that under this type of legislation the big will 
get bigger. This is again Fannie Mae and Freddie Mac, politically 
favorite firms given a political mission and that blows up. Now, again 
maybe the Merrill Lynches and the UBSs are taken care of. The school 
teachers in Mesquite, Texas, they're not taken care of under this 
legislation. They end up paying for the bailout in this political 
economy. The big will get bigger and they will be given a political 
mission. Again, your job will depend not so much on what you do at home 
but who you know in Washington.
  One of the great free market economists of our time, Nobel Laureate 
Milton Friedman said, ``Sooner or later, and perhaps sooner than many 
of us expect, an ever bigger government would destroy prosperity that 
we owe to the free market and the human freedom proclaimed so 
eloquently in the Declaration of Independence.''

                              {time}  2350

  That moment is here, and we must vote for freedom and against this 
bill.
  Mr. FRANK of Massachusetts. May I inquire as to the time remaining?
  The Acting CHAIR. The gentleman has 14\1/2\ minutes remaining.
  Mr. FRANK of Massachusetts. I yield myself such time as I may 
consume.
  First, I have to deal with some of the misstatements that we've 
heard. There is nothing in here that rations credit. There isn't even 
anything to refute because there is nothing here they could even 
misinterpret, Madam Chair, about the rationing of credit. Now, some are 
particularly upset because we establish a Consumer Protection Agency. 
In the first place, as far as the banks are concerned, that entity gets 
no new powers; it takes powers that are already there in the bank's 
regulators that haven't been used very well.
  If my friends on the other side want to go to the American people and 
say, oh, great, here's one of the differences between the parties, we 
think you consumers have been very adequately protected, and you don't 
need to improve that manner of administration, then I will take that 
debate to the American public.
  They tell us that this is bad for small business. The Independent 
Community Bankers Association supports this bill. They will be unhappy 
if bankruptcy is added, I understand that, but as far as the bill now 
stands, before we get to the bankruptcy clause of the Judiciary 
Committee amendment--which I'm

[[Page 30848]]

going to vote for, but insofar as the accusation that it restricts 
credit, the Independent Community Bankers don't think so, just as when 
we did the credit card bill and the Republicans said--some of them, 
some of them voted for it--this is bad for small business and the 
National Federation of Independent Business said no.
  What we say here is--and this is a big difference--we do say that we 
want to prevent the granting of those kinds of mortgages that get 
people in trouble because it's not just the individual who gets in 
trouble; the whole economy suffers. And we do want to ban the kind of 
practices in the mortgage area--so it's true, it's an expansion of 
government power. I will say, by the way, that was a constant debate. 
For much of the past, oh, 15 years, until recently, many Democrats 
tried to get restrictions on irresponsible subprime mortgages. The 
Republicans resisted them.
  From 1995 to 2007, my Republican friends controlled this House; not a 
piece of legislation passed to stop mortgages, not a piece of 
legislation passed to deal with Fannie Mae and Freddie Mac. We did, in 
2007, pass such legislation, but the damage had been done.
  So, yeah, there is a difference. We want to expand the regulatory 
power to stop the kind of mortgages from being granted that were a 
major problem in the crisis. One Member said, Well, we would do nothing 
to stop the AIG crisis. No, we do many things to stop the AIG crisis. 
First of all, we do not allow, under the legislation we are putting 
forward, an entity like AIG to get so overextended by issuing credit 
default swaps that they can't pay off. They would be restricted because 
derivatives would be better regulated. They would be restricted because 
they would not be allowed to be so leveraged because we would give 
regulators the power to hold them in.
  The notion that it's socialism when you have bank regulation is quite 
odd. We heard Members say this is socialism. There is nothing in here 
about the ownership of the means of production. There is nothing in 
here about the government taking over any ongoing institution. Yes, we 
have bank regulation, and that's the deal. These are people who think 
that regulation is socialism. We are for regulation. We do believe that 
the absence of regulation over the last 20 years contributed greatly to 
this problem.
  Now, I know there are people who say, when you start regulating the 
innovation aspects of the economy, you get into trouble. They said it 
about Franklin Roosevelt and the Securities Exchange Commission, they 
said it about Theodore Roosevelt and antitrust. I urge people to go 
back and read the same old arguments.
  Now, the gentleman from Texas (Mr. Neugebauer) said the Federal 
Reserve will decide that you are too big to fail and you will be 
advantaged; wrong, wrong, wrong. In the first place, the designation 
that an entity, a financial entity--by the way, we heard some comments 
about Dell and American Airlines, which are not covered under this 
bill. They are not financial holding companies and could not be made 
financial holding companies. So Dell and American Airlines are total 
red herrings.
  What we have here is the ability of a group of the existing 
regulators--not the Federal Reserve--to decide that a particular 
institution is so big and so overleveraged that it's a danger. But they 
don't get designated and then carried around; coordinated with that is 
a restriction on what they do. They are not told you're too big to 
fail, go out and make more money. They are told, you are so big that if 
you fail because of problems, raise your capital, cut back on your 
activity, and if you're AIG, stop selling the credit default swaps.
  There is this very real difference between the bills. Their bill is 
very small because it does nothing to retard the kind of activity that 
got us in trouble. It does not stop over-leveraging, it does not stop 
unregulated derivative trading, it does not stop credit default swaps 
without anything to back them up, it does not stop any subprime lending 
abuses. So yes, that's their view, and they're very clear: Leave it to 
the private market. We say the private market always does better with 
sensible regulation.
  When Roosevelt and Wilson put antitrust into place, I think they did 
a good thing. When Franklin Roosevelt did the SEC and the Investment 
Company Act, those were good things. So, yes, a lack of regulation we 
believe did cause this great problem.
  Now, we get into the bailout issue because the Judiciary Committee, 
frankly, copied the Republican bill by saying you should use chapter 
11. The Republican bill talks about chapter 14--the equivalent of 
chapter 11 here. Here's what, however, the Judiciary language is 
subject to. It is subject to--we are talking about now the fund. Yes, 
somebody could be put into chapter 11, but none of the money could be 
spent that's in the fund. It's raised not by taxpayers, but by an 
assessment.
  On page 399, ``The Fund shall be available to the corporation for use 
with respect to the dissolution of a covered financial company to cover 
the costs incurred by the corporation. The Fund shall not be used in 
any manner to benefit any officer or director of such company.''
  It also then says, on page 397, here is the fund, this is the purpose 
of the fund, ``to facilitate and provide for the orderly and complete 
dissolution of any failed financial company or companies that pose a 
systemic threat to the financial markets or economy as determined under 
1603(b).'' The language about Judiciary does not alter that in any 
respect. It says that the Fund can only be used for dissolution.
  Now, it is true, they said, well, what about AIG when they paid off 
all these people? This is precisely to prevent the repetition. That was 
done, by the way, as Members will know, under section 13(3). It can no 
longer be done. We have changed section 13(3), so that should not 
happen again.
  What they did was to say--and this was in the Bush administration--
they said, look, we don't have the discretion to pick and choose, so we 
are doing exactly the opposite of AIG. With AIG, it was the ruling of 
the Bush administration's top officials, concurred in by President Bush 
without any congressional input, that they had to pay off every 
creditor of AIG because they got the legal authority to pick and 
choose. They said, we can put them all into bankruptcy, we have Lehman 
Brothers, and the markets will end--Secretary Paulsen said--or we can 
pay everybody.
  We give them the authority precisely to avoid that dilemma. And by 
the way, AIG was not being put out of business. It is not AIG. AIG was 
not put under dissolution; they are being kept going. That could not 
happen. What we say is, in the future, if you think an entity like AIG 
has gotten too big and owes too many people too much money, you take it 
over and you spend money only to wind it down and to dissolve it. If 
there was some notion that it could be kept going, then none of these 
monies could be used for it.
  Let me read it again: ``To facilitate and provide for the orderly and 
complete dissolution of any failed financial company.'' That is a 
restriction on the use of the fund--it's not a taxpayer fund, but even 
of the other funds.
  And then on page 288 it says, ``The Corporation is authorized to take 
the stabilization actions''--including the bankruptcy--``only if the 
Secretary and the Corporation determine that it is necessary for the 
purpose of financial stability and not for the purpose of preserving 
the covered financial company.'' And it then says, ``The Corporation 
ensures that any funds from taxpayers shall be repaid as part of the 
resolution process before payments are made to creditors.'' Funds will 
be repaid if there is a borrowing. Funds go to the taxpayer before a 
nickel goes to the creditors.
  These are the inaccuracies that we have heard. There is no Dell or 
American Airlines in here. Oh, by the way, there is no permanent 
bailout fund either because that fund and the borrowing authority the 
gentleman from New Jersey talks about sunsets in 2013. The borrowing 
authority is sunsetted

[[Page 30849]]

at 2013. So permanent is true if you believe that the world is ending 
on January 1, 2014. Now, I know the Republicans believe the world began 
on January 21, 2009, and all the bad things that happened never 
happened under Bush--they didn't fail to vote for them. They all 
happened in 2009.

                              {time}  0000

  Again, as my partner said to me, that was also the day of a terrible, 
terrible disease outbreak, mass Republican amnesia on January 21, 2009, 
when they forgot what all these--We've heard talk about job losses. 
Isn't it interesting that the gentleman from Texas cannot remember that 
a single job was lost before January 20. He talks about the job losses 
since the stimulus bill was passed. In fact, this recession, the worst 
since the Depression, began in 2007, in December; and there was 
enormous job loss under President Bush. Job loss has diminished 
recently.
  So, yes, I will acknowledge that the Obama recovery from the Bush 
recession has been slower than we would have liked. But every sensible 
economist understands that the question is not whether there were any 
job losses at all, or whether you have affected the rate. And clearly 
the economic recovery plan has affected the rate. And further things 
will affect it further.
  I yield to my friend from North Carolina.
  Mr. WATT. I just wanted to inquire of the chairman whether he saw 
anything in the bill about cockroaches.
  Mr. FRANK of Massachusetts. No, I did not, and I did read the whole 
bill. And by the way, I also would object, there was some reference to 
steamroll, or not having the opportunity to read it. We have had 
complaints from the minority about too many markups and too many 
hearings and people on the staffs of both sides, and there was a 
magnificent group of staffers on both sides who have given the American 
people the best bargain they've ever gotten with the amount of work 
both sides have done on this. So, yeah, this has been very thoroughly 
vetted and discussed and debated and all the deadlines have been met.
  But here's the fundamental difference: we do not have a bailout fund. 
We have a fund that will come from the financial institutions that can 
only be used, as I said, for dissolution, that will sunset in terms of 
borrowing authority in 2013, in terms of borrowing authority. It is 
used so you don't just say, okay, you're out of business; we end you 
tomorrow. It is to avoid what Secretary Paulsen and Ben Bernanke and 
George Bush told us was the dilemma of a year and half ago, all or 
nothing. We've got to use these funds to wind it down in an orderly 
way.
  But here's the bigger difference: the Republican bill doesn't even 
try to stop the situation from arising. That's the difference. We 
analyzed the various things, too much leverage, unregulated 
derivatives, subprime loans, executive bonuses that encourage people to 
take too many risks. Their bill says, no, they're none of the 
government's business. It is true, every time you try to prevent a bad 
practice by regulation, you're expanding government power. That's true. 
An unregulated derivative market versus a regulated derivative market, 
that's more government power.
  Restrictions on irresponsible subprime loans, that's government 
power. Telling an institution they can't be overleveraged, that's 
government power. In terms of breaking up companies, no one's breaking 
up Dell or American Airlines. That is fantasy. What we say is we first 
try to stop an institution from being so overleveraged and so big that 
it causes a problem. So, yes, we do say that the regulators should be 
able to step in if the Systemic Risk Council says so and restrain them 
from doing things. And, yes, the Federal Reserve is the agent, so the 
Federal Reserve gets more powers under the Systemic Risk Council.
  We, by the way, take away more power in our bill with the Consumer 
Protection Agency from the Federal Reserve than any other agency. We 
limit section 13(3) of the Federal Reserve very severely. We do empower 
them as the agent of the Systemic Risk Council to do what the 
Republicans say you should never do: tell a company you've gotten too 
big and owe too much money and need to slow down. Break them up because 
their parts have begun to pull apart.
  AIG should not have been allowed to be an insurance company and a 
credit default swap handler. And, yes, under the amendments we've 
adopted someone could have come in and said, okay guys, stay in the 
insurance business, but don't put us all at risk by doing all of these 
other things.
  So that's the fundamental difference. The Republican position is, 
business knows best. Do not have any rules, do not prevent--and 
literally, nothing in their bill would retard any of the irresponsible, 
reckless, overleveraging that happened and led to the crisis.
  And then they said, if there is a crisis, just let them go bankrupt. 
We say, first of all, let's try to prevent the crisis. Let's try to 
step in and slow it down.
  And if that's socialism, I guess the antitrust laws are socialism by 
that definition, and the Republican equivalents of today's Republicans 
called Theodore Roosevelt a socialist. They turned against him. They 
called Franklin Roosevelt a socialist because he created the Securities 
and Exchange Commission. They call people socialists when they want to 
do regulation. The Independent Community Bankers don't think so. And 
the consumers of America do not believe that being protected from 
abuses is socialism. I look forward to tomorrow when we debate the 
amendments.

                                         House of Representatives,


                                  Committee on Ways and Means,

                                 Washington, DC, December 2, 2009.
     Hon. Barney Frank,
     Chairman, Financial Services Committee, 2129 Rayburn House 
         Office Building, Washington, DC.
       Dear Mr. Chairman: I am writing regarding H.R. 2609, the 
     ``Federal Insurance Office Act of 2009.'' As you know, the 
     Committee on Ways and Means had jurisdictional and other 
     concerns with provisions of this bill. I note that in 2008, 
     we exchanged letters on similar legislation (H.R. 5840) 
     introduced in the 110th Congress.
       Earlier today, the bill was amended during markup by your 
     Committee to address the concerns my staff and I have raised. 
     For example, the bill was amended: to preserve USTR's 
     authorities, including over development and coordination of 
     U.S. international trade policy and the administration of the 
     U.S. trade agreements program; to modify the types of 
     agreements that are covered by the bill and to provide for 
     their joint negotiation by USTR and the U.S. Department of 
     the Treasury; to require that annual reports by the Federal 
     Insurance Office be provided to the Committee on Ways and 
     Means; and to modify the standards and process for preempting 
     State law. I appreciate your willingness, and the willingness 
     of your staff, to work with me and my staff on this important 
     legislation.
       To expedite this legislation for Floor consideration, the 
     Committee on Ways and Means will forgo action on this bill. 
     This is being done with the understanding that it does not in 
     any way prejudice the Committee with respect to the 
     appointment of conferees or its jurisdictional prerogatives 
     on this bill or similar legislation in the future.
       I would appreciate your response to this letter, confirming 
     this understanding with respect to H.R. 2609, and would ask 
     that a copy of our exchange of letters on this matter be 
     included in the committee report on the bill and in the 
     Congressional Record during House Floor consideration of this 
     bill.
       Once again, thank you for your work and cooperation on this 
     legislation.
           Sincerely,
                                                Charles B. Rangel,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                 Washington, DC, December 3, 2009.
     Hon. Charles B. Rangel,
     Chairman, Committee on Ways and Means, 1102 Longworth House 
         Office Building, Washington, DC.
       Dear Chairman Rangel: Thank you for your letter regarding 
     your committee's interest in H.R. 2609, the ``Federal 
     Insurance Office Act of 2009.''
       I appreciate your willingness to support expediting floor 
     consideration of this important legislation today. I 
     understand and agree that this is without prejudice to your 
     Committee's jurisdictional interests in this legislation as 
     amended or similar legislation in the future. In the event a 
     House-Senate conference on this or similar legislation is 
     convened, I would support your request for an appropriate 
     number of conferees.
       I will include a copy of your letter and this response in 
     the committee report on the bill and in the Congressional 
     Record during House floor consideration of this bill. Thank

[[Page 30850]]

     you for your cooperation as we work towards enactment of this 
     legislation.
                                                     Barney Frank,
     Chairman.
                                  ____

         House of Representatives, Committee on Oversight and 
           Government Reform,
                                 Washington, DC, December 3, 2009.
     Hon. Barney Frank,
     Chairman, House Committee on Financial Services, 2129 Rayburn 
         House Office Building, House of Representatives, 
         Washington, DC.
       Dear Chairman Frank: I am writing to you concerning the 
     jurisdictional interest of the Committee on Oversight and 
     Government Reform in H.R. 4173, ``The Wall Street Reform and 
     Consumer Protection Act of 2009''.
       I appreciate your effort to work with the Oversight 
     Committee regarding those provisions of H.R. 4173 that fall 
     within the Committee's jurisdiction. This includes provisions 
     relating to the audit authorities of the Comptroller General, 
     federal personnel matters, the applicability of the Federal 
     Advisory Committee Act and the Freedom of Information Act, 
     amendments to the Inspectors General Act, and governmentwide 
     reporting requirements for federal agencies.
       As you know, the Oversight Committee was one of the 
     committees receiving an additional referral of this bill. 
     Because of the cooperation between our two committees, 
     further consideration in the Oversight Committee is 
     unnecessary. However, this letter should not be construed as 
     a waiver of the Oversight Committee's legislative 
     jurisdiction over subjects addressed in H.R. 4173 that fall 
     within the jurisdiction of the Committee. I request your 
     support for the appointment of conferees from the Oversight 
     Committee should H.R. 4173 or a similar bill be considered in 
     conference with the Senate.
       Please include a copy of this letter and your response in 
     the Congressional Record during consideration of this 
     legislation on the House floor.
       Thank you for your attention to these matters.
           Sincerely,
                                                   Edolphus Towns,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                 Washington, DC, December 3, 2009.
     Hon. Edolphus Towns,
     Chairman, Committee on Oversight and Government Reform, 2157 
         Rayburn House Office Building, Washington, DC.
       Dear Chairman Towns: I am writing in response to your 
     letter regarding H.R. 4173, ``The Wall Street Reform and 
     Consumer Protection Act of 2009''.
       I wish to confirm our mutual understanding on this bill. I 
     recognize that certain provisions of the bill fall within the 
     jurisdiction of the Committee on Oversight and Government 
     Reform. However, I appreciate your willingness to forego 
     committee action on H.R. 4173 in order to allow the bill to 
     come to the floor expeditiously. I agree that your decision 
     to forego further action on this bill should not be construed 
     as a waiver of the Oversight Committee's legislative 
     jurisdiction. I would support your request for conferees on 
     those provisions within your jurisdiction should this or a 
     similar bill be the subject of a House-Senate conference.
       I will include this exchange of letters in the 
     Congressional Record when this bill is considered by the 
     House. Thank you again for your assistance.
                                                     Barney Frank,
                                                         Chairman.

  Mr. POMEROY. Madam Chair, I rise today in support of H.R. 4173, the 
Wall Street Reform and Consumer Protection Act of 2009. I would like to 
thank Chairman Peterson of the Agriculture Committee for his leadership 
and work to produce legislation that regulates the futures markets and 
brings transparency to the dark corners of the financial markets. I 
would also like to thank Chairman Frank of the Financial Services 
Committee for his leadership and efforts in crafting the greater 
overall regulatory package.
  Madam Chair, the unchecked greed and excesses of Wall Street have 
brought our economy to its knees, placed hardship on millions of 
American families and dimmed the prospect of leaving behind a better 
life for our children. The volatility in the oil prices and the crash 
of the financial markets were fueled by outrageous short term profits 
at the expense of our shared long term prosperity. These markets 
resemble the Wild West, and are void of transparency or effective 
regulation.
  Today, Congress has before it a commonsense reform package that will 
assure the American people that what happened to create the financial 
meltdown will not happen again. H.R. 4173 would place limits on 
speculators, preventing them from dominating the markets, and also 
bring transparency to the markets. The bill will also give regulators 
the information they need to properly police the markets and the 
authority to identify and protect against systemic risk. H.R. 4173 
protects the economy from irresponsible too-big-to-fail companies like 
AIG, by creating a responsible mechanism to dissolve them without 
putting the American tax payer on the hook. It is essential that 
consumers, farmers, and businesses have access to a reliable source of 
credit and financing that does not dry up because Wall Street tries to 
gamble away our future.
  Madam Chair, the landmark Wall Street Reform and Consumer Protection 
Act of 2009 puts the interests of consumers, small business and the 
millions of Americans dependent on their 401Ks for retirement, first. I 
urge my colleagues to support H.R. 4173.
  Ms. JACKSON-LEE of Texas. Madam Chair, today I rise in support of 
H.R. 4173--``The Wall Street Reform and Consumer Protection Act.'' I 
support this legislation because I believe that it is an important step 
in preventing the conditions that created last year's financial crisis 
from occurring again.
  Last year's financial crisis put hundreds of thousands of Americans 
out of work and our economy into turmoil. The White House estimates 
that 5 trillion dollars worth of American household wealth disappeared 
in approximately three months. Credit markets froze as bank after bank 
after bank failed or require government assistance to stay afloat. This 
weak financial system and credit market impacted businesses large and 
small throughout the Nation. Furthermore, the weak credit market 
affected student loans, credit cards, and purchases of automobiles and 
homes.
  In response, Congress, in collaboration with President Obama passed 
sweeping legislation to help hardworking Americans soften the blow from 
the worst economy in years.
  Although I still believe that our response was necessary to help 
bring America out of the recession, we must ensure that actors in the 
financial industry are never again able to behave recklessly as to 
threaten the economy of not only our Nation, but also the world. I do 
not believe that the financial industry acts with malice toward people 
or our economy; however, some firms in the financial industry are prone 
to taking risks in a manner that threatens our economic structure. As 
President Obama said in New York on September 15, ``We will not go back 
to the days of reckless behavior and unchecked excess at the heart of 
the crisis, where too many were motivated only by the appetite for 
quick bills and bloated bonuses. Those on Wall Street cannot resume 
taking risks without regard for consequences, and expect that next 
time, American taxpayers will be there to break the fall.''
  This legislation is a response to the dangers and loopholes that 
persist, and it will serve to protect the American investors, students, 
home and auto buyers, and business owners. A new Consumer Financial 
Protection Agency will protect families and small businesses by 
ensuring that bank loans, mortgages, and credit cards are fair, 
affordable, understandable, and transparent.
  We have tough rules that keep companies from selling us faulty 
toasters that burn down our houses, but there is currently no agency 
that has as its sole mission oversight of potentially harmful financial 
products sold to consumers. This critical enforcement is necessary to 
ensure that consumers get information that is clear and concise from 
banks, mortgage servicers, and credit card companies. It is critical to 
prevent the financial industry from offering predatory mortgage loans 
to people who can't afford repayment that marked the subprime lending 
era. Finally, it will put in place common sense regulations to stop 
abuses by the financial industry, such as payday lending and exorbitant 
overdraft fees.
  Secondly, this legislation will put an end to ``too big to fail'' 
financial firms, providing the government with the tools--funded by big 
banks and financial firms and NOT taxpayers--it needs to manage 
financial crises so we are not forced to choose between bailouts and 
financial collapse.
  This includes the ability to preemptively dismantle big banks whose 
risky and irresponsible behavior could bring down the entire economy, 
as well as an orderly process to wind down failing firms.
  This legislation will end taxpayer-funded bailouts and Help ensure 
American taxpayers are never again on the hook for bailing them out by 
requiring big banks and other financial institutions (with $50 billion 
in assets) to foot the bill for any bailouts in the future. These 
institutions would pay assessments based on a company's potential risk 
to the whole financial system if they were to fail.
  These new consumer safeguards will require that all financial firms 
that pose risk to the financial system--not just banks--are subject to 
strong supervision and regulation, including stronger capital standards 
and leverage rules.
  They will increase transparency at the Federal Reserve, which has 
played an enormous role in shoring up big banks and other financial 
institutions in this crisis, subjecting it to

[[Page 30851]]

scrutiny by Congress's Government Accountability Office with audits of 
the Fed's lending programs.
  This legislation will also stop predatory and irresponsible mortgage 
loan practices including prepayment penalties, deceptive mortgage 
documentation, and making extra profits for steering borrowers to 
higher cost loans that played a major role in the current financial 
meltdown. Help ensure that the mortgage industry follows basic 
principles of sound lending and consumer protection.
  The legislation also imposes tough new rules on the riskiest 
financial practices by strengthening enforcement by the Securities and 
Exchange Commission to better protect investors and prevent future 
Bernie Madoff Ponzi schemes.
  It creates rules to curtail excess speculation in derivatives and 
growing use of unregulated credit default swaps that devastated AIG and 
Bear Stearns.
  It provides more transparency and tougher regulation of hedge funds, 
private equity firms and credit rating agencies, whose seal of approval 
gave way to excessively risky practices that led to a financial 
collapse.
  Finally, it requires investment advisors to act for the sole benefit 
of their client under the law, exercising the highest standard of care.
  Finally, this legislation addresses egregious executive pay 
compensations by putting an end to compensation practices that 
encourage executives to take excessive risk at the expense of their 
companies, shareholders, employees, and ultimately the American 
taxpayer.
  It also provides shareholders of public companies with an annual, 
non-binding vote on executive compensation and golden parachutes for 
the top five executives, requires independent directors on the 
compensation committees of public companies, and authorizes the SEC to 
restrict or prohibit ``inappropriate or imprudently risky compensation 
practices'' at large financial firms (with at least $1 billion in 
assets).
  In conclusion, this legislation will modernize America's financial 
regulations as we seek to prevent last year's financial conditions from 
ever happening again. America is on the road to recovery, and we need 
this legislation to ensure that the recovery is permanent.
  Mr. MARKEY of Massachusetts. Madam Chair, one of the most critical 
elements of the legislation now before us is the establishment of tough 
new regulation of the over-the-counter derivatives market. This reform 
is long overdue and I strongly support the legislation now before us.
  I am pleased to say that I can wholeheartedly support this bill 
because--thanks to language agreed upon by Chairman Peterson, Chairman 
Waxman and myself--it ensures that the expansion of Commodity Futures 
Trading Commission's authority over derivatives will not in any way 
limit the Federal Energy Regulatory Commission's authority to regulate 
energy markets. FERC plays a critical role in ensuring that those 
markets deliver energy reliably and at just and reasonable rates.
  The bill preserves FERC's role in three ways:
  First, the bill amends the Commodity Exchange Act to fully preserve 
FERC's authority over agreements, contracts, and transactions entered 
into pursuant to a FERC-approved tariff or rate schedule. An exception 
is made for instruments that are executed, traded, or cleared on a 
CFTC-registered entity. However, it is the drafters' understanding and 
intention that CFTC cannot construe this exception to limit FERC's 
underlying authority. For example, FERC-regulated entities, such as 
Regional Transmission Organizations and Independent System Operators, 
would not be required to register with CFTC based on their utilization 
of Financial Transmission Rights or other instruments to facilitate the 
physical operation of the electric grid. Nor will CFTC require 
instruments of that nature to be executed, traded, or cleared on some 
other CFTC-registered entity.
  Second, in any area where FERC and CFTC have overlapping authority, 
the bill requires the two agencies to conclude a memorandum of 
understanding delineating their respective areas so as to avoid 
conflicting or duplicative regulation. Where FERC has regulatory 
authority, CFTC is permitted to step back and let FERC do its job. It 
is the drafters' understanding and expectation that CFTC will recognize 
FERC's primacy with regard to energy markets that it comprehensively 
regulates.
  Finally, the bill states that it does not in any way limit or affect 
FERC's existing authority, under Section 222 of the Federal Power Act 
and Section 4A of the Natural Gas Act, to protect against manipulation 
of the electricity and natural gas markets. As one of the principal 
authors of these anti-manipulation provisions, which were included in 
the Energy Policy Act of 2005, I see the preservation of this authority 
as critical to ensuring fair and transparent energy markets. These 
provisions were drafted broadly to allow FERC to protect against the 
use of any manipulative or deceptive device or contrivance ``in 
connection with'' FERC-regulated electricity and natural gas markets, 
regardless of where such manipulation occurs.
  With these elements now included in the legislation, I strongly urge 
my colleagues to vote ``yes'' on this legislation.
  Mr. BRALEY of Iowa. Madam Chair, I strongly support the Wall Street 
Reform and Consumer Protection Act and urge my Colleagues to vote for 
this bill.
  I'm proud to chair the Populist Caucus. One of our founding 
principles is to fight for America's working families. For the past 
eight years, our economic policies have put the interests of Wall 
Street ahead of Main Street. Wall Street and big bank executives 
exploited loopholes and gambled with our money, which last year led us 
into the worst financial crisis since the Great Depression. And while 
some big banks continue to accept excessive compensation and bonus 
packages, America's middle class families are still struggling.
  The firms that received more than $350 billion in federal TARP funds 
increased executive compensation by an average of four percent last 
year. This is outrageous and unacceptable. This legislation will 
provide shareholders of public companies an annual vote on executive 
compensation and help reign in excessive executive compensation.
  The Wall Street Reform and Consumer Protection Act will hold Wall 
Street and big banks accountable by ending the practice of ``too-big-
to-fail,'' so that America's taxpayers and middle class families are 
never again forced to pay off Wall Street's gambling debts. It will 
manage financial crises by requiring banks and other financial 
institutions worth at least $50 billion in assets to foot the bill for 
any bailouts in the future.
  As we rebuild our economy, we must implement common-sense rules so 
that big banks and Wall Street don't jeopardize this recovery at the 
expense of hard-working Iowa families. This bill protects consumers 
from predatory lending abuses and finally brings transparency and 
accountability to an out-of-control financial system. It is about time 
that we put Main Street ahead of Wall Street. Thank you for taking up 
this important legislation.
  Mr. FATTAH. Madam Chair, I rise in strong support of H.R. 4173, the 
Wall Street and Consumer Protect Act of 2009. The bill proposes to 
address the financial crisis brought on by the financial industry by 
crafting a comprehensive set of measures that will modernize America's 
financial regulations and hold Wall Street accountable. A myriad of 
issues, from predatory lending to unregulated derivatives, are 
contained in the bill to prevent conditions that led to last year's 
financial meltdown.
  The legislation being considered today outlaws many of the egregious 
industry practices that marked the subprime lending boom, and it would 
ensure that mortgage lenders make loans that benefit the consumer. H.R. 
4173 establishes a simple standard for all home loans, mandating that 
institutions must ensure borrowers have the ability to the loans they 
are sold. In addition, the bill prohibits the financial incentives for 
subprime loans that encourage lenders to steer borrowers into more 
costly loans, including the bonuses known as ``yield spread premiums,'' 
which lenders pay to brokers to inflate the cost of loans. Many 
homeowners in the current mortgage crisis received were steered into 
more expensive loans than they qualified for. The bill limits the 
prepayment penalties charged to borrowers who wish to get out of their 
loans and refinance on more affordable terms.
  Implementing laws to correct the failures that led to the economic 
conditions that created the worse financial crisis since the Great 
Depression is important in ensuring the ensuing calamity that 
transpired after the collapse of the financial markets. Nevertheless, 
the Chairman's inclusion of a mortgage foreclosure assistance provision 
in the Chairman's Manager's Amendment brings to light one of the least 
discussed causalities of the financial disaster. Many homeowners now 
find they are unable to meet their financial obligations due to the 
severe recession caused by the unbridled greed and recklessness of many 
financial services institutions.
  On numerous occasions, President Obama declared the road to recovery 
must begin with correcting the damaged housing market by providing 
people the tools necessary to keep their homes and prevent foreclosure. 
According to a recently released report by RealtyTrac, a realty company 
that maintains a comprehensive national database of pre-foreclosure and 
foreclosure properties, nearly 400,000 properties received foreclosure 
filing

[[Page 30852]]

in August 2009. Though number of filings decreased less than one 
percent from the previous month, the overall number of foreclosure 
filings is nearly 18 percent higher than the previous year. More 
strikingly, the report also indicates 1 in every 357 properties used 
for housing are under threat of foreclosure.
  Although not all homes in the foreclosure process will end in a 
foreclosure completion, an increase in the number of loans in the 
foreclosure process is generally accompanied by an increase in the 
number of homes on which a foreclosure is completed. According to the 
Mortgage Bankers Association, about 1 percent of all home loans were in 
the foreclosure process in the second quarter of 2006. By the second 
quarter of 2009, the rate had quadrupled to over 4 percent.
  Traditionally, housing is considered a relatively safe investment 
that allows for the possibility for a high rate of return. Rapidly 
rising home prices reinforced supported this view. During the rapid of 
expansion of housing in the early part of this decade, many people 
decided to buy homes or take out second mortgages in order to access 
their increasing home equity. Furthermore, rising home prices and low 
interest rates contributed to a sharp increase in people refinancing 
their mortgages. For example, between 2000 and 2003, the number of 
refinanced mortgage loans jumped from 2.5 million to over 15 million. 
In 2006 and 2007, the value of housing dropped precipitously, which 
triggered an unexpected increase in the number of homeowners that were 
delinquent on their mortgages payments and facing foreclosure.
  Mortgage foreclosures are very costly to both the foreclosed 
homeowner and the mortgage lender. Lenders suffer revenue losses from 
uncollected interest on delinquent loans, as well as unrecoverable 
origination costs and fees. Though loans that are insured under the 
Federal Housing Act mitigates losses to lenders to a certain extent, 
foreclosures cost the lending industry approximately $32,000 for every 
home that is in foreclosure proceedings since foreclosed properties are 
often sold below market value.
  Losing a home to foreclosure can have a number of negative effects on 
a household. For many families, losing a home means losing the 
household's largest store of wealth. Furthermore, foreclosure can 
negatively impact a borrower's creditworthiness, making it more 
difficult for him or her to buy a home in the future. Finally, losing a 
home to foreclosure can also mean that a household loses many of the 
less tangible benefits of owning a home. Research has shown that these 
benefits include increased civic engagement that results from having a 
stake in the community, and better health, school, and behavioral 
outcomes for children.
  In addition, many homeowners experience difficulty finding a place to 
live after losing their home to foreclosure. Many will become renters. 
Nevertheless, some landlords may be unwilling to rent to families whose 
credit has been damaged by a foreclosure, limiting the options open to 
these families. There can also be spillover effects from foreclosure on 
current renters. Renters living in units facing foreclosure may be 
required to move, even if they are current on their rent payments. As 
more homeowners become renters and as more current renters are 
displaced when their landlords face foreclosure, pressure on local 
rental markets may increase, and more families may have difficulty 
finding affordable rental housing. Some observers have also raised the 
concern that a large increase in foreclosures could increase 
homelessness, either because families who lost their homes have trouble 
finding new places to live or because the increased demand for rental 
housing makes it more difficult for families to find adequate, 
affordable units.
  A concentration of foreclosures will negatively impacts communities, 
not just homeowners facing foreclosure. Many foreclosures in a single 
neighborhood may depress surrounding home values. If foreclosed homes 
stand vacant for long periods of time, they can attract crime and 
blight, especially if they are not well-maintained. Concentrated 
foreclosures also place pressure on local governments, which can lose 
property tax revenue and may have to step in to maintain vacant 
foreclosed properties.
  Unforeseen events can happen to all people, in all communities. 
Unexpected medical expenses, sudden unemployment, and divorce are only 
some of the myriad of unforeseen circumstances that can create 
financial instability for hardworking homeowners. Such hardships are 
frequently cited as significant contributing factors that hinder a 
homeowner's ability to maintain timely mortgage payments, ultimately 
resulting in dramatically higher rates of mortgage foreclosure. 
Homeowners in America face the added pressure of simultaneously 
handling the financial burdens of unforeseen events and their mortgage 
obligations.
  Making Home Affordable, the new Obama plan which requires lenders to 
modify mortgages, is a good idea that is off to a slow start as lenders 
have yet to gear up for or aggressively seek modifications to those 
eligible. Foreclosures caused by unemployment are becoming a greater 
and greater portion of the foreclosure problem. Estimates are that 5.5 
million homes will enter foreclosure in 2009 and 2010.
  In Pennsylvania, a major state initiative to combat family-
devastating foreclosures has been operating with success for more than 
a quarter-century, enacted in the wake of the severe recession of 1983. 
The Homeowners Emergency Mortgage Assistance Program (HEMAP) has 
provided loans to over 43,000 homeowners since 1984 at a cost to the 
Keystone State of $236 million. Assisted homeowners have repaid $246 
million to date which works out to a $10 million profit for the state 
after 25 years of helping families keep their homes.
  The Pennsylvania model will work nationally, and that is why I 
introduced H.R. 3142, the Homeowners Emergency Mortgage Assistance 
(HEMA) Act, which is pending before the House Financial Services 
Committee. HEMA establishes an emergency mortgage assistance program 
for qualifying homeowners who are temporarily unable to meet their 
obligations due to financial hardship beyond their control. Under HEMA, 
homeowners would have the opportunity to regain financial stability 
without the immediate pressure of foreclosure. With the support of 
Chairman Barney Frank of the Committee on Financial Services and 
Subcommittee Chairwoman Maxine Waters, the HEMA proposal was 
incorporated into H.R. 3766, the Main Street TARP Act. The Main Street 
TARP Act proposes to use unspent TARP funds to provide relief for 
distressed homeowners who are unable to meet their mortgage obligations 
due to financial hardship, as well as providing assistance to renters 
seeking affordable housing.
  A national HEMA program offers a workable complement to President 
Obama's new Making Home Affordable program. Making Home Affordable has 
allocated $75 billion in TARP funds to provide financial incentives to 
encourage participation by mortgage servicers and homeowners. Although 
the Treasury Department is taking steps to increase the effectiveness 
of Making Home Affordable by pressing mortgage servicers to put 
additional resources and staff into providing loan modifications that 
make mortgages affordable for homeowners, the scale of the problem is 
huge and the ability and willingness of servicers to do the work 
necessary is in question. The loss of six million US jobs since the 
start of the recession complicates the crisis as many jobless won't 
even have enough income for a loan modification to be effective.
  A HEMA-style loan program could use TARP funds already allocated for 
foreclosure prevention to directly cure mortgage defaults for the 
unemployed. As the economy recovers most jobless workers will get back 
to work and be able to resume their mortgage payments. Even a portion 
of the $75 billion set aside for Making Home Affordable could pay a lot 
of mortgage payments to bring homeowners current and not have them at 
the mercy of a mortgage servicer who is poorly equipped to offer them 
help.
  Such a program could be run much more efficiently than the time 
consuming loan modification program. A homeowner who indicated that he 
or she was unemployed would provide verification of unemployment 
compensation to the servicer and automatically be approved for a loan 
that would pay any mortgage above 31 percent of their income (the 
target amount in Making Home Affordable modifications). The Treasury 
could make payments for the homeowner who is then current on the 
mortgage. It would cut through the disorder of the loan modification 
program and slow the numbers of foreclosed properties on the market.
  The success of HEMAP is evident in the program's results. Since its 
inception, 42,700 families were saved from foreclosure by providing 
over $442 million in loans to at-risk homeowners. The average loan to a 
distressed homeowner is $10,500, which is much less than the $35,000 it 
costs to complete most foreclosure actions. Additionally, this 
estimated average foreclosure cost does not consider the impact of 
foreclosures on families, neighborhoods and communities.
  We have tried everything else. The Treasury has already allocated far 
more than $2 billion to prevent foreclosures. It seems likely that many 
of those dollars will not be spent in a timely manner by mortgage 
servicers modifying loans. It's time to get people's mortgages paid 
directly and to slow the pace of home losses that are destroying 
families and crippling our overall economy. It's time to think

[[Page 30853]]

outside the box about foreclosures--and way past time to keep Americans 
inside their homes.
  Mr. KENNEDY. Madam Chair, last fall, after 8 years of the previous 
administration looking the other way while Wall Street and the big 
banks exploited loopholes, we faced a near collapse of our financial 
system. Deregulation and lax oversight allowed Wall Street and big 
banks to gamble with the hard-earned money of the American people, 
compromising our savings and risking our future. Over the last year, 
Congress has had to make difficult, and frankly unpopular, decisions 
that were necessary to rescue our economy from the brink of disaster.
  The Wall Street Reform and Consumer Protection Act will put in place 
the rules to make sure that this doesn't happen again, to protect the 
middle-class Americans who play by the rules from the consequences of 
Wall Street greed. This legislation ends many of the unfair lending 
practices that created predatory mortgages and waves of foreclosure. By 
stopping ``too big to fail'' firms before they threaten to wreak havoc 
on our economy, H.R. 4173 will finally put an end to the era of 
taxpayer-funded bailouts.
  While many aspects of this legislation are important, perhaps its 
most significant achievement is the establishment of an agency whose 
primary mission is to ensure the safety of financial products and look 
out for consumers. For too long, all of our fractured regulatory 
agencies have only looked out for the financial institutions they work 
for. The Consumer Financial Protection Agency will look out for unsafe 
financial products the same way the FDA monitors unsafe medicines or 
the Consumer Product Safety Commission examines our children's toys.
  While we have taken extraordinary actions to correct our economic 
crisis, the Wall Street Reform and Consumer Protection act takes the 
necessary actions to hold accountable the people responsible for last 
year's crisis and to prevent another crisis in the future.
  Mr. BUYER. Madam Chair, I rise in strong opposition to H.R. 4173 
because it does not exempt the VA's very successful Loan Guaranty 
program from regulation under the provisions of this bill. The saying, 
``if it ain't broke, don't fix it,'' applies. The VA guaranteed loans 
are not experiencing the high rates of delinquency and foreclosure like 
those backed by FHA. VA, to its credit, recognized the risks inherent 
in easing underwriting standards and stayed out of the subprime market.
  According to the September 30, 2009 National Delinquency Survey 
conducted by Mortgage Bankers Association, VA-backed home mortgages are 
experiencing significantly lower delinquency and foreclosure rates than 
any other government-backed programs. For example, as of September 30, 
the delinquency rate for all subprime mortgages was over 28 percent. 
FHA-backed loans show about a 14.4 percent delinquency rate while only 
about 8.1 percent of VA loans were delinquent. More ominously, 24.7 
percent of subprime loans were in foreclosure (VA quite wisely does not 
guarantee subprime loans), and 3.3 percent of FHA loans had reached the 
foreclosure stage but only about 2.3 percent of VA loans were being 
foreclosed. These differences due to VA's stewardship and the Veterans 
Affairs Committee's oversight amount to tens of millions of dollars in 
savings to the taxpayers.
  Madam Chair, the provisions of H.R. 4173 would clearly apply to the 
VA's Loan Guaranty program. For example, in defining the scope and 
functions covered by the bill, section 4002 excludes only the 
``Secretary of the Treasury and any agency or bureau under the 
jurisdiction of the Secretary.'' That means VA loan guaranty programs 
are subject to the provisions of the bill. Further in the definitions 
of ``Financial Activity'', it includes extending credit. VA has a small 
direct loan program used to sell their foreclosed properties. The 
bill's definitions also cover collecting consumer data. VA does that. 
VA also sells mortgage-based securities on the secondary market. Such 
activities are covered in the definitions section. The definitions also 
cover VA's contracts for portfolio servicing, including sales and 
maintenance of its foreclosed properties. Finally, VA-guaranteed loans 
offered by lenders would be subject to the jurisdiction of the CPRA 
rules and regulations.
  There are a couple of reasons why VA's loan guaranty program is 
outperforming the non-VA sector. First, the House Veterans Affairs 
Committee has oversight of the program and works hard to ensure the 
program is conducted in a manner that does not stray into products like 
subprime loans. Second, VA did not reduce its underwriting standards, 
and the combination of its higher standards along with servicing 
programs to assist veterans experiencing difficulty, has allowed VA to 
be a good steward of taxpayer dollars.
  My understanding of this mammoth 1,300 page bill is that the new 
bureaucracies and czars and whatever else is hidden in the bill will 
have the ability to affect how the VA loan guaranty programs are 
offered. Additionally, the broad language in the bill which allows the 
CFPA the discretion to define its own powers is at best short-sighted 
and at worst Orwellian. I am reminded that absolute power corrupts 
absolutely. Moreover, by placing additional tax burdens on financial 
institutions, many of which invest in mortgage securities offered on 
the secondary market, mortgage rates will go up. That is exactly what 
the VA's Loan Guaranty program, or the housing market at large, does 
not need because the secondary market is a major source of new lending 
resources as well as a $200 million dollar revenue stream to the 
Treasury.
  Madam Chair, I didn't think it was possible to concoct a bill that 
was even more opaque and unintelligible than the majority's healthcare 
bill. Well, I was wrong. The majority has succeeded in grand fashion to 
foist yet another financial disaster in-the-making on the American 
public, one designed not to ensure stability in the markets, but to 
make financial markets subject to political intrusion and manipulation. 
We have seen what political pressure to expand access to credit to 
those whose incomes would not normally have qualified them for a 
mortgage did to the housing market. Let's not make this same mistake 
with veterans. In summary, the VA loan guaranty program has been well-
managed and does not need the regulation and supervision under H.R. 
4173 would allow.
  I urge all of my colleagues to oppose H.R. 4173 and I yield back.
  Mr. RYAN of Wisconsin. Madam Chair, H.R. 4173, The Wall Street Reform 
and Consumer Protection Act of 2009, presents a host of new financial 
rules and regulations and even establishes a new Federal agency, with 
an advertised goal of minimizing the risk of a future economic crisis 
like the one we've seen over the past 2 years. But Congress could go a 
long way toward preventing such damaging boom and bust cycles by 
changing its existing mandate for one of the most important stewards of 
our economy: the Federal Reserve. The Humphrey Hawkins Full Employment 
Act of 1978 directed the Fed to focus on two goals that are often at 
odds: maximizing employment over the short-run while guaranteeing price 
stability over the long-term. This dual mandate has put the Fed in an 
impossible situation with regard to managing the economy. Multiple 
goals that may sometimes be in conflict can increase the chance of an 
important miscalculation. Monetary policy, in fact, played a key role 
in this latest economic crisis. The Federal Reserve held interest rates 
too low for too long earlier this decade, sparking an expansion of 
credit that fueled a housing bubble that eventually burst and caused an 
all-out crisis. As we emerge from this recession, I fear that we may be 
on the cusp of yet another damaging cycle. If the Fed is too slow to 
act in withdrawing its substantial stimulus as the economy recovers, we 
will end up with a nasty bout of inflation in the coming years. And the 
Fed would then have to slam on the brakes and hike interest rates to 
wring inflation out of the system, costing growth and jobs in the 
process.
  We need to stop this roller coaster ride. That is why I offered an 
amendment to this bill that would repeal the Humphrey Hawkins Act and 
make price stability the Fed's sole mandate. This change is meant to 
re-focus the Fed on its core mission and make sure that we get one of 
the key fundamentals of the economy right. Price stability, after all, 
is a necessary precondition for economic growth, job creation and sound 
money. A focused and clear mandate from Congress would also increase 
the Fed's transparency and accountability at a time when many are 
seeking more information about the actions of our central bank. 
Unfortunately, my amendment was not made in order by the Rules 
Committee.
  In response to the recent crisis, the Fed has had to take a variety 
of unorthodox measures to stabilize our credit markets and resuscitate 
the economy. Many in Congress have felt unease as the Fed has taken 
emergency actions to rescue individual companies and launch a variety 
of new credit facilities for an increasing number of banks, financial 
institutions and even investors. I share this unease and I believe that 
Congress should have the ability to gather information about these 
actions and new facilities, with appropriate safeguards and time lags. 
But I also believe that we must preserve the existing restrictions on 
opening up monetary policy deliberations and actions to a government 
audit. Even the appearance of politicians gaining some measure of 
influence over monetary policy decisions could have disastrous 
consequences. Political independence is not simply a luxury for our 
central bank. It is a core principle of good economic policy that 
yields real benefits for the

[[Page 30854]]

American people. A number of empirical studies have shown that 
countries with independent central banks tend to have steadier economic 
growth and low and stable rates of inflation. This is not surprising. 
Just as politicians involved in fiscal policy have a bias toward 
greater spending, monetary policy influenced by politics would have a 
bias toward looser credit over the short term and therefore higher 
rates of inflation over the longer term. Financial markets would 
immediately recognize this and push up our borrowing rates and further 
weaken our currency.
  As we move forward in this process of financial regulatory reform, 
Congress should strive for robust oversight of the Fed, but it must 
guard against political interference. In the end, an independent 
Federal Reserve with a clear and focused single mandate is the best way 
to achieve the desirable ends of sustainable economic growth, job 
creation, and low inflation.
  Mr. MELANCON. Madam Chair, I rise today on behalf of thousands of 
families in Louisiana and across the nation who have been devastated by 
the fraud of Allen Stanford and his financial companies.
  Earlier this year, men and women who had played by the rules and 
worked hard to prepare for retirement and their children's futures 
learned that they had been cheated out of a lifetime of savings.
  While we continue in our efforts to make these families whole, we 
have a responsibility to ensure that this kind of fraud never again 
happens in the United States. The investor protections included in H.R. 
4173, the Wall Street Reform and Consumer Protection Act are a 
monumental step toward this goal.
  One thing we have learned through this tragedy is that the greed of 
criminals like Stanford is matched only by the danger of deregulation. 
The Securities and Exchange Commission, which was designed to prevent 
this very situation, is deeply flawed. The bill we are now considering 
reforms the agency and strengthens its authority to effectively and 
forcefully protect investors and our securities markets.
  In addition, the bill creates incentives for whistleblowers to expose 
crooks like Stanford. Through a new whistleblower bounty program, we 
will reward individuals who provide tips that lead to the prosecution 
of fraud.
  Finally, under this bill, every financial intermediary who provides 
advice to an investor will have a fiduciary duty toward them. This 
standard will force broker-dealers and investment advisers to put 
first, their customers' interests--not their own pocketbooks.
  American citizens need the confidence that their government will act 
quickly and forcefully to protect their hard-earned savings. The 
investor protection measures in the Wall Street Reform and Consumer 
Protection Act will provide families the security they need to prepare 
for the future.
  Ms. FUDGE. Madam Chair, the failure to regulate financial markets led 
to the worst financial crisis since the Great Depression. Reforming our 
financial system is one major part of restoring our economy's health. 
Today this Congress and President Obama are taking effective steps to 
bring our economy back from the brink of disaster.
  The Act is crucial in curbing the predatory practices of the past. It 
will protect consumers from predatory lending abuses and industry 
gimmicks.
  This bill will guard a family's retirement funds, college savings, 
home, and business from unnecessary risk by executives, lenders, and 
speculators.
  It will bring transparency and accountability into the financial 
system.
  I commend Chairman Frank for his tireless efforts to protect the 
American economy and taxpayers.
  Mr. ETHERIDGE. Madam Chair, I rise in support of H.R. 4173, the Wall 
Street Reform and Consumer Protection Act of 2009.
  The chaos that began last year on Wall Street has cost the country 
billions of dollars, rippled throughout the economy, and threatened to 
topple our entire financial system. Strong measures are required to 
address such a breakdown, and H.R. 4173 delivers a comprehensive set of 
financial regulations that increase accountability and oversight for 
Wall Street and much of America's financial sector.
  Earlier this year we saw the widespread damage that can occur when 
institutions like AIG or Lehman Brothers fail. This bill makes sure the 
taxpayer is not responsible for bailing out such firms, by establishing 
a process for dismantling failing financial institutions. By creating a 
new Systemic Dissolution Fund, large Wall Street firms will be in 
charge of paying the cost for risks they create instead of taxpayers. 
In addition, a Financial Stability Council will be created to identify 
and regulate financial institutions that are so large or interconnected 
that they pose a system risk to the economy as a whole. We must avoid 
the problems posed by firms that are ``too big to fail'' in the future.
  For years, I have argued that the wild west of speculation in 
derivatives markets must end. Unregulated speculation may be 
responsible for wide swings and increases in the price of energy for 
consumers and feed for farms. This bill would strengthen derivatives 
market oversight, and for the first time ever, regulate the over-the-
counter derivatives market for transactions between dealers and major 
swap participants. This provision will help prevent entities from 
driving up the cost of commodities and products and manufacturing risk 
in the larger economy.
  H.R. 4173 also takes a major step forward in consumer protection by 
creating the Consumer Financial Protection Agency (CFPA). This agency 
would be devoted to stopping unfair practices and preventing abusive 
financial products from entering the marketplace. The CFPA would cover 
a wide range of financial institutions, including non-bank financial 
institutions, and would impose effective consumer protections for 
subprime mortgages, overdraft fees, credit card practices, and other 
financial products.
  This bill includes other critical provisions for oversight and 
streamlining of the financial system like creating a Federal Insurance 
Office, reforming the credit ratings agencies that assess the value of 
the many financial products in our economy, and cleans up abusive 
practices in the mortgage lending industry that contributed to the 
collapse of the housing market. This regulation is long overdue and 
will benefit all Americans and businesses that depend on our financial 
institutions.
  I support this reform of our financial industry, and I urge my 
colleagues to join me in voting for its passage.
  Ms. LEE of California. Madam Chair, I rise in support of H.R. 4173 
and Chairman Barney Frank's manager's amendment.
  I want to thank the Chairman for his hard work and dedication to 
Comprehensive financial reform and strong protections for consumers. It 
is vital that we have a stand alone agency whose sole mission is to 
protect the rights of consumers.
  For too long our financial regulatory framework put the protection 
and stability of financial institutions first and too often ignored the 
impact on American consumers and retail investors.
  The Consumer Financial Protection Agency will help ensure that Wall 
Street will not be able to bring our economy to the brink of disaster 
ever again.
  I also want to thank Chairman Frank and the members of the Financial 
Services Committee for working with Congresswoman Maxine Waters and the 
Congressional Black Caucus to include several important provisions in 
the bill.
  Specifically, thanks to their focused work, this bill will include $3 
billion in funds to provide relief for unemployed homeowners. It will 
extend credit for the recently unemployed that will help save homes 
from foreclosure.
  This bill will stop the spread of foreclosure rescue scams and 
includes a vital $1 billion increase in Neighborhood Stabilization 
Funds to protect our hardest hit communities.
  Lower income communities and communities of color were targeted for 
these unaffordable and unethical products that are now driving millions 
of families into foreclosure.
  Access to financial services and insurance products for historically 
underserved communities is strengthened.
  The Office of Minority Inclusion, whose goal will be to make sure 
that all Americans have the equal protection of the work of the entire 
Federal financial regulatory framework is included in this bill.
  Fairness of access and opportunity, transparency and strong 
enforcement of securities regulations are vital to bringing our economy 
back from recession and ensuring that the uncontrolled risk taking on 
Wall Street will never again have such a devastating impact on the 
entire economy.
  Again, thank you Chairman Frank, Congresswoman Waters and the 
Financial Services Committee for such an important bill.
  Mr. STARK. Madam Chair, I rise to support the Wall Street Reform and 
Consumer Protection Act because it is time that the Wild West of 
financial ``innovation'' had a sheriff.
  Just over a year ago, I stood on this floor and twice voted against 
President Bush's taxpayer-funded bailout of Wall Street. I would cast 
the same votes again. I hope that this legislation will mean that 
taxpayers will never again be on the hook for the reckless behavior of 
financiers.
  This legislation will help to end ``too big to fail'' by providing 
dissolution authority to regulators. Instead of being bailed out with 
tax dollars, a company like AIG would be dismantled in an orderly and 
fair process. Shareholders

[[Page 30855]]

would be wiped out and executives dismissed. This would be paid for, 
not with tax dollars, but by an assessment on financial firms. The 
ideal solution would be the reinstatement of the Glass-Steagall Act, 
preventing the merger of commercial and investment banks. However, I am 
glad that this bill at least enables swift intervention and provides a 
financing mechanism so that bailouts will be a thing of the past.
  In addition to being forced to pay for the excesses of Wall Street, 
consumers have been preyed upon by financial services companies. These 
companies have profited from unfair and abusive lending practices, 
including steering families into subprime mortgages. Regulation has 
been lax or non-existent and there is no single entity charged with 
looking out for consumers. With the formation of a Consumer Financial 
Protection Agency an agency will, for the first time, be charged with 
ensuring that families are not exposed to toxic financial offerings.
  Finally, I wholeheartedly support the so-called ``cram down'' 
amendment, to allow courts to reset the principal for home mortgages in 
bankruptcy proceedings. This judicial discretion is allowed for every 
other type of debt--a reminder of the double standard that has too 
frequently separated average families from Wall Street.
  I urge all of my colleagues to put consumer interests over those of 
the Big Banks. Let's finally start policing Wall Street. Vote ``yes.''
  Mr. BLUMENAUER. Madam Chair, like many pieces of major, ground-
breaking legislation, today's product is a hybrid, combining some good 
with some questionable provisions. On balance, I think the product is 
positive and begins a step towards reorienting the protections in our 
financial system to deal with families, consumers, and the integrity of 
our institutions. The potential meltdown we faced last fall, the 
bursting of an unsustainable housing bubble, and radically flawed and 
abusive financial practices are among the many sources to blame. So, 
unfortunately, were a too lax financial regulatory system and Federal 
Reserve that in too many cases enabled reckless behavior.
  There's plenty of blame for past administrations and Congresses that 
were too interested in the collection of special interests to 
appropriately protect the public interest. To be sure, some of this 
blame rests at the footsteps of American consumers, a few of whom 
actually abused the system themselves, too many of whom were simply 
uninformed or did not exercise their own due diligence. On balance, it 
was the system that failed and we are all paying the price and will for 
years to come.
  This legislation, while the result of a number of compromises, is an 
important step towards rebalancing priorities and strengthening the 
protective institutions. I voted in favor of this as a symbol of 
support for a longer-term process of reform. This is the launch of an 
extensive process, and it represents a landmark.
  Passing the most significant reform bill in decades is an 
accomplishment that I hope will lead to productive action from the 
Senate, legislation the President can sign, and, most important, a 
commitment to continue the process of protection and reform to strike 
the right balance--legislation and a regulatory process that protects 
citizens with a touch as light as possible while still being able to do 
the job. Hopefully, this will inspire everybody--in Congress, in the 
administration, in the regulatory agencies, in the industry, and in 
American homes--to play the roles that only they can assume so that the 
horrific abuses of the financial system become a distant memory.
  Mrs. McCARTHY of New York. Madam Chair, I would like to thank 
Chairman Frank and his staff for working with me on a clarification 
included in the Manager's Amendment. The provision addresses how the 
Financial Services Oversight Council and the Federal Reserve should 
interact and supervise financial holding companies that do not own 
banks, but which are subject to stricter standards because the Council 
has found them to be systemically risky.
  The provision requires the Federal Reserve to be flexible when 
applying the standards to non-bank holding companies, rather than using 
a bank-centric approach that may not be appropriate for their 
structure. In addition, the Federal Reserve will have to consult with 
the Federal Insurance Office when determining how best to supervise 
insurance companies that are subject to stricter standards. For 
companies that are also foreign-based, the Federal Reserve and the 
Oversight Council must take into consideration if the company has 
comparable home-country supervision and decide how best to coordinate 
with that supervision. These minor clarifications help to ensure that 
institutions which are not banks will not be forced to comply with 
regulations that do not fit their business structure.
  The beauty of the U.S. financial system is diversity, both in 
products and in structure. It is important to preserve that diversity 
for the purpose of domestic and international competition. I thank 
Chairman Frank for his willingness to incorporate these changes into 
the manager's amendment.
  Mr. TIAHRT. Madam Chair, on June 30, 2009, the Obama Administration 
released details of its proposal to establish a Consumer Financial 
Protection Agency as an independent agency in the executive branch to 
regulate the provision of financial products and services to consumers. 
Five months later, Congressman Frank, Chairman of the House Financial 
Services Committee, has turned this proposal into a 1,300-page bill 
that further extends the federal government's hands into more aspects 
of our economy.
  I oppose this legislation for several reasons. One, it will 
permanently extend the Troubled Assets Relief Program (TARP)--something 
that I've been actively trying to end. I recently introduced 
legislation that will effectively end TARP by eliminating the Treasury 
Secretary's authority to utilize this program. This bill also creates 
another czar--a Credit Czar. This unelected official is granted the 
authority to restrict access to credit and impose taxes on consumers 
and small businesses.
  These reforms will continue to perpetuate the bailout mentality that 
has plagued our Nation and eliminate access to credit for many small 
businesses and families at a time when they need it most.
  One of the most troubling aspects of this bill is the vague, 
subjective standards that nonfinancial companies must meet. One such 
example of the bill's vagueness is found in the definition of 
businesses that engage in ``financial activities'' and those that pose 
a ``systematic risk'' to the stability of the financial market.
  A business that engages in ``financial activities,'' is now subject 
to increased regulations and fees. Exactly who comes under this 
definition, however, is not that clear. Maybe this will fall under the 
new ``Credit Czar's'' job description. Nonetheless, this bill will 
drastically affect businesses, specifically non-financial businesses 
that had no part in the irresponsible decisions that lead to the market 
collapse in 2008.
  Vague definitions expose non-financial businesses that utilize the 
commodity and derivatives markets to manage risk and plan for the 
future. These markets, which date from the 1980s, involve hedgers. 
Hedgers, producers or commercial users of commodities, trade in futures 
to offset price risk. They use the markets to lock in today's price for 
transactions that will occur in the future, shielding their businesses 
from unfavorable price changes.
  This bill restricts the use of these practical business tools. These 
practical tools encourage job creation and provide customized hedges to 
help businesses like farmers, grocery stores and energy companies to 
manage price volatility, so that retail prices can remain low and 
stable. Yet H.R. 4173 authorizes government regulators to arbitrarily 
impose capital and margin requirements for ``over the counter'' (OTC) 
derivatives, and impose new capital requirements for cleared swaps, 
which would lead to increased retail prices and make it less likely 
that corporations could engage in responsible risk management.
  Companies that utilize these markets to shield themselves from future 
risk and uncertainty in the energy markets should not be penalized for 
planning ahead. Unless the definition of ``financial activities'' and 
others like it are changed, companies who have not contributed to the 
market collapse will be required to shell out large sums of money as 
security for increased regulations. This will no doubt drive up 
operational costs and increase the price of energy.
  In the midst of continuing economic turmoil, this bill increases the 
size of government, expands its reach in the marketplace, jeopardizes 
the safety and soundness of many of America's financial companies and 
non-financial companies, and significantly increases the cost of credit 
for all consumers at a time when consumers can least afford it.
  For the above reasons, I am opposed to this bill. I encourage my 
colleagues to vote no.
  Mr. KUCINICH. Madam Chair, I rise today in opposition to H.R. 4173. 
Although I am supportive of the Consumer Financial Protection Agency as 
well as other provisions in the bill, ultimately I do not think H.R. 
4173 adequately addresses the causes of the financial crisis, and I do 
not believe the reforms are sufficient to prevent another financial 
crisis from occurring.
  In testimony before the Committee on Financial Services earlier in 
the year, Dr. Robert Johnson of the Roosevelt Institute stressed that 
reform of the derivatives markets is absolutely central to fixing the 
financial system. In fact, he went so far as to say that without strong 
and comprehensive derivatives reform,

[[Page 30856]]

any effort to address the problem of systemic risk would be rendered 
impotent.
  H.R. 4173 makes some progress toward regulating derivatives by 
establishing regulations for clearing and regulating over-the-counter 
derivatives; however the bill--especially in light of the House's 
adoption of the Murphy amendment--contains a number of loopholes that 
sophisticated financial industry insiders will exploit with ease. For 
example, the Murphy amendment's expansion of the exemption of 
derivatives users, jeopardizes the integrity of the whole reform. As 
Dr. Johnson said in his testimony, the challenge is to ``[preserve] as 
much scope for deriving value from derivative instruments for end users 
without making the definition of end user so broad that it allows large 
scale financial institutions to effectively continue their unregulated 
OTC practices and at the same time assures that end users do not 
themselves, through loopholes, contribute to a weakening of the 
integrity of the financial system.'' H.R. 4173 does not accomplish 
this.
  Credit rating agencies were also at the heart of the financial 
crisis. It was their bogus ratings on opaque securitizations and other 
financial products that fueled the asset bubble, and it was the 
fundamental conflict of interest in their ``issuer pays'' business 
model that strengthened their position in the industry.
  Unfortunately H.R. 4173, rather than address the fundamental conflict 
of interest in the ``issuer pays'' model, instead sidesteps the issue 
and gives the Securities and Exchange Commission more authority to 
mitigate conflicts of interest. The years leading up to the financial 
crisis, however, taught us some very important lessons regarding the 
enforcement authority of the SEC: when officials at the Agency operate 
with a philosophical disagreement with its mission, it does not matter 
what tools they have; they simply will not use them. In the interest of 
long-term, systemic reform, H.R. 4173 should have directly addressed 
this problem.
  As everyone knows, another major cause of the crisis was gargantuan, 
systemically-interrelated institutions headed by shortsighted 
executives that scarcely had a notion of their complexity. H.R. 4173 
attempts to address ``too big to fail'' by creating a resolution 
authority for unwinding and dissolving large institutions that have 
failed. Simply put, too big to fail is too big to exist. Real financial 
reform would include prohibiting financial institutions from 
metastasizing to the point where they threaten the whole system. Real 
reform would also include limits on interconnectedness and risk. In the 
words of Nobel laureate Joseph Stiglitz, ``Such an approach won't 
prevent another crisis, but it would make one less likely--and less 
costly if it did occur.''
  Yet another cause of the financial crisis was the contagion that 
spread from the $8 trillion housing bubble that burst. The housing 
bubble was fueled by predatory and subprime mortgages that were 
securitized on a massive scale. The manager's amendment included 
language from H.R. 1728, the Mortgage Reform and Anti-Predatory Lending 
Act, and I applaud Chairman Frank for acknowledging the importance of 
including this legislation. The manager's amendment also included $1 
billion for the Neighborhood Stabilization Program to help communities 
address the problem of abandoned and foreclosed properties. My Domestic 
Policy Subcommittee did important work on how to target this federal 
assistance most effectively, I was glad to see its inclusion, and I 
supported the manager's amendment.
  Curiously absent from H.R. 4173, however, is real reform of the 
process of securitization or any acknowledgement whatsoever that the 
federal government, through interventions at the Federal Reserve and 
the Treasury, is the securitization market right now. H.R. 4173 would 
only require that securitizers retain 5 percent of their assets, called 
``skin in the game.'' However, regulators would have the power to raise 
that amount, but only to 10 percent, and could also eliminate it 
altogether. This would hardly act as a deterrent to what has become an 
abused practice. Securitization, done wisely and thoughtfully, is vital 
to our economy; however by failing to address this issue H.R. 4173 
simply allows the abuse of securitization to continue.
  There is no reform of the government-sponsored enterprises (GSEs) 
that subjugated the ``public good'' aspect of their missions to the 
demands of their investors for higher profits.
  Finally, H.R. 4173 does not fix the problem caused by the conflict of 
interest in the Federal Reserve's dual mandate. I applaud the efforts 
of my colleagues Ron Paul and Alan Grayson to include in the bill the 
authority of the Government Accountability Office to conduct audits of 
the Federal Reserve, but the financial crisis--and the government's 
extraordinary response--taught us monetary policy and regulatory policy 
must be exclusive. Relying on one entity to conduct both activities so 
vital to a healthy financial system will inevitably give rise to 
conflicts of interest. This bill, however, further conflates these 
policies at the Fed by giving the Fed more regulatory authority.
  H.R. 4173 cannot be the end of this process, but I fear passage of 
this bill will preclude further consideration of financial reform. If 
Congress rests on the laurels of H.R. 4173, we will be back here sooner 
rather than later to debate the same issues all over again. I look 
forward to continuing efforts to enact real, comprehensive reform of 
the financial services industry.
  Mr. DeFAZIO. Madam Chair, I rise to express my concerns over the 
legislation before us. H.R. 4173, The Wall Street Reform and Consumer 
Protection Act, takes steps to address many of the problems that 
created our current financial crisis. However, I am alarmed at a number 
of provisions that weaken the bill.
  The creation of a Consumer Financial Protection Agency is long 
overdue. Consumers need a strong advocate to protect them from the many 
questionable and confusing financial products offered. However, 
provisions put in by the banking industry to preempt meaningful state 
regulation threaten the strong consumer protections we are fighting 
for. Federal rules promulgated by this agency should set a floor of 
protection, not a ceiling.
  Title III, pertaining to regulation of derivatives, could have been 
improved by amendments offered that banned certain abusive derivatives 
from being traded and offered better transparency to the swap market. 
Unfortunately, those commonsense amendments were defeated. Other 
amendments that created more loopholes in the derivatives markets were 
unfortunately included.
  I was also disappointed that several amendments I cosponsored were 
denied an up or down vote. The Inslee/DeFazio/Hinchey ``Too Big to 
Fail'' amendment set a cap on the size of bank liabilities for 
financial institutions. Instead of relying on regulators to protect us 
from financial firms laden with risky investments, this amendment 
simply breaks up companies with excessive liabilities. The Hinchey/
Inslee/Conyers/DeFazio/Tierney amendment would restore key protections 
from the Glass Steagall Act including the separation of commercial and 
investment banking.
  Furthermore, I opposed the Republican Motion to Recommit because it 
struck all financial reform from the bill, and would have ended the 
TARP program at the most inopportune time. I have long opposed the TARP 
program because it bailed out Wall Street for excessive risk taking at 
taxpayer expense. Now that Wall Street has been bailed out, the major 
problem facing Americans is rising unemployment. We should redirect the 
remaining TARP funds to real job creation on infrastructure because 
that will get people back to work quickly, rebuild critical 
infrastructure, and these jobs cannot be exported overseas. Wall Street 
got its bailout, now it's time to jumpstart American job creation.
  I was a strong opponent of financial deregulation legislation in the 
1990s. This undermined our financial regulators and gave Wall Street 
the opportunity to make the risky speculative bets that it lost big on. 
Reversing this trend is essential; therefore I plan to vote in favor of 
this legislation to move the process forward. I am eager to see what 
emerges from the Senate as they continue their debate on financial 
reform. I am hopeful that this legislation moves us back to responsible 
regulatory oversight. It is important that we rein in the cowboy 
capitalism that has too long prevailed in our financial markets.
  Mr. CONYERS. Madam Chair, last fall we witnessed the greatest 
financial collapse in American history since the Great Depression. As 
Main Street recovers from Wall Street's excesses, we must reexamine the 
laws that govern banks and other financial institutions and hold them 
accountable for their actions. The collapse of our economy shows the 
need for tough new regulations. Today, the House will vote on H.R. 
4173, Wall Street Reform and Consumer Protection Act of 2009, a bill 
authored by Chairman Frank that aims to rein in the titans of finance's 
excesses and protect consumers from unfair and abusive practices.
  The bill being considered today creates the Consumer Financial 
Protection Agency (CFPA) with the sole mission of protecting consumers 
from financial products and services. Banks, subprime mortgage 
companies, pay day lenders, and money transmitters will be under the 
supervision of the CFPA. The new agency will stop unfair, deceptive and 
abusive consumer financial products and services.
  During the last bubble, executives at banks took on more risk because 
risk was profitable. No one paid much attention to what would happen 
when the speculation bubble burst.

[[Page 30857]]

Today's bill will amend this practice by allowing shareholders of 
public companies to have an annual, nonbinding ``say on pay'' vote on 
compensation packages for executives. Federal regulators will be 
authorized to ban any inappropriate or risky compensation practices 
that pose a threat to the financial system and to the broader economy.
  I am concerned this legislation does not go far enough. Specifically, 
today's bill will focus on empowering our financial regulators to 
manage and mitigate some level of ``acceptable risk'' within the 
present system, instead of correcting the structural flaws that make a 
collapse likely to recur. As a result, I am an advocate of a modernized 
Glass-Steagall act which would mandate that America's banking sectors 
and investment houses need to remain separate to prevent banks from 
gambling on the stock market with our savings.
  Moreover, I am worried that consumers will not be allowed to address 
their grievances with financial institutions and banks through the 
CFPA. Banks rarely directly violate specific federal rules, but the 
same cannot be said for some of the smaller nonbank lenders, brokers, 
and other individuals and entities who will be governed by CFPA rules. 
Violations by smaller actors are less likely to be worth the investment 
of resources for a federal agency enforcement action, or even one by a 
state AG, but they can have a devastating impact on individuals 
nonetheless. Individual remedies are essential to holding all violators 
accountable and providing incentives for everyone to comply. The 
Federal Trade Commission received 78,000 complaints against debt 
collectors last year and took only 3 enforcement actions. Consumers 
must be able to stand up and defend themselves and hold wrongdoers 
accountable if CFPA rules are violated. For over 200 years, it has been 
a fundamental tenet of American law, derived from our Anglo-Saxon 
heritage, that ``for every right, there's a remedy.'' The concept is 
commonsense: wrongdoers who violate laws should be accountable to those 
they injure.
  Madam Chair, even with all of the legislation's weak points, the Wall 
Street Reform and Consumer Protection Act makes great strides to shield 
Americans from the despotic behavior of Wall Street. I urge my 
colleagues to support today's bill.
  Mr. OBERSTAR. Madam Chair, I rise in strong support of the Wall 
Street Reform and Consumer Protection Act. This legislation will 
protect consumers, end the concept that an institution is ``too big to 
fail'', and ensure that the American people never again have to be the 
lifeline for failing Wall Street firms.
  The failure of President Bush and a Republican Congress to regulate 
financial markets and to reign in excessive greed has had devastating 
consequences for families in northeastern Minnesota and across this 
country. In short, we have lived through the worst financial crisis 
since the Great Depression. Irresponsible lending and bets by 
speculators against the housing market led to a mortgage meltdown that 
sent the Nation into a deep recession. By the fall of 2008, the failure 
of major Wall Street firms put in jeopardy our entire economy and 
threatened jobs in every community. Families watched as the value of 
their college and retirement investments were decimated. Excessive 
greed threatened the very livelihood of most Americans.
  As families in my district have been facing layoffs, stagnant wages, 
and reduced hours, the greed of Wall Street has shown no restraint. 
Last year, the Nation's nine largest banks ran up more than $81 billion 
in losses, and they accepted tens of billions of dollars in emergency 
aid from taxpayers. The culture of Wall Street led these institutions 
to respond with more than $33 billion in bonuses. Where else is such 
reckless performance so highly rewarded?
  Today, the House takes a bold step towards changing the rules of Wall 
Street. In the e-mails and phone calls that I have received from across 
Minnesota, my constituents have sent a resounding message. They work 
hard to earn their pay, to pay their bills, and hopefully, to have a 
little left over at the end of the month. They play by the rules, and 
expect others to do the same. This legislation places Wall Street under 
some of the common-sense rules that people on Main Street live by every 
day. That means no institution is ``too-big-to-fail'', failure will not 
earn a taxpayer-funded bailout, speculators will no longer be able to 
hide behind an unregulated marketplace, shareholders will be given a 
say on executive compensation, and consumers will be protected from 
confusing and abusive financial products.
  My constituents have asked me to focus on creating jobs. This 
legislation is part of that effort, and I am pleased to support this 
necessary reform.
  Mr. GARAMENDI. Madam Chair, I rise today in strong support of this 
bill.
  Listening to this debate, it amazes me how short the memories are of 
some of my colleagues on the other side of the aisle. Our financial 
sector collapsed and millions of Americans lost their jobs and their 
savings because Wall Street knew it could get away with just about 
anything under the previous administration.
  Today, with this vote, I'm proud to say no more. No more to abusive 
lending practices, no more to loopholes that allow billions of dollars 
between large firms to go unregulated, no more to a system that 
prioritizes short term profit in one sector over the long term health 
of an entire economy.
  Under this legislation, consumers will finally have a Federal 
regulator with teeth ready to battle predatory financial firms. We will 
stop financial conglomerates from becoming `too big to fail' and 
provide legal and financial assistance to homeowners and renters trying 
to save their homes. For the first time in U.S. history, we will 
regulate the over-the-counter derivatives marketplace, where millions 
of contracts between large banks have gone unregulated for years. We 
are also requiring most private equity and hedge fund advisors to 
register with the Securities and Exchange Commission and expanding the 
SEC's staff and antifraud capabilities. We also require full disclosure 
of financial firms' compensation structures and give shareholders the 
opportunity to give an advisory vote on executive compensation 
practices. With millions of Americans unemployed, including tens of 
thousands in my district, we can't afford further delay on this 
important package.
  For 8 years as California's Insurance Commissioner, I regulated the 
largest financial industry in America: the insurance companies. The 
insurance companies had one commandment: thou shalt pay as little as 
possible as late as possible. Many in finance have their own 
commandment: thou shalt build up thy house of cards as fast as possible 
as profitably as possible without consideration of the long term 
consequences. The games have to stop; it's time we created an economy 
that focuses on the needs of Main Street, not just Wall Street.
  Mr. SHERMAN. Madam Chair, I would like to speak about a provision I 
authored that was included in the manager's amendment. The provision 
provides that a Nationally Recognized Statistical Rating Organization 
shall be liable if it is grossly negligent in determining a credit 
rating. My intention in drafting this provision was only to impose 
potential liability on ratings provided pursuant to a contract with the 
issuer of the debt. Nationally Recognized Statistical Rating 
Organizations that provide ratings solely for the purpose of 
journalism, without being paid by the issuer, do not face potential 
liability under this provision.
  Mr. LANGEVIN. Madam Chair, I rise in strong support of H.R. 4173, the 
Wall Street Reform and Consumer Protection Act, which will rebuild our 
economy and crack down on Wall Street to prevent another economic 
collapse caused by institutions that are ``too big to fail.''
  Over the past year, I, like many Rhode Islanders, have been angered 
by the greed exhibited by Wall Street and other companies that took 
advantage of their investors, preyed on our constituents, and rewarded 
executives with outrageous pay packages. With this bill, consumer 
protection will come first, and irresponsible companies will be held 
accountable for their actions.
  H.R. 4173 establishes the Consumer Financial Protection Agency, which 
will protect families and small businesses by ensuring that bank loans, 
mortgages, credit cards and other financial products are fair, 
affordable and transparent. Merchants will be excluded from the 
oversight of the CFPA, and small banks and credit unions will not be 
subject to undue regulatory burdens. However, the CFPA will play a 
backup role if the primary regulators fail in their oversight 
responsibilities.
  This measure also establishes an orderly process for dismantling 
large, failing financial institutions like AIG or Lehman Brothers, 
which will protect taxpayers and prevent collapse throughout the rest 
of the financial system. These large institutions will pay into a fund 
that will be tapped if a company faces dissolution. There will be no 
more taxpayer bailouts for these ``too big to fail'' institutions.
  Additionally, H.R. 4173 responds to the failure to detect frauds like 
the Madoff scheme by ordering a study of the entire securities 
industry. This measure will also increase investor protections by 
strengthening the Securities and Exchange Commission and boosting its 
funding level. For the first time ever, the over-the-counter 
derivatives marketplace will be regulated under this bill and hedge 
funds will have to register with the SEC. It also takes steps to reduce 
market reliance on the credit rating agencies and impose a liability 
standard on the agencies.

[[Page 30858]]

  I would like to thank the committees for their work on this bill, and 
especially want to thank Chairman Frank for his leadership on this 
strong reform measure. I encourage all my colleagues to vote for this 
bill.
  Mr. VAN HOLLEN. Madam Chair, I rise in support of the Wall Street 
Reform and Consumer Protection Act of 2009 and the comprehensive 
approach it takes to reining in systemic risk, curbing excessive 
speculation and restoring transparency, accountability and oversight to 
our financial system.
  In the wake of the worst financial crisis since the Great Depression, 
the Democratic majority has launched a series of deliberate and wide-
ranging initiatives to stem that crisis--and those initiatives are 
clearly working.
  Our economy is no longer in free fall. Markets are sharply up. 
Foreclosures are starting to come down. The vicious spiral of job 
destruction we inherited from the past Administration is now slowing.
  We know we are headed in the right direction--but we also know there 
is more work to do. We will not stop until our economy has fully 
recovered, there is a good-paying job for every American who wants one, 
and we have launched a new era of broadly shared American prosperity.
  This legislation represents the next step on our nation's road back 
to recovery. To make sure we never have another AIG, this bill 
establishes a Financial Stability Council charged with the exclusive 
mission of identifying and regulating systemic risk. In the future, a 
Systemic Dissolution Fund will be able to safely wind down failing 
firms so that taxpayers aren't left holding the bag. To protect 
consumers, today's legislation creates a new Consumer Financial 
Protection Agency to police our markets for abusive financial products 
and services. We are bringing transparency and oversight to our 
derivatives markets. Investors will get a better shake, credit rating 
agencies will face reforms and shareholders will get a ``say on pay.''
  I want to commend Chairman Frank, Chairman Peterson and their staffs 
for their hard work on this legislation. I urge my colleagues' support.
  Mr. HOLT. Madam Chair, I rise in support of H.R. 4173, the Wall 
Street Reform and Consumer Protection Act of 2009, and to commend 
Chairman Frank, Chairman Peterson, and the broad coalition of Members 
who have worked to craft this financial services reform legislation.
  The American Recovery and Reinvestment Act was an important first 
step, but we are still in the throes of recovery from the worst 
financial crisis since the Great Depression, which was caused m large 
part by more than a decade of regulatory failures. Reckless, abusive 
and irresponsible practices on the part of some in the mortgage 
issuance and financial services industries combined to create a perfect 
storm, resulting in a catastrophic economic collapse. The country had 
fallen into recession by the end of 2007, which exploded into an 
economic crisis as the subprime mortgage crisis unwound, Lehman 
Brothers filed for bankruptcy and AIG collapsed.
  The impact on the American people has been profound. Household net 
worth dropped by more than $14 trillion from 2007 to mid-2009, the 
value of retirement assets dropped by 22 percent between 2006 and in 
mid-2008, total home equity dropped from $13 trillion in 2006 to $8.8 
trillion by mid-2008, and as of today, almost one in four homeowners 
owes more on their mortgage than their home is worth. In addition, 
Americans in every income strata have simply not been protected from 
even the most egregious behavior. The Securities and Exchange 
Commission utterly failed to discover and prevent the collapse of a $65 
billion Ponzi scheme, as well as several others which also resulted in 
billions in losses to investors. Meanwhile, millions of Americans who 
live paycheck to paycheck and rely on payday loans are being charged 
annual interest rates of 400 percent or more, totaling nearly $5 
billion per year.
  The Wall Street Reform and Consumer Protection Act is an aggressive 
and comprehensive response to the broad spectrum of problems the recent 
economic crisis brought to light. It creates a new Consumer Financial 
Protection Agency to ensure that bank loans, mortgages, payday loans, 
overdraft fees and credit card policies are fair, affordable, 
understandable, and transparent. It establishes a new Financial 
Services Oversight Council to monitor and respond to systemic risk, to 
prevent the sort of tidal wave of catastrophic interconnected 
developments that brought down the economy in 2008. It puts measures in 
place to ensure that there will never again be a company deemed ``too 
big to fail,'' and it establishes an industry-funded dissolution fund 
to ensure that taxpayers will not be asked to bail out any such company 
if it goes into collapse. The bill also includes legislation passed in 
the House earlier in the year, to regulate the type of incentive-based 
executive compensation that provoked some of the riskiest and most 
reckless behavior in the financial services markets, and to prohibit 
the sorts of fraudulent and abusive mortgage issuance practices that 
caused the subprime mortgage crisis.
  I am also pleased that the bill includes several strengthening 
amendments I offered, and I thank Chairman Frank again for his support 
of those amendments and for including them in the Manager's Amendment. 
My amendments would clarify that the newly-created Financial Services 
Oversight Council, rather than one dominant member thereof (the Federal 
Reserve Board), is the systemic risk regulator empowered under the Act. 
The amendments would also ensure that the Council is a broad-minded 
think tank staffed equitably by all of its Voting Members, rather than 
predominantly by one (the Department of the Treasury). The staff would 
remain on the payrolls of the detailing agency, pre-empting a budgetary 
problem for the Council.
  In addition, the bill includes two good government amendments I 
offered, which clarify that financial companies cannot be compelled by 
the systemic risk regulator to waive any privilege (such as attorney-
client privilege) when providing data at the request of the systemic 
risk regulator, and that the same protection against compelled waiver 
of privilege applies to private funds, investment advisors and others. 
In times of crisis and crisis response, we must exercise heightened 
diligence in protecting and preserving our foundational rights and 
principles.
  The Committee has taken bold steps to confront the failures of our 
financial services regulatory system, and I urge my colleagues to 
support this bill.
  Mr. KIND. Madam Chair, I rise today in support of H.R. 4173, the Wall 
Street Reform and Consumer Protection Act of 2009.
  Over the past year, we became aware of many financial practices which 
were abusive and reckless. We're putting an end to those practices and 
making ``too big to fail'' a thing of the past. Americans will no 
longer be responsible for the bad business calculations and 
irresponsible behavior that almost brought down our entire economic 
system. This bill effectively ends the notion of a government guarantee 
by allowing large, systemically risky institutions to fail at their own 
expense and in a way that doesn't jeopardize the whole U.S. financial 
system.
  The legislation holds Wall Street accountable through increased 
transparency and regulation of risky practices. A new systemic risk 
regulator will monitor financial activity across the whole sector to 
identify risks and irresponsible behavior and prevent them from 
becoming a problem for individual investors and the entire economy. The 
bill also establishes an orderly process for dismantling large, failing 
companies--at their own expense, and requires that stockholders and 
executives take a financial hit if risky deals fall through, ensuring 
an end to taxpayer funded bailouts.
  This bill effectively reforms our financial system without unduly 
restricting appropriate risk- taking. This is pro-business, anti-
bailout legislation that aims to address the flaws in the current 
system in a targeted manner to minimize the burden on those who did not 
cause the crisis, like Community Banks and Credit Unions--most of whom 
will be exempt from additional oversight by the Consumer Financial 
Protection Agency, CFPA.
  We are addressing the fractured oversight that exists in our current 
system. In creating a Consumer Financial Protection Agency, we will 
establish a baseline for consumer financial protection and target the 
appropriate financial institutions. If we are willing to demand that 
products used by our children are reviewed for safety, we should demand 
appropriate oversight for the financial products we use to pay for 
their college. More broadly, the CFPA will ensure that all consumers 
have a watchdog to protect them against financial institutions engaging 
in abusive or deceptive practices.
  This bill focuses on reforming the system so that we maximize the 
good and minimize the harm, and I am proud to support it.
  Mr. STUPAK. Madam Chair, years of abuse on Wall Street, manipulation 
of our financial markets and expansion of regulatory loopholes have 
harmed American consumers and businesses, leading to the global 
financial disaster last fall. As the U.S. House of Representatives 
sought to craft aggressive financial regulatory reforms, I worked with 
the relevant Committee Chairmen and Democratic leadership to end the 
abuses that have allowed Wall Street to profit at the expense of 
American consumers for far too long.
  Unfortunately, H.R. 4173, the Wall Street Reform and Consumer 
Protection Act of 2009, falls short of ending the practice of Wall 
Street speculators, big banks and the nation's largest

[[Page 30859]]

financial houses (Goldman Sachs, J.P. Morgan, Morgan Stanley, Bank of 
America and Citigroup) operating outside the watchful eye of federal 
regulators. Because this bill does not put an end to many of these 
abuses, I must oppose H.R. 4173.
  As chairman of the Energy and Commerce Subcommittee on Oversight and 
Investigations, I have led a three-year-long investigation into the 
role speculators play in driving up the cost of energy. What we have 
learned from our investigation can be applied across the energy, 
commodity, and financial markets: As long as loopholes exist, 
speculators will manipulate markets and consumers will pay the price.
  I fought for and made part of the American Clean Energy and Security 
Act regulatory reform for the energy and carbon markets. The provisions 
found in the Prevent Unfair Manipulation of Prices, PUMP, Act of 2009 
should have served as a starting point for further reform of the 
unregulated over-the-counter derivatives markets known as ``dark 
markets.'' Unfortunately, this legislative precedent and my amendments 
were ignored in favor of big money interests on Wall Street. But those 
of us who have spent time working on this issue know true regulatory 
reform cannot occur without bringing transparency to all markets and 
subjecting all financial transactions to federal oversight.
  Therefore, I offered two amendments to H.R. 4173 to close loopholes 
and bring strong reform to the unregulated ``dark markets.'' The first 
amendment required all trades to occur on an open marketplace, 
effectively bringing an end to ``dark markets'' so regulators could see 
the transactions. This most fundamental reform would have brought 
sunshine to the largest unregulated financial sector of our economy. 
For example, trades on the regulated markets totaled $80 trillion in 
2008 while trades on the unregulated ``dark markets'' accounted for 
$600 trillion, or 41 times the size of the entire U.S. economy. 
Regulators could not view the transactions, the contracts or the 
financial terms of these trades.
  As Commodity Futures Trading Commission, CFTC, Chairman Gary Gensler 
noted in a letter supporting my amendment, ``As a nation, we do not 
stand for this lack of transparency in other markets.'' Staunch 
opposition from Wall Street led to the amendment's defeat, despite 
Gensler's assertion that: ``your (Stupak) amendment promotes the 
critical goal of promoting transparency without imposing any additional 
cost on business.'' Without providing our regulators the most basic 
tools they say they need to effectively monitor the markets, we cannot 
call H.R. 4173 a true reform bill.
  My second amendment narrowed a loophole that banks and large 
financial houses use to avoid regulation, prohibited credit default 
swap contracts that threaten the stability of the financial markets, 
and prohibited illegal swap contracts from being considered valid in a 
court. A comprehensive financial regulatory reform bill has to close 
the loopholes that allow speculators to control the markets. In 
defeating my second amendment, speculators will be allowed to continue 
their abusive practices.
  Defeating my second amendment was not Wall Street's only success in 
ensuring loopholes remain in place. Banks, large financial firms and 
speculators were able to push through an amendment authored by 
Congressman Scott Murphy that widened the loophole banks can use to 
evade regulation.
  Financial Services Committee Chairman Barney Frank offered an 
amendment to ensure everyone trading in the markets has some ``skin in 
the game'' by requiring collateral be posted up front. The amendment 
was opposed by Wall Street and it ultimately failed.
  Many parts of H.R. 4173 accomplish important financial reform, and I 
support efforts to protect consumers from predatory financial products 
and end taxpayer funded bailouts. The amendment process on the House 
floor offered the opportunity to strengthen the bill in a way that 
delivers true reform across all of our financial markets. 
Unfortunately, Wall Street succeeded in using this opportunity to 
weaken the bill and significantly dilute the impact the legislation 
would have on their practices.
  If regulators cannot shine a light on ``dark markets'' and loopholes 
can be exploited by Wall Street, we are just a few years away from 
another economic crisis. Leaving ``dark markets'' unregulated, 
unchecked and unfazed allows speculators to dictate prices for goods 
ranging from gasoline to bread to life insurance, and leaves consumers 
vulnerable to these financial abuses.
  Today ``dark markets'' operate like a casino, with a commercial 
business betting that the price of a product will move in one direction 
and a Wall Street bank betting against that price change. The only 
difference is that we actually regulate casinos. On Wall Street neither 
the company nor the bank are subject to regulation. Only the largest 
Wall Street banks know the price or volume of these trades, leaving 
federal regulators and consumers in the dark. H.R. 4173 does nothing to 
change this.
  Leaving these markets to police themselves has resulted in the 
Federal Deposit Insurance Corporation, FDIC, taking over 133 banks so 
far this year, a record. When these markets implode, credit across the 
financial system freezes. Small businesses and farmers can't secure 
loans. Community banks, credit unions and businesses are threatened 
with insolvency, and ultimately employees and taxpayers are left out in 
the cold. H.R. 4173 attempts to bring regulation to these markets, but 
leaves loopholes and creates new ones that far outweigh any positive 
reforms in the bill.
  I want to thank Congressman Chris Van Hollen, Congresswoman Rosa 
DeLauro and Congressman John Larson for their strong support in working 
with me to try to strengthen this bill and bring true reform to Wall 
Street.
  As H.R. 4173 moves through the legislative process, I will work with 
Senators Maria Cantwell, Bernie Sanders, Byron Dorgan and others who 
have a shared interest in closing loopholes that remain a threat to our 
economy. It is imperative that the bill be strengthened in the U.S. 
Senate to rein in speculators and end the abusive practices of Wall 
Street's largest financial houses. I hope the Senate can accomplish 
these goals in the form of a final bill I can support.
  I did not vote for the Wall Street bailout last year. Once again, I 
stood up to Wall Street's reckless financial transactions. Now, we need 
more members of Congress to stand with me for effective regulatory 
reform. For I believe, in this one instance where doing too little is a 
far greater threat than doing too much.
  Mr. CONYERS. Madam Chair, as the Chairman of the Judiciary Committee, 
I would like to highlight some of the contributions made by our 
Committee to this important legislation. The Committee considered over 
the course of several months a range of legal issues posed by this 
legislation, and held two days of hearings this fall on its bankruptcy 
and antitrust law ramifications--on October 22 in the Subcommittee on 
Commercial and Administrative Law, and on November 17 in the 
Subcommittee on Courts and Competition Policy. Below is a summary of 
some of the more significant provisions added to the legislation, or 
revised in it, at the request of the Committee.


                             Bankruptcy Law

  The bill's new emergency procedures for dealing with financial 
institutions posing imminent toxic danger to our Nation's financial 
system is an exemption from the bankruptcy laws in favor of a 
receivership managed by the Federal Deposit Insurance Corporation 
(FDIC). While appreciative of the need for the government to be able to 
act with dispatch when the stability of the entire financial system is 
in jeopardy, and while respectful of the considered judgment of the 
Treasury Department, the FDIC, and the Financial Services Committee to 
devise an approach outside the Bankruptcy Code for this purpose, the 
Judiciary Committee believes it is important to remain mindful of 
fundamental due process and equitable considerations that are embodied 
in bankruptcy procedure. The Committee has accordingly limited the 
availability and extent of this bankruptcy exemption.
  First, because this departure from well-established bankruptcy 
procedures and protections is justified only in the exigencies of an 
extraordinary emergency threatening stability of the financial system, 
the Judiciary Committee added a new ``purpose'' section to the 
emergency dissolution title to mandate that there be a ``strong 
presumption that resolution under the bankruptcy laws will remain the 
primary method of resolving financial companies, and the authorities 
contained in this subtitle will only be used in the most exigent 
circumstances.'' The Treasury Secretary is required to explain any 
determination that such an extraordinary emergency exists, to the House 
and Senate Judiciary Committees, along with other committees.
  Our Committee also added provisions ensuring that bankruptcy remains 
available as the preferred option. There are new provisions authorizing 
the FDIC, at any time, with the approval of the Treasury Secretary and 
after consultation with the Financial Services Oversight Council, to 
convert an emergency receivership into a case under either chapter 7 or 
chapter 11 of the Bankruptcy Code, while clarifying that doing so will 
not affect any of the FDIC's powers with regard to any bridge financial 
company created under the receivership. Upon its appointment, and 
periodically during the receivership, the FDIC will be required to 
report to the House and Senate Judiciary Committees, as well as to 
other committees, why a receivership is necessary rather

[[Page 30860]]

than using bankruptcy, and the consequences for the rights of other 
creditors.
  The Committee also added amendments to the Bankruptcy Code to clarify 
how a case brought by the FDIC proceeds, including authority for the 
FDIC to serve as trustee, with accommodations to certain trustee 
obligations in order to make it feasible for the FDIC to serve.
  The Committee also adapted a number of key protections from the 
Bankruptcy Code into the FDIC's new dissolution procedure. These 
protections include:
  Priority protection for unpaid wages and benefit plan contributions 
for employees of the financial company, who do not have the same 
recourse against their employer as business creditors have against the 
company.
  Protection of collective bargaining agreements from repudiation by 
the FDIC, unless the FDIC determines repudiation is necessary for the 
orderly dissolution of the financial company, taking into consideration 
the cost to taxpayers and financial stability of the U.S.
  Appointment of a consumer privacy advisor to protect the privacy of 
consumers whose personal information is in the possession of the 
financial company.
  The Committee also directed the Government Accountability Office to 
undertake two studies and reports:
  The first is a report in the event a financial company is taken into 
emergency receivership and assets are removed by the FDIC, on the 
extent to which claims against the company for violations of the Truth 
in Lending Act have been satisfied.
  The other is a report on the ``safe harbor'' provisions for 
derivatives, swaps, and securities under federal law, that excludes 
them from bankruptcy and receivership proceedings, on how they have 
affected the ability of businesses to reorganize.


                             Antitrust Law

  One major impetus of this legislation is to address the problem faced 
last year by financial institutions that were deemed ``too big to 
fail.'' The emergency efforts to deal with those institutions led to 
infusions of billions of federal dollars, and federal guarantees of 
billions more, putting the Treasury at significant risk.
  But ``too big to fail'' has another aspect that places our nation at 
significant risk--and that is the potential danger to competition when 
the marketplace becomes concentrated in the hands of so few competitors 
that consumers no longer have meaningful choice, and the healthy 
influence of competition on price, quality, and innovation are lost.
  It is important to the Judiciary Committee, as the Committee in 
charge of the laws protecting our economic freedoms against 
monopolization and other anticompetitive restraints of trade, that 
should our nation ever be faced with a similar financial system 
emergency in the future, that antitrust protections remain in place to 
ensure that our response does not leave us, when the dust clears, with 
an even more concentrated market, with companies that are even bigger, 
with more market power, and less responsive to the consumers they are 
supposed to serve.
  Accordingly, the Committee revised the emergency FDIC dissolution 
procedures for financial institutions posing imminent toxic danger to 
the broader financial system, to ensure that any proposed sale of 
significant assets to a competitor that occurs after the initial 
urgency has passed would be subject to effective pre-merger antitrust 
review when warranted, under the procedure developed for reviewing 
sales of assets during a bankruptcy proceeding. This procedure 
expedites the initial review, while permitting the antitrust 
enforcement agency to extend the period when more information is needed 
to make its assessment. The Committee also clarified that the federal 
antitrust enforcement agencies would retain their legal authority to 
challenge a merger or acquisition that would harm competition in 
violation of the antitrust laws.
  These changes balance the need for expeditious transfer of assets 
from a failing financial company to a safe new home with the imperative 
of preserving our competitive free market system.
  The Committee also revised provisions in the title of the bill 
dealing with regulation of over-the-counter derivatives markets. 
Provisions in the legislation as introduced sought to prohibit entities 
involved in the derivatives markets from engaging in or facilitating 
anticompetitive conduct. These entities included derivatives clearing 
organizations, swap dealers, major swap participants, swap execution 
facilities, clearing agencies, security-based swap dealers, and major 
security-based swap participants. There was language in these 
provisions that appeared to create exceptions, and that the Committee 
was concerned might potentially be read to create exemptions from the 
antitrust laws.
  The Committee revised these provisions to make clear that no 
antitrust exemptions are intended. In two instances, in parts of the 
derivatives title amending the Securities Exchange Act, the provisions 
were removed entirely. In three instances, in parts of the derivatives 
title amending the Commodity Exchange Act, the exception language was 
removed to make clear that the prohibitions apply without exception, 
and to further clarify that the antitrust laws remain fully in effect 
with respect to any conduct involved.


                            Practice of Law

  The Constitutional freedoms and legal rights we enjoy as Americans 
are ultimately protected in our courts, through the advocacy of 
attorneys who are licensed to practice before them. In keeping with 
these critical responsibilities, the activities of these ``officers of 
the court'' are regulated by the States, through government bodies, 
generally overseen by the State's highest court, with specialized 
expertise in the duties imposed by the code of legal ethics.
  Accordingly, the Judiciary Committee revised the Consumer Financial 
Protection Agency Act title to clarify that the new agency is not being 
given authority to regulate the practice of law, which is regulated by 
the State or States in which the attorney is licensed to practice. The 
Committee further clarified that this is not intended to preclude the 
new agency from regulating other conduct engaged in by individuals who 
happen to be attorneys or acting under their direction, as long as the 
conduct is not part of the practice of law or incidental to the 
practice of law.


                          Other Contributions

  Other contributions by the Judiciary Committee include revisions to 
the Consumer Financial Protection Agency's new investigative authority 
to bring it closer into conformity with the Antitrust Civil Process 
Act, on which it is modeled; clarifications to the new revised 
procedures for FTC rulemaking in the unfair and deceptive acts or 
practices area, to bring them closer in line with the Administrative 
Procedure Act, as intended; clarifications to the FDIC's new rulemaking 
authority to ensure it is used in compliance with the Administrative 
Procedure Act; and revisions to the new authority for nationwide 
service of subpoenas by the Securities and Exchange Commission to 
ensure that the authority will be exercised consistent with due 
process.
  Ms. McCOLLUM. Madam Chair, I rise in strong support of the Wall 
Street Reform and Consumer Protection Act (H.R. 4173). This legislation 
will finally bring accountability to big banks and ensure families are 
protected from high-stakes Wall Street speculation. I thank Chairman 
Frank, the House Leadership, and all of my colleagues who have worked 
to shape this important legislation.
  It was one year ago that our country's financial system stood on the 
brink of collapse. The failure of large financial institutions such as 
Bear Steams and Lehman Brothers quickly led to sinking home prices, a 
collapse in retirement savings, and job losses on a scale not seen 
since the Great Depression. Today this Congress faces a choice. We can 
cling to the failed policies of lax regulation that nearly drove our 
economy off a cliff, or take decisive action to prevent another crisis 
of this proportion by passing H.R. 4173.
  This legislation combines eight separate reform measures into one 
comprehensive package. H.R. 4173 establishes a new Consumer Financial 
Protection Agency to protect Americans from unfair and abusive 
financial practices and to bring needed transparency and accountability 
to the financial system. It regulates the exotic debt instruments that 
contributed to the unraveling of our financial markets. And this bill 
reigns in Wall Street excess by banning egregiously high executive 
bonuses and giving shareholders input on executive compensation.
  In addition, H.R. 4173 will put an end to ``too big to fail'' 
financial firms. American taxpayers should never again be called upon 
to rescue large financial institutions because their failure threatens 
to bring down the entire financial system. This legislation creates a 
Dissolution Fund, paid for by the industry, which would be used to 
dismantle failing financial institutions in an orderly manner and 
without taxpayer assistance.
  The Wall Street Reform and Consumer Protection Act is vital to our 
economic security because it will restore confidence in our financial 
system--an essential step toward rebuilding our economy. Although this 
bill is not perfect, my constituents and all citizens across the nation 
should recognize H.R. 4173 as a tremendous step in the right direction.
  Once again, I thank Chairman Frank for his leadership and I urge my 
colleagues to join me in supporting this important legislation.
  Mr. FRANK of Massachusetts. I yield back the balance of my time.

[[Page 30861]]

  The Acting CHAIR. All time for general debate has expired.
  Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Watt) having assumed the chair, Ms. Titus, Acting Chair of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration 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, had come to no resolution thereon.

                          ____________________