[Congressional Record (Bound Edition), Volume 155 (2009), Part 6]
[Senate]
[Pages 7151-7154]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      AMERICAN CREDIT CLEANUP PLAN

  Mr. BOND. Madam President, after passing the trillion-dollar ``spend-
ulus'' bill, House Democrats are already talking about a second 
stimulus. It sounds to me as if they have already concluded that the 
first trillion dollar stimulus bill is a failure and was nothing more 
than a downpayment on their social agenda.
  I know Missourians and many Americans agree that a trillion dollars 
is a terrible thing to waste. This is one economic crisis we cannot 
simply pay our way out of. The bottom line is that our economy will not 
recover and conditions for families, workers, and small businesses will 
not improve until we get to the root of the problem and rid our 
financial system of toxic assets. That is what the President said when 
he addressed the joint session. He said: We must solve the credit 
problem or nothing else will work.
  Well, to date, the Obama administration seems as though they have 
been trying to treat every cut and bruise on a patient who is 
experiencing cardiac arrest. Their strategy has been to address each 
perceived crisis as a new one in an ad hoc manner. That has gone back 
to last fall under the previous administration. The Treasury strategy 
has been to address the symptoms, not the underlying illness, and it is 
one that, unfortunately, we have followed here.
  Let's take a look at what ``ad-hocracy'' has done for us:
  February's unemployment numbers came out last Friday. Our Nation is 
now struggling under the highest unemployment rate in more than 20 
years--8.1 percent. This is more than a number of millions of Americans 
who have been laid off and are struggling to find new jobs. That is 
right--millions.
  Almost 2 million workers have lost their jobs in the last 3 months. 
The latest job numbers are another sad reminder that right now our 
financial system is not working. It has been clogged with toxic debt.
  The Treasury's ad hoc approach is not working. The President's 
approach seems to be to appease his different constituencies with one 
boutique initiative after another, and we have racked up over a 
trillion dollars in debt doing so. That effort--that ``spend-ulus'' 
bill--is going to stimulate the debt. It is going to stimulate the 
growth of Government. But it will not stimulate the economy or jobs.
  We have to focus on the urgent priority. I hope it does not take 
another 2 million workers to face layoffs before the administration 
gets serious about addressing this crisis.
  Yesterday, the President said we need some ``adult supervision'' in 
Washington. I could not agree more. We definitely need some adult 
supervision in the Treasury Department when it comes to addressing our 
credit crisis. We need someone who is willing to make tough choices, 
not just slapping new names on old ineffective programs and throwing 
billions of taxpayer dollars into failed financial institutions in the 
hopes that Americans will see it as the change they have been promised.
  In the words of the current President and CEO of the Federal Reserve 
Bank of Kansas City, Thomas Hoenig:

       We have been slow to face up to the fundamental problems in 
     our financial system and reluctant to take decisive action 
     with respect to failing institutions.

  We saw what happened in Japan when policymakers lacked the political 
will and were slow to clean up its sick banking system--a decade-long 
recession. That is why I believe we need a bold, coherent, and tested 
plan that will address the root causes of our economic crisis, and the 
experts agree. They have been unanimous, and I have talked to many of 
them: people such as the former FDIC Chairman Bill Seidman, who ran the 
successful RTC program to clean up the savings and loan crisis; the 
former Fed Chairman, Alan Greenspan. The Presidents and CEOs of the 
Federal Reserve Banks of St. Louis, Kansas City, and Boston believe we 
must address the toxic assets clogging our financial system.
  Under my American credit cleanup plan, which I have talked about 
before on this floor, the Government can put to work statutory 
authorities long used by the FDIC for failed banks. We know this plan 
can work. It worked during the savings and loan crisis, and it can work 
again to solve the credit crunch. It works every day when the FDIC goes 
in to shut down failed institutions, and it can work right now in this 
major crisis. When we boil it down, it is not easy, but the solution is 
simple--three steps: First, identify the sick banks; second, remove the 
toxic assets, protect depositors, and fire the failed executives and 
board of directors who caused this mess; third, relaunch cleansed 
healthy banks back into the private market; get the Government out so 
the banks can get about doing their job of providing credit; no more of 
us fighting on the floor of how much a failed executive of a failed 
bank should be paid. Get them out.
  This is the right approach that provides a clear exit strategy. It 
puts an end to throwing more and more billions of good taxpayer dollars 
into failing banks. It is the right approach to put our economy back on 
the road.
  I call on the President and his economic team to get past their 
denial about the serious illness facing our economy. Their trillion-
dollar box of Band-Aids isn't going to work. Stop pouring good taxpayer 
dollars into failed banks with no plan and no strategy. We have a 
skilled surgeon in the FDIC who has operated on failed banks and has 
the experience and knowledge to deal with toxic assets.
  Last night, a reporter was questioning me and said, ``Everybody is 
talking about removing toxic assets.'' Well, that is the problem.
  In the words of one of my favorite country music songs, we need a 
little less talk and a lot more action. If the FDIC's current 
authorities are insufficient, Congress must stand ready to provide any 
tools or resources the FDIC needs to complete the surgery. I have 
cosponsored S. 541 with Senator Dodd to expand the FDIC borrowing 
authority. I call on our leadership to bring it up, to add authority 
for the FDIC to regulate bank holding companies. Give them the tool and 
let them use it.
  The Obama administration must face the reality that major surgery on 
our financial institutions is imperative to extract toxic assets 
clogging our financial system so the economy can recover. No more 
throwing billions at failed banks. Send in the FDIC. This is one crisis 
where hope won't be enough. We must act, and we must act now.
  Madam President, I ask unanimous consent that the remarks of Thomas 
Hoenig, the President and CEO of the Federal Reserve Bank of Kansas 
City, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                           Too Big Has Failed

       Two years ago, we started seeing a problem in a specialized 
     area of financial markets that many people had never heard 
     of, known as the subprime mortgage market. At that time, most 
     policymakers thought the problems would be self-contained and 
     have limited impact on the broader economy. Today, we know 
     differently. We are in the midst of a very serious financial 
     crisis, and our economy is under significant stress.
       Over the past year, the Federal government and financial 
     policy makers have enacted numerous programs and committed 
     trillions of dollars of public funds to address the crisis. 
     And still the problems remain. We have yet to restore 
     confidence and transparency to the financial markets, leaving 
     lenders and investors wary of making new commitments.
       The outcome so far, while disappointing, is perhaps not 
     surprising.

[[Page 7152]]

       We have been slow to face up to the fundamental problems in 
     our financial system and reluctant to take decisive action 
     with respect to failing institutions. We are slowly beginning 
     to deal with the overhang of problem assets and management 
     weaknesses in some of our largest firms that this crisis is 
     revealing. We have been quick to provide liquidity and public 
     capital, but we have not defined a consistent plan and not 
     addressed basic shortcomings and, in some cases, the 
     insolvent position of these institutions.
       We understandably would prefer not to ``nationalize'' these 
     businesses, but in reacting as we are, we nevertheless are 
     drifting into a situation where institutions are being 
     nationalized piecemeal with no resolution of the crisis.
       With conditions deteriorating around us, I will offer my 
     views on how we might yet deal with the current state of 
     affairs. I'll start with a brief overview of the policy 
     actions we have been pursuing, but I will also provide 
     perspective on the actions we have taken and the outcomes we 
     have experienced in previous financial crises. Finally, I 
     will suggest what lessons we might take from these previous 
     crises and apply to working our way out of the current 
     crisis.
       In suggesting alternative solutions, I acknowledge it is no 
     simple matter to solve. People say ``it can't be done'' when 
     speaking of allowing large institutions to fail. But I don't 
     think that those who managed the Reconstruction Finance 
     Corporation, the Resolution Trust Corporation, the Swedish 
     financial crisis or any other financial crisis were handed a 
     blueprint that carried a guarantee of success. I don't accept 
     that we have lost our ability to solve a new problem, 
     especially when it looks like a familiar problem.


                  Current Policy Actions and Problems

       Much has been written about how we got into our current 
     situation, most notably the breakdowns in our mortgage 
     finance system, weak or neglected risk management practices, 
     and highly leveraged and interconnected firms and financial 
     markets. Because this has been well-documented, today I will 
     focus on the policy responses we have tried so far and where 
     they appear to be falling short.
       A wide range of policy steps has been taken to support 
     financial institutions and improve the flow of credit to 
     businesses and households. In the interest of time, I will go 
     over the list quickly.
       As a means of providing liquidity to the financial system 
     and the economy, the Federal Reserve has reduced the targeted 
     federal funds rate in a series of steps from 5.25 percent at 
     mid-year 2007 to the present 0 to 25 basis-point range. In 
     addition, the Federal Reserve has instituted a wide range of 
     new lending programs and, through its emergency lending 
     powers, has extended this lending beyond depository 
     institutions.
       The Treasury Department. the Federal Reserve and other 
     regulators have also arranged bailouts and mergers for large 
     struggling or insolvent institutions, including Fannie Mae 
     and Freddie Mac, Bear Stearns, WaMu, Wachovia, AIG, 
     Countrywide, and Merrill Lynch. But other firms, such as 
     Lehman Brothers, have been allowed to fail.
       The Treasury has invested public fluids, buying preferred 
     stock in more than 400 financial institutions through the 
     TARP program. TARP money has also been used to fund 
     government guarantees of more than $400 billion of securities 
     held by major financial institutions, such as CitiGroup and 
     Bank of America. In addition, the Federal Reserve and the 
     Treasury Department have committed more than $170 billion to 
     bail out the troubled insurance company AIG.
       Other actions have included increased deposit insurance 
     limits and guarantees for bank debt instruments and money 
     market mutual funds.
       The most recent step is the Treasury financial stability 
     plan, which provides for a new round of TARP spending and 
     controls, assistance for struggling homeowners, and a plan 
     for a government/private sector partnership to buy up bad 
     assets held by financial institutions and others.
       The sequence of these actions, unfortunately, has added to 
     market uncertainty. Investors are understandably watching to 
     see which institutions will receive public money and survive 
     as wards of the state.
       Any financial crisis leaves a stream of losses embedded 
     among the various participants, and these losses must 
     ultimately be borne by someone. To start the resolution 
     process, management responsible for the problems must be 
     replaced and the losses identified and taken. Until these 
     kinds of actions are taken, there is little chance to restore 
     market confidence and get credit markets flowing. It is not a 
     question of avoiding these losses, but one of how soon we 
     will take them and get on to the process of recovery. 
     Economist Allan Meltzer may have expressed this point best 
     when he said that ``capitalism without failure is like 
     religion without sin.''


          What Might We Learn from Previous Financial Crises?

       Many of the policy actions I just described provide support 
     to the largest financial institutions, those that are 
     frequently referred to as ``too big to fail.'' A rationale 
     for such actions is that the failure of a large institution 
     would have a systemic impact on the economy. It is emphasized 
     that markets have become more complex, and institutions--both 
     bank and nonbank entities--are now larger and connected more 
     closely through a complicated set of relationships. Often, 
     they point to the negative impact on the economy caused by 
     last year's failure of Lehman Brothers.
       History, however, may show us another experience. When 
     examining previous financial crises, in other countries as 
     well as in the United States, large institutions have been 
     allowed to fail. Banking authorities have been successful in 
     placing new and more responsible managers and directors in 
     charge and then reprivatizing them. There is also evidence 
     suggesting that countries that have tried to avoid taking 
     such steps have been much slower to recover, and the ultimate 
     cost to taxpayers has been larger.
       There are several examples that illustrate these points and 
     show what has worked in previous crises and what hasn't. A 
     comparison that many are starting to draw now is with what 
     happened in Japan and Sweden.
       Japan took a very gradual and delayed approach in 
     addressing the problems in its banks. A series of limited 
     steps spread out over a number of years were taken to slowly 
     remove bad assets from the banks, and Japan put off efforts 
     to address an even more fundamental problem--a critical 
     shortage of capital in these banks. As a result, the banks 
     were left in the position of having to focus on past problems 
     with little resources available to help finance any economic 
     recovery.
       In contrast, Sweden took decisive steps to identify losses 
     in its major financial institutions and insisted that solvent 
     institutions restore capital and clean up their balance 
     sheets. The Swedish government did provide loans to solvent 
     institutions, but only if they also raised private capital.
       Sweden dealt firmly with insolvent institutions, including 
     operating two of the largest banks under governmental 
     oversight with the goal of bringing in private capital within 
     a reasonable amount of time. To deal with the bad assets in 
     these banks, Sweden created well-capitalized asset management 
     corporations or what we might call ``bad banks.'' This step 
     allowed the problem assets to be dealt with separately and 
     systematically, while other banking operations continued 
     under a transparent and focused framework.
       The end result of this approach was to restore confidence 
     in the Swedish banking system in a timely manner and limit 
     the amount of taxpayer losses. Sweden, which experienced a 
     real estate decline more severe than that in the United 
     States, was able to resolve its banking problems at a long 
     term net cost of less than 2 percent of GDP.
       We can also learn a great deal from how the United States 
     has dealt with previous crises. There has been a lot written 
     attempting to draw parallels with the Great Depression. The 
     main way that we dealt with struggling banks at that time was 
     through the Reconstruction Finance Corporation.
       Without going into great detail about the RFC, I will note 
     the four principles that Jesse Jones, the head of the RFC, 
     employed in restructuring banks. The first step was to write 
     down a bank's bad assets to realistic economic values. Next, 
     the RFC would judge the character and capacity of bank 
     management and make any needed and appropriate changes. The 
     third step was to inject equity in the form of preferred 
     stock, but this step did not occur until realistic asset 
     values and capable management were in place. The final step 
     was receiving the dividends and eventually recovering the par 
     value of the stock as a bank returned to profitability and 
     full private ownership.
       At one point in 1933, the RFC held capital in more than 40 
     percent of all banks, representing one-third of total bank 
     capital according to some estimates, but because of the four 
     principles of Jesse Jones, this was all carried out without 
     any net cost to the government or to taxpayers.
       If we compare the TARP program to the RFC, TARP began 
     without a clear set of principles and has proceeded with what 
     seems to be an ad hoc and less-than-transparent approach in 
     the case of banks judged ``too big to fail.'' In both the RFC 
     and Swedish experiences, triage was first used to set 
     priorities and determine what institutions should be 
     addressed immediately. TARP treated the largest institutions 
     as one. As we move forward from here, therefore, we would be 
     wise to have a systematic set of principles and a detailed 
     plan to guide us.
       Another example we need to be aware of relates to the 
     thrift problems of the 1980s. Because the thrift insurance 
     fund was inadequate to avoid the losses embedded in thrift 
     balance sheets, an attempt was made to cover over the losses 
     with net worth certificates and expanded powers that were 
     supposed to allow thrifts to grow out of their problems. A 
     notable fraction of the thrift industry was insolvent, but 
     continued to operate as so-called ``zombie'' or ``living 
     dead'' thrifts. As you may recall, this attempt to postpone 
     closing insolvent thrifts did not end well, but instead added 
     greatly to the eventual losses and led to greater real estate 
     problems.
       A final example--our approach to large bank problems in the 
     1980s and early 1990s--shows that we have taken some steps to 
     deal with banking organizations that are considered ``too big 
     to fail'' or very important on a regional level.

[[Page 7153]]

       The most prominent example is Continental Illinois' failure 
     in 1984. Continental was the seventh-largest bank in the 
     country, the largest domestic commercial and industrial 
     lender, and the bank that popularized the phrase ``too big to 
     fail.'' Questions about Continental's soundness led to a run 
     by large foreign depositors in May of 1984.
       But looking back, Continental actually was allowed to fail. 
     Although the FDIC put together an open bank assistance plan 
     and injected capital in the form of preferred stock, it also 
     brought in new management at the top level, and shareholders, 
     who were the bank's owners, lost their entire investment. The 
     FDIC also separated the problem assets from the bank, which 
     left a clean bank to be restructured and eventually sold. To 
     liquidate the bad assets, the FDIC hired specialists to 
     oversee the different categories of loans and entered into a 
     service agreement with Continental that provided incentive 
     compensation for its staff to help with the liquidation 
     process.
       A lesson to be drawn from Continental is that even large 
     banks can be dealt with in a manner that imposes market 
     discipline on management and stockholders, while controlling 
     taxpayer losses. The FDIC's asset disposition model in 
     Continental, which used incentive fees and contracts with 
     outside specialists, also proved to be an effective and 
     workable model. This model was employed again in the failure 
     of Bank of New England in 1991, the failures of nearly all of 
     the large banking organizations in Texas in the 1980s, and 
     also for the Resolution Trust Corporation, which was set up 
     to liquidate failed thrifts.


                      Resolving the Current Crisis

       Turning to the current crisis, there are several lessons we 
     can draw from these past experiences.
       First, the losses in the financial system won't go away--
     they will only fester and increase while impeding our chances 
     for a recovery.
       Second, we must take a consistent, timely, and specific 
     approach to major institutions and their problems if we are 
     to reduce market uncertainty and bring in private investors 
     and market funding.
       Third, if institutions--no matter what their size--have 
     lost market confidence and can't survive on their own, we 
     must be willing to write down their losses, bring in capable 
     management, sell off and reorganize misaligned activities and 
     businesses, and begin the process of restoring them to 
     private ownership.
       How can we do this today in an era where we have to deal 
     with systemic issues rising not only from very large banks, 
     but also from many other segments of the marketplace? I would 
     be the first to acknowledge that some things have changed in 
     our financial markets, but financial crises continue to occur 
     for the same reasons as always--over-optimism. excessive debt 
     and leverage ratios, and misguided incentives and 
     perspectives--and our solutions must continue to address 
     these basic problems.
       The process we use for failing banks--albeit far from 
     perfect in dealing with ``too big to fail'' banks--provides 
     some first insight into the principles we should establish in 
     dealing with financial institutions of any type.
       Our bank resolution framework focuses on timely action to 
     protect depositors and other claimants, while limiting 
     spillover effects to the economy. Insured depositors at 
     failed banks typically gain full and immediate access to 
     their funds, while uninsured depositors often receive quick, 
     partial payouts based on expected recoveries.
       To provide for a continuation of essential banking 
     services, the FDIC may choose from a variety of options, 
     including purchase and assumption transactions, deposit 
     transfers or payouts, bridge banks, conservatorships, and 
     open bank assistance. These options focus on transferring 
     important banking functions over to sound banking 
     organizations with capable management, while putting 
     shareholders at failed banks first in line to absorb losses.
       Other important features in resolving failing banks include 
     an established priority for handling claimants, prompt 
     corrective action, and least-cost resolution provisions to 
     protect the deposit insurance fund and, ultimately, taxpayers 
     and to also bring as much market discipline to the process as 
     possible.
       I would argue for constructing a defined resolution program 
     for ``too big to fail'' banks and bank holding companies, and 
     nonbank financial institutions. It is especially necessary in 
     cases where the normal bankruptcy process may be too slow or 
     disruptive to financial market activities and relationships. 
     The program and resolution process should be implemented on a 
     consistent, transparent and equitable basis whether we are 
     resolving small banks, large banks or other complex financial 
     entities.
       How should we structure this resolution process? While a 
     number of details would need to be worked out, let me provide 
     a broad outline of how it might be done.
       First, public authorities would be directed to declare any 
     financial institution insolvent whenever its capital level 
     falls too low to support its ongoing operations and the 
     claims against it, or whenever the market loses confidence in 
     the firm and refuses to provide finding and capital. This 
     directive should be clearly stated and consistently adhered 
     to for all financial institutions that are part of the 
     intermediation process or payments system. We must also 
     recognize up front that the FDIC's resources and other 
     financial industry support funds may not always be sufficient 
     for this task and that Treasury money may also be needed.
       Next, public authorities should use receivership, 
     conservatorship or ``bridge bank'' powers to take over the 
     failing institution and continue its operations under new 
     management. Following what we have done with banks, a 
     receiver would then take out all or a portion of the bad 
     assets and either sell the remaining operations to one or 
     more sound financial institutions or arrange for the 
     operations to continue on a bridge basis under new management 
     and professional oversight. In the case of larger 
     institutions with complex operations, such bridge operations 
     would need to continue until a plan can be carried out for 
     cleaning up and restructuring the firm and then reprivatizing 
     it.
       Shareholders would be forced to bear the full risk of the 
     positions they have taken and suffer the resulting losses. 
     The newly restructured institution would continue the 
     essential services and operations of the failing firm.
       All existing obligations would be addressed and dealt with 
     according to whatever priority is set up for handling claims. 
     This could go so far as providing 100 percent guarantees to 
     all liabilities, or, alternatively, it could include 
     resolving short-term claims expeditiously and, in the case of 
     uninsured claims, giving access to maturing funds with the 
     potential for haircuts depending on expected recoveries, any 
     collateral protection and likely market impact.
       There is legitimate concern for addressing these issues 
     when institutions have significant foreign operations. 
     However, if all liabilities are guaranteed, for example, and 
     the institution is in receivership, such international 
     complexities could be addressed satisfactorily.
       One other point in resolving ``too big to fail'' 
     institutions is that public authorities should take care not 
     to worsen our exposure to such institutions going forward. In 
     fact, for failed institutions that have proven to be too big 
     or too complex to manage well, steps must be taken to break 
     up their operations and sell them off in more manageable 
     pieces. We must also look for other ways to limit the 
     creation and growth of firms that might be considered ``too 
     big to fail.''
       In this regard, our recent experience with ad hoc solutions 
     to large failing firms has led to even more concentrated 
     financial markets as only the largest institutions are likely 
     to have the available resources for the type of hasty 
     takeovers that have occurred. Another drawback is that these 
     organizations do not have the time for necessary ``due 
     diligence'' assessments and, as we have seen, may encounter 
     serious acquisition problems. Under a more orderly resolution 
     process, public authorities would have the time to be more 
     selective and bring in a wider group of bidders, and they 
     would be able to offer all or portions of institutions that 
     have been restored to sound conditions.


                          Concluding Thoughts

       While hardly painless and with much complexity itself, this 
     approach to addressing ``too big to fail'' strikes me as 
     constructive and as having a proven track record. Moreover, 
     the current path is beset by ad hoc decision making and the 
     potential for much political interference, including efforts 
     to force problem institutions to lend if they accept public 
     funds; operate under other imposed controls; and limit 
     management pay, bonuses and severance.
       If an institution's management has failed the test of the 
     marketplace, these managers should be replaced. They should 
     not be given public funds and then micro-managed, as we are 
     now doing under TARP, with a set of political strings 
     attached.
       Many are now beginning to criticize the idea of public 
     authorities taking over large institutions on the grounds 
     that we would be ``nationalizing'' our financial system. I 
     believe that this is a misnomer, as we are taking a temporary 
     step that is aimed at cleaning up a limited number of failed 
     institutions and returning them to private ownership as soon 
     as possible. This is something that the banking agencies have 
     done many times before with smaller institutions and, in 
     selected cases, with very large institutions. In many ways, 
     it is also similar to what is typically done in a bankruptcy 
     court, but with an emphasis on ensuring a continuity of 
     services. In contrast, what we have been doing so far is 
     every bit a process that results in a protracted 
     nationalization of ``too big to fail'' institutions.
       The issue that we should be most concerned about is what 
     approach will produce consistent and equitable outcomes and 
     will get us back on the path to recovery in the quickest 
     manner and at reasonable cost. While it may take us some time 
     to clean up and reprivatize a large institution in today's 
     environment--and I do not intend to underestimate the 
     difficulties that would be encountered--the alternative of 
     leaving an institution to continue its operations with a 
     failed management team in place is certain to be more costly 
     and far less likely to produce a desirable outcome.

[[Page 7154]]

       In a similar fashion, some are now claiming that public 
     authorities do not have the expertise and capacity to take 
     over and run a ``too big to fail'' institution. They contend 
     that such takeovers would destroy a firm's inherent value, 
     give talented employees a reason to leave, cause further 
     financial panic and require many years for the restructuring 
     process. We should ask, though, why would anyone assume we 
     are better off leaving an institution under the control of 
     failing managers, dealing with the large volume of ``toxic'' 
     assets they created and coping with a raft of politically 
     imposed controls that would be placed on their operations?
       In contrast, a firm resolution process could be placed 
     under the oversight of independent regulatory agencies 
     whenever possible and ideally would be funded through a 
     combination of Treasury and financial industry funds.
       Furthermore, the experience of the banking agencies in 
     dealing with significant failures indicates that financial 
     regulators are capable of bringing in qualified management 
     and specialized expertise to restore failing institutions to 
     sound health. This rebuilding process thus provides a means 
     of restoring value to an institution, while creating the type 
     of stable environment necessary to maintain and attract 
     talented employees. Regulatory agencies also have a proven 
     track record in handling large volumes of problem assets--a 
     record that helps to ensure that resolutions are handled in a 
     way that best protects public funds.
       Finally, I would argue that creating a framework that can 
     handle the failure of institutions of any size will restore 
     an important element of market discipline to our financial 
     system, limit moral hazard concerns, and assure the fairness 
     of treatment from the smallest to the largest organizations 
     that that is the hallmark of our economic system.

  Mr. BOND. Madam President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Republican leader is 
recognized.

                          ____________________