[Congressional Record (Bound Edition), Volume 156 (2010), Part 4]
[Senate]
[Pages 5219-5220]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       FINANCIAL SERVICES REFORM

  Mr. DODD. Mr. President, I wish to take a few minutes, if I can. I 
know we are in the waning minutes of going out of session and Members 
have, I think by and large, probably left the city for their respective 
States--as I will be doing in a day or so, going back to Connecticut to 
spend time with my family and constituents over the Easter-Passover 
break.
  I wish to take a couple of minutes to talk briefly about my 
responsibilities as chairman of the Senate Banking, Housing, and Urban 
Affairs Committee on which I serve with 22 others of our colleagues. 
Almost a quarter of this institution sits on that committee. Senator 
Richard Shelby of Alabama is my ranking Republican member and former 
chairman of the committee, I might point out.
  We finished our work, at least in our committee, last Monday--a 
rather abbreviated markup, I might point out. I didn't plan it to be 
that way, but we ended up with a pretty short markup of a fairly 
complicated bill.
  A week ago today, at about this time or a little after this time, we 
received amendments. Almost 400 amendments were filed, so I anticipated 
a rather elongated markup, but members decided they weren't going to 
offer their amendments in the committee, which is their right. I had a 
responsibility as chairman of the committee to consider those 
amendments if they were offered, and we were prepared to accept some, 
modify some, and reject others. But the conclusion of the committee was 
to take what changes we had made and move forward. So it is my hope 
that shortly after our return in the second week of April, we will come 
to the floor of the Senate to debate--hopefully a full-throated 
debate--about how we reform the financial services sector of our 
Nation.
  In light of the events over the last several years, this is a 
compelling issue that mandates our involvement and participation. We 
can hardly allow this Congress to leave the door wide open again to the 
kind of abuses that brought our Nation to the brink of financial 
collapse. Those were the words used by the Chairman of the Federal 
Reserve, Mr. Ben Bernanke, on September 18 of 2008, as they were the 
words of the former Treasury Secretary, Henry Paulson, when they met 
with the leadership of the House and the Senate and the respective 
leaderships of the committees of jurisdiction. They predicted that had 
we not acted in the remaining weeks of that session before the 
adjournment in 2008, in fact, we might very well be looking at a very 
different country today. Certainly we avoided the collapse they talked 
about but at great cost. The fact that this country and its taxpayers 
had to write a check for $700 billion, resources of which went to a 
handful of financial institutions to ``bail them out'' in order to 
preserve the safety and soundness of a fragile financial system is 
something that still causes remarkable levels of anger and 
frustration--understandable levels of frustration and anger--of the 
American people all across the country, regardless of where one lives. 
The idea is that a firm on Wall Street could get near the brink of 
disaster and get massive resources poured into them and then we have to 
watch someone's home in Connecticut or Delaware or Colorado, Tennessee 
or Alabama foreclosed, a business closed, a retirement account 
evaporating within a matter of hours, despite the fact these larger 
institutions were getting the resources from the American taxpayers.
  We made an effort--I don't claim by any stretch of the imagination 
perfection--to try to deal with the reforms. Obviously, it is a 
complicated matter and complications are added to it. We have 23 
members of a committee, not to mention 100 Members of this body who all 
have various views on what ought to be done, not to mention the other 
body, the White House, stakeholders, and others, trying to fashion 
legislation, not saying we are going to stop all financial problems in 
the future--that would be ludicrous to make such a suggestion--but 
there will be other financial problems.
  What we are going to try and do with this bill and what we think we 
have done to a large extent with this bill is to say there may be other 
financial problems but never again should a financial problem of a 
major financial institution put the rest of the country at risk. That 
is what happened. Because of their abuses, their greed, the failure of 
regulators, or the failure of the government to regulate certain 
institutions, we saw a system go haywire.
  I do not mind if some firm wants to go to the casino and gamble with 
their money. I understand that. But the idea that they would do that 
with the taxpayers' money or with the well-being of our economy has to 
stop. Our legislation is designed to do that.
  First and foremost, never, ever again should a financial institution 
get so large, so interconnected, and produce products that put the rest 
of us at risk. Our legislation shuts that door, we believe, firmly.
  Others are arguing because, frankly, they do not want to admit what 
the real argument is about, they do not

[[Page 5220]]

like the fact we have a consumer protection agency for the first time 
in the history of our country, so people who buy a mortgage, buy stock, 
buy an insurance policy, whatever else it may be, will have someplace 
to go if, in fact, they are being abused. That is exactly what 
happened. They were abused in too many instances. Rather than focus 
their criticism on that, they are focusing on other things that, 
frankly, we are dealing with very effectively in the legislation.
  We also set up an early warning system to the largest extent possible 
so we know what is going on out there with products and firms that 
bring us to the brink of disaster as they did only a few short months 
ago.
  We are looking at some of these exotic instruments--credit default 
swaps, derivatives, over the counter--an industry that went from about 
$90 billion and within the space of 6 or 7 years, to close to $600 
billion. It exploded in large measure because it was in the shadow 
economy. That ends with this bill. They are going to have the glaring 
light of sunshine on them through exchanges so the American people can 
know exactly what these instruments are and how much risk is being 
taken with their use.
  There are elements of this country that do not like that idea because 
they would rather not have the light shone on them to examine what they 
are, but we are determined to see to it that is going to be the case in 
our legislation as well.
  There are a lot of other provisions in a 1,400-page bill that deal 
with other matters related to all of this business. I wanted to inform 
my colleagues that we have a strong bill coming out of our committee--a 
fully independent consumer protection agency, bureau or division. It is 
housed in the Federal Reserve in our bill, which has caused some people 
to wonder how independent it can be. It is totally independent. Its 
head will be appointed by the President of the United States. That head 
would then have to be confirmed by the Senate. The budget this agency 
would have is going to be separate from other budgets. It will have its 
own line of funding to go forward. It has independent authority on 
rulemaking, examination, and enforcement with institutions that have 
assets in excess of $10 billion. And for those that are smaller than 
that, the examination and enforcement will be done at the State level 
or others will be responsible.
  Many are concerned this would reach down to the community banks. We 
separated that out. I know my colleagues expressed that view. That we 
have finally someone watching out is going to be very important. We 
were told for years our system was safe and sound because they were 
making a lot of money. As we learned painfully, that is not the only 
criteria to determine whether a financial institution is safe or sound. 
In fact, they were anything but safe and sound, despite their earnings 
reports. We subsequently learned that people were put into homes they 
never could afford, did not understand because these institutions were 
securitizing those mortgages, bundling them together and then selling 
them to unwitting investors because they had ratings on them that never 
reflected the reality of what those instruments were worth in our 
country. Our legislation deals with that as well in a very strong and 
effective manner.
  My only purpose in sharing a few thoughts this afternoon before 
adjournment occurs is to say I hope my colleagues in their visits back 
to their States, in talking with their constituents, will talk about 
these issues. Listen to your businesses on Main Street. Listen to the 
borrowers. Listen to the users and the customers of financial 
institutions.
  The institutions are going to call you. They are going to write you. 
They are going to find you, believe me, because many of them do not 
like what I have done in this bill. They would like the status quo to 
be maintained. You are going to hear from them, I promise you. You are 
going to have to work a little harder to listen to the voices out there 
who may not contact you about this but will tell you what it is like to 
try to borrow money, make an investment, get credit, buy a home, get a 
student loan in order to afford the cost of higher education. I urge my 
colleagues to listen to those voices as well. They deserve to be heard 
in this debate. Then I hope we will have the kind of full-throated 
debate when we get back, meet with the other body with a final product, 
and hopefully give the President of the United States a bill worthy of 
the challenge before us.
  This is the single largest reform of financial services since the 
thirties. It is long overdue. We must not fail in our obligation to 
meet the challenges. If we leave here failing to do this, we will 
expose our economy, and the American public will never, ever again 
write a check as they did in the fall of 2008. You can forget about 
that. We need to make sure these firms that get into trouble understand 
the presumption is bankruptcy, receivership. Shareholders will pay a 
price, and management goes. The idea that you are going to be able to 
count somehow on the American taxpayer pulling your chestnuts out of 
the fire is over within the ``too big to fail'' concept.
  The importance of achieving that goal along with these other reforms 
I think will have the desired effect. Failure to do that leaves us 
exposed to the kinds of financial challenges we have witnessed over the 
last several years.
  Again, a business, I say respectfully, in Connecticut, Delaware, or 
Colorado, a homeowner in those States should not have to pay the price 
because a handful of financial institutions got too greedy, too risky, 
and were unwilling to examine what they were doing or did, recognizing 
the Federal Government would bail them out if they made a bad choice, 
which they did.
  I look forward to that debate and presenting the bill our committee 
marked up on Monday of this past week.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Colorado.

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