[Congressional Record (Bound Edition), Volume 156 (2010), Part 5]
[Senate]
[Pages 5890-5891]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      FINANCIAL REGULATORY REFORM

  Mr. DeMINT. Mr. President, good morning.
  I rise in opposition to the piece of legislation that Chairman Dodd 
is calling financial reform. All Republicans want to reform our 
financial system and fix the things that have caused so much financial 
distress in our country. But rather than address the underlying causes 
of the 2008 financial crisis, this bill would institutionalize 
government bailouts for those it chooses are too big to fail. If 
Democrats were serious about financial reform, they would work with 
Republicans to permanently end too big to fail, to curb the power of 
the Federal Reserve, and to address the government distortions in the 
mortgage market that led to the financial meltdown. This bill does none 
of these.
  Instead of focusing on solving these problems, the Democrats have 
eagerly crafted another massive bill designed to increase centralized 
government planning, and they are vilifying anyone who dares to oppose 
it.
  Without bringing any more accountability to the government actors who

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contributed to the causes of the financial crisis, this bill simply 
represents additional regulation without real reform. Despite a recent 
Pew poll stating that more than 80 percent of Americans support ending 
bailouts, this bill ensures they will continue. The bill requires the 
government to keep a list of financial companies it considers too big 
to fail, and it provides these companies with a $50 billion slush fund 
to help them when they get in trouble.
  In one respect the Democrats may be right in saying they would not 
let the bailouts take place like they did in the past. If their bill 
passes, the next TARP bailout would not even be voted on by Congress. 
That is because this slush fund empowers the Treasury, the Federal 
Reserve, and the FDIC to pump money to ailing banks without asking for 
any permission from Congress.
  There have been rumors that this slush fund could be removed. I hope 
it will be. But even if that is done, the bill will still perpetuate 
too-big-to-fail policies.
  Additional programs in the bill will still allow the FDIC to 
guarantee the debts of financial companies in trouble, and they will 
also allow the Treasury to still selectively bail out the creditors of 
failing institutions. The bill also fails to stop the Federal Reserve 
from propping up financial companies as it did AIG. It additionally 
expands the Fed's reach by creating a new consumer protection bureau 
inside the Federal Reserve. With its extensive jurisdiction and its 
unchecked ability to micromanage lending, it should be considered the 
anticonsumer bureau. This new bureau will have sweeping authority to 
regulate almost anything it regards as financial activity. From car 
dealers to other companies that offer financing for their products, to 
software companies that help people manage their money, this massive 
new bureaucracy is certain to increase regulatory burdens on community 
banks, credit unions, and many others who had no role whatsoever in the 
financial crisis, as well as to raise consumer costs and kill jobs.
  Before we rush to give the Fed more control over our economy, we need 
more information about its activities surrounding the 2008 financial 
crisis. Even to this day, the Fed refuses to provide information about 
the extent to which they have used taxpayer money for the bailouts, and 
it is unacceptable to keep this kind of secrecy. Legislation to fully 
audit the Fed continues to enjoy widespread support, and I will 
continue to champion this audit of the Federal Reserve.
  I would also like to see this bill bring some much needed 
accountability to Fannie Mae and Freddie Mac. These government entities 
that dominate the mortgage market and hold $5 trillion in debt were 
ringleaders in the chain of buying, securitizing, and spreading toxic 
subprime mortgages that led to the financial collapse. Since the 
government took them over in 2008, taxpayers have been forced to give 
them $127 billion so far, and there is no end in sight. The Obama 
administration handed them a blank check last Christmas Eve by lifting 
the $400 billion cap on government aid, ensuring endless bailouts in 
the future.
  Real reform would address the ongoing crisis at Fannie Mae and 
Freddie Mac. Although the Democratic bill is completely silent on this 
issue, I intend to see that we find a way to reduce their holdings and 
divorce them from government ownership. We cannot deny the fact that 
these two government entities were a major cause of the financial 
crisis. Yet they are not even mentioned in this so-called financial 
reform.
  Reform would not be complete without also addressing the underwriting 
issues that led to the explosion of risky lending that fueled the 
housing bubble. This bill leaves the Community Reinvestment Act and 
Fannie Mae's and Freddie Mac's affordable housing goals untouched. Each 
required significant increases in mortgage lending to lower income 
borrowers, which led to a decrease in the underwriting standards to 
make more loans to folks who could not afford to pay them back. These 
bad practices became contagious in the industry.
  If we do not deal with these housing policy problems that led to 
unsafe lending, as well as Fannie Mae's and Freddie Mac's sizable 
ability to sustain demand for such loans by still buying them, we risk 
continuing a boom-or-bust housing cycle that saddles taxpayers with the 
consequences of mortgages given to borrowers who likely cannot afford 
to pay them back.
  Meanwhile, Fannie Mae and Freddie Mac keep getting bailed out by the 
taxpayers. That is the kind of impervious backing a reckless bank could 
only dream of getting, and that is the same kind of deal Democrats are 
now offering to the big banks they pretend to despise.
  Despite all the rhetoric coming from my Democratic colleagues, this 
bill does not crack down on Wall Street. In fact, Wall Street loves it. 
It turns the relationship between Wall Street and Washington into a 
freeway. The best way to get tough on Wall Street would be to make sure 
those banks have the same freedom to fail as the banks who did not get 
bailed out by the government in the last few years.
  Ruling out special treatment for these big banks would be the 
harshest punishment possible. So instead of ending too big to fail, 
Democrats are constantly inventing new ways to break down barriers 
between Washington control and Wall Street. That is not how you stand 
up to big banks; that is how you deal them in.
  It is important we fix the problems that caused our financial 
meltdown. But it is even more important to recognize that this 
political vehicle that is being called financial reform is just a lot 
more government control, a lot more government takeovers, an overreach 
by the Obama administration, with very little financial reform.
  This is not fair to the American people. It perpetuates too big to 
fail. It essentially guarantees future bailouts. It does not fix the 
core causes of the problems, and, again, it expands big government 
control over thousands of community banks, credit unions, and 
businesses that had nothing to do with this financial crisis. I am 
afraid it is just another crisis being used as an excuse to expand 
government without solving real problems.
  Republicans are standing by and eager to work with Chairman Dodd and 
other Democrats to fix the problems in this bill so we can present real 
reform to the American people. I urge my colleagues on the other side 
to stop trying to stick another bill down our throats and down the 
throats of the American people and work with us to do what the American 
people expect.
  With that, I yield back and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. Will the Senator withhold his 
request?
  Mr. DeMINT. Yes.
  The ACTING PRESIDENT pro tempore. The Senator from Wyoming is 
recognized.

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