[Congressional Record (Bound Edition), Volume 156 (2010), Part 5]
[Senate]
[Pages 6117-6118]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      FINANCIAL REGULATORY REFORM

  Ms. CANTWELL. Madam President, this speech is not meant to target or 
malign anyone. It is simply to talk about the responsibilities we have 
as Members of Congress to our constituents.
  Our country has been rocked by a financial crisis of epic 
proportions, one that will have Americans paying for generations to 
come. It has shaken the public's faith not only in Wall Street but in 
this institution, the Congress.
  Whether it is Enron or Amaranth or Bernie Madoff or the Wall Street 
bailout, the American people are asking themselves a fundamental 
question: Can I even trust those guys in Washington to look out for me 
when it comes to the special interests creating rules of the game that 
tilt the board in their favor?
  Some people listening today may be smiling and thinking: Senator, 
that is one of the oldest questions and most frequently asked in 
Washington, DC: Whose side are you on? But never has this question of 
``whose side are you on'' had such dramatic consequences for the 
economic lives of millions of Americans. Over 2 million people have 
lost their homes, many going into bankruptcy, 7.3 million jobs have 
been lost, and our government has put something like $24 trillion on 
the line to help Wall Street in this meltdown--something taxpayers will 
be paying for decades, to say nothing of the kids who will not go to 
college because college tuition went up 32 percent or workers whose 
401s have been wiped out, making it almost impossible to retire.
  The American people have been let down by those involved in 
government oversight who have feigned: Oh, this stuff is too complex 
for us to understand. We better listen to those outside interests. They 
understand this better than I do.
  It takes a mighty man, who was in control of our financial markets 
for nearly two decades, like Fed Chairman Alan Greenspan to admit his 
philosophy was wrong. But it took even more dogged oversight by the 
likes of Henry Waxman to take a subject that some people think is too 
complex to understand and boil it down to a simple yes-or-no question.
  Congressman Waxman to Mr. Greenspan:

       Mr. Greenspan, the premise that you could trust markets to 
     regulate themselves, were you wrong?

  Mr. Greenspan, in response:

       Yes.

  Mr. Waxman to Mr. Greenspan:

       Mr. Greenspan, you found that your view . . . your ideology 
     was not right.

  Mr. Greenspan, in response:

       Precisely.

  This debate we are about to have on financial reform, in my mind, is 
really about the backbone of Congress. The central issue before us 
today is whether Congress is going to continue to trust Wall Street and 
those who represent them because there is too much complexity for 
Congress to understand. Really? Is it any more complicated than 
national security or the Medicare GPCI reimbursement formulas or our 
Tax Code in general? Really? Is it too complicated?
  P.J. O'Rourke, at a recent dinner honoring journalists, said:

       It's a fundamental principle of the rule of law, a 
     fundamental principle of economics, and a fundamental 
     principle of politics. . . . that beyond a certain point, 
     complexity is fraud.

  I agree with him. How is it that average Americans know that a back-
alley craps game with fixed dice is a no-win situation, yet a dark 
market with fixed financial instruments is allowed to carry on for more 
than a decade under the mischaracterized title of ``free market''?
  The issue is, we were told over the last 10 years by the Bush 
economic working group--and, for that matter, the Clinton economic 
working group and now even some members of the Obama economic working 
group--that these issues are too complex to understand. Really? Is that 
what happened when Bernie Madoff literally made off with millions of 
investors' life savings in a Ponzi scheme? It was not complex. And 
regulators were either afraid, lazy, or paid off when they failed to 
ask a simple question: Let me see your books. When we deregulated 
energy markets and Enron had at least one manipulation scheme for every 
day of the week--Death Star, Get Shorty, Ricochet, Fat Boy, just to 
name a few--these issues were not complex; it was simply shorting 
supply to drive up the price.
  No, the issue is not complexity. It is about the central issue of 
markets. They have to have transparency and oversight to operate 
effectively. Never more have the American people been counting on their 
Members of Congress to act like David against the big Goliath, Wall 
Street interests.
  We have been repeatedly warned about derivatives. The Long-Term 
Capital Management crisis almost took down the world economy in 1998 
because it started using complex mathematical formulas to do 
derivatives.
  Then-Chairman Brooksley Born of the Commodity Futures Trading 
Commission proposed regulating derivatives. That was her agency's 
primary role. Not only was she told by the President's working group 
she could not, they helped mastermind a strategy with Congress to stop 
her. So instead of regulating derivatives, Congress passed a law making 
sure the oversight agency could not regulate them. And just for extra 
measure, we also prohibited State attorneys general from regulating 
them as well.
  Well, why, if you were on Wall Street, would you ever worry about 
what exotic financial tools you were cooking up if you knew there was 
no oversight? Let me say that there are people on Wall Street who 
operate ethically, without fraud, without manipulation, and provide an 
essential tool to our economy and functioning markets. But when you 
take away the accountability of Wall Street, something happens to the 
accounting on Wall Street.
  We have had many votes here in the last 10 years to regulate and have 
oversight of the derivatives market and bring them out of the dark, and 
those efforts have primarily failed because the so-called smartest guys 
in the room stopped us. Did it really take another near 1933 Depression 
to remind us of our fundamental role? I ask my colleagues to check 
their previous votes on derivatives and tell me whether they still want 
to vote the same way.
  My constituents have been so disgusted by our lack of holding Wall 
Street accountable, they have said: If you can't beat them, then at 
least break them up. So I will be offering an amendment to return us to 
Glass-Steagall, the law of the land previous to 2000, to help protect 
consumers for decades. And I will be offering an amendment to 
strengthen our antimanipulation laws to make sure that if manipulation 
happens in the future, there will be a price to be paid.
  I will also say that my constituents want us to get this right and 
get capital flowing to small business. While Treasury turned the keys 
over to Wall Street to bail them out, small business is still being 
strangled by the lack of access to capital.
  As one quote says:

       This then is more than the tale of one company's fall from 
     grace. It is at its base the story of a wrenching period of 
     economic and political tumult as revealed through a single 
     corporate scandal. It is a portrait of America in upheaval at 
     the turn of the century, torn between the worship of fast 
     money and its zeal for truth, between greed and high 
     mindedness, between Wall Street and Main Street. Ultimately 
     it is a story of untold damage wreaked by a nation's folly--a 
     folly that in time we are all but certain to see again.

  I wish that quote was about our current crisis that started in 2008, 
but it is not. That quote is from a book called

[[Page 6118]]

``Conspiracy of Fools'' by Kurt Eichenwald that was written in 2005. He 
warned us that what was happening was just a tremor leading up to a 
massive earthquake that was about to happen. We did not listen. Are we 
listening now?
  I am going to be working with my colleagues to offer several 
amendments on the floor to strengthen this legislation, to make it the 
strongest legislation possible, to be accountable to my constituents, 
and to make sure we are putting derivatives back into the clear light 
of day.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Pennsylvania.

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