[Congressional Record (Bound Edition), Volume 156 (2010), Part 5]
[Senate]
[Pages 6463-6468]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      FINANCIAL REGULATORY REFORM

  Mr. JOHANNS. Mr. President, I rise for a few minutes to talk about S. 
3217, the financial regulatory reform bill. I focus, if I could, my 
comments today on why the cloture vote on financial reform is such an 
important key vote.
  My colleagues from the other side have talked about this vote, and it 
is often referred to as a procedural vote to begin debate. Almost in 
the same sentence, I think both sides of the aisle recognize that 
notwithstanding the good work that has been done by Chairman Dodd and 
Ranking Member Shelby, there is still much to be done on this bill, and 
there are still some significant flaws within the bill.
  The argument goes on to say: Don't worry, these problems can be 
worked out on the Senate floor. We will have a robust debate, and we 
will have floor amendments. So get the bill to the floor--the argument 
goes--and the promises made to fix it will then happen.
  But that is where the logic goes into the ditch. Once this bill does 
get to the floor of the Senate, we all recognize it is going to be very 
difficult to change it. Look at the health care bill to see how 
difficult it was to make changes. Let me make that comparison because I 
think it is a fair comparison.
  During the health care debate, let me remind my colleagues, there 
were 488 amendments that were filed. Of those 488 amendments, only 28 
received a vote--28 out of 488. Of those 28 amendments, only 11 
amendments passed. This being said, only 2 percent of all the health 
care amendments filed actually got passed.
  If we look at the partisan nature of this bill, it even becomes more 
blatant. If we look at the Republican amendments, we come to the 
conclusion that there was a serious problem. Only one Republican 
amendment passed. So the death knell of the amendment depended upon 
whether it had an ``R'' or a ``D'' behind the name.
  The notion that we will be able to fix a bill--and again, everybody 
is acknowledging it is a flawed bill--on the Senate floor is pure 
folly. History is our greatest teacher. Instead, I respectfully suggest 
that what we need to do is get serious about reaching a bipartisan 
compromise.
  I have said publicly, and I will say on the Senate floor every 
opportunity I get, that with a sufficient amount of work, this bill can 
get 70 or 80 votes. We have worked on this issue on the Banking 
Committee for months and months, trying to understand what went wrong 
and how best to fix it. The American people want Members of the Senate 
to work together on the bill. They wonder what on Earth has come of 
Congress when they see us holding the exact same cloture vote on the 
exact same legislation day after day.
  They ask a simple question: Why can't you just sit down and work 
through these differences of opinion?
  I am mindful of the fact that this is probably clever messaging--a 
clever messaging ploy by Washington's standards. But by Nebraskan 
standards, we are tired of Washington cleverness and the partisan 
rhetoric that goes with it. I can tell you that people want a bill that 
will end too big to fail and protect our economy from financial 
meltdown. What they don't want is a bill written so broadly that it 
impacts businesses in segments of our economy that play no part in the 
economic collapse. I want these same things.
  I still believe we can accomplish this. My hope is that we can quit 
making this an issue of political gamesmanship and talking points and 
start working toward a solution.
  I have consistently stated that the issue of regulatory reform isn't 
a partisan exercise. The issue just doesn't cut on ``R'' or ``D'' 
lines. We can get a broad, bipartisan bill if we stop the attacks and 
focus on trying to solve the differences that still exist on this 
bill--important policy differences.
  Stop the daily cloture votes. I understand the political theater of 
that, but it doesn't lend itself to solving problems. What we need is a 
bipartisan effort, where people sit down and work through these 
differences of opinion.
  With that, I yield the floor and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. LEVIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. LEVIN. Mr. President, yesterday, the Senate Permanent 
Subcommittee on Investigations, which I chair, held the fourth in our 
series of hearings to explore some of the causes and consequences of 
the financial crisis. These hearings are the culmination of nearly a 
year and a half of investigation.
  The freezing of financial markets and the collapse of financial 
institutions that sparked our investigation are not just a matter of 
numbers on a balance sheet. These are numbers reflecting millions of 
Americans who lost their jobs, their homes, and their businesses in a 
recession that the housing crisis sparked, the worst economic decline 
since the Great Depression. Behind these numbers are American families 
who are still suffering the effects of a manmade economic catastrophe.
  Our goal has been to construct a record of the facts in order to try 
to deepen public understanding of what went wrong, to inform a 
legislative debate about the need for financial reform, and to provide 
a foundation for building better defenses to protect Main Street from 
Wall Street.
  Our first hearing, 3 or 4 weeks ago, dealt with the impact of high-
risk mortgage lending. It focused on a case study, as our committee 
does, of Washington Mutual Bank, known as WaMu, a thrift whose leaders 
embarked on a reckless strategy to pursue higher profits by emphasizing 
high-risk loans. WaMu didn't just make loans that were likely to fail; 
these loans also created real hardships for the borrowers, as well as 
risk for the bank itself. What happened was there was basically a 
conveyor belt that fed those toxic loans into the financial system like 
a polluter dumping poison pollution into a river. That poison came 
packaged in mortgage-backed securities that WaMu sold to get the 
enormous risk of these mortgages off its own books and shifted to 
somebody else's.
  Our second hearing examined how Federal regulators at the Office of 
Thrift Supervision watched and observed WaMu--saw the problems year 
after year--and did nothing to stop them. Regulation by the Office of 
Thrift Supervision that should have

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been conducted at arm's length was instead done arm-in-arm with WaMu.
  The third hearing dealt with credit rating agencies. These are 
specific case studies of Standard & Poor's and Moody's, the Nation's 
two largest credit raters. And while WaMu and other lenders--and WaMu 
wasn't alone by a long shot--dumped these bad loans, regulators failed 
to stop the behavior. Credit rating agencies were assuring everybody 
that the poisoned water was safe to drink. Triple A ratings were 
slapped on bottles of high-risk financial products. So that was the 
third hearing. We have to do something about the inherent conflict of 
interest that is involved when the credit rating agencies are paid by 
the people whose actual documents and whose transactions they are 
rating, putting labels of triple A, double A, what have you, on them. 
There is a built-in conflict of interest.
  Yesterday's hearing explored the role of investment banks in the 
development of this crisis, and we focused on the period of 2007, when 
that housing bubble burst, of Goldman Sachs, one of the oldest firms on 
Wall Street. Goldman's documents made it very clear that it was betting 
against the housing market while it was aggressively selling 
investments in the housing market to its own clients. It was selling 
the clients high-risk, mortgage-backed securities and what they call 
CDOs, and synthetic CDOs, that it wanted to get off its books. They 
wanted to get securities off the books. They were reaching out with one 
hand to prospective buyers and saying: Here. But with the other hand 
they were betting against those same securities.
  The bottom line is that what we have discovered in this 
investigation, and heard yesterday at our hearing, is that there is a 
conflict of interest too often between what was in Goldman's interest--
what was good for their bottom line--and what was in their clients' 
best interest.
  These are deeply troubling findings. There not only was a collapse of 
a housing market, there was a collapse of values. Extreme greed is the 
thread that connects these events, starting with those mortgages that 
were sold out there in the State of Washington by Washington Mutual 
Bank; extreme greed that indeed involved the people who were supposed 
to be doing the credit rating, being paid and doing a lousy job of 
rating the financial instruments that pension funds and others they 
were buying, and the greed, of course, that was involved in Wall Street 
selling securitizing financial instruments which they believed were not 
good and that they were betting against at the same time they were 
selling them to their clients and customers.
  What we have to do is build defenses against these kinds of excesses. 
I think most of us at the hearing--Democratic and Republican Senators 
on the Permanent Subcommittee on Investigations--saw the problems right 
from the beginning, upstream where the mortgages were created and 
downstream where they landed in Wall Street securities. We see the 
problems and Americans see the problems. We cannot understand, and 
Americans cannot understand, how a company can design and build a 
product and sell that product to its clients while at the same time 
they are betting that product will fail. It runs contrary to common 
sense--a kind of common ethics.
  If you are going to sell somebody a pair of shoes, and you know or 
believe that pair of shoes is defective and you bet against that pair 
of shoes so that your profit is not just the profit you would make on 
the immediate sale of that pair of shoes, but when the pair of shoes 
fails there is, in some way, a profit that comes to you as well. When 
you are betting on the failure of the product and will make money from 
that bet when that product fails, most Americans, and I think most 
members of the committee--hopefully, maybe all of us--would say to 
ourselves: That kind of conflict of interest has got to be stopped.
  That is not what the Wall Street folks were telling us yesterday is 
``making a market,'' where you have someone who comes in and wants to 
sell something and somebody who wants to buy something and they are put 
together. That is ``making a market''--bringing a buyer and a seller 
together.
  This is where the firm--the entity that is going to be benefitting is 
on one side of the deal--and that entity was Goldman Sachs. They 
actually, in some of these deals, were taking securities from their own 
inventory that they wanted to get rid of, packaging them into a 
financial instrument and selling that instrument to their customers. So 
far, so good, providing they disclose it is their own product they are 
selling. That is okay. But then they take what they call a short 
position. They take a bet. They make a bet against the very instrument 
they put together to sell to their customers.
  That, to me, is incredible. They also are engaged--and a lot of 
people are engaged--in what we call these credit default swaps, which 
are nothing more than casino bets as to whether something will happen; 
where, for instance, people are betting that a particular stock will go 
up or down. Neither party owns the stock, if it is a so-called 
synthetic default swap. I bet that stock will go up, you bet it will go 
down. That is okay; if people want to bet on that, let them bet. But 
when the government ends up paying the winning bettor, now you have a 
problem. Where the company that is making those bets, or insuring those 
bets, as it was called in the case of AIG--supposed to be insuring 
those bets--is too big to fail--they have insured so many bets for so 
many companies and so many pension funds that if that private company 
fails, the economy is going to be terribly damaged as a result and we 
end up, as taxpayers, paying off those bets--that has got to be stopped 
as well. These are casino bets and we shouldn't be paying them.
  I yield myself 5 additional minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. LEVIN. Now, throughout these hearings we see a lack of 
accountability. Executives of Washington Mutual make the reckless 
mortgage loans--not held accountable. Executives at Goldman Sachs and 
their company packaged many of these same loans that were toxic 
securities and then took a conflict-of-interest position on it--no 
accountability. Regulators, credit rating agencies that were supposed 
to check these excesses--no accountability. In each case, the senior 
leaders managed to avoid responsibility for their contribution to a 
crisis which has caused millions of Americans to lose their jobs or 
their homes or their businesses.
  Others may fail to take responsibility for their actions, but we must 
exercise our accountability. We must act. I do not understand our 
Republican colleagues, knowing what they know about the crisis, knowing 
there is no real regulator on the beat on Wall Street, can vote against 
beginning a debate. We don't have a cop on the beat on Wall Street. We 
need a regulator there. We need credit rating agencies not involved in 
conflicts of interest which are inherent to the way they are now being 
paid. We need a banking regulator which acts; one that doesn't just 
observe and watch things going off track but acts, and has a 
responsibility to act as well.
  The Dodd bill takes very significant steps relative to each of these 
areas. Whether it is the banking area, the regulator area, the credit 
rating area, there are some critical steps that are taken in the Dodd 
bill. There are some people who say they do not like portions of the 
Dodd bill. Okay, bring the bill to the floor and let's debate it. Let's 
legislate.
  The legislative process is supposed to involve, sooner or later, a 
bill which comes to the floor and then is open to amendment and then 
debate. There are a lot of areas in this bill that can be strengthened. 
There are some areas in the bill that some people don't like and wish 
to strike. We have been on this bill now in committees of jurisdiction 
for months. There have been hearings in those committees. I think we 
know what the issues are.
  There is no agreement on the resolution of this. There is no 
unanimous

[[Page 6465]]

consent, obviously, as to exactly what reform should be put in place 
and how that should be written. But we can't always operate in the 
middle of a crisis by unanimous consent. At some point, where there are 
differences, we have to bring those difference to the floor and debate 
them and offer amendments on them and vote them up or down. That is our 
responsibility. It is not responsible--it is irresponsible--to block 
that process from taking place.
  I think almost all of us say that we want reforms. But there are 
enough of us who say we are not going to allow this to be debated 
unless we get our way that this has been stymied. The reform process 
has been thwarted by a filibuster here. It is wrong. And the remedies 
that are offered and can be debated and can be amended are essential to 
avoid a repeat of this disaster. These are complex issues. We all know 
that. But there has been a huge amount of debate, attention, and 
analysis on these issues. There are going to be differences on these 
issues, but the place to resolve differences finally is here on the 
floor.
  Often we can resolve them before we get to the floor. Fine. But to 
stop a legislative process from taking place, it seems to me, is an 
irresponsible act when we are in the middle of a crisis and where the 
people of the United States want confidence that their legislators are 
addressing this crisis. So I would hope our Republican colleagues will 
allow this bill to come to the floor and to offer amendments.
  There are many amendments that are going to be offered. Senator 
Merkley and I have an amendment which we believe will strengthen the 
bill, to give one example. That amendment has not yet been ``worked 
out'' with the sponsors of the bill. Hopefully, we can get them to 
agree to language which will allow for a stronger step to be taken in 
an area which we think involves a serious conflict of interest. But if 
we can't ``work it out in advance,'' okay. There is such a thing called 
an amendment. It is part of our rule book. You can offer amendments if 
you want to. You can't always work out things in a back room somewhere. 
I don't want to denigrate working out problems. I try to do it all the 
time, as chairman of the Armed Services Committee. I don't denigrate 
that process of working things out in advance. Lord knows, we work out 
most things in advance. But with a threat of this size, which requires 
us to act, and where there has been a good-faith effort to come to some 
kind of agreement in advance that proves not to be possible, for 
heaven's sake we have to legislate. We have to have an ability to move 
to the floor with a bill and to go through the legislative process with 
it. That is what has been thwarted. That is what has been denied us 
because we don't have 60 votes.
  I hope our Republican colleagues will see the importance of this 
issue, the essential need for reform, and allow this bill to come to 
the floor and be legislated upon.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Louisiana is 
recognized.
  Mr. DURBIN. Would the Senator from Louisiana yield for a question, 
very briefly?
  Mr. VITTER. Yes, I will.
  Mr. DURBIN. If I could ask the Senator how long he expects to hold 
the floor.
  Mr. VITTER. I would expect to hold the floor for 14 minutes, at the 
least.
  Mr. DURBIN. Mr. President, I ask unanimous consent that following the 
Senator from the Louisiana I be recognized for 15 minutes in morning 
business.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. VITTER. Mr. President, I rise to strongly agree with Chairman 
Levin that what we have heard in many of these hearings regarding 
Goldman Sachs' activity and others is extremely disturbing--
outrageous--and I don't support that activity in any way, shape, or 
form. I think I have a lot of credibility saying that, because back in 
the fall of 2008, I didn't support huge taxpayer bailouts to Goldman 
Sachs and the other megafirms. I opposed those taxpayer bailouts. I 
thought it was wrong and counterproductive and moving us in the wrong 
direction.
  But I have to disagree with the distinguished chairman that the 
present version of the Dodd bill fixes these key issues. I don't think 
it does. So I encourage us to have a true bipartisan bill that can come 
to the floor to address the problems that exist.
  I have three major sets of concerns about the Dodd bill in its 
present form. The first is very fundamental. It goes exactly to what I 
was talking about, having opposed all the bailouts. The Dodd bill 
expands too big to fail. It doesn't end it. The Dodd bill ensures 
future bailouts; it does not stop bailouts. That is a big problem to me 
and I believe to American taxpayers.
  It is not just me saying this. It is many educated folks. Take Time 
magazine, not exactly an arch-conservative publication. They have 
reported:

       Policy experts and economists from both ends of the 
     political spectrum say the bill does little to end the 
     problem of banks becoming so big that the Government is 
     forced to bail them out when they stumble. Some say the 
     proposed financial reform may even make the problem worse.

  Also, Jeffrey Lacker--he is the President of the Richmond Federal 
Reserve Board--agrees with that. In a CNBC interview, CNBC asked him: 
``Doesn't the Dodd bill allow for winding down failed institutions?'' 
And Lacker said: ``It allows those things but it does not require 
them.''
  Let me repeat that because that goes to the heart of the problem:

       It allows those things but it does not require them. 
     Moreover, it provides tremendous discretion for the Treasury 
     and FDIC to use that fund to buy assets from the failed firm, 
     to guarantee liabilities of the failed firm, to buy 
     liabilities of the failed firm. They can support creditors in 
     the failed firm. They have a tremendous amount of discretion.

  Again, they have the ability for more bailouts, for continued pumping 
of taxpayer dollars into failed firms.
  William Isaac is a respected former Chairman of the FDIC. He agrees.

       Nearly all of our political leaders agree that we must 
     banish the ``too big to fail'' doctrine in banking, but 
     neither the financial reform bill approved in the House nor 
     the bill promoted by the Senate Banking Committee Chairman 
     Chris Dodd will eliminate it.

  Simon Johnson, distinguished MIT professor, put it succinctly:

       Too big to fail is opposed by the right and the left, 
     though not, apparently, by the people drafting legislation.

  These are specific ways the Dodd bill actually expands too big to 
fail, specific authorities, specific sections that clearly do that. A 
lot of the attention has been paid recently to the $50 billion prepaid 
fund, and that is problematic in my mind. But that is not the only, not 
even the most problematic section of the bill that expands too big to 
fail. All these sections go directly to that issue.
  My second main objection to the bill is, the bill also creates an 
all-powerful superbureaucracy that goes well beyond the need for 
targeted regulation to prevent what has happened in the last 5 years. 
Again, these are specific sections that create this huge, new, all-
powerful superbureaucracy. One of the most worrisome is section 1081. 
That subjects anybody, any business that accepts four installment 
payments to the CFPB, the new superbureaucracy.
  That is not just Goldman Sachs. That is not just Citigroup, Bank of 
America. That is my family's orthodontist. That is my neighborhood 
store that sells electronic equipment. That is a huge coverage 
affecting millions of small businesses throughout America.
  Imagine, anybody who accepts four installment payments--is that the 
problem actor we are going after? This is a huge overreach, in terms of 
Federal regulation, and this is a fundamental problem with the bill.
  Finally, the third major problem with the bill is, the present 
version of the Dodd bill does nothing to fix certain key causes of the 
crisis. What do I mean by that? It does nothing on Fannie Mae and 
Freddie Mac; a 1,100-page bill, supposedly comprehensive financial 
regulatory reform. Yet the four words ``Fannie Mae, Freddie Mac'' are 
nowhere in those 1,100 pages. This was

[[Page 6466]]

not the only cause of the crisis, but this clearly, admittedly, was a 
key cause of the crisis--disastrous policy and administration at Fannie 
Mae and Freddie Mac. As Lawrence White, distinguished economics 
professor, has said:

       The silence on Fannie and Freddie is deafening. How can 
     they look at themselves in the mirror every morning thinking 
     that they have a regulatory reform bill and they are totally 
     silent on Fannie and Freddie? It just boggles my mind.

  It boggles my mind as well.
  Also, there is nothing on lending standards. Clearly, one of the 
fundamental problems that caused the financial crisis is institutions 
which lent money, subprime loans, with no meaningful standards. What 
are the new standards we are enacting, putting into this bill? 
Absolutely nothing--silence on lending standards, underwriting 
standards. Clearly, that was a huge part of the last crisis.
  Where is the change? These are the top firms that got bailout funds, 
including Goldman Sachs. I voted against all these bailouts. But these 
are the firms that got them.
  These are the billions of taxpayer dollars that they received. This 
is their old regulator, the Federal Reserve, and this is the brave new 
world this Dodd bill will be introducing--exactly, precisely the same 
regulator. Where is the change?
  We need meaningful financial reform, but we need it targeted on the 
problem. We need it to include all the causes of the problem.
  These are key principles that would mean permanently ending bailouts 
and too big to fail. I fought against the bailouts a few years ago. We 
cannot continue that policy. We need to end it.
  Ending all bailout authorities for the Federal Reserve and FDIC. It 
is not good enough to say we have a new resolution mechanism. If those 
bailout authorities continue as they do in the Dodd bill, they will be 
used again.
  Enhanced consumer protection without overreach, without creating this 
new all-powerful superbureaucracy.
  Greater transparency for derivatives, while allowing businesses to 
properly, legitimately manage risk.
  Begin addressing Fannie Mae and Freddie Mac. Again, the current Dodd 
bill does not include four words, ``Fannie Mae, Freddie Mac.''
  Establish minimum lending standards for mortgages. We had subprimes 
with no underwriting standards, no lending standards. This present Dodd 
bill does not change that. We must change that.
  Increase competition for credit rating agencies. They were clearly 
part of the last crisis.
  Improve coordination and communication among all financial Federal 
regulators.
  These are the principles of strong regulatory reform. I hope these 
are the principles around which we can come together in a bipartisan 
way. I certainly support that effort by Richard Shelby and Chairman 
Dodd. I encourage that effort. But those negotiations will not be 
meaningful unless we demand on the Senate floor that they be meaningful 
and demand that a bill moving to the Senate floor is true reform and a 
bipartisan approach. I urge that approach. I enthusiastically support 
that approach.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Burris). The Senator from Illinois is 
recognized.
  Mr. DURBIN. Mr. President, in about 1 hour, the Senate will convene 
for a vote. It is one of the few times this week that the Senate comes 
together. Those who are following our proceedings will see Senators 
from all over the United States gather on the floor of the Senate. That 
gathering will be for a crucial vote as to whether the Republican 
filibuster on Wall Street reform will continue or end. This will be the 
third time this week we have given the Republicans an opportunity to 
join us in a bipartisan effort to bring real reform to Wall Street and 
the big banks on Wall Street.
  Twice now we have failed to get a single Republican who will stand 
and vote with us for Wall Street reform. I don't understand it. 
Certainly, they understand what we have been through as a nation with 
this recession. They realize that some $16 trillion of value has been 
yanked out of our economy, yanked out of savings accounts and 401(k)s 
and out of business ledgers. They know what has happened when 
businesses have failed and millions of Americans are out of work and 
they realize the root cause of this was on Wall Street, with some of 
their dealings that, frankly, were outrageous, and now we are trying to 
change them. Yet we have failed to come up with one Republican Senator 
who will vote to begin the debate on Wall Street reform--not one.
  A colleague of mine analyzed what Wall Street is doing to lobby 
against this bill. He took the amount of money that Wall Street banks 
and financial institutions are paying their lobbyists on Capitol Hill 
and divided it and came up with a number. They are spending $120,000 a 
day to stop Wall Street reform--$120,000 a day, 2 to 2\1/2\ times the 
average income of an American, the Wall Street banks are spending each 
day to stop this bill.
  So far they have been successful. They have convinced every 
Republican Senator to vote against beginning the debate on this bill. 
They have convinced every Republican Senator to vote to continue the 
filibuster because the Wall Street lobbyists know that if this bill 
doesn't come to the floor, they are not going to have to change their 
ways. They can keep doing what they have done for so long and they do 
not have to face any new laws, any new oversight, any new regulation.
  Of course, the American people know what has happened too. They saw 
the hearings yesterday. Senator Carl Levin of Michigan, who was just on 
the floor, presided over the Permanent Subcommittee of Investigations 
of the Committee on Homeland Security. Carl Levin told me he had worked 
for 16 months in preparation for that hearing, trying to understand the 
complexity of Wall Street and how it works. He brought in the highest 
executives from Goldman Sachs and asked them point blank to explain 
what they had been doing. We saw it on television, last night and this 
morning.
  When the men who were called before him, who have literally made 
millions of dollars out of this investment scheme, were asked to 
explain it--something as basic as this--how could they sell a product 
to a consumer at Goldman Sachs without disclosing that Goldman Sachs 
was betting that consumer would lose money, that is what happened. They 
were so-called shorting the market, meaning they were betting huge sums 
of money that the investment they were selling to their customers was 
going to fail. These men sat before that committee and said that is 
business. That is how we do business.
  That is the sort of thing that has to come to an end in this country. 
There is a man by the name of Paul Krugman, who writes for the New York 
Times. He wrote an article about what happened at Goldman Sachs, which 
led to their investigation as well as charges that have been lodged 
against them. I would like to read from this article, from April 19 of 
this year, where Mr. Krugman says:

       We've known for some time that Goldman Sachs and other 
     firms marketed mortgage-backed securities even as they sought 
     to make profits by betting that such securities would plunge 
     in value. This practice, however, while arguably 
     reprehensible, wasn't illegal. But now the S.E.C. is charging 
     that Goldman created and marketed securities that were 
     deliberately designed to fail, so that an important client 
     could make money off that failure.

  Krugman writes, ``That's what I would call looting.''
  He goes on to say, this legislation we are considering contains 
consumer financial protection, the strongest law in the history of the 
United States. Here is what Krugman writes:

       For one thing, an independent consumer protection bureau 
     could have helped limit predatory lending. Another provision 
     in the proposed Senate bill,--

  Which is before us, being filibustered by the Republicans--

     requiring that lenders retain 5 percent of the value of loans 
     they make, would have limited the practice of making bad 
     loans and quickly selling them off to unwary investors.

  He goes on to write:


[[Page 6467]]

       The main moral you should draw from the charges against 
     Goldman, though, doesn't involve the fine print of reform; it 
     involves the urgent need to change Wall Street.

  Listening to financial industrial lobbyists and the Republican 
politicians who have been huddling with them, you would think that 
everything will be fine as long as the Federal Government promises not 
to do any more bailouts. But that is totally wrong, not just because no 
such promise would be credible, but the fact is that much of the 
financial industry has become a racket, a game in which a handful of 
people are lavishly paid to mislead and exploit consumers and 
investors. If we do not lower the boom on those practices, the racket 
will just go on.
  Every day that the Republican filibuster of Wall Street reform 
continues is another day that we will fail to take into consideration 
this bill, this Financial Stability Act, which is pending before the 
Senate. Each day that the Republican filibuster continues is a victory 
for the Wall Street lobbyists. That is just wrong. Have we learned 
nothing from the recession we are in? Have we learned nothing from the 
hearing yesterday where these men, these multimillionaires who pay 
themselves lavishly sat and said they thought it was perfectly 
acceptable to sell a product to one of their customers that they were 
betting would fail with their own money? They think that is just fine. 
It is part of the casino they run on Wall Street.
  Well, John Ensign of Nevada took exception to that and said: That 
gives Las Vegas casinos a bad name because we deal with things 
honestly, and people know the odds are against them. It is not like the 
situation on Wall Street where people are misled into believing they 
are making a good bet when the house is betting against them. And that 
is what happened at Goldman Sachs. That is the sort of thing that will 
come to an end.
  What this bill does is it holds Wall Street accountable. We are 
fighting to hold them accountable for the reckless gambling that led to 
our recession and the loss of 8 million jobs in America--8 million. 
There are 8 million families affected by these activities on Wall 
Street, and the Republican filibuster would stop us from even 
considering changes to the regulation and oversight of Wall Street 
activities.
  We want to end taxpayer bailouts for good. I listened to the 
criticism of this bill. I try to draw an analogy which I heard Senator 
Menendez of New Jersey use. What we try to do in this bill is to 
create, for lack of a better term, under Senator Menendez's analysis, a 
prepaid burial plan. What it basically means is that if your company--
financial institution--is going to go out of business, we want to make 
sure we have put enough money in the bank to pay for funeral expenses--
literally the winding down and liquidation of the company--because we 
don't want the American taxpayer to do it. So this bill creates a so-
called prepaid corporate funeral fund and says, let the banks 
themselves fund it so the taxpayers do not have to. I think that is 
reasonable.
  The Republican approach, though, is to say: Well, let's just bet 
there is enough money left in the estate to pay for the funeral. Maybe 
there will be and maybe there will not be. In that case, the taxpayers 
are on the hook again. That is not a good outcome. So trying to create 
some assurance that there is money to liquidate and wind down these 
financial institutions protects taxpayers from another bailout. The 
Republicans object to that, but they have not come up with a better 
solution.
  The third thing we want to do is to put commerce and consumers in 
control in America. I do not have to remind most people, if you open a 
bank account, if you enter into a mortgage, if you decide to sign up 
for a credit card, go off to buy an automobile, sign up for a student 
loan, sign up for a retirement plan, they usually send you some legal 
documents along the way.
  At a real estate closing--I have been to many as a consumer and a 
lawyer--they give you a stack of papers and you sit there at the bank, 
with your spouse nearby, signing these papers, one after the other 
after the other, until after 20 or 30 minutes it is all over, they hand 
you the keys, and you head on out to see your new house. Well, most 
people do not know what is in those papers. Even if a lawyer is sitting 
at the table with them, it is unlikely that they have parsed every 
single word. As a result, a lot of people end up signing up for things 
they did not understand. We want to change that. I do not think it is 
too much to ask that these financial obligations and instruments be in 
plain English so the average person knows what they are getting into.
  What we want to do in this bill is to empower consumers so that you 
can make the right choice for yourself, your family, your business, and 
your future. We do not want you to fall victim to the tricks and traps 
of the latest little turn of a phrase that can turn your world upside 
down. That is why the consumer financial protection law is included in 
this bill. It is the strongest consumer financial protection law in the 
history of the United States.
  There are lobbyists lined up outside this Chamber trying to carve out 
exceptions. They are trying to argue: Wait a minute, we do not want 
this to apply to pawn brokers; let's give them a pass. We do not want 
this to apply to casinos; let's give them a pass. We do not want this 
to apply to automobile companies, auto agencies; let's give them a 
pass. They want to have loopholes and carve-outs for the favorite 
industries they represent.
  I was at the airport coming out here this week, and one of these 
folks, a good, local businessman in the suburbs of Chicago, came up and 
said: I am an honest businessman. I did not cause the recession. I have 
never had a problem in my life. People do not complain about me. The 
Better Business Bureau gives me the highest of marks. Why should I be 
regulated? Why should the government look at what I am doing?
  And I said to him: If you are doing everything you said, you should 
not worry about it. What you ought to worry about is your competitor 
down the street who is fleecing people and giving folks in your 
industry a bad name.
  These carve-outs and these changes--and they have been arguing for 
them all morning on the Republican side of the aisle--are the reason 
they are holding up the bill. They have promised the lobbyists that 
they will cut out loopholes in this bill for the special interest 
groups that are represented by them. They would exempt the automobile 
dealers, some of them would exempt the home loan industry, and some of 
them would exempt pawn brokers. The exemptions could be as long as your 
arm, exemptions as long as the list of lobbyists who are trying to push 
these loopholes.
  I don't think that is a good outcome. I don't believe we should be 
creating lobbyist loopholes in this law. Let's hold everyone to the 
same legal standard, a good-faith standard of real disclosure and 
honest dealings with consumers; clear English language whether you are 
taking out a credit card, buying a car, buying a home, a student loan, 
or a retirement benefit for the rest of your life. Shouldn't the 
language be clear? We have to make that clear as part of this.
  At some point, I hope the Republicans who are filibustering this Wall 
Street reform will decide, if they have a good cause and they want to 
bring it to the floor, that they can open the debate, provide their 
side of the story, and urge the Members of the Senate to go along with 
them. If a majority agrees, it will be in the bill. If not, it will be 
outside the bill.
  If that sounds vaguely familiar, like the Senate you read about when 
you were going to school, it is. It is what we are supposed to be 
doing. This is not supposed to be an empty Chamber of desks here 
waiting as we launch day to day another filibuster vote. Ninety-nine 
Senators are supposed to be out here with me in heated debate over the 
biggest financial issue of our generation. Instead, the Republicans 
continue to filibuster, stop the debate, refuse to go to amendments, 
refuse to take their special pleadings on what they want to achieve in 
this bill to the court of public opinion. That is not fair, and it is 
not right.
  It is also interesting, when we were in the middle of the health care 
debate,

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how many times those on the other side of the aisle stood up and said: 
Do you know what the problem is here? The Democrats are trying to write 
this bill behind closed doors. They will not bring it out to the floor 
of the Senate.
  Now fast forward to the current debate. What are the Republicans 
saying? You know what the problem is here--the Democrats refuse to 
change this bill behind closed doors. They want to amend it right here 
on the Senate floor.
  It seems to me they are in an inconsistent position.
  If they believe these amendments are good amendments, they should not 
be afraid to offer them in front of the American people. But if they 
want to cook a deal behind closed doors, I do have some problems with 
that. If they have a good cause, they should bring it to the floor and 
deal with it. Shady institutions are not good for this country and 
sunlight is good, transparency is good. I believe it is time we stand 
up for the American people and say that reckless gambling on Wall 
Street with the future of the American economy is absolutely 
unacceptable.
  Some of them argue: Well, let's go after the biggest financial 
institutions. Let's not blame the little people who are involved in the 
credit business.
  There was an article in the New York Times on Sunday, April 18, by 
Jim Dwyer. He was talking about credit card companies turning $2.50 
slices of pizza into a $37.50 slice. They did it, of course, when they 
bought a slice of pizza with a debit card that was over the limit and 
the penalty was $35. The question on that fee was, Were the people 
notified ahead of time what they were going to face? I don't think it 
is unfair to notify people what they have to pay. I believe this kind 
of disclosure is important to confidence in our economy.
  I am urging my colleagues to stand and join us in making sure we have 
a chance to bring this bill to the floor. In less than 1 hour, this 
empty floor will be filled with Senators, Democrats and Republicans. We 
need 60 Senators to step up and say: This recession has taught us a 
lesson. We are not going to let America go through this again because 
of the greed and malpractice of those in Wall Street and financial 
institutions. We are going to change the system. We are going to 
require them to be more transparent, more accountable, to put their own 
money on the table, and to be honest with their customers. We are going 
to require financial institutions to make full disclosure to the people 
they deal with so that those customers can be empowered to make the 
right decisions for themselves and their families. We are not going to 
exclude certain businesses in America and say they can do whatever they 
like when what is at stake is the financial security of a family.
  Everybody is going to be held to the same basic standard of honesty, 
a standard which good businesses live up to every single day. I urge 
the good businesses across America not to stand in defense of the 
bottom feeders. I urge them to stand up for good business practices 
which are part of the free market system and have made our Nation so 
strong as the entrepreneurial spirit has blossomed into more jobs and 
economic growth. That spirit needs to be regained, the confidence needs 
be regained.
  The embarrassing chapter yesterday in the Committee on Homeland 
Security, when these Wall Street titans came in and said they saw 
nothing wrong with misleading their customers into millions of dollars 
of losses, has to come to an end. It will only end when the Republican 
filibuster ends on the floor of the Senate.
  I will hope at 12:20 when this vote begins that at least a handful of 
Republicans will stand up and say: Enough is enough. Let's move forward 
with reform. Let's move forward to putting the American economy back on 
track.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HARKIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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