[Congressional Record (Bound Edition), Volume 156 (2010), Part 5]
[Senate]
[Pages 6608-6621]
[From the U.S. Government Publishing Office, www.gpo.gov]




           RESTORING AMERICAN FINANCIAL STABILITY ACT OF 2010

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 3217, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 3217) to promote the financial stability of the 
     United States by improving accountability and transparency in 
     the financial system, to end ``too big to fail,'' to protect 
     the American taxpayer by ending bailouts, to protect 
     consumers from abusive financial services practices, and for 
     other purposes.

  The PRESIDING OFFICER. The majority leader is recognized.


                           Amendment No. 3739

  Mr. REID. Mr. President, there is a substitute amendment at the desk. 
I call up that amendment on behalf of Senators Dodd and Lincoln.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mr. Dodd, for 
     himself and Mrs. Lincoln, proposes an amendment numbered 
     3739.

  Mr. REID. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')


                Amendment No. 3737 to Amendment No. 3739

   (Purpose: To prohibit taxpayers from ever having to bail out the 
                           financial sector)

  Mr. REID. Mr. President, I now ask the clerk to report the Boxer 
amendment No. 3737.

[[Page 6609]]

  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mrs. Boxer, 
     proposes an amendment numbered 3737 to amendment No. 3739.

       At the end of title II, add the following:

     SEC. 212. PROHIBITION ON TAXPAYER FUNDING.

       (a) Liquidation Required.--All financial companies put into 
     receivership under this title shall be liquidated. No 
     taxpayer funds shall be used to prevent the liquidation of 
     any financial company under this title.
       (b) Recovery of Funds.--All funds expended in the 
     liquidation of a financial company under this title shall be 
     recovered from the disposition of assets of such financial 
     company, or shall be the responsibility of the financial 
     sector, through assessments.
       (c) No Losses to Taxpayers.--Taxpayers shall bear no losses 
     from the exercise of any authority under this title.

  Mr. REID. Mr. President, the managers of the bill wish to give 
opening statements on this important legislation. I ask unanimous 
consent that Senator Dodd be recognized to use whatever time he feels 
appropriate, that Senator Shelby then be recognized to use whatever 
time he feels appropriate, that Chairman Lincoln then be recognized to 
make a statement, and following that, Senator Chambliss, the ranking 
member of the Agriculture Committee, and then Senator Warner, a member 
of the Banking Committee, wishes to make a statement. I ask that be the 
order.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, we are beginning debate on the floor of the 
Senate of a matter that has obviously been the subject of great 
discussion and debate over the last couple years. My remarks will be 
very brief. I have talked a lot over the last week or so about the 
bill. I presume I will be spending a lot of time in the coming days. I 
do not need to spend a lot of time now. My colleague and friend from 
Alabama, Senator Shelby, wants to be heard and others want to be heard 
this afternoon. I will be here to engage them.
  I begin by thanking and commending my colleague from Alabama. We have 
disagreements about this bill. He is a good friend and someone I work 
with closely, as we will on this bill as we move forward. We want to 
accommodate Members on all sides to be heard, to offer their 
amendments, to have a good debate. We would like to accommodate and 
accept amendments where we can. If we cannot, we will try to lay out 
why or offer alternative ideas as we move through this debate.
  Obviously, it is very important we get this right. Senator Shelby has 
said that many times, and I agree with him. It is very important. 
Literally, language, punctuation marks can have implications. It is 
that delicate as we work through language. My intention is to get 
there.
  Today we are going to have general debate on the bill; tomorrow 
possibly some additional debate. We will pick up our first amendments 
on Tuesday when we get back. I wish to address that point in a minute, 
if I may.
  I wish to begin the debate with a message for those who have seen the 
acrimony in the Chamber over the past couple weeks and have concluded 
that the Senate is not up to getting the job done on legislation of 
this import and this size.
  I will be the first to admit that sometimes we become discouraged and 
disappointed with each other. That is the nature, I suppose, of a 
legislative body when we have as many different and strongly held 
views. I, myself, was frustrated with how long it took to bring the 
bill up on the floor. Others are frustrated by what they see in the 
bill. All of this can be a rationale for why we express our 
frustration.
  The thing that made it possible to get to this point is the same 
thing that will make it possible to get to the finish line on this 
important legislation; that is, the trust we have, that we are each 
committed to getting the job done.
  As Senator Shelby and I both pointed out last evening, we have worked 
closely over the past 37 months that I have chaired the Banking 
Committee. I mentioned we brought 42 measures out of our committee, 37 
of which have become the law of the land. While we do not agree on this 
bill or at least not all of it, we are both confident this legislation 
can become law as well if we work hard and together and achieve common 
ground, even if it is not exactly as we would want if we were writing 
it on our own. I think it is what our colleagues in the country think 
of us.
  Simply put, we have no other choice but to do so. The status quo is 
unacceptable. We cannot leave the American people vulnerable to the 
present construct of our financial regulatory system. The American 
people have paid too high a price for the failure of our system to stop 
Wall Street greed and recklessness from undermining the stability of 
our economy.
  We heard over and over that we have lost 8.5 million jobs and 7 
million homes lost to foreclosure or are in foreclosure. Trillions of 
dollars--some say $11 trillion, some say $13 trillion, some say 
higher--trillions of dollars of household wealth has been lost in the 
last 18 months; home values--again, the number everyone agrees on--a 37 
percent decline in home values across the Nation. In some States, the 
numbers are much higher. We have seen a decline in retirement income by 
some 20 percent as well across the Nation.
  All this was not cause by one particular event or set of 
circumstances. There was a variety of circumstances, the culmination of 
which and the expansion brought us to the brink of financial collapse 
and disaster.
  I described the aims of our legislation. First, it ends ``too big to 
fail.'' Senator Shelby and I have been working on that issue. We have 
had long discussions agreeing on principles and what needs to be done. 
My hope is, in the first part of next week--our staffs are going to 
work over the weekend to take the principles on which we have reached 
some agreements and then do the delicate job of writing the language 
that reflects those principles and ideas.
  I thank my staff as well as Senator Shelby's staff for trying to get 
us to a point where we reach a level of comfort, that we have done what 
we said we were going to do; that is, to end too big to fail. No longer 
will there be an implicit understanding that if a major financial 
institution or even a less-than-major financial institution starts to 
fail somehow it is going to get propped up by taxpayer dollars. Our 
colleague from California, Barbara Boxer--we heard already the language 
of her amendment which will once again add a voice to this effort to 
say, when losses occur, too big to fail will never expose the American 
taxpayers to writing a check to have to underwrite that cost.
  I presume there may be others who have ideas on how best to nail this 
down. We welcome those ideas. Again, Senator Shelby and I will work on 
an amendment we intend to offer the first part of next week that 
reflects those values as well. I thank him and his staff and others for 
the time already spent. I cannot count the hours we have spent sitting 
with each other, talking about these ideas and how best to achieve 
them.
  Obviously, we want to involve as well the Treasury Department and 
others for their advice and counsel because they ultimately will be 
asked to implement a lot of what we have talked about. We will be busy 
over the coming days as well on those issues.
  Senator Boxer's idea--I discussed this with Senator Shelby already, 
and without committing anyone at all, there seems to be, at least at 
this juncture, a relatively good response or reaction to what she 
intends to do. Too big to fail has been a subject of major 
conversation. We all agree what we want to achieve. The question is, 
Can we do this? I am confident we can.
  I would like us to begin on a positive note as well. There will be 
times during this debate where we will be at very different sides. That 
will happen, as it should be. There is nothing wrong with that. I think 
it is better to begin a process where you can agree on issues and sit 
down and come to common understandings. Too big to fail is an area 
where there is no disagreement about what we are trying to achieve. 
That is a great starting point. My hope is we can do that in the coming 
days.

[[Page 6610]]

  We create an early warning system. This has not been the subject of a 
lot of debate. I think we all agree that to have the ability to watch 
and monitor what is occurring, both domestically and internationally, 
is very important.
  We have established what we call a systemic risk council that will 
allow us to observe what is occurring on a regular basis so we can spot 
these problems before they metastasize and grow into, as we have seen, 
problems that created as much harm for our economy as the present 
recession has. I will not go into the details of it, but I think there 
is a general agreement that this makes a lot of sense.
  We bring derivatives out of the shadow and into the sunlight so Wall 
Street is accountable for actions. I do not sense a lot of disagreement 
on what we are trying to achieve. There is some disagreement on about 
how this is best worked.
  I am hopeful that in the coming weeks we can resolve these 
differences as we deal with these exotic instruments. Clearly, getting 
more sunshine, more transparency we think will be a great asset as 
well.
  Finally, we put cops on the beat with consumer protection so 
Americans can make smart decisions based on full information when they 
are planning for their financial futures. There is general agreement 
having a consumer protection agency or bureau or division makes sense. 
There is disagreement on what the powers of that agency will be, how it 
should operate, how it can be working. We have to work on that issue to 
see if we can reach common ground. If not, we will have votes on 
whether one is for it or against it, with additions or subtractions, 
what it can do and over what jurisdiction it has authority.
  These are the principles. There is not much disagreement with what we 
are trying to achieve but there will be on how best to do it in certain 
areas. There may be disagreements on how to actually accomplish these 
goals.
  I said before that we agreed to move forward on this bill and that I 
will allow each Member in this Chamber to offer his or her suggestions, 
air their concerns, vote up or down on ideas.
  What I would like to see occur during this debate is not only are we 
taking on a large issue, but this institution has been damaged over the 
last number of years. It amounts to this: Senator Jon Kyl and I engaged 
in a colloquy the other day--not a planned one--about the issue of 
trust, which is what people are concerned about. We need to restore 
that trust if we can. It is incumbent we try to understand each other's 
motives, not question them, and then deal effectively with ideas as 
they come up.
  My hope is not only will we end up with a good bill at the end of all 
this, but we can also end up repairing some of the tensions and stress 
that exists in this legislative body. When I said I want Members to be 
able to offer their amendments, to debate those amendments, and have 
votes on those amendments, I mean it--I know my colleague from Alabama 
shares that view as well--and that people with limited time--obviously, 
we do not want filibustering occurring--ought to have it to express 
those ideas and then vote on the ideas.
  I mentioned last night the amendment proposed by Senator Boxer. I 
have discussed that amendment already. Others will have amendments to 
come next week as well.
  I cannot promise that the final product will be a bill that all 100 
Senators will feel they can support. I understand that. But my goal is 
to get the best, most effective legislation we can. My belief is we can 
make that happen by acting like Senators, listening to each other, 
ensuring our debate is as civil as it is passionate, as factual as it 
is fierce.
  To paraphrase our President: We did not ask for the job of saving our 
financial system from its inefficiencies and excesses, but that is our 
job today. That is what we have been asked to do. I have the greatest 
confidence in my colleagues that we can get that job done. I look 
forward, again, to working with my colleague and friend, Senator 
Shelby, moving forward as well with the leadership and others to 
achieve the desired results with this bill.
  I yield the floor to my colleague and friend from Alabama.
  The PRESIDING OFFICER. The Senator from Alabama is recognized.
  Mr. SHELBY. Mr. President, before proceeding to my remarks on the 
bill, I want to thank Senator McConnell, the Republican leader, for his 
leadership, and also the members of the Banking Committee on both sides 
of the aisle for their hard work and dedication which has brought us 
this far.
  Also, I want to thank my colleague and the committee's chairman, my 
friend, Senator Chris Dodd. Over the years, as he has said, we have 
worked together on a number of bills and quite often found a way to 
compromise, to work forward on some very difficult and complex issues. 
Unfortunately, thus far, compromise has alluded us on this particular 
piece of legislation, at least some of it.
  Throughout our discussions, we shared roughly, I believe, the same 
goals. Where we have differed, however, is how to achieve those goals. 
My goal during consideration of this legislation here will be to 
reshape this bill so that it actually ends bailouts, protects consumers 
without jeopardizing our small community banks, and brings 
transparency, as Senator Dodd mentioned, to the world of derivatives, 
without sacrificing economic growth and job creation, which we 
desperately need in this country.
  I, along with many of my colleagues on both sides of the aisle--
Democrats and Republicans--will seek to remove dozens of provisions 
that unnecessarily expand the reach of the Federal Government into the 
private affairs of Americans and potentially endanger our civil 
liberties. As always, I will try to focus on policy and not politics.
  Unfortunately, over the last several days, debate has become tainted 
by accusations and misrepresentations. This is nothing new here. The 
process has already become overly political with allegations that 
Republicans are blindly following the advice of a pollster's political 
memo.
  I wish to say for the record here that I voted against the Chrysler 
bailout in 1979, I believe it was, when this particular pollster they 
are talking about was still in high school. So I have a long record of 
fighting against bailouts and trying to protect the taxpayer.
  Also, I advanced the toughest piece of legislation that would have 
reined in Fannie Mae and Freddie Mac years ago. But that was opposed 
unanimously by the Democrats in the Banking Committee.
  I was the only Senator criticizing the SEC's lack of supervision of 
the Nation's largest investment banks while some of my Democratic 
colleagues, including then-Senator Obama, were endorsing it.
  I also opposed the imposition of the Basel II capital accords that 
would have left our banks in far worse shape than they were when the 
crisis hit.
  I was questioning regulators about the growing housing bubble and the 
stability of our housing market years before the collapse.
  As chairman of the Banking Committee before Senator Dodd, I authored 
and passed, with the help of the Senator, the only attempt to address 
the lack of competition in the credit rating industry, once again over 
a lot of opposition.
  Finally, when Congress repealed the restrictions put in place by 
Glass-Steagall, I was the only Republican on the Banking Committee to 
vote no. So if any of my colleagues wish to discuss my motivation and 
my record, I am standing here on the floor right now.
  As I have stated, there are a number of changes I believe need to be 
made to this bill before I can consider supporting it. I think we 
should begin by listening to the people who will be negatively affected 
by this bill if it were to become law.
  If a small business owner from my hometown in Tuscaloosa, AL, tells 
me that he fears an out-of-control consumer regulator, I listen. If an 
orthodontist from Mobile, AL, fears regulatory burdens because she 
offers installment payments, I listen. If the makers of Mars candy bars 
fear massive cost increases from this legislation that will threaten 
American jobs and prices, I listen.

[[Page 6611]]

  There are others we should be listening to as well. For example, 
large financial firms such as Goldman Sachs and Citigroup are in favor 
of this bill. Why is that? The answer is, as now written, they know 
that the bill will bring them and Wall Street firms like them under the 
Federal safety net where they will get preferential treatment, just as 
Goldman Sachs got in the AIG bailout.
  Yes, the bill, as written, will guarantee that Goldman Sachs could 
again be paid 100 cents on the dollar if its bets go bad. That is a 
huge benefit for Wall Street firms at the expense of others--mainly the 
taxpayers.
  The resolution authority established by this bill at the moment will 
ensure that the politically influential investors in these firms, such 
as foreign governments and sovereign wealth funds, will get special 
taxpayer bailouts not available to creditors of small financial 
companies. This will give these firms a permanent funding advantage 
over smaller competitors on Main Street.
  Make no mistake, this bill will help the big banks get bigger, as it 
is written today, and further tilt the competitive playing field 
against small and less politically connected firms.
  The legislation that we are about to consider will help the likes of 
Goldman Sachs but harm the American people. It will lead to job losses, 
lost opportunities for businesses to productively invest in the future, 
and it will ensure future bailouts, which Senator Dodd and I both want 
to prevent.
  Chairman Dodd has assured me that he will address a number of 
concerns I have expressed with respect to bailouts. We have talked 
about this at length. I appreciate his assurances and take him at his 
word, but I am concerned that there appear to be no substantive changes 
in the relevant sections of the bill that would reflect such assurances 
yet. Therefore, at the conclusion of my remarks, and picking up on what 
we talked about earlier, I wish to hear how the chairman intends to 
address the following: the removal of the $50 million bailout fund, 
which some people call the honey pot; not allowing the government to 
pay creditors and shareholders of a failed firm more than they would be 
entitled to in bankruptcy; not allowing the FDIC to prop up failing 
firms with government and debt guarantees--meaning the taxpayer; not 
allowing the Federal Reserve to lend broadly on bad collateral; holding 
the FDIC accountable if it fails to properly conduct resolutions or 
uses the resolution authority to provide bailouts; and not allowing the 
government to deem any nonbank financial company as systemically 
important and worthy of taxpayer funds at the Fed's discount window.
  As many of my colleagues are beginning to realize, it doesn't matter 
what we say. What matters is what is in the bill's language. And the 
language in this bill right now would allow for bailouts. I urge my 
colleagues to read the language carefully.
  I have been assured that the bailout provisions will be addressed. 
However, they have not been addressed yet in the chairman's substitute 
language. We need to see language from the majority that clearly 
addresses the issues I have set forth. My hope is that by Tuesday this 
can be resolved quickly, with both of us offering a joint amendment.
  Nevertheless, we are still left with a bill this afternoon that will 
create massive and intrusive new government bureaucracies, damage job 
creation, reduce private investment in productive projects, make risk 
management more difficult, and threaten our economy.
  The bill before us now establishes overarching bureaucracies without 
any meaningful protections for our financial privacy rights. Also, the 
bureaucracies have been designed to address many issues that have 
little or no bearing on the recent crisis or any financial crisis. It 
is a power grab that can reach into virtually every aspect of our 
economy, and it needs to be restrained.
  I wonder how any crisis will be prevented through data collection 
from banks about deposit accounts of their customers to identify 
community development opportunities as found in section 1071 of this 
bill.
  Small businesses across this country fear the massive and potentially 
very intrusive new bureaucracy created under the rubric of consumer 
protection. And they have every right to be afraid. The massive new 
government bureaucracy called for in this bill has authorities and 
powers to call you forward and ask you, under oath, about your personal 
financial affairs. The fact so many are looking the other way on this 
serious threat to our civil liberties is troubling. But as this debate 
goes on, I think America is going to start focusing on the deep aspects 
of this bill.
  The architects of this massive new bureaucracy have long argued for a 
consumer bureau with the right culture, they call it. Whether that 
culture focuses on consumer protection and a safe and sound banking 
system or it becomes a way for community organizers and groups such as 
ACORN to grab Federal resources is left wide open here.
  This massive new bureaucracy will be funded by over $600 million 
taken directly from the Federal Reserve, outside of the congressional 
oversight or appropriations process. Tapping the central bank to pay 
for political initiatives is a very disturbing and dangerous precedent. 
They did that in Argentina to the utter dismay of the global community 
and to Argentina itself. It shows a complete lack of understanding of 
the importance of an independent central bank. For us to follow 
Argentina's lead and tap the Fed for new government programs is not 
only shortsighted but signals to the rest of the world the failure of 
this country to act in a fiscally responsible manner.
  In addition to the new Fed consumer protection bureaucracy, this bill 
envisions a massive new potentially $\1/2\ billion per year Federal 
bureaucracy called the Office of Financial Research, designed to 
collect granular financial data and to construct complex financial 
models. Did you hear that? This new bureaucracy is given unprecedented 
authority, including abilities to obtain virtually any type of data it 
wants from financial companies, to the level of detail of what you buy 
on your credit card.
  This new bureaucracy is also designed to gather data, process it, and 
then is required to make it available to Wall Street firms so they can 
cut their costs. So who is for Wall Street now?
  This bill also threatens our economy, as Senator Dodd mentioned, by 
its treatment of derivatives. Greater transparency in all derivative 
markets is a good thing. But this bill, at this juncture, under the 
guise of promoting transparency, I believe, threatens Main Street 
companies and their customers for no good reason. The end-user 
exemptions put Main Street companies through almost endless and 
unworkable hoops that will ensure higher costs, lower growth, fewer 
jobs, and diminished economic opportunity.
  In addition, by seeking to concentrate all manner of risky products 
into clearinghouses, the bill threatens to concentrate risk to the 
point of becoming systemically large, which, as we all know, leads to 
government or taxpayer bailouts. This bill could actually increase risk 
in our financial system, as it is written, and decrease economic output 
at a time when we need it the most.
  Finally, while concentrating risks in America, this bill will shift 
derivative trades offshore to places where we have no oversight or 
regulatory abilities to act.
  Proponents of this bill also argue that regulatory gaps are being 
closed and that the bill somehow simplifies and rationalizes the 
regulatory framework. Yet the Kansas City Fed President has said:

       This bill actually increases the complexity of the 
     regulatory structure . . . as well as creating unnecessary 
     costs.

  As is often the case with this bill, claims about what it does do not 
match the language itself. They claim it is regulatory simplicity; the 
language means that there will be increased complexity.
  I have highlighted here this afternoon some of the major problems in 
this bill. It will not end taxpayer-funded bailouts as it is written; 
it provides for a drastic expansion and overreach

[[Page 6612]]

of government into the economy and every aspect of our personal 
financial lives; it also raises the cost of risk management and 
threatens the abilities of companies to manage risk using derivatives 
while potentially accumulating risk to systemic proportions; and it 
makes an already complex regulatory maze even more complex.
  I welcome the opportunity to debate the bill before us and to offer 
amendments and work with Senator Dodd, the chairman, to improve the 
deficiencies and strengthen this bill's shortcomings. I hope we are 
going to be able to do this in a spirit of cooperation in the days 
ahead.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, I say to my colleagues, other than what you 
heard from my good friend from Alabama, he likes the bill. So we will 
have some work to do.
  Let me again assure him and my colleagues here that we have had very 
productive talks, my friend from Alabama and I, particularly in the 
too-big-to-fail area. My two colleagues, Mark Warner and Bob Corker, 
did a tremendous amount of work in our committee over many weeks as we 
divided the labor to try to address these issues as thoroughly and as 
comprehensively as possible. I think we have done that work, but I 
respect the fact that others may have additional ideas to make this 
work even better. I know he raised the issue here, and we are going to 
try to work over this weekend to try to put together the legal 
language, the language that has to be drafted here, to reflect some of 
these ideas we can incorporate as part of this bill. My colleague and 
friend from Alabama has my word on that. We will work on that to do 
that. Again, I thank him. We have worked well together over these last 
37 months.
  I make this offer to my colleagues too. I just had a brief 
conversation with Senator Chambliss. I say this on my own behalf, but I 
hope Senator Shelby might agree with me. If Members have amendments, it 
would help, even in the next day or so, if you could let us know what 
those amendments are. Even though we may not get to them for a while, 
we can start to work with our colleagues on their ideas. We may be able 
to accept some.
  I see my colleague from Arkansas here, the chairman of the 
Agriculture Committee. I don't know whether she shares that view, but 
it would be helpful. If people have ideas, the earlier we know about 
them, the better we will be able to respond to them or modify them in 
some way so they are acceptable. I hope Senators will take advantage of 
that offer; that the chair of the Agriculture Committee, myself, and I 
presume Senator Chambliss would share that view as well. Let's see 
these amendments early on so we can try to be helpful to our colleagues 
early on, if at all possible.
  I commend my colleague as chairperson of the Agriculture Committee. 
She has taken over that job over the last number of months and done a 
great job at it. I look forward to working with her, hopefully, in the 
next week or two on this bill as well.
  The PRESIDING OFFICER. The Senator from Arkansas is recognized.
  Mrs. LINCOLN. Mr. President, I thank Chairman Dodd for his hard work. 
I absolutely agree that getting Members to bring their amendments 
forward is going to be critical in terms of working with them and their 
ideas to see if we can move forward. We have a historic opportunity to 
do something on behalf our country, and I hope we all work together to 
make that happen.
  I ask unanimous consent that Senator Boxer be the next Democratic 
speaker after Senator Warner in the queue.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. LINCOLN. Mr. President, I rise today to speak in support of the 
Dodd-Lincoln substitute amendment. This substitute amendment represents 
a critical step forward in restoring the soundness of our financial 
system. This bill will ensure that our markets work for Main Street and 
not just for Wall Street.
  We have come to a critical juncture, and our Nation faces great 
challenges. But within those challenges we find great opportunities.
  Last fall, I had the honor and solemn responsibility of taking over 
the gavel of the Committee on Agriculture, Nutrition, and Forestry. As 
the daughter of a very pragmatic, seven-generation Arkansas family, I 
find myself, in the Senate Committee on Agriculture's 184 years, the 
first Arkansan to ever serve as chairman of that committee. I am proud 
of the work that has gone into the product we bring, along with the 
banking bill, to this process.
  Our committee was tasked with putting an end to the reckless behavior 
that put our financial system in jeopardy, specifically bringing 
regulation to the over-the-counter derivatives market. Reforming this 
market is at the heart of financial regulatory reform. Within a decade, 
this market exploded to $600 trillion in notional value and is today 
completely unregulated.
  Last week, the Senate Agriculture Committee took a critical step 
toward bringing transparency and accountability to this market, a 
critical step toward passing the Wall Street Transparency and 
Accountability Act with bipartisan support.
  The major provisions of this bill are included in this substitute 
amendment I have offered today with Chairman Dodd. I appreciate the 
work of my distinguished colleague, Chairman Dodd, and the Senate 
Banking Committee staff, along with the amazing staff from the 
Agriculture Committee, to merge our two bills.
  I also appreciate the leadership of Majority Leader Reid, whose 
commitment to producing strong financial regulatory reform guided us 
through this process.
  This substitute legislation takes the best of both committees' 
products and represents the strongest reform legislation to date. I 
thank Chairman Dodd for his strong leadership on this combined effort. 
He is a longtime leader in this body, and I very much appreciate not 
only all of his leadership but certainly our strong relationship. I am 
grateful for all of his hard work.
  I would also like to thank the President and his Treasury Department 
for their leadership on this issue. I also greatly appreciate the 
strong support from Chairman Gensler at the Commodity Futures Trading 
Commission. Because of their commitment, the administration has been 
instrumental in bringing us to this point.
  I am also very fortunate to have a strong partner in my good friend 
and ranking member, Saxby Chambliss. His thoughtfulness and the hard 
work of his unbelievable staff is reflected in many of the provisions 
we will begin debating on the Senate floor today. While we have had 
some policy differences, I know without a doubt that we share the goal 
of bringing thoughtful reform to these markets.
  This legislation is historic. It is landmark reform. It will keep 
banks in the business of banking. It will prevent future bailouts and, 
through the work done by Chairman Dodd, put an end to too big to fail. 
It will lower systemic risk--systemic risk through our clearing 
mechanisms and our exchange trading and real-time price transparency. 
It will close loopholes and make sure the regulators have the full 
authority to go after those entities that would evade or abuse the law. 
It protects jobs on Main Street by giving true commercial end users the 
ability to hedge and manage their risks. It protects municipalities, 
along with pensions and retirees and any governmental agency, from the 
gouging or the gross profiteering that has occurred in the past. Most 
importantly, it will bring 100 percent transparency to what is 
currently a completely unregulated and dark marketplace.
  This bill is true reform. This is strong reform. But we need to 
remember that this is not regulation for regulation sake. We have an 
important but narrowly tailored end user exemption and appropriate 
restraint on the regulators where necessary. We understand we are 
competing in a global financial world. This is a robust package that 
balances the need for strong, meaningful reform and recognizes the 
importance of these markets.
  Americans are demanding transparency and accountability from their

[[Page 6613]]

government and from their financial system. America's consumers and 
businesses deserve strong reform that will ensure that the U.S. 
financial oversight system promotes and fosters the most honest, open, 
and reliable financial markets in the world. That ensures that not only 
does the United States remain the world financial leader but, most 
importantly, that we lead by example.
  I look forward to working with Chairman Dodd and my colleagues to 
consider amendments over the next several days and to improving the 
substitute bill where necessary. Most importantly, though, I am looking 
forward to providing the American people with a sound economy and a 
financial regulatory system that they truly deserve.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Georgia is recognized.
  Mr. CHAMBLISS. Mr. President, I will say more about it in my 
conclusion remarks, but first of all, Senators Dodd and Shelby, thanks 
for continuing your dialog with each other, and thanks for coming forth 
with the type of agreement that has allowed us to get this extremely 
important agreement to the floor.
  With the financial collapse of 2008, there are a number of issues 
that simply have to be addressed, and this is the appropriate forum now 
for all of those issues to come forward and have debate on both sides 
of the aisle; to hopefully at the end of the day come up with the right 
kind of product that is going to make sure situations like 2008 never 
occur again.
  To my chairman and my partner on the Committee on Agriculture, she is 
my dear friend, and we have worked very closely together on so many 
issues, including this one. When we have our differences, we are able 
to disagree in a very professional way. I am very appreciative of her 
as well as of her friendship.
  We all know that appropriate regulation of derivatives and 
specifically the swaps market is a critical component of this 
legislation, and the Agriculture Committee is responsible for the 
oversight of the Commodity Futures Trading Commission, which will 
become one of the key regulators of the swaps market. As the ranking 
member on the Agriculture Committee, I have the responsibility to 
ensure that we get this right.
  The Agriculture Committee has a history of not falling subject to 
partisan influence. We have a long tradition of checking our partisan 
politics at the door in an effort to reach consensus so that both 
Republicans and Democrats can then support our products on the floor. 
For instance, the Agriculture Committee facilitated a bipartisan deal 
to close the Enron loophole back in 2008. Then-chairman Senator Harkin 
and I worked across party lines with Senators Snowe, Feinstein, Levin, 
and Cantwell to ensure that electronic trading facilities offering 
contracts that perform a significant price discovery function are 
properly regulated in a transparent way. Earlier this week, the CFTC 
used this new authority to subject seven natural gas contracts to 
increased oversight. That is an example of how laws written with 
bipartisan agreements yield real results.
  Derivatives legislation should have been handled this way too. It 
should have come out of the Agriculture Committee as a bipartisan 
product. My staff and Chairman Lincoln's staff spent 5 months crafting 
a derivatives bill which should have been reported from the committee 
with support from both sides.
  Unfortunately, things fell apart just as we were about to circulate 
an agreed-upon discussion draft. This discussion draft, which would 
have required clearing of swaps by swaps dealers and others who 
contribute to systemic risk--it would have provided the FTC and the 
CFTC with the authority to establish capital markets and margin 
requirements. It would have allowed the CFTC to impose aggregate 
limits, and, most importantly, it would have provided the much needed 
transparency that has been absent from the swaps market. This would 
have represented a 180-degree shift from current law that was in place 
in 2008. Transparency is the key here. Under our agreed-upon discussion 
draft, 100 percent of all trades in the swaps and derivatives market 
would have been out in the open and available to regulators to review 
in real time.
  Unfortunately, this language is not part of the underlying bill. 
Instead, we are faced with a derivatives product crafted without input 
from Republicans, a derivatives product that reflects an agreement 
between both Democratic committee chairmen and the administration. 
Republicans were not even invited into the room to provide input.
  The product they have developed will have many unfortunate 
consequences for Main Street businesses that had nothing to do with 
creating this financial meltdown. I fear what I believe to be 
unintended consequences resulting from applying complicated regulations 
too broadly will subject our American businesses to more risk, not 
less.
  For example, this legislation would force the Farm Credit System 
institutions to run their interest rate swaps through a clearinghouse, 
which will result in additional costs in the form of higher interest 
rates to their customers, without doing anything to lessen systemic 
risk. Let me be clear as to whom this will ultimately affect--our 
farmers and ranchers, our electric cooperatives, and our ethanol 
facilities that seek financing from these institutions. Institutions 
such as CoBank will be forced to clear their swaps and execute them on 
a trading facility, which will impose significant new costs and result 
in higher interest rates for their customers or, worse, discourage them 
from managing their risk, which will again result in higher costs for 
their borrowers.
  Because this legislation broadly applies regulation, treating all 
financial institutions exactly the same. Cobank and Goldman Sachs are 
not the same and should not be regulated in the same manner. Cobank 
should have the option to clear their swaps and not be mandated to do 
so.
  This legislation will also prevent John Deere Credit from hedging its 
interest rate risk except through a clearinghouse. Again, this will 
result in less attractive credit arrangements for farmers who need 
financing to buy tractors and combines.
  The same can be said for consumers who would like favorable financing 
arrangements with Ford Motor Credit to buy a car. They will not be 
allowed the best deal because Ford Motor Credit is now going to be 
forced to take on additional cost when hedging their interest rate 
risk. Can anyone tell me why we are treating John Deere and Ford Motor 
Credit exactly the same as Goldman Sachs?
  Also, entities such as Koch Industries that is hedging their risk and 
also engaged in developing products for their customers' hedging needs 
should not inadvertently be captured in a new regulatory category 
designed to apply to big financial dealers. But that is exactly what 
this legislation does.
  Koch's and Goldman Sachs' swaps businesses would essentially be 
regulated in the same way. Treating these entities like dealers may 
force them to stop offering those products to their customers, in which 
case their customers will have no other option but to seek products 
from the large dealers such as Goldman Sachs and other Wall Street 
bankers.
  Today I heard the stock price of Goldman Sachs is up, and this 
explains it. They will get increased opportunities to make more money 
under this legislation. Why do we want to essentially lessen 
competition and drive all of the swaps business to those that are the 
most systemically risky or, even worse, drive them offshore where we 
cannot regulate them?
  Banks such as Goldman Sachs may even be forced out of the swaps 
business if this legislation becomes law, which begs the question: Who 
will then be left to offer these risk management tools to our 
constituents' businesses? Businesses rely on swaps as a very legitimate 
option to help them alleviate risk inherent to their business. But if 
no one is left to sell them this protection, they will be forced to 
hold the

[[Page 6614]]

risk on their books. Why on Earth would Congress advance legislation 
that would actually prevent the businesses in each of our States from 
properly managing their risk, especially in these difficult times?
  The American public wants to know why we cannot target these new 
regulations so Wall Street is regulated properly without punishing the 
businesses they rely on every day. I would like to know the same thing. 
Unfortunately, I think I already know the answer: It has absolutely 
nothing to do with regulating Wall Street.
  When the Obama administration realized the Committee on Agriculture 
was on the verge of producing a derivatives regulation package that 
would have appealed to both Republicans and Democrats, they scrambled 
to kill the deal. You see, to the extent that any aspect of the 
financial regulatory reform package has Republican support, they can no 
longer play politics with this issue.
  If we produce a bill that has the support of several Republicans, 
then they can no longer blame us for holding up this process, which 
would cause the administration to lose the message they are pushing, in 
hopes that voters will forget about health care. Their message is 
simple: They want to be able to tell the public that Republicans are 
opposed to regulating Wall Street.
  Well, that is disingenuous at best and totally false at worst. 
Republicans are just as anxious as Democrats to address what went wrong 
on Wall Street and, frankly, it is long overdue. Why has the 
administration waited almost 18 months to push financial regulatory 
reform? Why are they trying to cut Republicans out of the process? Is 
it that they wanted an issue that will drag on into the election 
season, not a solution that will truly protect the consumers on Main 
Street?
  I wish we were here today debating a derivatives product that had 
input from Senators on both sides of the aisle and perhaps a little 
less input from the administration. The American people expect the 
administration to implement the laws that Congress passes, but they 
elected us to write those laws.
  I feel certain that we could have done a much better job had we been 
allowed to work in a more bipartisan way. Unfortunately, I have to 
encourage my colleagues to oppose the derivatives portion of this bill 
because I think it will have undesirable consequences for Main Street 
businesses and consumers who are already struggling in this weakened 
economy.
  We will have amendments to correct the deficiencies in this bill, and 
I hope we will receive bipartisan support for those amendments because 
they truly will reflect commonsense solutions to the complex 
derivatives issue.
  Let me close by saying that I know Senator Dodd, Senator Lincoln, 
Senator Shelby, all of us, wanted, at the end of the day, to develop a 
bipartisan bill. I hope we can still do that. I see my friend, Senator 
Warner, is on the Senate floor. He and I have had some conversations 
about trying to meld some of our ideas. I know he has worked very 
closely with my dear friend, Senator Corker, from this side of the 
aisle.
  Now that we have this bill on the Senate floor, I hope we can get by 
the rhetoric; that we can all say our piece and that we can roll up our 
sleeves and do what the American people want to see us do, which is to 
work together for their best interests. They are the ones who are going 
to suffer for what comes out of here or they will be the ones to 
benefit from what comes out of the Senate.
  Senator Dodd is a dear friend. We have had many conversations about 
this bill. I know what is in his heart. I know he wants to get this 
done in the right way. Likewise with my dear friend, Senator Lincoln. 
So as we move ahead now, I am very hopeful we can settle down to the 
real business the Senate is famous for; that is, having real, hard-core 
debate on issues because these are extremely tough.
  There has not been a more complex issue that we have had to deal with 
in my now going on 8 years in this body. But the minds are very capable 
of resolving these issues. We can do so with good ideas from both sides 
of the aisle. I am very hopeful at the end of the day, we will come out 
with a product the American people can look back at and say: Wow. That 
is the way the Senate is supposed to work. And the people we sent to do 
the peoples' business have, in fact, put together a good product that 
is going to benefit America; it is going to benefit American business 
and, most importantly, it will benefit Americans.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, before Senator Chambliss leaves the floor, 
before we hear from my colleague from Virginia, let me thank both of 
our colleagues: my colleague from Arkansas who spoke, but also my good 
friend from Georgia. I thank him immensely for his comments. We have 
worked together, not as often, and we do not sit on committees 
together. But we have come to know each other and respect each other 
immensely. I know he is going to do exactly what we are talking about. 
This is an opportunity for us not only to get a bill right, but to get 
this institution right, in a way. It ought to be the way we can conduct 
ourselves.
  I have always said, there is nothing wrong with partisanship. In 
fact, the country was not built on anything but partisanship. It was 
the contest of ideas. But the ability to have a civil debate in the 
context of some partisan ideas, with the ultimate goal of resolving 
those issues so that we reach a common solution, is the purpose for our 
existence in all this.
  I have great faith in our ability to do that. I know we will get 
closer to that because there is a guy named Saxby Chambliss. So I thank 
him.
  The PRESIDING OFFICER. The Senator from Virginia is recognized.
  Mr. WARNER. I appreciate the opportunity to follow the chair and the 
ranking member of the Banking Committee and the chair and the ranking 
member of the Agriculture Committee on this critically important 
debate.
  I commend their work, the great amount of work that has been done, 
actually, in a bipartisan fashion already on this important piece of 
legislation. There are differences. But an awful lot of work has gone 
into getting this product that now can be fully aired on the floor of 
the Senate.
  I want to pay particular compliments to my dear friend, someone I had 
the opportunity to actually work for close to 30 years ago, the 
chairman of the Banking Committee, who, while I am a new guy in the 
Senate, seems to me, on this bill, has kind of done it the old-
fashioned way. He has had an open door to any Member of both sides of 
the aisle.
  As this issue got more and more complex, he asked various members of 
the committee to roll up their sleeves and take on portions. Senator 
Corker and I--and nobody has been a better partner than Bob Corker for 
me during this process--took on a major portion of the bill. Then, as 
we kind of got to the Senate floor, time and again--and I will come 
back to certain specific examples--he has said: How can we find that 
common ground that seems to be so often missing from this debate?
  I also commend the ranking member, Senator Shelby. Nobody has been 
kinder and no one has spent more time with me kind of helping me learn 
the ropes of this institution than Senator Shelby. But I also have to 
say that as we get into the substance, some of the comments that have 
been made from my colleagues, particularly on the other side, do not 
resemble the bill we are actually starting debate on, particularly some 
of the portions in which I personally have been very involved.
  I want to try to address some of those briefly. In some of the 
comments we have heard from my colleagues, they have talked about that 
we did not put in too big to fail. If there was one overriding 
challenge that we were all tasked with--I believe my colleagues from 
the other side of the aisle would completely concur with this--it was 
ending too big to fail and never again exposing taxpayers to the 
financial mistakes made by large systemically important institutions, 
made by Wall Street.

[[Page 6615]]

  What I have not heard from my colleagues--and I guess this will be 
assent--is that a lot of the things that we have put in this 
legislation, bipartisan, take us down that path. We have created a 
systemic risk council so for the first time the regulators can actually 
get above their silo-like focus, so they can look ahead of the crisis 
and create early trip wires to make sure we do not get to the kind of 
catastrophic place we ended up in September of 2008.
  This systemic risk council will make sure that these systemically 
important firms--and there will be systemically firms no matter what we 
do--but that the price of getting so large will actually be borne by 
those institutions and not by the taxpayers.
  So what are those speed bumps, as I have called them? Increased 
capital requirements, making sure there is a better management of 
leverage, making sure they actually have in place risk management 
plans.
  Then we have created two brandnew tools that regulators have never 
had before. In fact, the price of getting so large, one is a whole 
new--and I apologize to my colleagues and those who are viewing because 
some of this is in the weeds, but the weeds are where billions of 
dollars are made or lost.
  But we are creating a whole new area of capital that is called 
contingent debt, that any of these firms will have to put in place. 
That debt will convert to equity and dilute shareholders and dilute 
management if any firm even gets close to getting into trouble.
  It will be an immediate check by current management on not getting 
too far over the edge, because we believe the bankruptcy process should 
be the way that firms unwind themselves; if they get into trouble, go 
into bankruptcy. They may or may not come out at the other end, but you 
have to have a plan in place.
  We have spent an awful lot of time looking back, back to the Bear 
Stearns crisis, the Lehman crisis, AIG. All of the stories show there 
was no plan in place for how to unwind these firms.
  So we have given this risk council the ability to require these 
systemically important firms to basically put forward a plan on how 
they will unwind themselves in bankruptcy at no risk to taxpayers. If 
the regulators do not approve, they have the ultimate sanction of 
actually being able to break up these firms.
  Now, time and again, in this legislation--and I hear some of my 
colleagues saying: We are going to always default to resolution. If 
this works, resolution should rarely and hopefully never, ever have to 
be called upon. But who would have ever predicted that we would have 
ever gotten to the point of complete financial meltdown of September 
2008? So we cannot go responsibly forward without also having--and we 
heard this from people across the spectrum--without having some form of 
a resolution plan in place.
  There has been a great deal of comment made about the notion that the 
chairman's bill says we ought to go ahead and in effect ask these 
financially important firms to pony up a little bit of the resources so 
that if one of them gets into trouble and has to be unwound, there is 
some capital available to, in effect, keep the firm operating so the 
market doesn't lose faith in that institution and then create a 
financial run. We saw institutions that seemed to be very well 
capitalized but, because the market lost faith in them, their capital 
disappeared virtually overnight. You have to make sure there is an 
assurance that the firm can continue to operate and be out of business. 
Senator Corker and I looked at different options, but we thought 
perhaps the best way is to have some resources available, whether the 
number is $50 billion, as the chairman proposed, or a lesser amount, 
subject to valid debate, and perhaps the industry ought to be paying 
for that.
  I have heard others criticize that, but what I have not heard from my 
colleagues on the other side is, if the industry is not going to pay to 
keep these firms alive through the process of being put out of 
business--again, resolution means your firm is going out of business, 
your management is gone, your shareholders are gone, your unsecured 
creditors are gone. No rational management team would ever want this to 
happen. They would always prefer bankruptcy. That is how we have tilted 
this process. But if you are going to do that, you need to put them out 
in an orderly way. You don't want to have what happened when there was 
no plan to unwind Lehman. What I would ask is, if they don't like the 
prefund from industry--and some even in the Treasury don't like it--
then who will pay and how do we make sure taxpayers are not exposed?
  My two goals are--and I know Senator Corker agrees--that taxpayers 
should not be exposed, and you have to have some liquidity operating so 
you can keep the firm operating so you can put it out of business.
  I have also heard critiques that somehow in this process there would 
be some preference for one creditor over another. Nothing could be 
further from the truth in terms of what the Dodd bill proposes. It is 
as if somehow a whole new process was created out of whole cloth where 
somehow the firm that was going to be put out of business was going to 
be choosing which creditor was going to be paid or not paid. Nothing 
could be further from the truth. The model I believe the chairman's 
bill adopted was basically the model the FDIC uses as it puts banks out 
of business through the normal resolution process.
  The fact is, the FDIC is charged, as this resolution authority is 
charged, to say you have to maximize value as you put the firm out of 
business. So, yes, you may have to pay the electric bill to keep the 
lights on, but there will be a recoupment process at the end so that 
creditors balance out. It is not some new process. This has been used 
for decades relatively effectively.
  I also heard comments made about some new bureaucracy in the Office 
of Financial Resolution. Nothing could be further from the truth. One 
thing we heard time and again as institutions came in, as regulators 
came in, was that too often they didn't have current real-time data. So 
when AIG was going down, nobody knew the extent of the 
interconnectedness. When Lehman went down, nobody understood the state 
of their transactions. The Office of Financial Resolution that is 
proposed is to make sure that the regulators--experts from all across 
the field, not Wall Street--have real-time data on the state of 
interconnectedness of all the transactions that take place on a daily 
basis. To me this could be one of the most effective tools in this 
whole piece of legislation, making sure we have an immediate snapshot 
of the market.
  In the consumer area, I think there is, again, broad agreement that 
we need to improve consumer protections; that we ought to make sure 
financial products are regulated by the nature of the product, not by 
the charter of the organization that is issuing the product.
  There are still parts we need to work on. We need to make sure, 
particularly for community-based banks, that a community-based bank, a 
smaller institution that didn't create the crisis in the first place, 
doesn't have one regulator come in on a Monday on a consumer issue and 
another come in on a Wednesday on safety and soundness, and get 
conflicting advice. How we get enforcement right is an issue we have to 
work through. But again, common ground can be found on this issue.
  I commend the Agriculture chair and Senator Chambliss on the issue on 
derivatives. There has been a lot of discussion. There is an agreement 
that derivatives, while they have been oftentimes appropriately 
vilified as some of the tools that created the crisis, are also a 
useful way that legitimate businesses hedge risk. At the same time, as 
we try to put in place new rules around derivatives, we don't want to 
push the whole derivatives market offshore. While I commend the end-use 
exemption that was created and the goal of trying to get everything 
cleared and on exchanges, my hope is we can put some penalties in 
place. Some of the penalties the Agriculture Committee has put in place 
perhaps could be triggered if the banks do not end up meeting what they 
basically said, not overusing the end-use exemption or not getting all 
their products cleared or on the exchanges. My concern is that no 
matter

[[Page 6616]]

how good the end-use exemption we write, there will always be more 
resources on Wall Street to find ways around even the best written 
legislation on something where as much money was put in place. So 
putting in place trip wires that might then cause a Draconian response 
would help self-police the industry.
  One more example of the approach Chairman Dodd has taken on this 
bill. In my background, I spent 20 years in the finance industry before 
I was Governor. I was in the early stage capital formation business, 
something that is very important in the tech community. A lot of firms 
that are thrown around on this floor and elsewhere I have been a client 
of, worked with, worked against. One of the areas I had great concerns 
about in an earlier draft was anything that might stop or slow the 
ability for startup companies to access capital. There were some 
provisions in the bill that looked at the definition of a qualified 
investor that could hurt the creation of angel investors which are so 
critical to creating new jobs. There were perhaps provisions put in 
around the SEC in terms of new deals that might have to be vetted for a 
long period.
  If you are a startup company, you don't have 120 days before you can 
raise your dollars to kind of get to the next step to stay alive. I 
cite these two examples because instead of simply saying no to the 
chairman, I said: Yes, you raise good points. Others have raised these 
points. They are changing the bill. I think that spirit is what the 
chairman is going to bring to the debate.
  In the 20 years of being in the finance business or around the 
finance business, I came to this body thinking I might know a little 
something about this subject. There was probably a month in which I 
realized that whatever I knew was incremental and that the last year 
and a half I have had to go back and retest all of my assumptions. It 
has been an enormously challenging and exciting experience. I come away 
from this year and a half--again, particularly working with Senator 
Corker, where we had everybody from across the political spectrum talk 
to us to get us up to speed on these issues--with a couple conclusions.
  One, there is no Democratic or Republican solution to financial 
regulatory reform. If there is ever an area that should not be broken 
down on partisanship, it is this issue. Second, what the market craves 
most is predictability. Sometimes it is overstated: if you do this, oh, 
my gosh, it will be the death knell of American capitalism--there has 
to be balance. But oftentimes those statements are overstated. At the 
end of the day, what the market wants is a good, commonsense bill that 
will set the tone, not just for the next year or two but for the next 
20 to 30 years.
  Finally, because of the good work of Chairman Dodd, Senator Shelby, 
and many others, common ground is attainable. I look forward to 
spending as much time as needed and appreciate in particular those on 
the Republican side who agreed to bring this bill to the floor and no 
longer are there going to be political shenanigans; let's air these 
issues back and forth.
  There is a lot more to say about some of the critiques that are made 
of the bill. I look forward to that discussion and look forward to 
working toward that common ground so we end up with 21st century 
financial rules of the road.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, before we hear from my colleague from 
California, I thank Senator Warner of Virginia. He is a relatively new 
Member of this body and a new member of the committee, but I can't even 
begin to aptly characterize his contribution to this product. Since day 
one, he has been at every meeting, been involved in almost every 
conversation about this bill, particularly the focus that he and 
Senator Bob Corker agreed to take on in working out title I and title 
II of the bill dealing with resolution authority and too big to fail. 
His background, his experience, his knowledge made a wonderful 
contribution to this product. His interest in other matters is valued 
as well, because he brings two decades of living in a world in which 
these matters were something he absolutely grappled with. We have a 
long journey in front of us in the coming weeks to get through all of 
this, but his continuing involvement in this Chamber on this subject 
matter will be invaluable to all of us as we go forward. I thank him 
for that.
  Let me thank my colleague from California. She also has a background 
on this subject matter. She has often talked about it. I thank her for 
what will be our first amendment on this bill, something I think brings 
all of us together. I thank her for her energy and interest in the 
subject.
  The PRESIDING OFFICER. The Senator from California.


                           Amendment No. 3737

  Mrs. BOXER. Mr. President, I thank Senator Dodd for all his work on 
so many issues. Just the way things worked out, he has been so pivotal 
in health care reform and now in Wall Street reform. This is an era of 
reform. My friend should be very proud that he happens to be here at 
this time, because we can't go back to the days we left. As a reminder, 
I will show you some of the headlines. It is worth a minute of looking 
at these headlines. This is taken from 2007 and 2008, some of the 
headlines we had to face in those times: ``U.S. unemployment rate hits 
10.2 percent, highest in 26 years.'' How about this one: ``Nightmare on 
Wall St.'' ``The bailout to end all bailouts.'' ``Wall Street's latest 
downfall: Madoff charged with fraud.'' ``Credit crunch continues as 
lending rates climb.'' ``Jobs, wages nowhere near rock bottom yet.'' 
``Where do we go from here?'' ``The Nasdaq in biggest fall since the 
dot.com crash.'' ``Dow dives 778 points.'' ``U.S. loses 533,000 jobs in 
biggest drop since 1974.'' We can see the look on this man's face. He 
is obviously standing in the middle of the New York Stock Exchange. 
That explains how everybody felt as our constituents lost their wealth. 
They lost their wealth and with it their confidence in America.
  I want to continue with one more chart because all of us want so much 
to put this behind us. That is what we will do with this bill. But we 
have to remember. ``Economy in crisis, what now?'' ``U.S. pension 
insurer lost billions in market.'' ``Housing prices take biggest dive 
since 1991.'' ``Full of doubts, U.S. shoppers cut spending.'' ``Wall 
Street employees set to get 145 billion 2009,'' the bonuses during this 
time. ``How low can they go?'' ``Home prices drop 42%.'' ``Carnage 
continues: 524,000 jobs lost in December.'' And from the San Jose 
Mercury News: ``Foreclosure Wave, San Jose Fights to Protect 
Neighborhoods.''
  What we are doing here is so important. I am so proud of the work 
Senator Dodd did in his committee that has brought us to this point. I 
am grateful that our Republican friends let this bill move forward. We 
will have our debates. That is fine. But we can't afford to go back to 
those old days. Those old days could happen unless we act, as the 
President has stated.
  I want to take the time to thank Senator Dodd in particular for 
working with us, as well as to thank the administration for working 
with us, to come up with an amendment which will synthesize exactly 
what the bill does.
  The purpose of this amendment--which is pending at the desk, which I 
am hopeful we will vote on Tuesday--says in its purpose: ``To prohibit 
taxpayers from ever having to bail out the financial sector.''
  When I heard my colleagues on the other side say Senator Dodd's bill 
would ensure taxpayer bailouts, I knew it was false, and I went to 
Senator Dodd and colleagues on the committee and said I did not 
understand why these comments were coming from the other side, as if 
saying this glass of water on my desk is a cup of coffee. No. This 
glass of water is a glass of water. It is not coffee. And if you say 
seven, eight, and nine times that it is coffee, somebody might believe 
it. That is how I view the comments from the other side that this is 
guaranteeing bailouts, when in fact it is not.
  So I said to Chairman Dodd: I have an idea that we should put 
together a

[[Page 6617]]

very simple amendment to the bill that basically says what we know is 
true:

       All financial companies put into receivership under this 
     title shall be liquidated.

  No company is ever going to be kept afloat. No taxpayer funds should 
ever be used to prevent the liquidation of any financial company under 
this title, that all funds expended will be repaid to the taxpayers by 
the financial sector through assessments or the sale of the assets of 
the company.
  Then, we repeated at the end:

       Taxpayers shall bear no losses from the exercise of any 
     authority under this title.

  I am going to put up the Boxer amendment. It simply fits right on 
this chart, I say to my friends. It is very simple. If a company is 
taken into receivership, liquidation must follow. Nobody is being kept 
afloat. No one's business is being kept afloat. They are liquidated.

       Recovery of Funds.--All funds expended in the liquidation 
     of a financial company under this title shall be recovered 
     [either] from the disposition of assets of such financial 
     company, or shall be the responsibility of the financial 
     sector, through assessments.

  Lastly, just in case people really wanted it stated--and I see some 
smiles on faces because we worked together to make sure no one could 
turn this around--

       No Losses to Taxpayers.--Taxpayers shall bear no losses 
     from the exercise of any authority under this title.

  So let there be no mistake. Senator Dodd's arms were open to this 
amendment. He said this reflects exactly what we have done. But he 
said: Senator, if you feel better if we put it in one place, we will do 
it.
  I think it is important for the American people to understand the 
simplicity of the approach: No loss to taxpayers, period, end of quote. 
So if somebody goes on TV this weekend and says this bill is about 
bailing out companies and keeping them afloat with taxpayer funds, it 
cannot be done under the bill, and this amendment certainly brings it 
home in a very simple, plain English fashion.
  I am proud to be working with my colleague Senator Dodd. I used to 
sit on the Banking Committee, and I was kind of lured off the committee 
because the people in California said: We have to have somebody on the 
Commerce Committee. We have so much at stake there. So it was tough for 
me to walk away, but I did walk away. But I still retain the 
relationships.
  I am going to go through what is in the Dodd bill that I think is so 
terrific--then I am going to yield the floor--because Senator Dodd has 
been talking about this by himself, and I think he deserves to have a 
bit of a rest and the rest of us should come over here and talk about 
it.
  Again, taxpayer bailouts are done. We know the bill itself does it, 
but we have made it clear. Taxpayers are covered. We will have a cop on 
the beat for our consumers. We will know that a Consumer Financial 
Protection Bureau has only one job, and that is the job to look after 
our consumers so they are protected from the kind of deceptive and 
abusive practices that fueled this crisis.
  Let's face it, this crisis was fueled by Wall Street, by speculation, 
no leverage requirements--lots of things--dark markets. This bill takes 
on these issues.
  We see another part: brings disclosure to dark markets. The bill 
eliminates the loopholes that allow reckless speculative practices to 
go unnoticed. It brings real regulation to derivatives markets and to 
the ``shadow banking system.''
  I think we are probably going to have some debate over this. But I 
can say right now, when I worked on Wall Street so many years ago, I 
have to say--too many years ago to remind myself of, but let's say it 
was a long time ago, and it was in the 1960s--those were the years when 
a $12 million share day on Wall Street was breaking all the records. 
Now a $1 billion share day isn't that much. We did not have these kinds 
of instruments. We did not have these kinds of toxic instruments that 
were so complex.
  When I asked Treasury Secretary Paulson about it--he was George 
Bush's Secretary of the Treasury--he essentially held his head in his 
hands and said: You know, it is hard for me to explain this to you. 
That is a fact. It did not build up my confidence very much. I have to 
say, we need to have a financial system that is understandable by 
everybody. But certainly the Secretary of the Treasury should not have 
to hold his head in his hands and say: I can't explain it. We have to 
end those days, and the best way is sunshine.
  So I say to Senator Dodd, you did a great job in working to bring 
disclosure to the dark markets. Senator Lincoln, working through the 
Agriculture Committee, I think brought us even more protection, and 
that is very good. Because I think the President said it well. The 
President said: We want everyone to prosper. We want everyone to be 
innovative. But we do not want to put our people at risk. When people 
start losing in the ways we were losing--20 percent of our net worth; 
40 percent, 50 percent the market went down--50 percent of its value--a 
lot of people lost their dreams, and it was unnecessary. But it 
happened because there were markets that were in the dark, and there 
were people who were not fulfilling their fiduciary responsibility to 
their clients.
  What else does the Dodd bill do? It curbs risky behavior on Wall 
Street. The bill provides for strict new capital and borrowing 
requirements as financial companies grow in size and complexity and 
pose a risk to the financial system.
  Regulators will restrict proprietary trading--speculative gambling--
by critical financial firms. We have situations where a firm is 
advising a client--and we know this happened with Goldman Sachs--
advising clients to buy a particular instrument which happened to be 
worthless. And I cannot use the word the traders used to describe it 
because this is a family audience. These were junk, and they called 
them worse than that. They were junk. They were being sold to the 
customers of Goldman while Goldman was taking a short position--in 
other words, a position that bet on these instruments' failure. The 
kind of e-mails that came out were reminiscent of the e-mails that came 
out during the Enron scandal, bragging about how widows and orphans 
were going to get hurt.
  Well, if there is anything we should do here, it is to protect our 
people, not put them at greater risk.
  There is going to be an early warning system created to prevent a 
future crisis--the Financial Stability Oversight Council--to focus on 
the risks before they lead to a crisis. As a last resort, the 
regulators can break up a company that is too big to fail.
  Lastly, of the big accomplishments of the bill, the bill protects 
against securities markets scams. It mandates management improvements 
and increased funding for the SEC. The bill creates a new SEC Office of 
Credit Rating Agencies to strengthen the regulation of credit rating 
agencies, many of which failed to correctly rate risky financial 
products.
  I have to say, I am working on an amendment that is even stronger 
because, for me, as someone who relied on, so many years ago, the 
honesty of these rating companies--these are the companies that say: 
This is AA, this is AAA, this is A, this is B, this is bad--they are 
getting paid by the people who have an interest in them giving a good 
rating. That is wrong, and we have to do something here to insert some 
type of responsibility to the public. These rating agencies have a 
responsibility to the public. I am working on some approaches. We do 
not have it ready. We are going to talk to Senator Dodd, and we hope he 
will be amenable to it. But we have some thoughts about it.
  In this area, the people of this country are putting their hopes and 
dreams into the financial markets. It has been a great thing, in 
general, over the years. It has been a great thing because America is a 
great country, and we have innovation and innovators, and we have 
venture capitalists who put it all on the line, and they hit, and we 
can all do very well if we invest, even if we do it through our 401(k) 
or our company does it through a pension plan.
  We know most Americans have a stake in these markets. I heard some

[[Page 6618]]

things from Goldman Sachs--they said something like this: Well, the 
people we were selling to were sophisticated, and they should have 
known better. But they stop short of the truth. Maybe they were 
sophisticated, and maybe they were not doing their job either; 
therefore, it trickles down to the people who were relying on that so-
called sophisticated investor. All we are saying is, we need reasonable 
rules of the road. We want to know a rating agency is giving it their 
best shot to tell the truth about a security. We want to ensure that. 
If there are new, exotic instruments being traded, that is fine, but 
let's take a look at them in the light of day so people are fully 
informed. Then, if you take a gamble, if you are fully informed, that 
is one thing. But if you do not understand you are taking a gamble, 
that is another.
  So again, I am very pleased we are at this point. Somebody said the 
only reason we got here is we threatened to work through the night. 
Maybe there is some truth in that. Frankly, it does not matter to me. 
We are at this point. We can get to this bill. My Republican friends 
who say they want to improve it--they did not try to do it in the 
committee, is my understanding--but if they want to do it now, I 
welcome that because I am sure I will support some of their amendments 
if they are in the spirit of this bill. The spirit of the bill is 
protecting consumers, protecting taxpayers, making sure taxpayers are 
never on the hook, and stopping a situation like this one, as shown on 
this chart, where every newspaper had pictures of people like this who 
were at a loss to understand: How could this happen in America?
  I get the chills thinking about the conversations many Democratic 
Senators had. I know Republicans had the same conversation with the 
Secretary of the Treasury and with Fed Chairman Ben Bernanke, in which 
they basically said: We are on the brink of collapse. We may never come 
back from this situation.
  We cannot forget that. If we do not move to correct the system in 
ways that are not overly burdensome, but we get it right--and I think 
Senator Dodd pretty much has gotten to that sweet spot on this thing; 
we may want to move here or there with an amendment--if we can do this, 
if we did nothing else--and, by the way, we have done other things, and 
we will do more--this is crucial. It is crucial to consumer confidence. 
Consumer confidence fuels 70 percent of the market. Let's do this 
right.
  I thank my Republican friends who decided to work with us. I thank 
Senator Dodd for his patience, for his passion, and I am very happy he 
is leading us because he is so effective and he knows what he is 
saying.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Franken). The Senator from Connecticut.
  Mr. DODD. Mr. President, again, I commend our colleague from 
California and thank her for her involvement and her ideas and 
suggestions. Again, it is going to be helpful that we begin with a 
proposal that I think is going to bring us together. As I said--I 
cannot speak for others; but at least I have heard, when I have asked 
people to comment on the Senator's proposal--there seems to be almost 
unanimity around the Senator's idea. In a debate that is obviously 
going to have us not with unanimity, as we move forward in a number of 
areas, I think it is always good to begin where we speak with one 
voice. I think that common voice is making sure we never again have 
that too-big-to-fail concept as part of our economic structure.
  The Senator will be making a significant and historic contribution to 
this effort, and I thank her.
  Mrs. BOXER. I thank the Senator.
  Mr. DODD. Mr. President, I do not have any other requests for time to 
speak this afternoon on this bill. But it is obviously a leadership 
call as to what their decisions are to go forward.
  Again, I want to say to my friend and colleague from Alabama, we have 
had a very good working relationship, and it will continue through this 
process. We have already been discussing several ideas. I appreciate 
Senator Warner raising a couple of issues. The angel investor idea is 
one that needs to be changed. I know my friend and colleague from 
Missouri, Kit Bond, has ideas on this as well, and I am going to be 
getting in touch with him and asking him, along with Senator Warner and 
others, to work on some language we can add to our bill. I know Senator 
Corker is working on some ideas as well and, again, we want to be 
cooperative. A number of my colleagues over here have been submitting 
amendments, including Ben Cardin and others, Sherrod Brown. I know 
Senator Sanders has some amendments. We have a lot of ideas that are 
going to be coming up in the coming days, so we have a lot of work in 
front of us before we complete action on this bill.
  Again, I am grateful to Senator Shelby and the other members of the 
Banking Committee. They have been very helpful over these many months, 
and we have had long conversations about this. There are a lot of 
different ideas as to how this all can work, but each and every one of 
them made a constructive contribution to the process, and I am grateful 
to them for that. I am very grateful to Leader Reid. Obviously, none of 
this happens without the involvement of the leader and his very fine 
staff who have been tremendously helpful in us getting to this point by 
providing the structure and the organization that allows us to actually 
begin a debate. Many thought we couldn't even get to this debate. I 
wish to underscore something Senator Boxer said a few minutes ago. We 
spent a lot of time over the last 2 weeks; there was a lot of acrimony 
and finger-pointing as to why we weren't starting. That is behind us. 
We have now started. Some people want to flyspeck that debate. The fact 
is, we are on the bill and we are moving forward. That is good news. My 
hope is, over the next few weeks, we will complete this bill.
  With that, I will note the absence of a quorum and let the leadership 
decide what they want to do.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BROWN of Ohio. Mr. President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWN of Ohio. Mr. President, Wall Street's crisis became the 
Nation's crisis. Lost jobs in Toledo, foreclosed homes in Bedford 
Heights, frozen credit for small businesses in Lebanon, State budget 
shortfalls, and the list goes on and on. It can't happen again. We must 
not let it happen again.
  One of the most disturbing aspects of the Wall Street reform process 
is, some policymakers started with the premise that, first of all, Wall 
Street wealth must be protected. Sure, they have their lobbyists. Sure, 
they have their PR people spinning. But it amazes me to think that is 
where some people started this whole debate. They focused their 
energies on minimizing the safeguards put in place to protect our 
Nation from another financial meltdown.
  In this morning's Washington Post, E.J. Dionne quotes an e-mail from 
an arrogant banker, who happens to work at Goldman Sachs, who wrote:

       What if we created a ``thing,'' which has no purpose, which 
     is absolutely conceptual and highly theoretical and which 
     nobody knows how to price?

  At some point, we have to ask in this body: Whom do we report to, the 
megabanks that raked in millions by gambling with the livelihoods, the 
homes, the retirement security of middle-class Americans, or do we 
report to middle-class Americans themselves? Is our job to protect Wall 
Street or is our job to protect against more taxpayer-funded bailouts?
  In my view, we must take the steps necessary to eliminate bailouts 
and establish foolproof financial protections for the Americans we 
represent, and we do it even if the behemoth banks don't like it, even 
if Wall Street lobbyists don't like it, and even if most of my 
Republican colleagues don't like it. That is what the amendment I will 
offer on Tuesday is all about.
  In the last few decades, the banking industry has become so 
concentrated it

[[Page 6619]]

no longer functions as a competitive market. Yesterday I met with 
Kansas City Fed President Dr. Tom Hoenig. He observed that since 1990, 
the 20 largest financial firms have increased their control of banking 
assets. They once controlled 35 percent of those assets. Today they 
control 70 percent. Some firms are 30 to 40 percent larger than they 
had been just before the crisis.
  What does that mean? We are twiddling our thumbs as Wall Street once 
again places our Nation at risk.
  Think about this: 15 years ago the 6 largest U.S. banks had assets 
equal to 17 percent of GDP. Today, the 6 largest megabanks in this 
country have combined assets of 63 percent of GDP; from 17 percent 15 
years ago, percent of GDP, assets as a percent of GDP, to 63 percent 
today. Three of these megabanks have close to $2 trillion--that is two 
thousand billion--$2 trillion of assets on their balance sheets and 
over $1 trillion in liabilities. Because our economy rides on a few 
megabanks, taxpayer-funded bailouts are far more likely than if these 
banks were not so dominant.
  As we have seen, that is not the only downside of banking 
concentration. It also jeopardizes our small businesses which generate 
over 60 percent of new jobs. The current distortion in the market gives 
privileged large banks clear funding advantages, up to $34 billion 
annually over smaller community banks. These large banks could game the 
system far too often at the expense of the smaller banks, at the 
expense of the community banks. These large banks have put a virtual 
freeze on spending on small businesses--despite receiving this taxpayer 
bailout.
  Three of these largest banks slashed their SBA lending by 86 percent 
from 2008 to 2009. In Ohio, SBA-backed loans--those are government-
guaranteed loans to help small business. I know the Presiding Officer 
has fought for small business in Duluth and Rochester and St. Paul, as 
I have for small business in Toldedo and Dayton and Cincinnati. In 
2007, SBA-backed loans in my State went from 4,200 to only 2,100 in 
2009. They basically were cut in half.
  I have heard from manufacturers and entrepreneurs, energy startups 
and mom-and-pop corner stores--all small business owners who strive to 
be in the middle class and bring their employees up to the middle 
class, who are struggling to get the credit they need to hire workers 
and expand businesses. They have the capacity, they have the customers, 
they simply cannot get the credit they need to expand. It is clearly 
not the small banks who are cutting their lending. In fact, according 
to the Kansas City Fed, 45 percent of banks with assets under $1 
billion actually increased their business lending in 2009.
  What do the megabusinesses do instead of lending? In the last year 
Wall Street megafirms have increased their trading by 23 percent. They 
are trading with each other on Wall Street so they can make money. They 
are not making loans to Main Street because it simply is not as 
profitable for them.
  Last year, we let 100 community banks fail across the Nation. 
Meanwhile, we spent $165 billion of taxpayers' money to keep the big 
six banks afloat. But the cost of having these six megabanks is even 
greater. The Bank of England estimates that the true social cost to our 
economy of the financial crisis has exceeded $4 trillion, four thousand 
billion dollars. If we don't want another economic crisis, if we don't 
want more small business failures, if we don't want more bailouts, we 
need to do something about the unprecedented concentration of wealth 
among a few large banks.
  That is why Senator Kaufman of Delaware, Senator Casey of 
Pennsylvania, Senator Merkley of Oregon, Senator Whitehouse of Rhode 
Island, Senator Harkin of Iowa, Senator Sanders of Vermont, Senator 
Burris of Illinois, and I have introduced this amendment modeled after 
the Safe Banking Act of 2010. These Senators come from the East and the 
South and the Midwest and all over our country. They will rise with me 
in support of the Brown-Kaufman amendment.
  It would prevent any financial institution from becoming so large 
that it could jeopardize the entire economy. Too big to fail means too 
big to exist. The amendment would scale back the six largest banks of 
the Nation--just six banks but six megabanks. Those six banks' total 
assets, as I said, are 63 percent of gross domestic product in this 
country. This amendment would require them to liquidate some of their 
bank before it is too late.
  That would mean they could spin off one of their lines of work, they 
could reduce one of their lines of work, they could do less business in 
one region--whatever--so they are not megabanks with this kind of power 
over our economy.
  Our amendment would place statutory limits on the leverage of these 
banks. Our amendment imposes sensible size constraints on these banks. 
The leverage ratio would be set in the vicinity of 6 percent--about 16 
to 1.
  We saw on Wall Street one of the things that brought on this crisis 
was there were ratios of 25 and 30 and sometimes even 35 or 40 to 1. 
This amendment would cap concentration of deposits held by any one bank 
at 10 percent of the Nation's deposits, about $750 billion--not small 
but not so humongous as they are now.
  The bill we will be considering beginning next week is strong, but it 
needs to be stronger. It focuses on monitoring risk--that is the right 
thing--and taking action should regulators believe the risk has grown 
too big. But we know the regulators didn't exactly do it right during 
the Bush years, and that is why it is so important that we write 
legislation in a way to keep these large banks from getting too big. We 
should not just monitor risk until we are once again on the brink of 
trouble. We should learn from recent history and correct our regulatory 
mistakes by nipping risk in the bud. That means preventing the 
anticompetitive concentration of banks that become too big to fail and 
bank on that to engage in high-risk behavior. Not only would our 
amendment help prevent bailouts and protect us against economic 
collapse, it would help boost lending to small businesses.
  I am joined in the Chamber by the Senator from Louisiana who has 
specialized in finding ways to help small businesses. She knows, as I 
do, these small businesses have not gotten the kind of credit they need 
to expand; that they have the capacity to grow; that they have the 
employees, they have the customers, but they too often have not been 
able to get credit.
  The Brown-Kaufman amendment would take action now to prevent economic 
collapse and taxpayer-funded bailouts in the future. We believe the 
American public does not want regulators to wait and see whether 
another crisis develops. We should prevent it before it starts.
  Too big to fail is too big. The American people saw the arrogance of 
Goldman bankers who seem, with little regret, without second thought, 
to completely disregard the public interest. They want us to teach Wall 
Street megabanks a lesson that they will never again monopolize 
America's wealth or gamble away America's dreams.
  This is not about retribution. This is about protecting the American 
public from banks too big to fail, banks that are too big to exist. It 
will affect a relatively small number of banks, but these banks, 
frankly, have too much power over our economy. These banks, coupled 
with their risk and their size, present a real threat to the future 
prosperity of our great country.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Shaheen). The Senator from Louisiana.
  Ms. LANDRIEU. Madam President, I ask to speak as in morning business 
for up to 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. LANDRIEU. Before I begin on my topic, which is different from the 
topic of the Senator from Ohio--I thank him for his comments about our 
focus on small business and assure him, as the Chair knows, that we are 
doubling our efforts this week to hone in on a package of support and 
help for small businesses in America. We believe the recovery can take 
place and will take place, but it will be led in

[[Page 6620]]

large measure by the small businesses in America. We are going to do 
our very best, after we deal with this bill that is on the Senate 
floor, to focus the attention of the Senate in that regard.
  I thank the Senator from Ohio and look forward to working with him in 
the weeks ahead.


                          Tragedy in the Gulf

  Madam President, I rise today, though, to speak on an equally serious 
subject--actually, a tragedy and disaster that is occurring right now 
off the coast of my home State, in Louisiana. On Tuesday, on April 20, 
as we all now know, at approximately 10 p.m., a tremendous and terrible 
explosion occurred aboard a state-of-the-art drill ship, the Transocean 
Deepwater Horizon.
  There were 126 men and women onboard that rig. It was drilling in 
almost 6,000 feet of water--a real technological feat--some 50 miles 
off the Louisiana coast. The explosion, unfortunately and sadly, killed 
11 men and 17 others were injured--3 of them critically--and today 1 
remains in the hospital.
  We don't know what precisely caused this accident, but at present it 
appears that the blow-out preventer failed. We do not know why.
  The blowout preventer is a very large piece of equipment. I would 
like to try to explain.
  It is, of course, very dark down in the depths of the ocean. This is 
the best picture we have. This is what the floor of the ocean looks 
like. This is the blowout preventer. This is a graph of it.
  It is a standard piece of equipment on all wells, and it is a huge 
piece of equipment on a well like this. It would weigh up to 500 tons. 
It is about 18 feet in length. At some point this piece of equipment, 
which is standard--this piece of equipment, which is tested every 14 
days, as required by law-- failed. This actual piece of equipment, this 
blowout preventer on this rig, was actually tested 10 days before this 
tragic incident, and it passed the inspection.
  The investigation that is fully underway now and will continue for 
many weeks and months will tell us more. But what we know today is the 
blowout preventer failed. The explosion that occurred ignited the oil 
and gas that flowed from a riser pipe that was connected to the well at 
the sea bed. This riser pipe is a very thick and strong pipe. Right 
now, today, as we speak, it is curled on the bottom of the ocean floor 
much like a garden hose would be, twisted in many places, but the well 
is not closed. So there are anywhere from 1,000 to 5,000 barrels of oil 
leaking from this well.
  Despite heroic efforts that have been underway now for days, this has 
not been closed. This will continue to leach and leak until it is. The 
rig burned, as did the oil and gas that issued forth, for some 36 
hours, and then the rig began to take on water and ultimately sank to 
the sea floor.
  As I said, we know what the leak rate is, and it is headed to shore. 
These are the facts. Everyone agrees this accident was and is an 
unmitigated disaster. I know the hearts and prayers of everyone in the 
United States are with the families of those who lost their lives and 
those who are injured and we continue to pray for them as they recover.
  But the issue for us is to acknowledge this and to make decisions 
about how to move forward. Today, the U.S. Coast Guard reports that a 
rainbow sheen can be seen in the water--I will put up a map in a 
minute--about 32 miles by 42 miles in length. What is important about 
this sheen is that 97 percent of it is a rainbow sheen. Only 3 percent 
contains emulsified crude.
  I would like to take a moment to explain what emulsified crude means. 
It is a thicker oil clotted in water, but even in the areas where the 
crude has beaded or gathered on the water's surface, it is a very thin 
layer. In fact, in a briefing with the Coast Guard yesterday, the oil 
slick at its thickest point is about a millimeter or two in thickness, 
about the thickness of a couple of strands of hair.
  So it is important to understand why this is an unprecedented 
disaster. The oil slick is wide and covers a large section of our 
ocean. It is very thin; 97 percent of it is an extremely thin sheen of 
relatively light oil on the surface.
  I do not say that to diminish the tragedy, but to accurately convey 
to the American people what we are dealing with. This is not the heavy, 
thick oil that stained the Santa Barbara coast in 1969, nor does it 
look like Prudhoe Bay crude that spilled from the ruptured hull of a 
tanker in 1989.
  But what is of immediate concern to the people of my State and the 
Gulf Coast is that the oil sheen is approaching our shores. The edge of 
the sheen is approximately 23 miles off the coast of Plaquemines 
Parish. This could change in a few days. We do not know. But it looks 
as though the spill is going to move right to the mouth of the 
Mississippi River, to the Bayou La Loutre Pass.
  In the meantime, I do know that there are 56,000 feet of flexible 
barrier that have been deployed to contain the spill. That is about 15 
miles of barrier. An additional 31 miles is available to be deployed, 
and 72 miles of barrier and buffer have been ordered.
  I also know there are literally hundreds if not thousands of people--
I have been on the phone with the Commandant of the Coast Guard, I have 
been on the phone the last 3 days with the Admiral of the Coast Guard, 
Mary Landry. I have spoken to the Department of Interior, I have kept 
in touch with local and parish officials. I do know there are hundreds 
and thousands of people at work, in Houma, LA, outside of Hammond, LA, 
and hundreds along the coast doing everything they can to minimize 
potential damage to our shore.
  We are investigating every hour what more can be done. There are 70 
response vessels in place. They are being used as skimmers, tugs, 
barges, and recovery vessels, and approximately 1,000 government/
industry response personnel are on site responding to the incident. 
Some 65,000 gallons of dispersant have been deployed, and an additional 
110,000 gallons are available. And, today, a controlled burn began. 
There are different views about how this oil can be eliminated. Some of 
it is dispersed naturally, some of it can be burned. It has to be 
corralled and burned and, of course, controlled.
  This has not happened in this depth of water. So the industry and our 
government officials are using everything known at our disposal now to 
take care of it. Some of it will be trial and error.
  I want to spend a minute about what the options should be. We have 
seen disasters such as this before. We have seen them in the oil 
industry when tankers explode or hit ground. We have seen them in 
shipping, when ships, for no apparent reason, sink in the middle of an 
ocean. We have seen them in the nuclear power industry. And, in fact, 
we have seen them in our space program.
  We must react to this disaster in the measured but right way. We must 
apply the lessons of past tragedies to this one, so we can make the 
best and wisest decisions that will instruct us about how to move 
forward. I do not believe we can react in fear. I do not believe we 
should retreat.
  One option would be the way we dealt with, and I think it was a poor 
choice, the Three Mile Island nuclear powerplant disaster. There were 
no deaths or injuries, but the disaster was so frightening to people, 
there was so much concern, that basically we brought all new nuclear 
powerplant applications to a screeching halt.
  In hindsight, that was not the right decision. Today, we are 30 years 
behind the French in nuclear technology. France gets 80 percent of its 
electricity from nuclear; we get less than 20. France is the largest 
net exporter of electric power, exporting 18 percent of its total 
production to Italy, the Netherlands, Belgium, Britain, and Germany. 
Its electricity cost is the lowest in Europe.
  Today, Areva, a French company, is the world's leading nuclear 
company. It could have been a U.S. company, but it is not, because we 
ran, we retreated out of fear. We did not, in my view, respond the way 
we should have.
  For those who are interested in reducing carbon emissions--and I am 
one of them--consider that France's carbon

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emissions per kilowatt hour are less than one-tenth of Germany's, and 
one-thirteenth that of Denmark. France's emissions of nitrogen oxide 
and sulfur dioxide have been reduced by 70 percent over 20 years, even 
though their total output of power has tripled. Let me repeat that. Its 
emissions of nitrogen oxide and sulfur have been reduced by 70 percent, 
even through their production has tripled because they moved forward 
with nuclear power, found a way, fine-tuned their technology.
  But because of our poor and inappropriate and wrong reaction, our 
United States has largely sat out of the nuclear renaissance at great 
expense to our country. We have allowed foreign companies to step in as 
global leaders and 30 years later we are now trying to make up that 
ground. So retreat is not an option.
  By contrast, we can look at how we, the United States, responded to 
the 1986 disaster of the Space Shuttle Challenger. I can remember 
exactly where I was, as many Americans can remember when that incident 
happened. We all remember the joy of the takeoff and of the launch, and 
then the unbelievable visual of that space shuttle exploding into a 
billion pieces in space, losing all seven lives, and, remember, there 
was a teacher on board, Christa McAuliffe. The horror of that disaster 
shocked us all, and it haunts us to this day. However, what we did not 
do is end the space program. We did not stop launching. We did not stop 
exploring.
  As we go through with this disaster, and we handle it, whether it 
takes us a week or several weeks or a month or several months, we have 
to find a way to make sure it never happens again, strengthen our 
resolve, strengthen our technology, and continue to be the world leader 
in clean technology in this world. We did not declare the risks were 
too great and the benefits of the program were too few. We moved 
forward. As a result, the United States remains a global leader in the 
space race, and we must continue to remain a leader in energy 
production, even as we transition from fossil fuels to wind and solar 
and other offshore opportunities.
  No one has ever claimed, including myself, an unabashed proponent of 
the industry, that drilling is risk free. The people of my home State 
of Louisiana know these risks better than anyone, both the safety of 
the rig workers, and to the environment itself. But we also know that 
America needs 21 million gallons of oil a day to keep this economy 
moving. Twenty-one million gallons of oil a day are necessary for this 
economy. This well is leaching right now 5,000. That is less than one-
fourth of 1 percent of the oil that is necessary.
  So we must continue to drill. For advocates who say we cannot afford 
to drill off our coast, then what coast should we drill off of? Should 
we have all of our oil coming, 100 percent, from Saudi Arabia or 
Venezuela or Honduras or West Africa? We have to take responsibility to 
drill where we can safely. Out away from our shores is as safe as we 
can be. We obviously have to improve our technology, and that we will. 
Retreat, we will not.
  Let me give a few more facts, and then I will wrap up my comments. It 
is more risky to import our oil in tankers than it is to drill for it 
offshore, even considering this disaster we are dealing with today. 
According to a report by the National Academy of Sciences, spills from 
tankers bringing oil in from overseas account for four times as many 
oil spills as does offshore drilling.
  Compared to how much oil we use in this country, the industry spill 
rate is quite low. Minerals Management Service reports offshore 
operators have a spill rate of only .001 percent since 1980. That means 
that 99.99 percent of all oil is produced, transported, and consumed 
safely.
  Again, I am not saying that to minimize this disaster. We know the 
blowout preventer failed. There may be other safeguards that must be 
put into place. The investigation will show that. There may be those 
who need to be held accountable. The investigation will show that as 
well.
  But the fact is, natural seeps introduce as much as 150 times more 
oil into our oceans than does offshore drilling. I agree we do not want 
to drill everywhere. I do not think we should drill in Yosemite 
National Park. I believe there are places such as the Great Lakes and 
other places potentially off the Atlantic Coast that we should not 
drill. But using the right amount of buffer zone, whether it is 50 
miles, or 35 miles, or 100 miles, using up-to-date technologies, backup 
blowout preventers, something I am learning about that actually goes on 
in Norway and other countries, might also reduce these risks even 
further.
  But let me say one more word before I close, a word about revenue 
sharing. I have been probably the most outspoken advocate in this 
Senate, and will continue to be, and am proud of my advocacy on the 
part of coastal States, particularly the States of Texas, Louisiana, 
Mississippi, and Alabama, that have been host to this industry for the 
better part of 75 years. We have lived through its ups and downs. We 
have lived through disasters such as this, and periods of relative 
calm. We have benefitted from the millions of dollars that have 
benefitted our States indirectly through jobs. But with all that we 
have done, generating almost $5 billion in taxes off the Gulf Coast, 
out of this Gulf Coast, $5 billion a year comes to the Federal 
Treasury. The fishermen in Plaquemines Parish, the fishermen in St. 
Bernard, the schoolchildren in Orleans and in Jefferson have not 
received one penny, even though in our whole State today, many people 
along the coast are standing watch to keep this oil spill from our 
shores.
  We have come here time and time again and said, we are proud to be 
partners in this industry, even today, in the midst of this disaster we 
still have. But you must understand the risk. We do. And we would like 
to have a portion of that funding to help us either have the kind of 
technology in place to invest in our wetlands, to fill up some of these 
canals that have been left, even as we make the industry reach to 
higher and better standards. I hope that as people watch this disaster 
unfold, they will hear again the call of the gulf coast Senators and 
House Members to allow us to share these revenues in a fair way so we 
can all benefit from the upside, and most certainly share the downside, 
as we will do in the next weeks and months ahead.
  We are going to continue to monitor, to react, to do everything we 
can to save the environment, to investigate the accident, to continue 
to nurture and care for those who are still injured, and to comfort 
those who have lost members of their family. There is a young mother I 
spoke to who lost her 21-year-old husband, and will be raising a 3-
month-old and a 3-year-old by herself, at least for the foreseeable 
future. There are many other stories like that. But we are proud to be 
part of producing the resources this country needs, as we work on 
technologies to prevent these kinds of disasters in the future. We do 
not believe that moving this production completely off of our shore is 
the answer. We do not believe burying our head in the sand and 
pretending the country does not need 21 million gallons of oil a day, 
or pretending we can get this energy tomorrow from somewhere else--we 
may get it somewhere else in 20 or 30 years, but not next week, and not 
the month after, and not the year after.
  So let us be careful in the way we move forward. Let us be measured. 
Let us be open to hear the facts. Let us hold people accountable for 
what happened and understand what happened and prevent it again. In the 
meantime, I know the Coast Guard, the military, Louisiana's agencies, 
and our local officials are going to do everything we can to protect 
our people and our environment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.

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