[Congressional Record (Bound Edition), Volume 156 (2010), Part 6]
[Senate]
[Pages 8361-8369]
[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 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.

  Pending:

       Reid (for Dodd-Lincoln) amendment No. 3739, in the nature 
     of a substitute.
       Brownback further modified amendment No. 3789 (to amendment 
     No. 3739), to provide for an exclusion from the authority of 
     the Bureau of Consumer Financial Protection for certain 
     automobile manufacturers.
       Brownback (for Snowe-Pryor) amendment No. 3883 (to 
     amendment No. 3739), to ensure small business fairness and 
     regulatory transparency.
       Specter modified amendment No. 3776 (to amendment No. 
     3739), to amend section 20 of the Securities Exchange Act of 
     1934 to allow for a private civil action against a person 
     that provides substantial assistance in violation of such 
     act.
       Dodd (for Leahy) amendment No. 3823 (to amendment No. 
     3739), to restore the application of the Federal antitrust 
     laws to the business of health insurance to protect 
     competition and consumers.
       Whitehouse modified amendment No. 3746 (to amendment No. 
     3739), to restore to the States the right to protect 
     consumers from usurious lenders.
       Dodd (for Cantwell) amendment No. 3884 (to amendment No. 
     3739), to improve appropriate limitations on affiliations 
     with certain member banks.
       Cardin amendment No. 4050 (to amendment No. 3739), to 
     require the disclosure of payments by resource extraction 
     issuers.

  The PRESIDING OFFICER. Under the previous order, there will now be 30 
minutes of debate, equally divided and controlled between the Senator 
from Connecticut, Mr. Dodd, and the Senator from New Hampshire, Mr. 
Gregg, or their designees, prior to a vote in relation to amendment No. 
4051.
  The Senator from New Hampshire is recognized.


                           Amendment No. 4051

  Mr. GREGG. Mr. President, I sort of did a trailer version of this 
bill a few minutes ago while we had some time in morning business. But 
let me discuss the amendment again.
  The PRESIDING OFFICER. Will the Senator call up his amendment.
  Mr. GREGG. I call up amendment No. 4051 and ask unanimous consent 
that the pending amendment be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from New Hampshire [Mr. Gregg] proposes an 
     amendment numbered 4051 to amendment No. 3739.

  Mr. GREGG. 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 as follows:

(Purpose: To prohibit taxpayer bailouts of fiscally irresponsible State 
                         and local governments)

       On page 18, between lines 17 and 18, insert the following:

     SEC. 5. PROHIBITION ON THE USE OF FEDERAL FUNDS TO PAY STATE 
                   OBLIGATIONS.

       (a) In General.--Notwithstanding any other provision of 
     law, no Federal funds may be used to purchase or guarantee 
     obligations of, issue lines of credit to or provide direct or 
     indirect grants-and-aid to, any State government, municipal 
     government, local government, or county government which has 
     defaulted on its obligations, is at risk of defaulting, or is 
     likely to default, absent such assistance from the United 
     States Government.
       (b) Limit on Use of Borrowed Funds.--The Secretary shall 
     not, directly or indirectly, use general fund revenues or 
     funds borrowed pursuant to title 31, United States Code, to 
     purchase or guarantee any asset or obligation of any State 
     government, municipal government, local government, or county 
     government or to otherwise assist such

[[Page 8362]]

     governments, in any instance in which the State government, 
     municipal government, or county government has defaulted on 
     its obligations, is at risk of defaulting, or is likely to 
     default, absent such assistance from the United States 
     Government.
       (c) Limit on Federal Reserve Funds.--The Board of Governors 
     shall not, directly or indirectly, lend against, purchase, or 
     guarantee any asset or obligation of any State government, 
     municipal government, local government, or county government 
     or to otherwise assist such governments, in any instance in 
     which the State government, municipal government, local 
     government, or county government has defaulted on its 
     obligations, is at risk of defaulting, or is likely to 
     default, absent such assistance from the United States 
     Government. Notwithstanding any other provision of law, no 
     Federal funds may be used to pay the obligations of any 
     State, or to issue a line of credit to any State.

  Mr. GREGG. Mr. President, this amendment is pretty simple. It says 
American taxpayers should not be put on the hook for States which have 
been profligate. It says, specifically, that: Federal funds cannot be 
used to purchase obligations of States or local communities that are in 
default or are about to default, unless those States have gone through 
some sort of crisis such as the Katrina situation.
  But if the default that the State or local community is about to 
experience is the function of their failure to discipline their fiscal 
house, then we are not going to ask the taxpayers across this country 
to support that error in judgment and that misguided fiscal policy of 
that State or that local government.
  If we do not have this type of rule in play, basically we will be 
setting up a situation where the American people will become the 
guarantor of inappropriate actions across this country by legislators 
and city governments. You will have this untoward situation where you 
will basically create an atmosphere that there is an incentive for 
State governments and local communities to not be fiscally responsible.
  It is this moral hazard issue. We debated it at considerable length 
when we discussed too big to fail in the banking system. This bill has 
a lot of issues, as far as I am concerned, but one of the things it 
actually handles reasonably well is the issue of too big to fail. It 
does need some adjustment. But it basically handles that issue pretty 
well.
  We have designed language in this bill between Senator Dodd and 
Senator Shelby, which essentially says: No longer will the American 
taxpayer be presumed or in any way expected or have any obligation at 
all to support a financial institution which has gotten too large and 
has taken on too many risky decisions and is therefore in fiscal 
distress. That institution will fail. Its stockholders will be wiped 
out. Unsecured bondholders will be wiped out and the American taxpayer 
will not come in and defend that situation.
  Too big to fail ends with this bill, hopefully. But it should apply 
also to States and local governments. We should not create the moral 
hazard of having taxpayers in New Hampshire or taxpayers in Nebraska or 
taxpayers in New Mexico responsible for profligate activity in other 
States.
  In fact, many of our States, of course, have balanced budget 
requirements. In fact, in Nebraska, they do not even allow any debt, 
period. They have a constitutional amendment that says, there can be no 
debt. So they are extremely disciplined, these States, in the way they 
handle their budgets.
  The taxpayers and the citizens of those States expect their leaders 
to be disciplined. So how can we ask those taxpayers and those citizens 
in those States that have been disciplined, who have elected people who 
are willing to live within their means as they govern, whether it is at 
the community level or at the State level, how can we ask those 
citizens across this country to go in and bail out other States and our 
communities that have been totally undisciplined in managing their 
fiscal house and have put themselves at huge distress and have 
defaulted on their debt or are about to default on their debt?
  This is not acceptable. If we are going to have a bill which 
addresses the issue of too big to fail, it should apply to this type of 
a situation. So I have offered this amendment. It is very simple, as I 
said. It prohibits Federal funds from being used to purchase or 
guarantee obligations of States and local communities that are in 
default or about to go into default.
  It is a pretty strict standard, pretty clear. If you have a State 
that for reasons of its own making has created a fiscal mess of 
inordinate proportions and cannot pay its debt, it cannot come to 
Washington and say: We want you to bail us out.
  That is not right. That is not appropriate. So this bill bans that 
sort of an event from occurring. Why do we need to do this? It is 
pretty obvious. There are a couple States in this country that have 
been irresponsible in their spending, that have not disciplined 
themselves, and that, I think, are expecting everybody else in this 
country to bail them out.
  I sure do not want to be part that. I do not want my taxpayers in New 
Hampshire to be part of that. It is not fair that they should be part 
of that. Those States are going to have to figure out how to straighten 
out their own fiscal house. They should have to do that within the 
terms of their own spending streams and their own revenue streams.
  They should not expect the Federal Government to come in and take 
them out of their distress, which was self-imposed and self-created. 
There is an exception in this bill. There is this language so that if a 
State is put into severe distress because of an emergency situation, 
such as a Katrina-type situation, this would not apply. Obviously, it 
should not apply then.
  If it is a self-imposed event, simply resulting from the human nature 
of legislators and city councils to sometimes spend a heck of a lot 
more money than they have and that they can take in under their 
structure, they should have to pay for it and figure out how to deal 
with it themselves. They should not pass that problem on to the 
American people by financing it through Washington. It is consistent 
with the theme of this bill that there should be nothing that is too 
big to fail in this country, including State governments and local 
governments or financial institutions. I hope my colleagues will 
support the amendment.
  I reserve the remainder of my time and yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois is recognized.
  Mr. BURRIS. Mr. President, as I take the floor today, my colleagues 
and I are caught up in a momentous debate over the shape of our Wall 
Street reform bill.
  This legislation will not only help secure America's continuing 
economic recovery, it will also help prevent this kind of economic 
crisis from happening again in the future.
  It would create commonsense regulations designed to keep major 
institutions from gambling with America's economic stability, and it 
would extend a helping hand to the underserved populations that are 
currently suffering the most especially minority individuals and the 
elderly.
  I believe when the history of this economic crisis is written, we 
will judge that its most damaging legacy was the harm it did to 
people's savings and investments.
  It wiped out stock portfolios and 401(K)s. It forced many fixed-
income retirees to go back to work, and it undermined the hard-earned 
retirement security of an entire generation of Americans. So it is time 
to take action.
  We need to do everything we can to protect people's savings, 
investments, and retirement security.
  In a broad sense, this means limiting the risk that big firms can 
pose to the economy as a whole, and shoring up our overall financial 
stability. But it also means we need to guard against fraud and abuse.
  We need to prevent scam artists and people like Bernie Madoff from 
taking advantage of hard-working Americans, so folks can breathe a bit 
easier, so people know that their money is safe.
  Today, many Americans--including 39 percent of minority households--
invest in the financial markets.
  Most of these folks expect their portfolio to be there for them when 
they retire.

[[Page 8363]]

  But when big companies sell risky investment packages, and then bet 
against those investments--when companies have no incentive to be 
honest about high-risk opportunities--regular folks are bound to get 
the short end of the stick.
  That is why we need to institute basic rules of the road--to cut down 
on fraud and misrepresentation, and make sure financial institutions 
are operating fairly.
  That is why our Wall Street reform bill includes a number of key 
protections for American investors.
  Our legislation would create a new program at the Securities and 
Exchange Commission which would mandate an annual assessment of all 
internal supervisory controls, and encourage folks to report 
violations.
  It would establish a new Office of Credit Rating Agencies to 
strengthen regulation, expose hidden risks, and make sure a warning 
system is in place so we are never caught off guard again.
  Our bill would also require companies that sell mortgage-backed 
securities to hold on to at least 5 percent of the credit risk--or meet 
underlying loan standards--so their performance is tied to the products 
they are distributing.
  It would require these companies to be more transparent about the 
assets that underlie these securities, and more straightforward in 
their quality analysis.
  Finally, our legislation would give a company's shareholders the 
right to a nonbinding vote on executive pay so pay can be brought in 
line with performance, and these folks can make their voices heard.
  Together these measures would help to bring transparency and 
stability back to the financial markets.
  This would bolster the integrity of people's investments, and would 
help ensure that their retirement savings are secure.
  There will always be risk associated with making investments, and 
that is exactly as it should be.
  That is how our free market system is designed to work.
  But we need to eliminate the possibility that fraud and abuse can 
undermine the security of our entire economy.
  We need to pass rules of the road that will keep financial 
institutions honest, so ordinary Americans will be protected from 
serious harm at the hands of those they entrust with their savings.
  I yield the floor, suggest the absence of quorum, and ask unanimous 
consent that the time under the quorum be charged equally to both 
sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. KOHL. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KOHL. I ask unanimous consent to speak for up to 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KOHL. I joined the Senate Banking Committee about a year and a 
half ago, shortly after failures on Wall Street forced a taxpayer 
bailout. Bear Stearns, AIG, and other pillars of our economy had 
collapsed, and we learned that our financial system was built on a 
foundation of sand. The crisis on Wall Street hit Wisconsin households 
hard. Families lost their homes, workers lost their jobs, and retirees 
lost their life savings.
  Seventy years ago Congress reacted aggressively to our gravest 
economic crisis, and put us on the road to prosperity by creating new 
regulations and institutions that avoided a meltdown for generations. 
By creating agencies like the Securities and Exchange Commission and 
establishing margin requirements, the Federal Government helped put the 
markets back on track.
  We are now called on to set up rules to put our economy on the right 
track just like we did in the 1930s. For over a year, the Senate 
Banking Committee held hearings to study the financial crisis. We know 
that the conditions that led to this mess did not occur suddenly in 
2008, and these problems cannot be fixed overnight.
  Wall Street needs accountability and transparency to avoid future 
financial meltdowns. The legislation we are considering takes vital 
steps to end ``too big to fail,'' bring unregulated shadow markets into 
the light, and make our financial system work better for everyone.
  This bill protects Main Street jobs by focusing on Wall Street, where 
the crisis began. Community banks and credit unions have continued to 
act responsibly, and should not be subject to new layers of regulation 
that will impede their business.
  The bill also protects consumers, and I would like to thank Senator 
Akaka for working with me on the consumer protections in title XII of 
this bill. This title will help mainstream financial institutions make 
small loans on affordable terms to people who are currently limited to 
riskier choices like payday loans. This title will also help Americans 
get bank accounts, and encourages banks to offer financial education to 
their customers.
  I would also like to thank my friend and Chairman Chris Dodd for his 
leadership on this legislation. Fixing our financial system is a 
complex challenge, and Chairman Dodd has worked tirelessly to get this 
done right. He has been called upon to do so much in this Congress, and 
he has done it all with fairness, wisdom, and good humor. We will miss 
his steady hand in the future.
  I hope the Senate will continue to work in a bipartisan manner to 
complete this important bill. Our economy is slowly recovering from a 
devastating shock, and we must ensure that our progress is built on a 
more secure foundation. Continuing business as usual on Wall Street is 
not an option.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Missouri is recognized.
  Mr. BOND. Mr. President, I rise to speak on the Gregg amendment and 
ask unanimous consent to be included as an original cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. It is important we recognize what a fiscal crisis we face 
in the United States. Today, America's public debt stands at over $12.9 
trillion. Regrettably, that will be on our children's and 
grandchildren's credit cards. We have, just last year, raised that debt 
by $1.4 trillion, and it will be $1.6 trillion added this year. This 
mountain of debt is going on the backs of our children and 
grandchildren. We will have to pay the interest on it, but they are the 
ones who will bear the real burden. Taxpayers are already bailing out 
Wall Street and failed banks with $700 billion; GM and Chrysler, $80 
billion; the toxic twins, Fannie Mae and Freddie Mac, more than $1.2 
trillion. We have tried unsuccessfully to deal with Fannie and Freddie 
in this financial regulation bill. When we look at the cause of the 
financial crisis, it is the subprime market, the bad home loans that 
were enabled by Fannie and Freddie being willing to purchase them. In 
my humble estimation, we should not pass a financial regulation bill 
designed to prevent a reoccurrence of the crisis which we have just 
gone through without dealing with Fannie and Freddie.
  But when you look at the budget deficit, taxpayers are on the hook 
for $1 trillion in a failed stimulus package which only created jobs in 
the governments. It was a government expansion, not a measure to create 
jobs in the private sector.
  The President and majorities in Congress have also recently created a 
new taxpayer-funded entitlement for health insurance. Many of us in 
December were pointing out the fact that this bill would add to the 
debt, it would drive up costs of private health insurance, it would 
limit the ability of seniors on Medicare to get their services by 
cutting the amount of money going into Medicare, and it would lead to 
higher taxes.
  Funny thing, the new Actuary at the CMS has just come out and 
repeated those same four things. The health care bill is not only going 
to drive up private insurance costs, you are not going to be able to 
keep the same plan you had, it will continue to squeeze down the 
services Medicare recipients can receive, and it will add to the 
deficit and, thus, the debt.

[[Page 8364]]

  But how much more debt and how many more unfunded liabilities can we 
take on before destroying the economy? What is happening in Greece, 
regrettably, could happen here. I strongly support the Gregg amendment, 
which will ensure that taxpayer funds are not used to bail out States.
  We talked about too big to fail in terms of financial institutions. 
We ought to be talking about it in terms of governments. We adopted an 
amendment saying we should not use taxpayer money to bail out Greece. 
But we should not be in the position where we would be called upon to 
bail out States which have been unable to get their spending under 
control and get their spending in line with their revenues.
  I know a little bit about tight State budgets. When I was Governor of 
Missouri, we had to make tough decisions. I came back into office as 
Governor in 1981, with a huge deficit in the middle of the year, and we 
could not borrow money to cover that deficit. So we made major, drastic 
cuts in spending, and it was not pleasant. I was picketed by people who 
had to be laid off from the State government. But we readjusted and 
managed to provide services our State needed and put the State back on 
a sound financial footing.
  States all across the country are taking tough steps. There are areas 
where they have agreed to go without services to get their budget back 
in balance. Most States do not have the ability to run deficits. Those 
that do have the ability to do that should not be operating on the 
false assumption that the Federal taxpayers and our children and our 
grandchildren will come back in and be asked to take the irresponsible 
and unacceptable task of putting a burden on residents of the States 
that have made the tough decisions and cut spending to pay for the 
mounting debt of other States that have spent their way into the red 
for years.
  In fact, a bailout of States would create a disincentive, an ongoing 
disincentive, for State leaders to make tough decisions and implement 
necessary reforms to get their budgets in balance and future 
liabilities under control.
  The Missourians I hear from are very angry. They are angry every day 
at spending money on things that are too big to fail. They are angry 
that the government continues to use their hard-earned dollars to help 
companies such as AIG and potentially to help a country such as Greece, 
which failed, instead of paying down our debt and cutting the runaway 
spending.
  This bailout mentality must end. I thought that was one message we 
were going to carry with this legislation. I hope this legislation 
actually does, although I am concerned there are provisions that could 
enable the Federal Government to continue bailing out and taking over 
more businesses.
  The Federal Government must not continue to be an enabler of those 
companies or those countries or States that continue to spend beyond 
their means. It is time for the leadership at the State, as well as the 
national level, to make the decisions necessary to put all of us on a 
sound financial footing.
  I thank Senator Gregg for his strong leadership on budget issues and 
for offering this amendment, and I urge my colleagues to support his 
amendment.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, first, let me thank the Senator from 
Missouri for his thoughtful and substantive discussion of this 
amendment. As a former Governor, I think he appreciates how tough it is 
to maintain balances in the State budget, and you have to make the very 
difficult decisions to make sure your State does not get its fiscal 
house into disarray and end up defaulting on debt. That would be the 
worst thing that could possibly happen if you were a Governor--or one 
of the worst things. In any event, he certainly did that when he was 
Governor. I tried to do that when I was Governor.
  The PRESIDING OFFICER. The time of the Senator from New Hampshire has 
expired.
  Mr. GREGG. Mr. President, I ask unanimous consent that after the 
Senator from Connecticut has used up the time that was originally 
allocated to him, the remaining time between now and 12:05 be divided 
equally between the two sides.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. GREGG. Mr. President, I ask unanimous consent to speak on that 
remaining time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GREGG. I think the Senator from Missouri has made a superb case 
that it is inappropriate to set up a structure where States can be 
profligate or communities can be profligate and then basically throw 
the problems they have created on the rest of the country and the 
taxpayers of the rest of the country--whether they are from New Mexico 
or Missouri or Connecticut or New Hampshire. There is no reason why our 
taxpayers should pay for inappropriate fiscal actions by some other 
State or some other community. Rather, those States and communities 
should have to straighten out their own financial house and not expect 
that they can come to the Federal Government for a bailout if their 
problems have been self-inflicted, created by their own failure to 
discipline their fiscal house.
  As I said earlier in the discussion, a lot of States have a balanced 
budget amendment. I am not sure whether Missouri did--New Hampshire did 
not--but we understood if we did not run fiscally responsible budgets 
in New Hampshire, we would find our debt downgraded. That is what we 
were worried about--to get to the point where you might actually 
default, which would be, as I said, a totally terrible situation.
  But in States that have balanced budget amendments, States which have 
worked very hard to keep their fiscal house in order, the taxpayers of 
those States should not have to suddenly step up and take care of the 
taxpayers of another State that has failed to do that. It is not fair. 
It is not equitable. You certainly do not want to create that 
atmosphere because if you have an atmosphere where one State can throw 
its problems on to every other State, then you create an incentive for 
States to be profligate and irresponsible.


                    Amendment No. 4051, as Modified

  With those comments, Mr. President, I ask to modify my amendment. I 
believe the modification is at the desk.
  Have we shared the modification with the Chairman?
  Mr. DODD. I believe so.
  I ask the Senator, this is the modification?
  Mr. GREGG. Yes.
  Mr. DODD. As I understand it, the modification is a new paragraph:

       (d) Limitation.--Subsections (a) and (b) shall not apply to 
     federal assistance provided in response to a natural 
     disaster.

  Is that right?
  Mr. GREGG. That is correct.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it will be so modified.
  The amendment, as modified, is as follows:

       On page 18, between lines 17 and 18, insert the following:

     SEC. 5. PROHIBITION ON THE USE OF FEDERAL FUNDS TO PAY STATE 
                   OBLIGATIONS.

       (a) In General.--Notwithstanding any other provision of 
     law, no Federal funds may be used to purchase or guarantee 
     obligations of, issue lines of credit to or provide direct or 
     indirect grants-and-aid to, any State government, municipal 
     government, local government, or county government which has 
     defaulted on its obligations, is at risk of defaulting, or is 
     likely to default, absent such assistance from the United 
     States Government.
       (b) Limit on Use of Borrowed Funds.--The Secretary shall 
     not, directly or indirectly, use general fund revenues or 
     funds borrowed pursuant to title 31, United States Code, to 
     purchase or guarantee any asset or obligation of any State 
     government, municipal government, local government, or county 
     government or to otherwise assist such governments, in any 
     instance in which the State government, municipal government, 
     or county government has defaulted on its obligations, is at 
     risk of defaulting, or is likely to default, absent such 
     assistance from the United States Government.
       (c) Limit on Federal Reserve Funds.--The Board of Governors 
     shall not, directly or indirectly, lend against, purchase, or 
     guarantee any asset or obligation of any State government, 
     municipal government, local

[[Page 8365]]

     government, or county government or to otherwise assist such 
     governments, in any instance in which the State government, 
     municipal government, local government, or county government 
     has defaulted on its obligations, is at risk of defaulting, 
     or is likely to default, absent such assistance from the 
     United States Government. Notwithstanding any other provision 
     of law, no Federal funds may be used to pay the obligations 
     of any State, or to issue a line of credit to any State.
       (d) Limitation.--Subsections (a) and (b) shall not apply to 
     Federal assistance provided in response to a natural 
     disaster.

  Mr. GREGG. A parliamentary question: Mr. President, don't I have the 
right to modify without asking for unanimous consent?
  The PRESIDING OFFICER. There was a time limit on the amendment. That 
did require unanimous consent.
  Mr. GREGG. I thank the Chair.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, I ask unanimous consent that the time until 
12:05 p.m. be divided for debate with respect to the Gregg amendment 
No. 4051, and that at 12:05 p.m., the Senate proceed to vote in 
relation to the amendment, with the provisions of the previous order 
remaining in effect.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Mr. President, let me address this amendment, if I can.
  First of all, let me express my admiration and respect for Judd 
Gregg. He and I are good friends. We have worked together on numerous 
issues over the years, so I have developed a great deal of respect for 
him. In fact, it was Judd Gregg and a handful of others who made it 
possible, 18 months ago, for us to develop the emergency economic 
stabilization bill. Without his leadership and support, I think our 
country, unarguably, and, beyond our own borders, the world would have 
been in much more difficult economic shape--had it not been for his 
leadership, along with others who pulled together that proposal that 
passed this body 75 to 24 on that night in late September of 2008. So 
my admiration for Senator Gregg--and among other accomplishments he has 
had during his service here--is strong.
  This proposal, however, goes way beyond anything I have ever quite 
seen here, which basically says the Federal Government cannot provide 
any help to States and local governments. Then the wording of it: even 
if you might be in trouble.
  I go back and I think of New York City, a major metropolitan area of 
our country, which was in economic difficulties. I do not remember the 
history, exactly, of what occurred that brought the city to that fiscal 
brink, but it was serious enough, and there was a serious debate here 
that occurred before I became a Member of this body over what could be 
done to help put that city back on its feet again.
  As a result of the efforts, both in New York, New York State, as well 
as here, New York recovered, paid back whatever it was it received in 
financial assistance, and, arguably, the most important metropolitan 
area of our Nation survived a fiscal disaster.
  Again, now, through the IMF and the World Bank, we appropriate moneys 
each and every year to support international organizations that have as 
one of their purposes--or their purpose is to provide financial 
assistance and stability to nations that are struggling. In many cases, 
I suspect they are struggling for exactly the same reason my colleague 
and friend from New Hampshire has identified: They made bad choices, 
bad decisions. I am not suggesting their problems were afflicted by 
outside forces, although that could happen.
  Certainly what we are watching today in Europe is a classic example, 
where you have other nations now in trouble because of one Nation's I 
will even call it fiscal irresponsibility. I am not sure that is the 
final conclusion, but let's call it that. Yet we find the declining 
Euro, we find debt in trouble in that country, so other nations are 
feeling the effects of it.
  We have all seen where events could occur in our own country: The 
automobile industry in Michigan ends up in deep trouble. That has an 
impact on other States. It certainly affects the economy of Michigan. 
The idea is ``one nation,'' and we are one nation. We are not Europe 
where we have separate political structures and separate rules and 
regulations and one currency which pose difficulties. We are one people 
here, whether you live in New Hampshire or Connecticut or Arizona or 
Alaska or Hawaii or Texas or Oklahoma. Wherever it is, we are one 
people.
  Lord knows, we do not want to reward irresponsible behavior on the 
part of a local government or a State. But the idea that we are going 
to terminate or not provide any kind of assistance because we have 
drawn the conclusion, in the wording of this amendment, as I read it in 
this language here:

       The Board of Governors shall not, directly or indirectly, 
     lend against, purchase--

  All these things we could do here--

       State government, municipal government, local government, 
     or county government [that] has defaulted on its obligations, 
     is at risk of defaulting, or is likely to default. . . .

  Who makes that determination: ``is likely to default'' or ``is in 
danger of''? Is there some omnipotent force that is going to lean over 
all of this and say: I think such and such a county or such and such a 
State is ``in danger of''? That is pretty vague language here to 
decide, all of a sudden, regardless of the reasons.
  We have excluded natural disasters. I appreciate that addition to 
this amendment. But there can be other factors which can contribute to 
these circumstances in a State.
  Again, according to the language on the first page of the amendment, 
it says:

       Notwithstanding any other provision of law, no Federal 
     funds may be used to purchase or guarantee obligations of, 
     issue lines of credit to or provide direct or indirect 
     grants-and-aid to, any State. . . .

  I remind my colleagues that is a pretty broad, sweeping proposal.
  Medicaid; the Children's Health Insurance Fund; the CDC's disease 
control, research, and prevention programs; the Special Supplementary 
Nutrition Program for Women, Infants, and Children; the Unemployment 
Trust Fund; Veterans Health Administration medical services; Department 
of Justice, State, and local enforcement assistance; FEMA--FEMA, I 
guess, may be excluded because of ``a natural disaster''--but the idea 
we would be depriving a State of these resources seems to me would only 
exacerbate the problem.
  Again, I will acknowledge in certain circumstances local governments 
or State governments have made irresponsible choices. But you do not 
blame the entire population of that State or locality because some 
leadership has made a bad choice and then cut off Medicaid, nutrition 
assistance, and so forth. Do you blame a child living in a State 
because some Governor, a mayor, a county executive has made dumb 
decisions, and all of sudden, we say: ``I am sorry, you happen to live 
in that State. You are going to have to move. Go someplace else in 
order to get help''?
  I, for the life of me, do not understand. I understand the 
frustration we all feel when we read about States and localities that 
could have made better decisions. But, again, I remind my colleagues 
here, we are one Nation--one Nation. ``E Pluribus Unum''--they are the 
words right above the Presiding Officer's chair--``from the many, 
one.'' We are many: Over 300 million in 50 States and hundreds and 
hundreds of jurisdictions across the country. Thank the Lord we are not 
just some collection of disparate entities bound together by a common 
currency and little else. We are bound together by much more as a 
nation.
  So I hope my colleagues, at 12:05 or thereafter when we vote on this, 
would say respectfully to our friend from New Hampshire that this 
amendment ought to be rejected.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Mr. President, I admire the Senator from Connecticut and I 
appreciate what he has done in his efforts to stabilize the financial 
industry in this country. At the core of what he has done, of course, 
is to say: No more bailouts. That is essentially what this

[[Page 8366]]

bill is about: No more bailouts; the taxpayers of this country will not 
step up and bail out large financial institutions which have taken 
actions which have put them at risk financially, and the only people 
who should bear that burden are the stockholders and the unsecured 
bondholders of those institutions.
  What this bill also says is no bailouts, no bailouts for States which 
are in default or about to default on their debt. They are doing it not 
as a result of some external event forcing them into dire straits but 
because they simply spent their way into a fiscal situation where they 
can't pay their own debts. Why should the people of Connecticut, the 
people of New Hampshire have to bail out the people of California--
let's be honest about this; this is about California, the people of 
California--because their government has been totally irresponsible in 
spending for a large number of years, has created a massive obligation, 
especially in their public pension programs, which they can't afford to 
pay? Why did they run up those obligations? So that people who were 
running for office in California could get elected. Just promise this, 
promise that, promise this, promise that. Then, the people in New 
Hampshire are supposed to pay to help those people get elected on those 
promises which they could never fulfill and for which they created 
obligations to pay for? I don't think so. I don't think that is fair or 
right.
  If the people of New Hampshire and the people of Connecticut and the 
people of New Mexico have been fiscally responsible in the managing of 
their towns and their cities and their States and their counties, why 
should they suddenly have to pay for California which hasn't been? 
Clearly, they shouldn't. If we are going to have a no bailout bill, it 
ought to apply to California as well as to large financial institutions 
that have acted inappropriately and unwisely.
  That is all this says. It doesn't say you are not going to be able to 
get your usual Federal assistance that comes through the usual course 
of action. That is a bit of hyperbole. I appreciate the intensity and 
energy of the Senator from Connecticut, but that is hyperbole. This is 
about not having Federal funds be available to States that are in 
default or about to go into default on their debt as a result of the 
actions of the State leadership as elected by the people of that State 
and not asking the people in the rest of the country to have to pay the 
cost of those inappropriate actions and those actions which were 
fiscally irresponsible. It seems like a proposal which is totally 
consistent with the basic purpose of this bill, which is to end 
bailouts.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, I will not take a long time to respond.
  First of all, the distinction between a public company--and, again, 
my colleague is absolutely correct; we want to end bailouts of those 
companies, and we certainly want to discourage the kind of behavior 
that can put a county or a city or a community or a State in fiscal 
jeopardy.
  But the legislation also looks backward. On page 2 of the amendment 
it says: ``Municipal government, local government, or county government 
which has defaulted on its obligation.'' So it isn't just those that 
may default. Orange County, CA, for instance, defaulted, and worked 
itself out of its difficulties. But now I am to understand that because 
Orange County was in default a number of years ago, got out of its 
difficulties, yet the adoption of this amendment would preclude Orange 
County potentially from getting any kind of assistance. I don't 
understand that.
  Again, there are a lot of reasons, aside from natural disasters, why 
this can happen. Some of them have nothing to do--a major industry 
which all of a sudden finds itself departed. How many times have we 
seen a company located in a State or a locality, particularly a county, 
that is the major employer, employs thousands of people, all of a 
sudden go offshore. There is a dramatic decline in tax revenues that 
come in. So that community's obligations to its citizenry on education, 
health, highways, everything else, all of a sudden are in jeopardy. 
That is not mismanagement of the government. It is that company made 
the decision to leave. All of a sudden we find an area in trouble and 
they turn to their national government for some help, and we are 
saying: Well, because you are at risk of defaulting--not that you have 
defaulted; the language is, ``is likely to default or at risk to 
default,'' you can't get any help because you might be in trouble, not 
because you have done anything wrong necessarily but because it has 
happened to you. I just feel that such a step would be draconian, in 
the extreme, when it comes to the people of our Nation who, from time 
to time, need help with that list of obligations that would have to be 
curtailed if a community is likely to or is at risk of defaulting or 
has defaulted on its obligations. Over what period of time? Are we 
talking about 10 years, 20 years, over 100 years? How far do I go back 
to determine whether someone has defaulted? What were the reasons for 
it that occurred at that time? It provides none of that relief, except 
that maybe it was a natural disaster.
  Ms. STABENOW. Would my distinguished colleague yield for a question?
  Mr. DODD. I am happy to yield.
  Ms. STABENOW. First, I would say to our distinguished chair of the 
Banking Committee that when you describe communities where businesses 
have collapsed and left communities struggling, certainly we have many 
of those in Michigan. Through no fault of the communities, and many 
times through no fault of businesses in terms of our recession right 
now, we have many communities in this situation.
  Would the Senator from Connecticut agree that what we are talking 
about is not the cities or counties but the local communities and what 
happens? It is people. It is whether they are going to have a police 
force, police on the street or whether they are going to have the 
firefighters being able to answer if there is a fire or whether they 
are going to be able to pick up the garbage or whether they are going 
to be able to do snow removal on the streets. Aren't we talking about 
whether communities--people, families, and communities--if they need 
help, whether we would be able to respond to them? So it is not about 
the government; it is about whom it serves and the people who would be 
hurt through something such as this; would the Senator agree?
  Mr. DODD. Mr. President, my colleague from Michigan is absolutely 
correct and that was the point I made earlier and she makes it even 
more strongly. Again, I don't want to sound like I am in a civics 
class, but we are not just sort of a collection of disparate States and 
communities, we are a country, we are one Nation. It has been a great 
source of our strength. Our country has been through difficult times 
periodically, obviously through some natural disasters, through some 
manmade disasters. We are dealing with one as we speak. That is not a 
natural disaster occurring in the Gulf of Mexico; that is a manmade 
one. People didn't put in the proper safeguards and all of a sudden we 
are looking at the worst environmental disaster maybe in our Nation's 
history.
  What do we say to the States of Louisiana or Alabama or Florida, 
depending upon where these currents flow, and all of a sudden we find 
major industries--tourism, for instance, in the State of Florida. I 
don't know what percentage of the economy of that State depends upon 
tourism, but I suspect a pretty heavy number. All of a sudden beaches 
are closed on the west coast of Florida. Maybe that current brings it 
around to the east coast. All of a sudden hotels and resort areas are 
shut down. The economy begins to falter. A manmade disaster, created 
through the fault of some engineers or whoever else, of an oil company: 
What do we say if this amendment was adopted? I am sorry, Florida. It 
is in danger of defaulting or at risk of defaulting on its obligations 
because the revenues that would come into that State through the normal 
exercise of its business practices was affected not by a natural 
disaster but by one created through the fault, malfeasance or

[[Page 8367]]

misfeasance of a company that caused this kind of danger--or Louisiana, 
which has already been through a natural disaster and is now facing 
this one, or Alabama as well and its coastline.
  So, again, for all these reasons, I urge my colleagues to reject this 
amendment. I thank my colleague from Michigan for making her points.
  I reserve the remainder of my time, yield the floor, and note the 
absence of a quorum. I ask unanimous consent that the time be charged 
equally between the two sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DODD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                    Amendment No. 3884, as Modified

  Mr. DODD. Mr. President, on behalf of Senator Cantwell and others, I 
ask unanimous consent to send a modification to the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment, as modified, is as follows:

       At the end of subtitle C of title I, add the following:

     SEC. 171. LIMITATIONS ON BANK AFFILIATIONS.

       (a) Limitation on Affiliation.--Beginning 2 years after the 
     date of enactment of the Restoring American Financial 
     Stability Act of 2010, no member bank may be affiliated, in 
     any manner described in section 2(b), with any corporation, 
     association, business trust, or other similar organization 
     that is engaged principally in the issue, flotation, 
     underwriting, public sale, or distribution at wholesale or 
     retail or through syndicate participation stocks, bonds, 
     debenture, notes, or other securities, except that nothing in 
     this section shall apply to any such organization which shall 
     have been placed in formal liquidation and which shall 
     transact no business, except such as may be incidental to the 
     liquidation of its affairs.
       (b) Limitation on Compensation.--Beginning 2 years after 
     the date of enactment of the Restoring American Financial 
     Stability Act of 2010, no officer, director, or employee of 
     any corporation or unincorporated association, no partner or 
     employee of any partnership, and no individual, primarily 
     engaged in the issue, flotation, underwriting, public sale, 
     or distribution, at wholesale or retail, or through syndicate 
     participation, of stocks, bonds, or other similar securities, 
     shall serve simultaneously as an officer, director, or 
     employee of any member bank, except in limited classes of 
     cases in which the Board of Governors of the Federal Reserve 
     System may allow such service by general regulations when, in 
     the judgment of the Board of Governors, it would not unduly 
     influence the investment policies of such member bank or the 
     advice given to customers by the member bank regarding 
     investments.
       (c) Prohibiting Depository Institutions From Engaging in 
     Insurance-Related Activities.--
       (1) In general.--Beginning 2 years after the date of 
     enactment of this Act, in no case may a depository 
     institution engage in the business of insurance or any 
     insurance-related activity.
       (2) Definition.--As used in this section, the term 
     ``business of insurance'' means the writing of insurance or 
     the reinsuring of risks by an insurer, including all acts 
     necessary to such writing or reinsuring and the activities 
     relating to the writing of insurance or the reinsuring of 
     risks conducted by persons who act as, or are, officers, 
     directors, agents, or employees of insurers or who are other 
     persons authorized to act on behalf of such persons.

  Mr. DODD. I note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BOND. 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. BOND. Mr. President, I ask unanimous consent to speak for 2 
minutes remaining on Senator Gregg's time.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 4051

  Mr. BOND. Mr. President, the argument has been made that this bill 
would somehow limit responses to natural or manmade disasters, a 
natural disaster such as a flood or a tornado, a manmade disaster such 
as what is occurring in the gulf.
  I have read this language. It is very clear. It is talking about 
defaulting on obligations. It in no way restricts the ability of the 
Federal Government to respond to disasters.
  I used to chair the subcommittee on the Federal Emergency Management 
Act, and when there was a disaster, we provided money for those 
disasters, to deal with those disasters. But one cannot continue to 
present unbalanced budgets and enact them into law and continue to 
drive up the debt and say it is because of a natural or manmade 
disaster.
  That is a stupid decision. I don't think the taxpayers of the United 
States should be in a position of bailing out governments that make bad 
decisions and that, year after year after year, spend more money than 
they are taking in on their ongoing obligations. It has nothing to do 
with a sudden natural disaster or even a manmade disaster such as the 
spill in the gulf, which is partly natural and partly manmade. I agree 
that we should not stop providing assistance where there is such a 
disaster, but that is not the focus of this amendment.
  I urge my colleagues who really believe we should not be promising to 
bail out profligate States that continue to spend more than they take 
in, we should not bail them out with taxpayer funds.
  I yield the floor.
  Mr. GREGG. Mr. President, how much time remains?
  The PRESIDING OFFICER. Two minutes 40 seconds.
  Mr. GREGG. Mr. President, I really think the Senator from Connecticut 
is sort of reaching in his arguments here. This is really about a State 
like California defaulting and the rest of us having to pay for it. 
That is what this is about. This is about a State that has been 
irresponsible, to be kind, with its spending and now finds itself in a 
situation where it cannot pay its debt. You know the legislators of 
that State are saying: Let's go to Washington and get the money so that 
we can get reelected on the basis of spending all this money. That is 
not fair. That is not how a federalist system is supposed to work. You 
cannot argue that the American system was set up so that when one State 
would be profligate, another State would have to pay for the cost of 
that profligateness.
  The Senator's bill uses this same language. The Senator from 
Connecticut had phraseology that claimed my language as inappropriate 
on the issue of default and how he defined it, and it basically mirrors 
his language in title II. If it works in title II, it ought to work 
here.
  The real issue is that we should not set up a situation where States 
and communities can expect to spend a lot more than they can take in, 
know they are spending more than they are taking in, run up a lot of 
debts they cannot pay, and then come to the rest of America and say: 
You pay our debts because we want to get reelected. That is what this 
is about. It is limiting the ability of States to act in a fiscally 
irresponsible manner and expect the country will stand behind them and 
bail them out.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. GREGG. Mr. President, I ask unanimous consent that the time run 
equally against both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GREGG. I yield the floor.
  The PRESIDING OFFICER. All time has expired.
  The question is on agreeing to the Gregg amendment.
  Mr. GREGG. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The clerk will call the roll.
  The bill clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. 
Byrd), the Senator from Arkansas (Mrs. Lincoln), and the Senator from 
Pennsylvania (Mr. Specter) are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 47, nays 50, as follows:

[[Page 8368]]



                      [Rollcall Vote No. 153 Leg.]

                                YEAS--47

     Alexander
     Barrasso
     Baucus
     Bayh
     Bennett
     Bond
     Brown (MA)
     Brownback
     Bunning
     Burr
     Chambliss
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     DeMint
     Ensign
     Enzi
     Feingold
     Graham
     Grassley
     Gregg
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johanns
     Kyl
     LeMieux
     Lugar
     McCain
     McCaskill
     McConnell
     Murkowski
     Risch
     Roberts
     Sessions
     Shaheen
     Shelby
     Snowe
     Tester
     Thune
     Vitter
     Voinovich
     Wicker

                                NAYS--50

     Akaka
     Begich
     Bennet
     Bingaman
     Boxer
     Brown (OH)
     Burris
     Cantwell
     Cardin
     Carper
     Casey
     Conrad
     Dodd
     Dorgan
     Durbin
     Feinstein
     Franken
     Gillibrand
     Hagan
     Harkin
     Inouye
     Johnson
     Kaufman
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Sanders
     Schumer
     Stabenow
     Udall (CO)
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                             NOT VOTING--3

     Byrd
     Lincoln
     Specter
  The PRESIDING OFFICER. On this vote, the yeas are 47, the nays are 
50. Under the previous order requiring 60 votes for the adoption of 
this amendment, the amendment is withdrawn.
  The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, in a minute I will note the absence of a 
quorum, but we are working on a consent agreement that would schedule 
two votes after the weekly caucus conference lunches. We will possibly 
be able to do that. We are trying to get that written up. As soon as we 
get it written up, I will present it. But I see my colleague from Texas 
is ready to speak, so I will yield the floor and let her go ahead.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mrs. HUTCHISON. Mr. President, I was going to speak on the amendment 
Senator Landrieu and I have, the Hutchison-Landrieu amendment. I will 
be happy to yield any time the chairman of the committee wishes to 
clarify. Until he does, I will speak on the Hutchison-Landrieu 
amendment, which is an amendment that has been filed but is not yet 
pending.
  This is an amendment that will provide a permanent exemption for 
publicly traded small businesses with less than $150 million from the 
costly reporting requirements mandated by section 404(b) of the 
Sarbanes-Oxley Act. In removing this great burden, our amendment will 
free small businesses to focus on the capital investment and job 
creation that we need now to get our Nation's economy back on the right 
track.
  In 2002, Congress passed the Sarbanes-Oxley Act in the aftermath of 
the huge accounting frauds at Enron, Tyco, and Worldcom. This landmark 
bill was enacted to restore investor confidence in the wake of these 
shocking abuses by making it harder for companies to misrepresent 
corporate earnings.
  Hindsight is 20-20, though, and, while the Sarbanes-Oxley Act was 
well intentioned, it has created unexpected and unprecedented costs for 
the small to medium sized businesses that serve as the backbone of our 
economy.
  The main culprit of this immense burden on small businesses is 
section 404 of Sarbanes-Oxley. Here a public company is required to 
include in its annual report an assessment of the effectiveness of its 
internal control structure and procedures for financial reporting. The 
company's auditor must attest to and report on the company's 
assessment.
  The compliance costs of section 404(b) have been far greater than 
expected. In 2009, the SEC reported that companies paid an average of 
$2.3 million to comply with section 404. When taking into account the 
size of a company, small businesses with less than $150 million in 
public float, or the shares held by outside investors, are 
disproportionately encumbered by section 404(b), facing a compliance 
cost that is seven times greater than large companies.
  Small businesses are being forced to tie up time and money on 
burdensome amounts of paperwork. They should be directing these 
resources toward operations and capital investment that will create 
jobs and spur our economy toward recovery. The Hutchison-Landrieu 
amendment will fix this issue, ensuring that smaller public companies 
will no longer be subject to the cost burden imposed by section 404(b).
  Under current SEC rules, small public companies with less than $75 
million in public float are now exempt from section 404(b). However, 
this exemption expires in June. The Hutchison-Landrieu amendment builds 
on this existing exemption and takes into account recommendations from 
the SEC to increase the exemption. Our amendment will permanently 
exempt small businesses with less than $150 million in public float 
from the section 404(b).
  I am pleased that my amendment has the strong bipartisan support of 
my colleague, the distinguished chair of the Small Business Committee, 
Senator Landrieu. I also thank our other cosponsors, Senator Bob 
Bennett, Senator Scott Brown, Senator Crapo, Senator DeMint, and 
Senator Hatch.
  We are offering our amendment on behalf of the small businesses 
across our country that face this disproportionate burden. We have the 
support of: The Biotechnology Industry Organization, The Competitive 
Enterprise Institute, TechAmerica, The Association for Competitive 
Technologies, Advanced Medical Technology Association, and Technet.
  These groups represent the companies that want to innovate. That want 
to grow. They want to excel. But their companies are spending vast 
amounts of money on compliance costs, and, according to an SEC study, 
this money is being misdirected. The SEC reports that 75 percent of 
companies believe that the attestations of auditors required by 
Sarbanes-Oxley have little to no impact on investor confidence. Thus, 
rather than devoting important resources to invest and create jobs, 
small businesses are spending millions of dollars on paperwork that 
investors don't even care about.
  Our amendment also has the support of the Independent Community 
Bankers of America, and the American Bankers Association. Our community 
banks want to lend to worthy entrepreneurs and help jump start our 
economy. But our entrepreneurs and small businesses are hesitant to 
grow if they are hit with the high costs associated with 404(b) 
compliance.
  We are also offering this amendment because of the unintended 
consequences on our initial public offering market brought by section 
404(b). Since the enactment of Sarbanes-Oxley in 2002, IPOs in the 
United States have been lower each year than in every year of the 
1990s. Even in 2006, the peak year of economic growth after Sarbanes-
Oxley, the 162 U.S. IPOs were far below the 295 IPOs issued in 1991 
when our economy was mired in recession. This drop-off in IPO's hit the 
map in 2008 and 2009, when, according to a Renaissance Capital report, 
the IPO level was lower than any period since the Vietnam war.
  Why is this? Why are companies avoiding initial public offerings? Why 
are companies refusing to access the capital that the stock markets 
provide? Quite frankly, companies do not want to deal with onerous 
burden of Sarbanes-Oxley. And based on the costs I mentioned, who can 
blame them?
  This provision incentivizes small businesses to remain private to 
avoid 404(b) altogether. Worse, it incentivizes small businesses to go 
abroad to markets such as the London Stock Exchange, which has 
advertised itself as a Sarbanes-Oxley Free Zone, to encourage our 
companies to do their IPOs there instead of in Ameirca.
  Small businesses should not be incentivized to stop growing or list 
overseas. The Hutchison-Landrieu amendment also has the support of the 
New York Stock Exchange and NASDAQ, who want to see American companies 
list here and remain home-grown. Now more than ever, we should be 
encouraging our Nation's small businesses to invest in new jobs, plants

[[Page 8369]]

and markets. Our amendment will help small businesses do this by 
reducing their paperwork costs. A similar measure was included in the 
House financial reform language, and with immense bipartisan support. I 
ask my colleagues to support the Hutchison-Landrieu amendment to 
permanently exempt small businesses under $150 million from Sarbanes 
Oxley section 404(b), to ensure that small businesses can fully devote 
their resources toward being the engines that drive our Nation's 
economy.
  I ask unanimous consent to have printed in the Record the editorial 
that appeared today in the Wall Street Journal that is entitled ``The 
No-Cost Stimulus.''
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, May 18, 2010]

                          The No-Cost Stimulus

       Senate Majority Leader Harry Reid wants a floor vote this 
     week on financial regulatory reform, and he should first add 
     at least one provision worthy of the name. Senators Kay 
     Bailey Hutchison (R., Texas) and Mary Landrieu (D., La.) have 
     offered an amendment to spare the smallest public companies 
     from the worst bureaucratic horrors of the 2002 Sarbanes-
     Oxley law.
       Sarbox, the Beltway's previous attempt at financial-
     regulatory reform, was intended to improve the information 
     investors receive about public companies. The law did nothing 
     to prevent poor disclosure at companies like Lehman Brothers 
     but it did saddle the U.S. economy with billions in 
     unexpected costs. Even the Securities and Exchange 
     Commission, a Sarbox cheerleader, found in a 2009 survey that 
     the average public company pays more than $2 million per year 
     complying with the law's Section 404. The indirect costs may 
     be much greater, as initial public offerings of U.S. 
     companies have never returned to pre-Sarbox levels.
       The SEC admits that compliance burdens fall 
     disproportionately on smaller companies. This is one reason 
     the two Senators aim to exempt companies with less than $150 
     million of shares held by the public from ``internal-
     controls'' audits.
       These audits are piled on top of the traditional financial 
     audit, and on top of a company's own internal-controls 
     review. The result is that going public in the U.S., once the 
     dream of entrepreneurs world-wide, has for too many company 
     founders become something to avoid. If President Obama is 
     hoping for an unemployment rate below 9%, encouraging these 
     job creators is an obvious step.
       Thanks to New Jersey's Republican Scott Garrett and 
     Democrat John Adler, the House has already passed a similar 
     reform. Now the Senate should allow America's most innovative 
     companies to create jobs at no cost to taxpayers.

  Mrs. HUTCHISON. Mr. President, this editorial that appeared in the 
Wall Street Journal today says we can have a stimulus that will cost 
taxpayers nothing by freeing our small businesses and especially our 
entrepreneurial and high-tech businesses from the burdens of all this 
paperwork and instead let them focus on growing, on listing their IPOs 
in America for the benefit of the American economy. That is what we 
should be doing, and that is what the editorial says.
  I hope very much my colleagues will listen and we will be able to 
pass the Hutchison-Landrieu amendment, hopefully by voice vote. This 
should be a unanimous amendment passage.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, I want to propound a unanimous consent 
request. It has been cleared on both sides. I ask unanimous consent 
that at 2:15 p.m., the Senate consider the following two amendments: 
Senator Corker of Tennessee, amendment No. 4034, and Senator Carper of 
Delaware, amendment No. 4071, which is side-by-side to the Corker 
amendment; that the amendments be debated concurrently for a total of 
30 minutes, with the time equally divided and controlled between 
Senators Carper and Corker or their designees; that upon the use or 
yielding back of time, the Senate proceed to vote in relation to the 
Corker amendment, to be followed by a vote in relation to the Carper 
amendment, with no amendment in order to either amendment prior to a 
vote.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________