[Congressional Record (Bound Edition), Volume 156 (2010), Part 6]
[Senate]
[Pages 8656-8657]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           REGULATORY REFORM

  Mr. GREGG. Mr. President, first, I congratulate the Republican leader 
for a superb statement on where we stand relative to the bill on 
regulatory reform. It is truly a bill that is misnamed. This bill 
should be called ``The Expansion of Government for the Purposes of 
Making Us More Like Europe Act.''
  As a very practical matter, the bill does almost nothing about the 
core issues that have created the issue of financial stability in this 
country. It does nothing in the area of Fannie Mae and Freddie Mac, 
which is the real estate issue. It does virtually nothing in the area 
of making sure we have a workable systemic risk situation and structure 
so we can address the issue of systemic risk. Instead of addressing it 
in a constructive way, which would actually put some vitality and 
usefulness in to regulate the derivatives market, it actually steps 
back and creates a derivatives regulation that all the major 
regulators, whom we respect, have said simply will not work.
  I wish to talk about that. I didn't think there was anything you 
could do that would make this regulatory proposal on derivatives worse. 
But now we see an amendment from the chairman of the committee, which I 
am sure is well intentioned, but it makes it worse.

[[Page 8657]]

The way the derivatives language of the bill has evolved is it gets 
worse and worse, in an almost incomprehensible and irrational way, 
which is rather surreal. It is almost as if we were at the Mad Hatter's 
tea party the way this derivatives language is evolving.
  We now have in the bill itself proposed language which the chairman 
of the FDIC, the Federal Reserve staff, Chairman Volcker, and the OCC 
have all said will not work. In fact, not only did they say it will not 
work, they have said it will have a negative impact on the stability of 
the derivatives market. It will cause the market to move overseas and 
make America less competitive. It will cause a contraction in credit in 
this country, and it will hurt consumers and users of derivatives 
across this Nation.
  Those are the words--paraphrased to some degree but essentially 
accurate--of the major players who actually discipline and look at this 
market, in defining the bill as it is presently before us. Now, in some 
sort of bizarre attempt--as if the Mad Hatter had arrived--to correct 
this issue, we see an amendment from the chairman of the committee 
suggesting that we should put into place an even more convoluted 
system, tied to uncertainty of no decision occurring for 2 years. The 
proposal says we will have the stability council, which is made up of, 
I think, nine different regulators, take a look at what is in the 
language of the bill now, relative to taking swap desks out of 
financial institutions and determine whether that language makes sense. 
Well, it doesn't. We know that already because a group of regulators 
has already said it doesn't make sense. So we are going to wait for 2 
years to determine it doesn't make sense, when we already know it 
doesn't. Then they are going to make that recommendation to the 
Congress, so the Congress gets to legislate to correct what we already 
know is an error in the bill.
  Then, to make this an even more Byzantine exercise in regulatory 
absurdity, the Secretary of the Treasury has the right to overrule the 
Congress or maybe act independently of the Congress and take action 
pursuant to whatever the stability council decided.
  On top of this convoluted exercise in chaos, the proposal actually 
undermines the Lincoln proposal, which is in the bill, and makes it 
even less workable, by saying the swap desk cannot even be retained by 
affiliates but must be totally separated, which inevitably leads to 
swap desks that do not have capital adequacy or stability or the 
necessary strength to defend the derivatives action which they are 
making markets in. So you weaken and significantly reduce the stability 
of the market, making it more risky and, at the same time, the estimate 
is, you would contract credit in this country by close to $\3/4\ 
trillion less credit.
  What that means is John and Mary Jones, who are working on Main 
Street America producing something they are selling to a company that 
is maybe a little larger, and then they are selling that product 
overseas, are probably not going to be able to get the credit they need 
to produce the product, so they will have to contract the size of their 
business, and we will reduce the number of jobs in this country or 
certainly the rate of job creation.
  This country's great and unique advantage is that we are the best 
place in the world for an entrepreneur and risk-taker--somebody who is 
willing to go out there and do something to create jobs--to get capital 
and credit at a reasonable price and in a reasonably efficient way. 
This bill fundamentally undermines that unique advantage that we have 
in this language, and this language compounds that event, undermining 
that unique situation. It is, as I said, similar to participating in 
the Mad Hatter's tea party to watch the way this bill has evolved on 
the issue of derivatives regulation. The product--I guess the Queen of 
Hearts would be proud of it, but I can tell you the effect on the 
American people, on commerce, and on Main Street will be 
extraordinarily negative should we pass it.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Kansas is 
recognized.
  Mr. ROBERTS. Mr. President, I ask unanimous consent that I may be 
recognized for 15 minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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