[Congressional Record (Bound Edition), Volume 156 (2010), Part 8]
[Senate]
[Pages 10790-10799]
[From the U.S. Government Publishing Office, www.gpo.gov]




     AMERICAN JOBS AND CLOSING TAX LOOPHOLES ACT OF 2010--Continued

  The ACTING PRESIDENT pro tempore. The Senator from Maryland is 
recognized.
  Mr. CARDIN. Mr. President, I ask unanimous consent that the Senate 
proceed to a period of debate only until 3:30 p.m., with no amendments 
or motions in order during this time, and that the time be equally 
divided and controlled between the leaders or their designees, with 
Senators permitted to speak therein for up to 10 minutes each, and that 
the order for recognition for Senator Baucus remain in effect.

[[Page 10791]]

  The ACTING PRESIDENT pro tempore. Is there objection? Without 
objection, it is so ordered.
  Mr. CARDIN. Mr. President, before I suggest the absence of a quorum, 
I ask that the time be equally divided between the majority and the 
minority.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. CARDIN. Mr. President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BROWN of Ohio. Mr. President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. BROWN of Ohio. Mr. President, the Senate will soon vote on the 
American Jobs Act--a critical bill that would create jobs and help 
expand small businesses. It would close the tax loopholes that allow 
far too many large corporations to move jobs overseas. In doing so, it 
would establish, conversely, tax incentives for American small 
businesses so they can create jobs in America. We have seen for too 
many years--and the Presiding Officer, in New Mexico, has seen too many 
jobs in Albuquerque, Santa Fe, as I have in Cleveland and other cities, 
move overseas because of trade agreements and bad tax law.
  The Senate, we hope, is close to voting on extending unemployment 
insurance and COBRA subsidies through the extenders bill. Far too many 
Republicans seem to look at unemployment insurance as welfare. 
Unemployment insurance is what it is called--insurance. When you have a 
job, you pay into the unemployment fund. When you are laid off through 
no fault of your own, you can receive help from that insurance fund. It 
is as simple as that.
  We cannot forget why we are in this untenable position of needing to 
help small businesses and workers and strengthen the public programs 
that help Americans find new jobs. We are here because of reckless Wall 
Street practices brought on by unprecedented greed that has created a 
crippling recession.
  I rise to discuss the Wall Street reform bill, as it is now being 
negotiated in the conference committee, for a few moments.
  Last week, David Wessel noted in the Wall Street Journal--the paper 
of record for finance, if you will--that when surveyed by the 
newspaper, leading economists suggested the prevailing belief that the 
Senate bill didn't go far enough to address the issue of banks being 
too big to fail.
  During the Senate debate, I put forward a proposal with Senator 
Kaufman, of Delaware, that would have addressed the problem by capping 
the size of megabanks.
  Evidence backs up what has been abundantly clear in the last 2 years: 
Megabanks pose a greater risk and threat to our economy than smaller 
ones because of the heightened volatility of their assets and 
activities. Only 15 years ago, the largest six banks in the United 
States--their total assets were added up to be about 17 percent of GDP. 
Fifteen years ago, the combined assets of the six largest banks made up 
17 percent of gross domestic product. Today, their combined assets make 
up about 63 percent of the GDP.
  Our proposal would have limited the size of bank holding companies at 
$1 trillion and investment banks at $400 billion. Mr. President, $1 
trillion is $1,000 billion. I can't believe people in this institution 
would defend, as so many did, that that is not a bank that is too big. 
Too big to fail, as people as conservative as Alan Greenspan, who is as 
much to blame for all of this--for the government's total failure 
during the Bush years to regulate Wall Street--even he said too big to 
fail is simply too big. Only from the rarefied heights of a glass or 
ivory tower does $\1/2\ trillion appear too limited. Remember, Lehman 
Brothers had more than $600 billion in assets and liabilities when it 
failed and sent the markets into a tailspin.
  We can all agree that our financial system should never again be on 
the brink of total collapse and that taxpayers should never have to 
foot the bill for the mess created by Wall Street. If we want to 
prevent bailouts, we have to prevent banks from becoming so big that 
bailouts are necessary. Why wouldn't big banks behave in a risky way 
when they suspect a bailout will be given? That is why we must not rely 
on a reactive approach to risks that can undermine our economy. 
Instead, we must be much more proactive to prevent those risks from 
ever recurring.
  On June 3, Richard Fisher, the president of the Dallas Fed, explained 
in an important speech why we need to address the size of the 
megabanks. He said:

       Ending the existence of ``too big to fail'' institutions is 
     certainly a necessary part of any regulatory reform effort 
     that could succeed in creating a stable financial system. It 
     is the most sound response of all. If we are to neutralize 
     the problem, we must force these institutions to reduce their 
     size.

  This isn't some far-left or far-right economist; this isn't some bomb 
thrower; this is Richard Fisher, the president of the Dallas Fed, 
emphasizing that too big to fail is, in fact, too big.
  The Brown-Kaufman amendment wasn't adopted into the Wall Street 
reform bill that passed this body. Yet I continue to believe that it is 
essential if we want to prevent giant institutions from driving down 
the economy. But it is not the only proposal that would address the 
instability created by the megabanks.
  There are several other amendments and issues in the House or Senate 
bills that I would briefly like to address.
  First, the Merkley-Levin amendment ending proprietary trading. 
Because of Republican obstruction, we were denied the opportunity to 
vote on that proposal to end the reckless Wall Street gambling called 
proprietary trading. Opponents of this, particularly from across the 
aisle, went to such great pains to avoid a vote because I think they 
knew it had strong support.
  The Merkley-Levin amendment would strengthen the Volcker rule in 
Senator Dodd's Wall Street reform bill. It would have barred banks and 
their affiliates from engaging in proprietary trading, which, in 
layman's language, is the ``casino gambling'' that has banks selling 
products to clients with one hand, while betting against the products 
and their clients with the other hand. That can happen only on Wall 
Street.
  Too many Wall Street banks used their proprietary trading operations 
to get rich at the expense of their own clients. When those risky bets 
go bad, American taxpayers are footing the bill. Lehman Brothers' risky 
bets led to the largest bankruptcy in our Nation's history. Soon 
thereafter, other Wall Street banks, which also engaged in reckless 
proprietary trading, brought our economy to the brink of collapse. It 
is time for Congress to end this self-serving practice where the 
conflicts of interest are obvious--and dangerous.
  Second, Senator Lincoln's amendment on derivatives. Remember that the 
five biggest banks control 97 percent of the banking industry's 
derivatives holdings--five banks, 97 percent. I support Agriculture 
Committee Chairwoman Lincoln's proposal, which would separate 
derivatives dealing from lending at commercial banks.
  This provision is important for the same reason as the Merkley-Levin 
amendment. Sprawling financial institutions increase their lucrative 
operations at the expense of other more fundamental and traditional 
banking activities.
  Right now, megabank speculation is detracting from their primary job: 
consumer and small business lending. The fact is, too many banks in New 
Mexico, Ohio, and all over are simply refusing to lend now. They are 
not lending the way our economy needs them to do it. This is part of 
the reason.
  The latest report by the Congressional Oversight Panel of TARP, 
chaired by Elizabeth Warren, looked at how TARP recipients are lending 
to small businesses. It found that between 2008 and 2009, Wall Street 
lending portfolios have shrunk by 4 percent, with

[[Page 10792]]

their small business loan portfolios shrinking by 9 percent. Over the 
same period, banks' securities holdings increased by almost 23 percent. 
Traditional lending by the biggest banks, which received 81 percent of 
government bailout funds, has declined. At the same time, lending to 
small businesses from medium-size banks, which received 11 percent of 
the bailout, increased.
  Taxpayer-funded assistance, in other words, should not support a 
bank's gambling, but it should support sound economic growth.
  Third, Senator Collins' amendment on capital standards was adopted in 
the Senate bill. It would require the Nation's largest banks to meet, 
at a minimum, the same capital standards imposed on smaller banks.
  Under current law, regulators can often permit large financial 
institutions to follow more permissive capital standards, while smaller 
banks are held to a different standard. Capital standards applied 
equally to all banks would help reduce the risk presented by financial 
institutions as they grow in size or engage in reckless banking 
behavior. The principle behind this amendment is sound. Regulators 
should be empowered to apply and enforce capital standards equally and 
responsibly--regardless of a bank's size.
  Fourth, the amendment Representative Paul Kanjorski offered is a 
provision in the House bill that directs regulators to take action 
against any financial company that ``poses a grave threat to the 
financial stability or economy of the United States.'' The grave threat 
of a large financial institution results from excessive leverage, 
exposure to other risky institutions, or unstable sources of credit. 
Because of this provision, Federal regulators could apply stricter 
prudential standards, limit mergers and acquisitions, and force the 
selloff of business units and assets.
  Finally, there is a provision offered by Jackie Speier in the House 
which would impose a statutory 15-to-1 leverage ratio on systemically 
risky banks. Combining this with Senator Collins' new capital rule is 
essential. We tried something like this amendment as part of our larger 
amendment, with Senator Kaufman, in the breaking up of the largest five 
or six or seven banks.
  Placing limits on these banks' leverage--meaning their assets 
relative to their debt--is critical to ending taxpayer bailouts. They 
cannot just leverage and leverage, in ratios like Lehman Brothers did, 
at 30 and 40 to 1. Four of the five largest investment banks were 
leveraged 30, 35, or 40 to 1 at the time of the financial crisis. That 
means their assets far outbalanced their ability to cover the debt.
  According to the Kansas City Fed, the 20 biggest banks are more 
highly leveraged than community banks. Because the megabanks are bigger 
than ever before, bailing them out would cost taxpayers even more than 
they paid this time.
  It is unfair. More important, it is dangerous. The current 
distortions in the market give privileged, large banks a clear funding 
advantage. Their implicit government backing is worth up to $34 billion 
annually. That is Wall Street welfare where large financial 
institutions continue to receive cheaper rates--maybe 75 basis points 
is what most economists say--compared to smaller banks.
  As the Wall Street reform bill heads into conference, we should not 
dilute it to appease Wall Street. Wall Street lobbyists are all over 
this institution--all over the House, all over the Senate. They have 
already had too much impact on this bill. They have had almost total 
influence with Republicans. Frankly, they have had too much influence 
with my political party, too--the Democrats.
  We should keep our eye on the ball by stopping financial crises 
before they start.
  I yield the floor. I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant editor of the Daily Digest proceeded to call the roll.
  Mr. SESSIONS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                         Elena Kagan Nomination

  Mr. SESSIONS. Mr. President, I want to speak briefly on the 
President's nomination of Elena Kagan to the Supreme Court. The more we 
examine her record, the more concerns there are that her legal 
judgments might be infected by her very liberal political views.
  We see strong evidence of that in Ms. Kagan's memos as a clerk on the 
Supreme Court. In her work as Domestic Policy Adviser in the White 
House for President Clinton, we see those strong political views. We 
see strong evidence of this during her time as dean of Harvard Law 
School.
  Perhaps to some in the elite progressive circles of academia it is 
acceptable to discriminate against the patriots who fight and die for 
our freedoms, but the vast majority of Americans, I think, correctly 
know that such behavior is wrong. It has an arrogance about it and, 
really, it is not ethical.
  When Dean Kagan became dean in 2003, she inherited a policy of full, 
equal access for the military. But she reversed that policy in clear 
open defiance of Federal law. She kicked the military out of the campus 
recruitment office as our troops, at that very moment, risked their 
lives in two wars overseas.
  Some have recently attempted to defend this conduct by arguing that 
she deigned to speak with the student veterans to discuss whether they 
would coordinate a sort of second-class system for the recruiters who 
would come on campus to seek young men and women to serve as JAG 
officers. This all happened after she had defied the law and had shut 
down those official channels of recruitment at the official recruiting 
office. But the Harvard Student Veterans Association plainly expressed 
to Ms. Kagan in a letter to the entire law school that they lacked the 
resources to take the place of the campus office now closed to the 
military.
  The letter reads in part:

       Given our tiny membership, meager budget, and lack of any 
     office space, we possess neither the time nor the resources 
     to routinely schedule campus rooms or advertise extensively 
     for outside organizations, as is the norm for most recruiting 
     events.

  But Ms. Kagan was unmoved. Instead of welcoming the military 
recruiters on campus, she punished them, relegating them to second-
class status, even leading student veterans to arrange recruiter 
meetings off campus. In fact, Dean Kagan's public comments contributed 
to a hostile on-campus environment for both recruiters and student 
veterans alike. In fact, she said she ``abhorred'' the military's 
recruitment policy--blaming soldiers for the decisions of lawmakers--
the Congress--and the President. She called it a ``moral injustice of 
the first order,'' and participated in a student protest opposing 
military recruiting on campus.
  Stunningly, she expressed sympathy for students and faculty for whom 
she said ``the military's presence on campus feels alienating.'' Those 
alienated by the military's presence were not the ones who needed the 
sympathy, they needed a history lesson. They had the freedom to 
complain and protest from the safety of Harvard's campus because of the 
blood and sacrifice of the men and women who wear our uniform.
  If you talk to student veterans who were on campus during 2004 and 
2005, you will learn many of them felt exploited. Here were people who 
had just returned from battles in Iraq, dodging enemy gunfire, and they 
were supposed to quietly hustle the military recruiters through the 
back door and provide political cover for Dean Kagan.
  In a report for NPR, one student veteran who was there summed it up 
this way:

       Getting us to carry her water on military recruitment 
     through the back door was a bridge too far. I came to view 
     her as a very smooth political person.

  Ms. Kagan said her mistreatment of the military was justified by her 
view that don't ask, don't tell was a ``moral injustice of the first 
order.'' But don't ask, don't tell was created and implemented by 
President Clinton. Where

[[Page 10793]]

was her outrage during the 5 years she served in the Clinton White 
House? Why would she blame the military? They didn't pass the rule. It 
was Congress and the President.
  So Ms. Kagan didn't take a stand in Washington when she was here, 
where the policy was adopted, but waited until she got to Harvard and 
then stood in the way of hard-working military recruiters who had 
nothing to do with establishing the policy.
  Now information has come to light suggesting that Ms. Kagan may even 
have been less morally principled in her approach than has been 
portrayed. Around the same time that Dean Kagan was campaigning to 
exclude military recruiters--citing what she saw as the evils of don't 
ask, don't tell--Harvard University accepted $20 million from a member 
of the Saudi Royal family to establish a center for ``Islamic Studies'' 
and Sharia law. An Obama State Department report concerning Saudi 
Arabia and the Sharia law concept noted:

       Under Shari'a as interpreted in [Saudi Arabia] sexual 
     activity between two persons of the same gender is punishable 
     by death or flogging.

  Ms. Kagan was perfectly willing to obstruct the military, which has 
liberated countless Muslims from the hate and tyranny of Saddam Hussein 
and the Taliban, but it seems she was willing to sit on the sidelines 
as Harvard created a center funded by--and dedicated to--foreign 
leaders presiding over a legal system that would violate what would 
appear to be her position. She fought the ability of our own soldiers 
to access campus resources but not those who spread the oppressive 
tenets of Sharia-type law.
  Perhaps her response was guided by campus politics, but certainly Ms. 
Kagan lacks any experience as a judge or as a lawyer, and not much as a 
scholar of law. She hasn't written much. Much of her career has been 
spent actively engaged in liberal politics not legal practice, and 
there are serious questions as to whether she would be able to set 
aside that political agenda that has defined so much of her career. I 
think that is the test we try to give a fair evaluation of this 
nominee.
  So these are important issues, and she will have an opportunity to 
discuss her views. I expect many Americans will be listening closely, 
but it will be important that any nominee to the Supreme Court be able 
to assure with great confidence the American people--and this Senate--
that if confirmed, he or she would be faithful to the law, to serve 
under the Constitution, and not above it, and not have their political 
agenda infect their rulings, which must be nonpolitical.
  I thank the Chair, and I yield the floor.
  The ACTING PRESIDENT pro tempore. The majority leader is recognized.
  Mr. REID. Mr. President, I appreciate my friend from Alabama wrapping 
up his speech.


                     Amendments Nos. 4344 and 4351

  Mr. President, notwithstanding the pendency of a motion to concur, I 
ask unanimous consent that it be in order for the Senate to now 
consider the Reid amendment No. 4344 in its current form and the 
Isakson amendment No. 4351; that the amendments be debated concurrently 
until 2:45 p.m.; that at 2:45 p.m., the Senate proceed to vote in 
relation to the Reid amendment, to be followed by a vote in relation to 
the Isakson amendment; that each amendment be subject to an affirmative 
60-vote threshold; that if the amendment achieves that threshold, then 
it be agreed to and the motion to reconsider be laid upon the table; 
that if they do not achieve the threshold, then they be withdrawn; that 
no amendment be in order to either amendment; that if either amendment 
is agreed to, then once the Baucus motion to concur has been made, the 
amendment be considered incorporated in the motion to concur.
  I further ask there be 4 minutes between the two votes equally 
divided.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Amendments Nos. 4344 and 4351 are as follows:


                           Amendment No. 4344

(Purpose: To amend the Internal Revenue Code of 1986 to extend the time 
   for closing on a principal residence eligible for the first-time 
                           homebuyer credit)

       At the appropriate place, insert the following:

     SEC. --. FIRST-TIME HOMEBUYER CREDIT.

       (a) In General.--Paragraph (2) of section 36(h) is amended 
     by striking ``paragraph (1) shall be applied by substituting 
     `July 1, 2010''' and inserting ``and who purchases such 
     residence before October 1, 2010, paragraph (1) shall be 
     applied by substituting `October 1, 2010'''.
       (b) Conforming Amendment.--Subparagraph (B) of section 
     36(h)(3) is amended by inserting ``and for `October 1, 
     2010''' after ``for `July 1, 2010'''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to residences purchased after June 30, 
     2010.
       (d) Offset.--
       (1) Disallowance of deduction for punitive damages.--
       (A) In general.--Section 162(g) (relating to treble damage 
     payments under the antitrust laws) is amended--
       (i) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (ii) by striking ``If'' and inserting:
       ``(1) Treble damages.--If'', and
       (iii) by adding at the end the following new paragraph:
       ``(2) Punitive damages.--No deduction shall be allowed 
     under this chapter for any amount paid or incurred for 
     punitive damages in connection with any judgment in, or 
     settlement of, any action. This paragraph shall not apply to 
     punitive damages described in section 104(c).''.
       (B) Conforming amendment.--The heading for section 162(g) 
     is amended by inserting ``Or Punitive Damages'' after 
     ``Laws''.
       (2) Inclusion in income of punitive damages paid by insurer 
     or otherwise.--
       (A) In general.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

     ``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR 
                   OTHERWISE.

       ``Gross income shall include any amount paid to or on 
     behalf of a taxpayer as insurance or otherwise by reason of 
     the taxpayer's liability (or agreement) to pay punitive 
     damages.''.
       (B) Reporting requirements.--Section 6041 (relating to 
     information at source) is amended by adding at the end the 
     following new subsection:
       ``(h) Section To Apply to Punitive Damages Compensation.--
     This section shall apply to payments by a person to or on 
     behalf of another person as insurance or otherwise by reason 
     of the other person's liability (or agreement) to pay 
     punitive damages.''.
       (C) Conforming amendment.--The table of sections for part 
     II of subchapter B of chapter 1 is amended by adding at the 
     end the following new item:
       ``Sec. 91. Punitive damages compensated by insurance or 
           otherwise.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to damages paid or incurred after December 31, 
     2011.


                           Amendment No. 4351

(Purpose: To amend the Internal Revenue Code of 1986 to extend the time 
   for closing on a principal residence eligible for the first-time 
                           homebuyer credit)

       At the appropriate place, insert the following:

     SEC. --. FIRST-TIME HOMEBUYER CREDIT.

       (a) In General.--Paragraph (2) of section 36(h) is amended 
     by striking ``paragraph (1) shall be applied by substituting 
     `July 1, 2010''' and inserting ``and who purchases such 
     residence before October 1, 2010, paragraph (1) shall be 
     applied by substituting `October 1, 2010'''.
       (b) Conforming Amendment.--Subparagraph (B) of section 
     36(h)(3) is amended by inserting ``and for `October 1, 
     2010''' after ``for `July 1, 2010'''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to residences purchased after June 30, 2010.
       (d) Transfer of Stimulus Funds.--Notwithstanding section 5 
     of the American Recovery and Reinvestment Act of 2009, from 
     the amounts appropriated or made available and remaining 
     unobligated under division A of such Act (other than under 
     title X of such division A), the Director of the Office of 
     Management and Budget shall transfer from time to time to the 
     general fund of the Treasury an amount equal to the net 
     decrease in revenues resulting from the enactment of 
     subsections (a) and (b).

  Mr. REID. Mr. President, my friend from Georgia is here, so I will be 
very quick. In fact, he can take 3 of the 4 minutes between the votes.
  The home buyer credit has been wildly successful in stimulating home 
purchases. I have heard from a number of Nevadans who have met the 
April 30 deadline for having a binding contract for a home--and not 
only Nevadans but all over the country--but are very concerned they 
will not be able to close

[[Page 10794]]

their transaction by the end of this month.
  The failure to meet the June 30 deadline is not the fault of the home 
purchaser. Banks, title companies, and closing agents are swamped as a 
result of the success of this program. Many home buyers are stuck 
waiting for banks to make decisions on short sales. Unfortunately, the 
banks making these decisions feel no sense of urgency, leaving home 
buyers powerless to meet the current deadlines. They simply don't care, 
as has been shown during this entire period of time. The banks don't 
care about the home buyers or the homeowners.
  My amendment extends the deadline for 3 months. This will give the 
homeowners time and the home buyers time to close their home purchases. 
My amendment is fully offset by disallowing a tax deduction for 
punitive damages paid in connection with a judgment or settlement.
  Mr. DODD. Mr. President, I wanted to take a few minutes today to 
speak in support of the amendment offered by my dear friend and 
colleague from Nevada, Harry Reid. I am proud to be cosponsoring this 
important amendment. Last November we passed, with bipartisan support, 
an amendment that extended the very successful first time homebuyer tax 
credit and expanded it to the ``move up buyer.'' My good friend from 
Georgia, Senator Isakson was instrumental in crafting this extended and 
expanded tax credit and I want to commend him for all the work he has 
done on this issue. Under that legislation, which we worked on 
together, homebuyers who were eligible for the credit had to sign a 
binding contract for their new home by April 30 and close by June 30 to 
receive the credit.
  As of April, the Internal Revenue Service estimates that 2.6 million 
Americans have used the credit. The National Realtors Association 
reported that home sales rose by 6 percent between March and April this 
year as Americans clamored to qualify for the credit. That increase 
marked the third consecutive month that home sales grew. And that is 
exactly what this legislation was intended to do--spur home sales and 
bring the housing market back to life.
  There are between 55,000 and 75,000 eligible homebuyers who entered 
into contracts to purchase a principal residence by April 30, but who 
will not get the benefit of the homebuyer tax credit because they do 
not close by June 30. There are a variety of reasons this might occur: 
the seller is unable to secure a timely approval from their lender for 
sales related to distressed properties; recent natural disasters have 
damaged the property; or the homebuyer has experienced delays in the 
processing of their Federal mortgage program application.
  This amendment would extend the closing date deadline from June 30 to 
September 30 so that these eligible homebuyers can still claim the 
credit. I want to make very clear that this amendment does not extend 
the credit to new applicants--they must still meet all the eligibility 
requirements and be under contract by April 30. This amendment just 
gives them more time to close the deal.
  At the end of the day, this amendment is really about fairness for 
the thousands of homebuyers who might be ineligible for the credit 
simply because it is taking longer than usual to complete their 
paperwork. It is simply unfair to allow homeowners who played by the 
rules to lose this credit due to administrative challenges beyond their 
control. I also want to note that this provision is fully paid for by 
denying corporations the ability to deduct punitive damages from their 
taxable income. Once again, I thank the majority leader and his staff 
for crafting this fiscally responsible amendment to help homebuyers. I 
urge all my colleagues to vote for this amendment.
  The ACTING PRESIDENT pro tempore. The Senator from Georgia.
  Mr. ISAKSON. Mr. President, I will be brief. This deals with two 
amendments, and both do the same thing, except for the way in which 
they are paid for.
  I appreciate very much Senator Reid's interest in this as the leader. 
I have worked on this issue, as everybody knows, for a long time. We 
passed unanimously in the Senate last year a home buyer tax credit 
which ended on April 30 for contract date. Unfortunately, because of 
the backlog of appraisals and the current FDIC regulation, a lot of 
people who qualified for the credit are not going to be able to close 
by the end of June, and they will lose the credit because we put a June 
30 closing date as the deadline for closing the credit earned by the 
contract of April 30.
  Both amendments merely move that June 30 date to the end of 
September, which gives another 90 days to close the transaction that 
has already been under contract for 60 days. It ensures Americans they 
will get what the Senate promised them in terms of the tax credit, if 
they in fact performed and qualified prior to April 30.
  The difference in the two amendments is the pay-for. One is doing 
away with the deductibility of punitive damages, which is Senator 
Reid's. The other is mine, which takes it from the unspent $50 billion 
in stimulus money. And the pay-for, by the way, in both cases, is not a 
lot of money in the scheme of things. It is a lot of money to me and 
you, but it is $140 million and not $50 billion.
  So I would certainly appreciate support for the Isakson amendment, 
and I appreciate the support of Senators Dodd and Reid. I yield back 
the remainder of my time, and I ask for the yeas and nays on the Reid 
amendment.
  The ACTING PRESIDENT pro tempore. Is there a sufficient second? There 
appears to be a sufficient second.
  The question is on agreeing to amendment No. 4344.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. Byrd) 
and the Senator from Virginia (Mr. Warner) are necessarily absent.
  Mr. KYL. The following Senator is necessarily absent: the Senator 
from Kansas (Mr. Roberts).
  The PRESIDING OFFICER. (Mr. Merkley). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 60, nays 37, as follows:

                      [Rollcall Vote No. 191 Leg.]

                                YEAS--60

     Akaka
     Baucus
     Bayh
     Begich
     Bennet
     Bingaman
     Boxer
     Brown (OH)
     Burris
     Cantwell
     Cardin
     Carper
     Casey
     Collins
     Conrad
     Dodd
     Dorgan
     Durbin
     Ensign
     Feingold
     Feinstein
     Franken
     Gillibrand
     Gregg
     Hagan
     Harkin
     Inouye
     Johnson
     Kaufman
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     LeMieux
     Levin
     Lieberman
     Lincoln
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Sanders
     Schumer
     Shaheen
     Specter
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Webb
     Whitehouse
     Wyden

                                NAYS--37

     Alexander
     Barrasso
     Bennett
     Bond
     Brown (MA)
     Brownback
     Bunning
     Burr
     Chambliss
     Coburn
     Cochran
     Corker
     Cornyn
     Crapo
     DeMint
     Enzi
     Graham
     Grassley
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johanns
     Kyl
     Lugar
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Risch
     Sessions
     Shelby
     Snowe
     Thune
     Vitter
     Voinovich
     Wicker

                             NOT VOTING--3

     Byrd
     Roberts
     Warner
  The PRESIDING OFFICER. On this vote, the yeas are 60, the nays are 
37. Under the previous order requiring 60 votes for the adoption of the 
amendment, the amendment is agreed to.
  Mr. DURBIN. I move to reconsider the vote and to lay that motion on 
the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 4351

  The PRESIDING OFFICER. Under the previous order, there is 4 minutes 
equally divided on the Isakson amendment No. 4351.
  The Senator from Georgia.
  Mr. ISAKSON. Mr. President, this is a tax credit extension, as with 
the previous amendment, but with a different pay-for. The previous was 
deductibility

[[Page 10795]]

of punitive damages. This one is from the stimulus money. Both 
accomplish the same thing, which is allowing Americans who qualified 
for the tax credit by contracting by April 30 to close by September 30 
rather than by June 30. The reason we are pushing it forward is because 
FDIC rules, regulatory rules and appraisal rules, are forcing closings 
taking as long as 120 days. This doesn't give anybody a credit who 
hasn't already earned it. It just allows them to take advantage of it 
by protracting the closing date so they would have enough time to 
close. I urge a positive vote on the Isakson amendment.
  The PRESIDING OFFICER. Who yields time in opposition?
  The Senator from Montana.
  Mr. BAUCUS. Mr. President, I oppose this amendment. Recovery act 
money works. It adds to reducing unemployment. It adds to the economy. 
It is very productive. It is helpful. It makes no sense to cut back 
recovery dollars that work, that help our economy. I, therefore, 
strongly oppose the amendment.
  Mr. ISAKSON. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  All time is yielded back. The question is on agreeing to the 
amendment.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from West Virginia (Mr. Byrd) 
and the Senator from Virginia (Mr. Warner) are necessarily absent.
  Mr. KYL. The following Senator is necessarily absent: the Senator 
from Kansas (Mr. Roberts).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 45, nays 52, as follows:

                      [Rollcall Vote No. 192 Leg.]

                                YEAS--45

     Alexander
     Barrasso
     Bayh
     Bennett
     Bond
     Brown (MA)
     Brownback
     Burr
     Chambliss
     Coburn
     Cochran
     Collins
     Conrad
     Corker
     Cornyn
     Crapo
     Dorgan
     Ensign
     Enzi
     Graham
     Grassley
     Gregg
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johanns
     Klobuchar
     LeMieux
     Lincoln
     Lugar
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Nelson (FL)
     Risch
     Sessions
     Shelby
     Snowe
     Thune
     Vitter
     Voinovich
     Webb
     Wicker

                                NAYS--52

     Akaka
     Baucus
     Begich
     Bennet
     Bingaman
     Boxer
     Brown (OH)
     Bunning
     Burris
     Cantwell
     Cardin
     Carper
     Casey
     DeMint
     Dodd
     Durbin
     Feingold
     Feinstein
     Franken
     Gillibrand
     Hagan
     Harkin
     Inouye
     Johnson
     Kaufman
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Pryor
     Reed
     Reid
     Rockefeller
     Sanders
     Schumer
     Shaheen
     Specter
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Whitehouse
     Wyden

                             NOT VOTING--3

     Byrd
     Roberts
     Warner
  The PRESIDING OFFICER. On this vote, the yeas are 45, the nays are 
52.
  Under the previous order requiring 60 votes for adoption of this 
amendment, the amendment is withdrawn.
  Mr. REID. Mr. President, I move to reconsider the vote, and I move to 
lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. REID. Mr. President, I ask unanimous consent that debate be 
extended until 4:30 under the same conditions and limitations of the 
previous order; further, that during this period, any quorum calls be 
equally divided.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, I suggest the absence of a quorum, and I ask 
that the time during this quorum call be equally divided.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Franken). Without objection, it is so 
ordered.


                           Amendment No. 4333

  Mrs. HUTCHISON. Mr. President, I rise today to speak on the Thune 
amendment. This is the Republican alternative. Of course, we now know 
the Baucus package did not get the 60 votes required to go forward and, 
therefore, we are now looking at the Republican substitute and waiting 
for a new bill to come from Senator Baucus.
  I think it is so important that our Senate say to the American people 
that we know the debt being created in this country is unsupportable. 
Our bailouts have skyrocketed, our spending, our borrowing, now 
taxing--it is more than the American people can stand.
  Our national debt now tops $13 trillion. Since President Obama took 
office 18 months ago the debt has grown by over $2.4 trillion. The 
President's budget shows there is no end in sight. It doubles the 
national debt in 5 years and triples it in 10.
  In order to sustain this current spending level, the Federal 
Government is being forced to borrow 40 cents for every dollar it 
spends this year. The Federal Government is spending 67 percent more 
than it is earning. This is similar to a household that earns $62,000 
but spends $105,000.
  From whom are we borrowing that money? We owe China over $900 
billion, Japan nearly $800 billion. Every household in America knows 
what it is like to set a budget. They know what the income is, and they 
know how to stick with it. It involves setting priorities, making tough 
decisions, and discipline.
  The bill we are debating on the Senate floor today includes important 
policies that are national priorities, and I support many of them. 
However, it is time that the Federal Government does what every other 
household does; that is, pay for our priorities.
  Here is what the Thune amendment does. It extends the expiring 
unemployment provisions until November, the expired tax provisions, 
including the local and State sales tax deduction through the end of 
the year. So we know that any of the expired tax cuts that people have 
been counting on that have been in place for several years would go 
through the end of this year so people would know that is at least one 
stabilizing force on which they can count.
  It drops the job-killing tax increases in the Baucus substitute. The 
Thune amendment proves that government can make the tough choices. The 
Thune amendment is paid for. According to CBO, it cuts taxes by $26 
billion, it cuts spending by over $100 billion, and it reduces the 
deficit by $68 billion over the next 10 years. It shows the American 
people that this Senate is serious about stopping the deficit spending 
we have seen in the last 18 months.
  Spending cuts in the Thune amendment: one, it rescinds the 
unobligated stimulus funds; two, it imposes a 5-percent, across-the-
board cut in government spending for all Federal agencies except the 
Veterans' Administration and the Department of Defense; three, it 
freezes for 1 year Federal employee salaries, including, of course, 
Congress. It is very important that our Federal employees have the same 
kinds of restrictions that most Americans are feeling right now. It is 
a freeze, not a cut, in Federal employee salaries. It requires the 
selling of $15 billion of unneeded and unused government property.
  I believe the doctor fix that we have done in a patchwork way year 
after year since the balanced budget amendment is now another patch.
  Medicare pays doctors in a fundamentally broken way. It has become an 
access-to-care crisis for our seniors. Too many seniors are unable to 
find a doctor who takes Medicare because the Federal Government has 
proven time and again that it is an unreliable business partner. We 
need a long-term solution so that the best and brightest in our country 
will choose medicine for their career and will choose to serve

[[Page 10796]]

Medicare patients. Medicare is supposed to make seniors comfortable 
that they will be able to get medical care, but so many Medicare 
patients cannot find good doctors; they can't go to the doctors they 
want to see because the doctors have just said: I have had enough.
  In Texas, over 60 percent of our counties are considered health 
professional shortage areas. The number of medical school graduates 
choosing primary care has dropped 50 percent since 1997. Fifteen 
medical specialties have reported physician workforce shortages, and we 
could face a physician shortage of more than 150,000 physicians in the 
next 15 years.
  The Thune amendment provides over 2 years of a positive update for 
our Medicare physicians paid for by the kind of tort reform that has 
saved Texas doctors so much. The tort reform has brought down insurance 
premiums in Texas and we have increased our number of doctors since 
tort reform was enacted.
  We could do the same thing at the Federal level, and then the many 
counties I hear about from my colleagues all over our country that 
don't have a primary care physician or don't have an OB-GYN physician 
would be able to start seeing an influx of medical personnel back into 
the practice of medicine.
  We can do something good for America. We can show America that 
Congress understands that this debt is unsustainable, if we pass the 
Thune amendment. It is essential that we pass an amendment that will 
pay for the extension of unemployment insurance, that will not have any 
more deficit spending and not increase taxes.
  We need to continue the cutting of taxes so that our businesses will 
feel they can hire people, so that we will have an economy that can be 
sustained without sending more and more money to the Federal 
Government, which is growing bigger and bigger. We need business to 
grow, to hire people, to get our economy going again so that all of the 
sectors, including retail as well as manufacturing, will survive in our 
country.
  It is my hope we can pass the Thune amendment. It is fully paid for, 
it will not have deficit spending, and it will cut taxes rather than 
increase taxes on businesses. That is the alternative that we think is 
important for America to see.
  Mr. President, I yield the floor, and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant editor of the Daily Digest called the roll.
  Mr. BAUCUS. I ask unanimous consent that the order for the quorum 
call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                Motion to Concur with Amendment No. 4369

                (Purpose: In the nature of a substitute)

  Mr. BAUCUS. Mr. President, pursuant to the previous order, I move to 
concur in the House amendment to the Senate amendment to the bill with 
an amendment I send to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus] proposes an amendment 
     numbered 4369 to the House amendment to the Senate amendment 
     to H.R. 4213.

  Mr. BAUCUS. I ask unanimous consent that 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.'')
  Mr. BAUCUS. Mr. President, this is a new substitute amendment. We 
voted on an earlier version today. This is a new one. It still 
addresses many of the same issues as the last substitute, but it is 
smaller. It has fewer dollars involved and it is more paid for. The 
majority of this amendment is now offset. Most of the dollars spent in 
this amendment are offset, not by a lot but still the majority--more 
than half. All of the amendment is offset except for two matters: the 
unemployment insurance and the aid to the States under Medicaid; that 
is, the safety net provisions are not offset--those two. Everything 
else is offset. That means we do pay for changes to how doctors are 
compensated under Medicare. That is paid for. We do pay for all the 
changes to the tax laws. They are paid for as well.
  We also made changes to the provisions regarding S corporations and 
carried interest. I will have more to say about those tomorrow, but 
suffice it to say that the S corp changes address some of the 
administrative concerns and burdens some Senators had as we were 
attempting to stop the abuses of some professional S corps, the abuses 
they have been conducting. Frankly, they have been paying themselves a 
very small salary. These are professional corporations primarily. Then 
they pay themselves dividends. Because dividends are not wages, they 
avoid payroll taxes. They avoid the FICA tax and avoid paying the 
Medicare tax. That is something we are trying to stop. The substitute 
still addresses that abuse but in a way that is less burdensome to bona 
fide S corporations. The carried interest provisions generally soften 
some of the provisions that were contained in the substitute.
  The bottom line is that we listened. Several Senators had some 
concerns about the earlier substitute. We heard those Senators, and we 
have adjusted the amendment accordingly.
  We believe this amendment can provide a path forward. We believe this 
amendment can complete our work on this bill. We believe this amendment 
can help to enact into law help to people who need help, the 
unemployed, and States under Medicaid and also help create jobs our 
constituents are demanding. The tax provisions will have that effect.
  I very much hope that when we get to the substitute amendment vote, 
we will get the necessary votes to pass it. I am looking for something 
above 60, north of 60, so we can move forward to other measures.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. KAUFMAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Begich). Without objection, it is so 
ordered.
  Mr. KAUFMAN. Mr. President, I ask unanimous consent to speak as in 
morning business for up to 20 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Financial Reform

  Mr. KAUFMAN. Mr. President, it has only been 2 years since we had an 
extremely painful financial crisis that almost brought down our entire 
economy.
  To try to address the root cause of the crisis, we are currently 
nearing completion of a long and arduous process to develop a 
comprehensive financial reform bill.
  The world is watching to see how strong a bill this Congress will 
produce, and we need to show leadership. Yet I fear that instead of 
putting in place strong structural reforms as a model for other 
nations, we are deferring too much to the discretion of regulators who 
have failed in the past, and to international negotiations--currently 
underway in Basel, Switzerland--that have all too often resulted in 
global standards that were the lowest common denominators.
  Capital flows easily across borders, and so the United States needs 
to provide leadership and then produce harmonized global standards. 
Instead, I fear we are doing the opposite. We have hollowed out our 
national response so that we can negotiate with a free hand on the 
global stage--after Congress showed the world that we lack the 
political resolve to impose hard measures.
  This is why we have heard a common refrain that statutory 
requirements on capital or other prudential standards will tie 
regulators' hands during these international negotiations. We heard it 
before on the Brown-Kaufman amendment to restrict the size, leverage, 
and risk of our megabanks. Now we hear it on the Collins amendment.
  Senator Collins's commonsense provision would ensure that bank 
holding

[[Page 10797]]

companies and systemically significant nonbank financial institutions 
are subject to capital and leverage requirements as stringent as those 
that insured depository institutions face under existing prompt 
corrective action regulations. This provision would raise the capital 
bar for our largest financial institutions, requiring them to hold more 
committed and reliable forms of capital; namely, common equity and 
retained earnings. As my colleagues will recall, it passed by a voice 
vote during the Senate debate.
  Now there is the threat that the Collins amendment might be 
eliminated for the sake of ``international negotiations.'' Mr. 
President, I fear this is a recipe for a global race to the bottom for 
two reasons: First, a tepid response by the United States may also 
undermine other countries' consideration of tough reform measures. For 
example, the U.K. is studying whether to break up their megabanks. But 
some in the U.K. have suggested that since the United States isn't 
taking this preemptive action, the U.K. would not do it either.
  Second, some countries' regulators appear to be wedded to the status 
quo, and we are only reinforcing the impression that tough measures are 
not needed. Remarkably, only weeks before the European Government and 
the IMF cobbled together an almost $1 trillion bailout of European 
megabanks, one French Government official stated:

       The situation is completely different here, and the system 
     that was in place has not worked badly and does not need to 
     be overhauled.

  Regulators from Germany, France, and Japan, among others, are opposed 
to having a leverage requirement and a more strict definition of what 
constitutes capital.
  Leaving aside the opposition of many countries to the very concept of 
a leverage capital requirement, there are those who still indicate that 
the quantitative requirement must be set through the Basel 
negotiations. In fact, Treasury Secretary Geithner said:

       By the end of this year, we will negotiate an international 
     consensus on the new ratios.

  Why does it strengthen our negotiating hand for the Congress to have 
failed to enact hard rules? Moreover, it is tougher to imagine how we 
can set a number on leverage when we don't even have an agreement on 
how to measure leverage, since the United States follows GAAP 
accounting standards while the rest of the world follows IFRS. It is 
unlikely we will have uniformity, or even harmonization of those rules, 
for many years--if we ever will at all. While the accounting standard 
issue is often overlooked, it should go without saying that it is a 
more basic and first-order problem.
  Most important, for what are we negotiating? The history of 
international capital standards is that of colossal failures--Basel I, 
Basel II, and now Basel III. Instead, we have a sovereign banking 
failure and should be establishing a sovereign solution.
  If other countries want to permit banks to become risky and fail--
such as what Europe may be facing due to the European debt crisis--let 
them learn the hard lessons America has already learned.
  Let me briefly review the history of the Basel accords, which should 
stiffen the resolve of the conference negotiators to include measures 
that will prevent another financial crisis caused by U.S. megabanks.
  The Basel I Accord was a crude apparatus that established numerical 
requirements for the amount of capital that banks need to set aside 
based upon how risky the assets on their balance sheets were perceived 
to be. Different types of loans and assets were lumped into risk 
buckets. Some received lower risk weights, while others received higher 
risk weights. However, those weightings were arbitrary determinations 
that did not even take into account basic risks--most notably credit 
risk--associated with loans and other financial assets that banks hold.
  Under the Basel I system, a bond issued by a blue chip AAA company 
such as Johnson & Johnson would have had a much higher risk weight than 
a subprime stated-income loan, a loan to Greece, or a loan to Lehman 
Brothers. Not surprisingly, banks were able to easily game--or 
arbitrage--these capital requirements in a way that generally increased 
their risk profile. Banks were able to cherry-pick high-risk, and 
therefore, high-return assets that had low capital requirements because 
of the risk bucket in which they were placed. Banks also got around the 
Basel I requirements by shifting more assets off their balance sheets.
  The Basel II Accord, which was agreed to in 2004, was the culmination 
of several years of negotiations. While it was intended to address the 
flaws of Basel I by making capital requirements more risk sensitive, it 
actually created bigger problems.
  Most notably, the accord's complexity and sophistication masked a 
deregulatory philosophy that sought to make determinations on capital 
adequacy dependent on the judgments of rating agencies and, 
increasingly, the banks' own internal models. By outsourcing their 
regulatory responsibilities to the banks that they were supposed to 
regulate, bank regulators were making an implicit admission that the 
size and complexity of the megabanks had exceeded their comprehension.
  Unfortunately, complex capital standards that rely upon banks' own 
internal models pose serious problems for any democratic nation that 
prizes accountability and transparency, such as the United States. In 
his book ``Banking on Basel,'' Federal Reserve Governor Daniel Tarullo 
provides an exhaustive account of the Basel II capital accord that 
specifically questions the accord's decision to base capital standards 
on the internal ratings of banks. Tarullo indicates that the ``very 
complexity of the [accord's] approach gives banks more opportunities to 
manipulate, or make mistakes during, calculation of their capital 
ratios.''
  Even more troubling, Governor Tarullo noted it would also be nearly 
impossible for any independent auditor or examiner to identify failures 
and forbearance on the part of regulators. To that point, he states 
``it may be extremely difficult for an independent entity such as the 
Government Accountability Office to reconstruct the series of decisions 
and judgments that went into the creation and supervisory assessment of 
the credit risk model.'' Given that, how will we in Congress be able to 
hold either the megabanks or their regulators accountable?
  By virtually all accounts, the Basel II Accord was a complete 
failure. The Basel Committee itself estimated that it reduced capital 
for some banks by as much as 29 percent, at a time in which regulators 
should have been ramping up capital and other prudential requirements 
upon banks.
  By trying to tie capital requirements to so-called risked-based 
measurements, the Federal Reserve--the main driver of the Basel 
process--apparently hoped to eliminate the basic leverage requirement. 
In fact, former Fed Governor Susan Bies told banks that ``the leverage 
ratio down the road has got to disappear.'' Fortunately, despite the 
Fed's objections, Basel II has not been implemented in the United 
States, in large part due to concerns that it would disadvantage 
smaller community banks that did not have the resources and wherewithal 
to make investments in supposedly advanced risk models.
  It was, however, applied to European banks. Unconstrained by a basic 
leverage capital ratio, many of these banks went on to arbitrage the 
Basel requirements by gorging on AAA-rated bonds backed by subprime 
mortgages, not to mention the sovereign debt of highly indebted 
Eurozone countries such as Greece and Spain. The result has been 
hundreds of billions of dollars of losses followed by both explicit and 
implicit bailouts by EU governments.
  The accord was also effectively applied to investment banks such as 
Lehman Brothers and Goldman Sachs, which had precarious and explosive 
business models that utilized overnight funding to finance illiquid 
inventories of assets. These institutions were nominally regulated by 
the SEC, which had no track record to speak of with respect to ensuring 
the safety and soundness of financial institutions. The Commission 
allowed these investment

[[Page 10798]]

banks to leverage a small base of capital over 40 times--I repeat, over 
40 times--into asset holdings that, in some cases, exceeded $1 
trillion.
  Of course, in the wake of the most recent crisis, the same failed 
regulators now tell us that, this time, they have learned their lesson 
and will develop a new agreement that will address the deficiencies of 
the last one. But what reasons do we have for thinking that will be 
true?
  Assistant Treasury Secretary Michael Barr notes that regulators are 
now pushing for new global capital standards that will be ``more 
robust, higher and better quality, less pro-cyclical, and include 
global agreement on a leverage ratio.'' But the megabanks are already 
developing new ways to arbitrage as well as weaken the global capital 
standards to which Secretary Barr refers. In other words, they are 
finding ways to gut and go around the rules before they are even 
finalized.
  What is more, many of the regulators involved in the discussions 
inspire little confidence. Christian Noyer, the governor of the Bank of 
France and the new chairman of the Bank of International Settlements, 
the entity that oversees the Basel rulemaking process, indicated, that 
the new rules ``shouldn't undermine the business model of banks which 
have perfectly withstood the crisis.'' Given that the same Bank of 
International Settlements estimates that eurozone banks have two-thirds 
of the exposures to the most fiscally imperiled European countries--
Greece, Ireland, Portugal and Spain--it is not clear to which banks 
Governor Noyer is referring.
  As the Financial Times notes, France, Germany and Japan are ``more 
attached to the preeminence of the current risk-based approach and 
wants the leverage ratio to have a much less important role in 
governing banks' balance sheets.'' In effect, they are pushing for the 
status quo of Basel II, which has been an unmitigated disaster. After 
the multiple trillions of dollars worth of public funds expended on 
megabank bailouts, it seems amazing that many regulators would like to 
maintain a system where the largest banks effectively regulate 
themselves.
  But U.S. regulators are not immune to the defense of the existing 
regime. As the Wall Street Journal reports, ``some U.S. government 
officials are fighting what they view as an anti-American proposal that 
would prevent banks from counting as part of their capital cushion a 
specific type of security favored by U.S. banks known as a trust-
preferred security.'' In other words, we have unnamed U.S. regulators 
that are fighting against Senator Collins' amendment in international 
negotiations.
  The current state of international capital negotiations gives little 
comfort to those who would like to see fundamental structural reforms 
to address the problem of too big to fail.
  I am in favor of international negotiations to harmonize financial 
regulatory standards. However, these negotiations should not preclude 
the Congress from setting statutory floors. They should never result in 
the abdication of our sovereign powers and responsibilities.
  I, therefore, agree with the sage thoughts of former Federal Reserve 
Chairman Paul Volcker when he said that while ``good things may come 
out of the Basel process, ``it is not structural change.'' In his view, 
and in mine, we need to do both.
  Instead of trusting our financial stability solely to unelected 
financial guardians, in this country and abroad, Congress should 
legislate structural and fundamental reforms that preemptively address 
the persistent problem of too big to fail. Senator Collins' provision 
is but one example of that. There is also Senator Lincoln's proposal to 
require swap dealers to be spun off and separately capitalized from 
insured depository institutions; a strong Volcker Rule ban on 
proprietary trading at banks, as proposed by Senators Merkley and 
Levin. 
  Without transparency and accountability, a democracy cannot function. 
That is why we still need the statutory standards on the leverage as 
well as the size of these megabanks. While some technocrats may say 
that they are blunt tools, I say that that is precisely the point. They 
will not only provide a sorely needed gut check that ensures that 
regulators do not miss the forest for the trees when assessing the 
capital adequacy of a financial institution, they will also provide a 
basic means to ensure accountability in the performance of government 
officials.
  We cannot--we cannot--afford another meltdown and the American 
people--and, indeed, the rest of the world--are looking to Congress to 
take steps to ensure that that does not happen. By adopting these 
fundamental reforms and preemptive measures, Congress will go a long 
way towards protecting the American people from future bailouts. It 
will also be providing global leadership, demonstrating to the rest of 
the world that fundamental reform of our financial system does not rest 
upon the decisions of unelected technocrats whose grand designs brought 
our financial system to the brink.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. CHAMBLISS. Mr. President, I rise tonight to express my concern 
with how Congress continues to address this package of so-called 
extenders. This is a debate we have had on multiple occasions this 
year, and once again we find ourselves discussing how to enact a short-
term extension of items such as emergency unemployment benefits, 
reauthorization of the National Flood Insurance Program, the Federal 
Medicaid matching rate, FMAP, and the Medicare doc fix.
  This is a difficult debate for many of us. Times are tough across the 
country, as well as in my home State of Georgia where the unemployment 
rate is 10.4 percent. During a time of economic hardship, I do not 
believe we should allow provisions, such as the extension of emergency 
unemployment benefits, to expire. But I do believe that when we extend 
these programs, we should do so in a responsible fashion. Congress 
should find a way to pay for those extensions.
  That is where there is disagreement on this issue--not whether 
Congress should pass an extenders package but whether it should be paid 
for.
  Even though the need for these extensions comes as no surprise, we 
again find ourselves in a position where the majority has proposed 
extending these programs without finding the money to fund them.
  Just 2 weeks after our Federal debt topped $13 trillion--let me say 
that one more time; $13 trillion is owed by the United States of 
America today--we are now poised to vote on another proposal that would 
spend money this country simply does not have.
  That number, $13 trillion, is so big that it is difficult to 
comprehend. But what it boils down to is $42,000 of debt for every 
single citizen of the United States of America.
  The public debt has risen by $2.4 trillion in the 500 days since the 
current administration took office. That is an average of $4.9 billion 
per day. We are now borrowing 43 cents of every dollar we spend. But 
still we are continuing to spend.
  Estimates show that $4.8 trillion of the $9 trillion in debt that 
America will accrue over the next decade will be from interest. That is 
$4.8 trillion that could be better used on national defense or returned 
to taxpayers to pay for other necessities. Instead, future generations 
will be forced to pay higher taxes to foot the bill for Congress's out-
of-control spending.
  With much of our national debt being held by other nations, such as 
China, this is also an issue of national security. Just as with our 
energy and food supply, we put our Nation in a more vulnerable position 
when we disproportionately rely on other countries.
  It is a matter of great concern that our Nation is in deep debt to 
foreign countries that often do not share our positions on domestic or 
international policy matters. While our global economy ensures that 
there will be foreign investment in our debt, this sustained, exploding 
debt guarantees that we provide leverage to our creditors. At some 
point, we have to say enough is enough and make some tough decisions 
about

[[Page 10799]]

spending beyond our means. Again, we can pass an extenders package 
without recklessly adding to the cost of our Federal debt.
  Earlier this year, this body voted to give the rule known as pay-go 
the force of law. And yet virtually every piece of legislation that we 
have considered between then and now has fallen short of this standard. 
Talking about fiscal responsibility and restraint while spending 
recklessly is hypocrisy of which the American people will surely take 
notice, and they have taken notice. States as well are being left in 
the fiscal lurch.
  By not shoring up the Federal Medicaid matching rate, my State of 
Georgia will have a $370.5 million hole in its budget. We have had to 
make sacrifices at home. My legislature has had to make very difficult, 
hard, and tough decisions with respect to trying to find reductions in 
spending at the State level to come up with a fiscally responsible, and 
balanced budget that they are required to have under our State 
constitution.
  We know States are facing huge challenges, relying as they do on 
money promised from the Federal Government. But we all need to keep in 
mind that we are borrowing virtually every cent of that money. It is 
time we get serious about this Nation's precarious fiscal situation. We 
can no longer afford to burden our grandchildren with insurmountable 
debt.
  Recently, we witnessed what happens when a nation does not live 
within its means. The economic crisis in Greece was caused by years of 
unbridled spending and failure to implement fiscal reforms. This 
recklessness left Greece badly exposed when the global economic 
downturn appeared. This pattern should serve as a wake-up call to every 
one of us that spending must be controlled.
  Retirement programs such as Medicare and Social Security are on the 
verge of bankruptcy. In March of this year, reports emerged that Social 
Security is set to pay out more in benefits than it receives in payroll 
taxes this year--a threshold the program was not expected to cross 
until at least 2016. By some estimates, the program will no longer be 
able to pay retirees full benefits by the year 2037.
  Instead of trying to place programs such as Social Security on more 
stable footing, we spent more than a year debating a health care bill 
that will create even more costly entitlement programs, the true price 
tag of which is yet to be seen.
  The original proposal that was debated and voted on earlier today, 
advanced by the majority, increased spending by $126 billion, which 
included more than $70 billion in new taxes and increased the deficit 
by $79 billion over the next 10 years. Thank goodness the votes were 
not there to proceed with that underlying bill.
  Now, according to the chairman of the Finance Committee, we have a 
new bill. While it is smaller in dollars, according to the comments 
made by the chairman of the Finance Committee earlier tonight--he says 
also that the majority of the amendment is offset, which means it is 
still not paid for.
  We have an opportunity tomorrow to take a step toward responsibility 
and restraint by paying for this extenders package. I am a cosponsor of 
the amendment introduced by the Senator from South Dakota, Mr. Thune, 
which would extend the same programs as the House-passed version of 
this legislation. But unlike that version, the Thune amendment pays for 
those programs instead of adding their cost to the Federal debt. It 
also cuts taxes by $26 billion, cuts spending by more than $100 
billion, and, according to the CBO, reduces the deficit by $55 billion. 
It does this through spending cuts and the use of unobligated stimulus 
funds.
  The Thune amendment does away with the harmful tax increases on long-
term investment that are part of the underlying bill. These taxes on 
carried interest would almost certainly serve to discourage capital 
investment, increase borrowing costs associated with starting or 
growing businesses, and hurt real estate and stock prices, all at a 
time when our economy is extremely vulnerable. The real estate and 
venture capital arena--two segments of our economy that are vital to 
sustained job growth--would be especially hard hit by these taxes on 
long-term investments.
  Many Americans need the programs in this bill to be extended, but we 
must be sure we extend them in a responsible way, and that is why I 
urge my colleagues to strongly consider the Thune amendment as we 
debate it tomorrow and vote in favor of the Thune amendment.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant editor of the Daily Digest proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                             Cloture Motion

  Mr. REID. Mr. President, I send a cloture motion to the desk.
  The PRESIDING OFFICER. The Cloture motion having been presented under 
rule XXII, the clerk will report the motion.
  The legislative clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     hereby move to bring to a close debate on the motion to 
     concur in the House amendment to the Senate amendment to H.R. 
     4213, the American Workers, State, and Business Relief Act of 
     2010, with the Baucus amendment No. 4369.

       Harry Reid, Max Baucus, Patrick J. Leahy, Jeanne Shaheen, 
     Byron L. Dorgan, Sherrod Brown, Edward E. Kaufman, Daniel K. 
     Akaka, Christopher J. Dodd, Jeff Bingaman, Robert P. Casey, 
     Jr., Jack Reed, Barbara A. Mikulski, Roland W. Burris, Jon 
     Tester, Daniel K. Inouye, Tom Harkin.

  Mr. REID. I ask unanimous consent that the mandatory quorum be 
waived.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________