[Congressional Record (Bound Edition), Volume 156 (2010), Part 8]
[Senate]
[Pages 11166-11167]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            FINANCIAL REFORM

  Mr. DORGAN. Mr. President, 16 years ago I wrote a cover article for 
the Washington Monthly magazine. The title was ``Very Risky Business,'' 
the

[[Page 11167]]

subtitle, ``If we don't watch out, a new kind of Wall Street gambling--
exotic derivatives trading--could shake the market and put taxpayers on 
the line for another bailout.'' I talked about $35 trillion in 
derivatives. That is now a fraction of what is out there. I talked 
about banks that were trading on derivatives on their own proprietary 
accounts. I said they might just as well have a roulette wheel or a 
craps table in their lobby. It is just flatout gambling, and it ought 
to be stopped.
  It is not surprising to me because I made the same point 5 years 
after that, when they tried to repeal Glass-Steagall--and did 
successfully--in order for us to compete with the Europeans. That took 
apart the protections that existed after the Great Depression. It was 
decided that we don't need those protections anymore. They took it 
apart. I was one of eight Senators to vote no. I warned on the floor 
then that another taxpayer bailout would come within a decade. It did, 
regrettably.
  Now the question is, as we put together a piece of legislation to 
address these issues, what do we do that doesn't have us just having a 
press conference to say: Look at what we did. What is it we have to do 
to make sure this doesn't happen again? Have we really tightened the 
regulations?
  Let me go through a couple things. Will we have dealt with too big to 
fail? The answer is no, not really. Too big to fail means there are 
some businesses in this country in the financial services industry, 
some of the biggest financial institutions, that are determined ``too 
big to fail,'' and their failure would cause grievous harm to the 
economy, perhaps bring the entire economy down. Therefore, if they are 
too big to fail, they are, by definition, going to be bailed out.
  I happen to believe that if you are too big to fail, you are simply 
too big. You ought to be pared back, trimmed down until you are not too 
big to fail. That is not what is happening here. We are going to pass a 
piece of legislation in which the biggest financial institutions are 
bigger than they were before we got into this mess. Too big to fail 
doesn't mean you are too big. In fact, you can get bigger with the kind 
of legislation that is being considered in conference.
  Proprietary trading. Will they still allow banks to trade on their 
own proprietary accounts? Will they put a restriction, finally, on 
banks' ability to make speculative bets using their own capital in 
their own lobby? We will see. It doesn't look like it.
  What about the issue of naked credit default swaps, CDSs? They have 
no insurable interest on any side of them, just flatout betting. No, 
this isn't going on in Atlantic City or Las Vegas; it is going on 
across the country with financial institutions. Will this be trimmed 
down? It doesn't look like it.
  How about the ratings agencies, the agencies that gave AAA ratings to 
fundamentally worthless securities, had a bunch of people left with bad 
securities in the bowels of financial balance sheets? What about that? 
There was an amendment on the floor of the Senate to deal with that. 
That has now been watered down. Or capital standards.
  I won't go on except to say that I hope the sum total of this 
conference between the House and Senate on financial reform is about 
working for the American people and not the interests that helped 
create this mess. I hope this is a time to suck it up and do the right 
thing. I hope the conferees understand that if this bill is excessively 
weakened--and it wasn't strong leaving here--they should not assume 
they will have the votes to automatically pass that kind of legislation 
back in the Senate and perhaps the House.
  This is very important. This is not some other issue. This is about 
whether the economy will continue to provide strength and expand and 
promote hiring. It will be what our children and grandchildren 
experience in terms of opportunities for the future in our great 
country.
  It is a conference that is pushed by all sides to do various things 
for various interests. I hope they understand that this is something 
that will revisit us again in 2 years, 5 years, 10 years from now 
unless we do the right thing and make certain we address the key 
issues.

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