really learning from this organization, from this incident. we are thankful no one was killed. . . the trick is how to keep the pressure on when the crisis is happening. it should not take a tragedy for us to make the improvement. >> thank you. >> i agree with you. i appreciate the statement that was made. there may not have been a mission accomplished feeling among washington, but a feeling that the war had reached a different level of intensity.

we had a great as the records show, we had a greater number of attempts to attack our homeland last year than in any year before. it's a painful way to be awakened but here we are. i appreciate very much the forthrightness of the witnesses today. like a lot of other people i was raised with parental wisdom that everybody either falls or slips in life. the question is how you get up. and most important of all, if you slipped and made a mistake, the only way you will deal with it effectively is to acknowledge it. acknowledge there is a problem and then go on. i think that's the spirit of what your testimony has been today. i have a couple more questions. i know senator collins does as well. i want to come back to the washington list 'cause i appreciate admiral blair what you had to say and it tipped too much in the other direction and we don't camera to be harassed.

there ought to be a pretty simple way to stop grandma from being harassed without leaving prescreening people about whom somebody has information that suggests they may be a terrorist. we're not going to based on their presence on the tide list we're not going to arrest them or convict them we'll do a secondary screening that they will blow up the plane or come to the u.s. with evil intention. and i appreciate the remarks you made, director leiter. what's the process now by which the administration is reviewing the watch list? we're going to perform oversight continuing. we want to have involvement with you, mr. leiter. >> immediately after the event we took some near term actions which we're looking at categories of individuals, rescrubing their records and frankly elevating large numbers

of people based on certain characters which i can talk in closed session. further scrubs of that involving people with visas and the like. so there were some immediate steps taken. in the slightly longer term and i really shouldn't say long term this week, i expect that we will obtain interagency guidance out of this process so within the 30 days to more formally revise those standards so we can have a routine inclusion of people at higher levels of that watch list and certainly as we develop those standards, which i hope are simple for everyone to understand, we have to engage in real consultation with this committee and other members of congress to make sure that, again, we're hitting the right balance. >> okay, we want to be involved in that if i may since you're here is just suggest that it seems to me that the watch list system is too complicated. that having four levels, tide, watch list, selectee, no-fly is

more complicated in my opinion than we need. there ought to be a category where there's some basis for concern about contact with terrorism. and then some higher category where there's some greater evidence where you really want to stop somebody from getting on the plane. >> and senator, if i may, i've heard that a lot. i can tell you that we fundamentally to a vast degree eliminated one of those levels, which are those who were on tide that are not with -- in the watch list at the terrorist screen center. not completely and i can explain that more fully in closed session. fundamentally that step does not exist. i will say that one of the good things about the watch list and it did work in this case, we simply watch-listed someone at the right level. but what we do have is something that didn't occur before 9/11, which was a seamless connection of information flow from that

top secret level at the national counterterrorism center down to the screeners. again, we had a different problem here which was someone at the wrong level of the watch list but the information did flow so that basic structure was not in this case one of the flaws. >> okay. and secretary napolitano, i should ask you, you know, these questions of grandma getting screened or this young boy, michael hicks, the name sticks out in my point, there was somebody on the list getting screened all the time. there's got to be a commonsense way when there's a little boy coming through to not subject them to this. it's not a terrible price to pay, frankly, to protect the country. but we ought to try to avoid it if we can. >> indeed, mr. chairman. but i can talk about those -- that particular case in classified setting. what we are going to have to

build or have as we make the actual watch list and no-fly list more robust is a greater ability to have redress and remove people who are improperly on the list from the list in a clearly understood non-brewer -- brewer -- this is a question of prescreening international air travel passengers to the united states. customs border protection accesses the airlines' passenger name records 72 hours before a flight is set to depart. but those records don't typically include important identifying information like passport or visa numbers which obviously makes it harder to match the passenger manifests

with the government databases on the terrorism watch list. customs and border protection currently doesn't receive that important identifying information about passengers on a u.s.-bound flight till they begin the check-in process. and in some cases not until 30 minutes before the airplane's door closes. although we're checking the no-fly and selectee list in real time as passengers check into a flight we're not running as we described earlier visa revocations in real time. now, once the airplane's door closes and cpp receives national targeting center begin batchall the a more in depth analysis on the people on the flight to determine who will require additional attention once the flight lands. on christmas day, as you know, it was that in depth analysis that led cbp to uncover

abdulmutallab's father's concern about him and to determine that he would require a secondary inspection once he landed in detroit but, of course, it was far too late to stop what he intended to do. so i wanted to ask you whether waiting until the airplane's doors are closed to begin an in depth check of our databases is too late. and whether we need to thoroughly screen each flight's passenger manifest list against all of our databases such as we've described at least 24 hours if not longer before the airplane is set to depart from a foreign country to the u.s. >> mr. chairman, i think some of that should be held for our classified briefing in terms of how that flow of information works. obviously, where we want to get to is if we have derogatory information that someone is a threat to aviation, they never get on a plane. >> right.

>> and the problem here is when they put all the dots together, that derogatory information was enough to advise the carrier not to put him on a plane. that was the problem here. in terms of the entire movement of information across the system with the millions of passengers that move every day, i'd like to be able to talk to you about that a little more in depth in the classified setting. >> okay. you understand my point -- >> i do. >> prior to boarding the plane, what we've got is basically the passenger-identifying information but not -- that is his name, basically, or her name, but not other information like passport and visa numbers. it may be that we're not going to be able to effectively match them on that basis against the watch list. and, therefore, they'll get on the plane. but we'll continue this conversation. thank you. senator collins? >> thank you, mr. chairman. mr. chairman, before i ask a couple of final questions, i

want to clarify an issue raised by the senator from missouri. and i told her as she was leaving i was going to do this. there is, in fact, precedent for detaining someone on american soil as an enemy combatant in the military system. and that's jose padilla. jose padilla was first arrested in 2002. and he was subsequently detained by the military for 3 1/2 years before being charged in civilian court. whether that was the right way to handle the case or not, it is indeed a precedent so it would not have been unprecedented to detain abdulmutallab, who unlike jose padilla was not an american citizen.

so that could, in fact, have been done and would not have been unprecedented. the second point my friend from missouri raised had to do with the amount of information that was given. obviously by abdulmutallab. that is, obviously, classified and not for discussion here. but it's evident to me that you're going to get more information over a lengthier period of time than you are over just a few days. and it is clearly not a coincidence that abdulmutallab stopped cooperating once he had his miranda rights read to him. and once he had lawyers who advised him to cease answering questions. so i have a very different view from my friend from missouri on this issue, but i did want to establish some facts on jose padilla being a precedent.

i want to follow up with another issue with mr. leiter that senator levin raised, and this is just to clarify the record. on the terrorist watch list that contains 400,000 names, you had an exchange, mr. leiter, with senator levin in which you and he talked about that potentially a significant number of those individuals would be able to travel to our country because they're not on the no-fly list or even the selectee list. but, in fact, as i understand it, and again i understand the actual number is classified but very few of those 400,000 would have valid, current visas. isn't that correct? >> that's correct, senator. but approximately 2% of the people who are in tide are u.s. persons. so clearly that's an issue. and also there's a significant

number that are from visa waiver countries and could enter the united states without a visa. >> that is an excellent point. and it's a point that's been of great concern to the chairman and me for some time. particularly when we're looking at individuals in great britain who may have dual citizenship with pakistan and england. and maybe using one passport to travel to pakistan and then their british passport to travel to their country. i realize that's an issue of another day but it's of great concern. >> i don't consider it an issue for another day. as i said we have to learn the lessons of this case but we can't overlearn the lessons. and secretary napolitano and i have spoken previously and view the issue visa waiver and using data appropriate to detect individuals who might want to do harm to the united states is very much integrated in this equation.

>> secretary napolitano, in my remaining time, let me ask you about a question that concerns me. when dhs was established in 2002, congress authorized the secretary of homeland security to assign dhs personnel to visa-issuing diplomatic posts overseas to review individual visa applications and to initiate investigations of visa-security related matters. fast forward eight years, it's eight years later, and as i understand it, dhs personnel are only in about 15 out of the 220 state department posts around the world. and that small number is even more disturbing when you consider that dhs and the state

department have identified 57 posts as being high risk. i also understand that request to expand to three more of these high risk posts were waitingw6 your office for more than a year waiting for approval by the secretary. i realize part of that preceded you, but you've been in office for about a year. and that you signed them just recently. why the delay? here you have a need in a high risk area for dhs personnel. why let it languish for a year? >> it was not languishing, senator. and let me talk about this. it was being evaluated in light of all the work being done at the department about where assets -- people, people needed to be to have their highest most effective use around the world.

and in conjunction with the work we were doing on the qhsr which is due to the congress this month. let me if i might, though, talk about the visa security program. senator carper asked, you know, what we could do. well, both at the iap level and at the visa security program level -- there is a difficulty. and the difficulty is they make the department a little bit pregnant. either we run visas or we don't. either we do the revocations or we don't. but we live in kind of a half-cast world right now. and i think it's important -- and that's something that we ought to be as part of our review -- but it also should be part of our ongoing dialog with this committee. and lastly, the visa security program -- it is a

screening/investigative program where in this -- in the embassies where we have it with the agreement of the department of state, they go out and do further research. but as you have mentioned, it is limited. it doesn't cover all of the embassies nor can it by itself be more than and should be more than one of the many layers to be constructed here. so i would simply suggest to the committee that this is one of the things we really need to look at. in areas of the department where we kind of have authority but we kind of don't but we kind of have personnel but we don't. >> but you did have the authority to deploy people to these high risk posts. you had a request for these three. and i cannot publicly say what the three are. but they don't seem like hard calls from my perspective.

if they didn't languish for a year, are you saying that it took a year to evaluate the request? i mean, why the delay? >> no. what i'm saying it was not a delay. it was an ongoing process within the department led by leadership in the department to look at this in conjunction with everything else we were doing internationally. >> wasn't the request made a year ago? >> i don't know when the actual date of the request was. >> okay. it's my understanding that the request has been in your office for a year. and i will follow up with some additional questions. >> yeah, i don't think that's accurate. we'll be happy to have some correspondence with you. and to get you the information. >> thank you. thank you, mr. chairman. >> thank you, senator collins. senator, do you have any further questions? >> mr. chairman, i do have questions. [inaudible] >> if you would like to start, go right ahead. i think there's about 13 minutes left on the vote.

>> thank you, mr. chairman. and this is becoming so obvious now what has been going on with this administration and with different agencies as well as departments working together. director leiter, nctc has a directorate of strategic of operational planning to support effective government-wide counterterrorism planning, which is essential to preventing attacks. yet, congress also directed the state department coordinator for counterterrorism to conduct overall supervision and oversight of resources for international counterterrorism activities. nctc and states authorities appear from our perspective to overlap.

my question is, are the state department and nctc cooperating in counterterrorism planning? and how are you doing this? >> senator, i think we are cooperating well. but i would go back to something director blair said earlier. there are so many people involved here and i don't think the legislation that created nctc's strategic operational planning as i've discussed with this committee before -- i don't think the legislation gave clear authority -- in fact, it did not give us clear authority to negotiate actions and we were authority instead of director of action. i think the president's direction of january 7th to design a process whereby there would be follow-up of priority threat streams will be an empowering the strategic operational planning not to

direct operations contrary to urpa bw7k to empower us to demd accountability for a more broader range of threats that we see. i think that will require a new level of cooperation from the state department but not just the state department but homeland security, fbi, justice and the military. i believe the events of 12-25 at least give us the impetus to do that. >> thank you for that. secretary napolitano, the public, of course, has been very concerned about what has been happening. we're trying to put different things in place. in your testimony you state that as an interim measure you will deploy law enforcement officers from across dhs to serve as federal air marshals to increase security aboard some international flights.

which will these officers be deployed? and what training they receive to ensure that they are fully prepared? -- prepare to provide security inside an aircraft? >> senator akaka, if i might reserve the details of the deployment for the classified brief. with respect to training, there is specialized training indeed. we have an enlarged group -- a new group who started training this week that will begin deployment on february 1. but it includes things, for example, about how to take down a passenger in a plane and keeping the other passengers safe while you're doing it. 'cause you're in a closed environment. how to take down a passenger in a plane without yourself causing damage to the structure of the plane. there are other things.

but that gives you a flavor -- there's just some different things from a law enforcement perspective that happen in that airplane setting that are different than of a normal setting. >> yes. finally, this came to me while you were talking about working with other countries. you testified that tsa security directive requires passengers who are or who pass through 14 countries to undergo additional screening at international airports prior to being allowed on flights to the u.s. i'm concerned that requiring or additional screening of all passengers from certain countries may impact the relationships with those countries as well as the countries charged with providing the additional security and

could divert attention from other possible threats. my quick question is, have you heard concerns about this directive from other nations? and what has been done to address those concerns? >> senator, that list was developed from the state department's state sponsors of terrorist list plus add-ons to it in conjunction with the state department. it is of concern to several of the countries that have been put on the list recognizing the enhanced screening is happening for over half of the passengers from all other countries who are embarking for the united states. so this is a very, very aggressive, very all-inclusive method. nonetheless, we are talking with members of some of those countries. and talking about ways or things

that they could do that would alleviate concerns and allow them to be removed from the 100% list and go on to the list where we still do over half of the passengers. >> thank you. thank you very much for your responses. thank you. >> thanks, senator akaka. i'd say the witnesses that there's a vote on the floor now and you've been really generous with your time. so i think it would be a mistake to go in the classified session right now. it will take more of your time. we'll try to reschedule it if it's even possible in the spirit of cooperation and one of the unadopted recommendations of the 9/11 commission report that we might sit in with another committee in a closed session with the three of you. i want to thank you -- incidentally just to say in public session -- i know it's controversial. i've heard pushback from some of the 14 countries. but stay tough on this. i'm not saying -- i'm just saying what's on the line here is so critical, which is the

life and death of americans that, yes, it's inconvenient. but again basically you're talking about just some more screening before you get onto a plane. and it's -- it's done to achieve a public good. so i think you started out with the right position. i've already had people -- friends of mine in other countries complaining about it. but that's the world we live in. >> indeed, mr. chairman. as i respondent to senator akaka. our job is to make that air environment is as safe as it can be. and we will -- don't worry about staying tough. >> good. i appreciate it. again, i thank you. you've been forthright. we're in a war. we're in a world war with the islamist extremist terrorists who attacked us on 9/11 and have been coming at us in various ways from a diversity of places ever since. you had a little change with senator mccain. one thing we learned about war mistakes are constantly made and

when the enemy breaks through your defenses. you're immediately tough about it as you said. you close the gaps. you do hold people accountable as is appropriate. and you go on with the aim of securing the country that we're all here to defend and the freedom that we're all here to defend. so it's in that spirit that i appreciate your testimony. we covered a lot of ground. we learned a lot. i appreciate what you're involved in now to fix what didn't work in these cases. and we're going to keep going with these oversight hearings. next tuesday we have tom kean and lee hamilton and some other witnesses. and we're going to go on to separate subject matter hearings in this oversight. we'll issue some recommendations. we want to work with you every step of the way. we obviously have a goal, which is the greatest possible homeland security for the [beep]. -- american people. we'reng teep the record open for 15 days for additional questions and statements. with that i thank you again.

the hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> live now to the u.s. senate where members return to work on a bill that increases the federal debt ceiling by $1.9 trillion. we expect to see debate on pending amendments but no roll call votes. the legislation is expected to carry over till next week before a final passage vote can occur. and healthcare is still very much on the minds of members as democratic leaders continue to work out details of a final bill with the house. live now to the floor of the u.s. senate.

senate will come to order. the chaplain dr. barry black will lead the senate in prayer. the chaplain: let us pray.

eternal lord god, who is the light of all we see, make this day luminous with your presence. strengthen the members of this body to do their best, living lives worthy of their high calling. infuse them with the spirit of kindness, of thoughtfulness, and of fairness. may the tyranny of partisanship and expediency never prompt them to betray high principles. make them poor in misfortune and rich in blessings.

give them enough challenges to keep them humble, enough failure to keep them dependent on you, and enough success to enable them to fulfill your purposes for our nation and world. we pray in your sovereign name. amen. the presiding officer: please join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all.

the presiding officer: the clerk will read a communication to the senate. the clerk: washington, d.c, january 22, 2010. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable jeff merkley, a senator from the state of oregon, to perform the duties of the chair. signed: robert c. byrd, presidet pro tempore. mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: following any leader remarks, the senate will resume consideration of senate h. j. res. 45 which is to increase the limit of the public debt. there will be no roll call votes during today's session of the senate. the presid officer: under the previous order, the leadership time is reserved. under the previous order, the senate will resume consideration of h. j. res. 45,hi report.

the clerk: h. j. res. 45, joint resolution increasing the statutory limit on the public debt. the presiding officer: the clerk will call the roll. quorum call:

mr. baucus: mr. president?

the presiding officer: the senator from montana. mr. baucus: mr. president, i ask ispe further proceedings under thed with. the presiding officer: without objection. mr. baucus: mr. president, today the senate resumes its third day of consideration of the joint resolution to increase the debt limit. we continue our discussion of whether congress will allow the government to honor its commitments to pay its bills. yesterday, the senate disposed of the thune amendment to terminate the treasury department's troubled asset relief program. today, three amendments remain pending: the substitute amendment raising the amount of the debt limit, this senator's amendment to protect social security, and the conrad-gregg amendment to create a fast track process to consider a budget commission's recommendations. up to eight other amendments remain in order to the joint resolution. the senator from alaska has the right to offer an amendment on the environmental protection agency's endangerment finding.

the senator from alaska spoke on this subject yesterday, and although i do not by any means wish to speak for the senator from alaska, it appears from her statement yesterday that she seeks to address the subject matter through a freestanding resolution of disapproval rather than an amendment. the majority leader also has the right to offer an amendment reinstituting the statutory pay as you go budget law. we hope that we might see that amendment today. the six remaining amendments in order are a coburn amendment proposing a package of rescissions, a sessions amendment creating caps on appropriated spending, an amendment by the republican leader's designee relevant to any on the list, an amendment by the majority leader relevant to any on the list, and two amendments by this senator regarding the budget commission. under the previous order, every amendment to this joint resolution will be subject to bn

affirmative 60-vote threshold. the senate, however, will not conduct any roll call votes today. we expect that the next roll call vote will occur no earlier than monday afternoon. the senate is open for business this morning for any of these senators to offer their amendments, and the senate is available for the statements, obviously, of all senators. we will work toward developing an agreement for offering of all amendments by sometime early next week. and we hope to conclude action on this measure authoritily thereafter. and i thank all senators. mr. president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

a senator: mr. president? the presiding officer: the senator from rhode island. mr. whitehouse: mr. president, may i ask that the pending quorum call be lifted? the presiding officer: without objection. mr. whitehouse: thank you, mr. president. as we continue here on the senate floor to debate our nation's debt limit, i rise today to review how we came to this point of serious budgetary imbalance and in particular how how $9 trillion of it is bush republican debt. at a time when tens of millions of americans are out of work and families across the nation are struggling to heat their homes and pay their bills and buy their prescriptions and put food on the table, our constituents are rightly frustrated at america's lack of fiscal restraint, and they deserve to

hear the whole story. the unfortunate truth is that president bush left us with a budget so warped and imbalanced and an economy in such disarray that president obama and this congress have had no choice but to run temporary deficits. but the previous administration must bear at least $9 trillion worth of the blame. let's roll back to the time when george bush took the oath of office as president of the united states. in his first address to the nation, he pledged to, and i quote, "call for responsibility and try to live it as well." end quote. it had been a divisive election,

and many americans now found some comfort and hope in those words. they were to be disappointed. but on the budgetary front, there was good reason for optimism on that january morning in 2001. after decades of deficit spending, president clinton, president william jefferson clinton, had set the nation on its healthiest fiscal path in generations. after 28 straight years of multibillion-dollar budget deficits, our nation saw surpluses beginning in 1998 under president clinton. in president clinton's last full year in office, we saw the largest budget surplus in our nation's history, a budget surplus of $236 billion under president clinton. and that good budgetary news

looked forward as well. the month that george bush first moved in to 1600 pennsylvania avenue, our congressional budget office, the nonpartisan accounting arm of congress, projected that we would continue to see surpluses throughout the following decade. those budget surpluses, the product of responsible governing -- some might even say fiscally conservative governing -- were projected to be enough to completely wipe out our national debt by 2009. that was the picture we looked forward to when george bush took office in 2001, predictions by the congressional budget office that our national debt would be zero by 2009. indeed, there is actually debate in academic circles about whether a detect-free america was a good idea or not --

whether a debt-free america was a good idea for not. that discussion seems rather bitter now. in other words, at that time the hard work had been done. the nation was on a strong financial course, and if president bush had just stayed that course of fiscal responsibility, he could have been the first president since andrew jackson in 1836 to govern a debt-free united states of america. if president bush had chosen the responsible path, we would be having a very different debate today. of course, president bush and the republicans who governed congress did not choose the responsible path. this chart illustrates the difference between the surpluses that george bush inherited and the deficits that he created. this top line at the top of the red, that top line shows the c.b.o. budget outlook that i

have just described that was projected by c.b.o. in january of 2001 climbing with increased surpluses over the years to come. the bottom line at the bottom of the red shows what the bush administration actually did. the budget results under the bush administration. the difference -- the difference between the anticipated path president clinton left this country on and what president bush actually did is this. it is a mind-boggling $8.9 trillion. for purposes of rounding, i will call teds it $9 trillion. and that's a conservative figure that does not include the likely costs of servicing that debt over the years -- you have to pay interest and not just pay

back your borrowing -- and it also does not include the spending that president obama had to do -- had to do -- to offset fiscal disaster because of the financial meltdown that he inherited. that spending by president obama wasn't anything president obama wanted to do. it wasn't anything he campaigned on. it wasn't on his agenda. it was an emergency measure necessary to clean up the economic wreckage left by the bush administration. mr. president, look at one particular contrast. our current majority leader, harry reid, has worked to craft a health care reform bill that would not only achieve near-universal coverage but would do so without adding one penny to the national debt. in contrast, when george bush and his republican allies in congress designed a medicare

prescription drug benefit, they did so without offsetting at all the hundreds of billions of dollars in new spending. indeed, they even larded it up with special deals for the pharmaceutical industry. in other words, the republicans relied entirely on deficit spending to fund a huge new entitlement program. that was the way they actually did business. the republicans lethe republicay on deficit spending to fund a new entitlement program. that is the fact. now republicans inaccurately -- and frankly hypocritically -- rail on budgetary grounds against our efforts to extend health care coverage. but unlike their costly prescription drug bill, our health care bill improves our budget baseline. the baseline we inherited from

president bush desperately needs improvement. this next chart shows the deterioration of annual deficits under the previous administration. the facts are plain. george bush vastly increased spending while cutting tax revenues. the structural deficit that he built in and left to president obama simply cannot be sustain sustained, but how soon our friends on the other side of the aisle forget. in fact, as this next chart shoarks the national debt limit had to be increased seven times -- seven times -- while george bush was president. president bush inherited from president clinton a $5.95 trillion national debt limit. and by the time he left office, his reckless spending and his

tax policy favoring the rich at the expense of working americans necessitated a debt limit almost twice as high -- at $11.52 trillion. we should not take lightly the borrowing expansion that we are now forced to pursue to help recover from the bush economic meltdown, but we should also not forget how it is that we ended up in this position. each borrowed dollar brad under- each borrowed dollar borrowed under the bush administration includes a debt service cost and the republican explosion of debt tbeen 2001 and 2009 now makes everything we do from running the government to stimulating the economy more expensive. balancing our budget is a priority at which democrats have

succeeded in the past. it is one of the legacies of president clinton. and i am confident that democrats will succeed at it again because we believe in responsible governance. but now is not the time to play games with our nation's finances and put essential programs on which families depend at risk. in the worst economic recession since the great depression, the analogy between family budgets and the federal budget is a false one. if the federal government contracted its spending, shrunk its spending at the time when states, municipalities, companies, and families are all shrinking and constraining their spending, it would further shrink the economy.

it would worsen the recession. it would make things worse for american families, period. saying anything else is simply false. unemployment hovers around 10% nationwide and even harder in hig--and even higher in hard-hit places like my state of rhode island. and economic recovery first must remain our top national priority. indeed, we need to do even more to put americans back to work. the increased borrowing power that we are now considering will give us the flexibility to enact new job-creating legislation. let me make one point very clear. up-front commitment of resources to creating jobs need not add to our nation's long-term liabilities. let me give you some examples.

throughout the nation, there are bridges condemned or under weight restrictions. we have bridges in rhode island that are condemned or under weight restrictions. there are roadways that the united states department of transportation has deemed unfit for further maintenance. in my state, the providence via duct is in that condition. we have across the country water treatment facilities that release raw sewage, raw sewage in our waterways after it rainsy hazards for our students. and we have numerous other structures in demonstrable disrepair. we have an infrastructure deficit. all of these projects need repair, and repairing them is going to require our attention sooner or later. thus, getting that work done now would not add in a meaningful way to our national long-term

liabilities. we have to rebuild this failed infrastructure. we are not going to let those bridges fall into the rivers. why not do it now when we need the jobs? why not do it now when the old adage that "a stitch in time saves nine" prevails? every american understands, whether they're working on their car or making repairs on their house that when you get off maintenance earlier, the cost is always lower. so there's no need to be concerned about the nation's fiscal liabilities when we are engaged in the repair of decrepit infrastructure. a vote to increase the debt limit should be taken in proper context. when he was sworn in, president obama faced the twin evils of a deep recession, a recession that for many american workers is as

bad as the great depression. and he faced the $9 trillion bush debt, run up in a time when things were fine. it was fair-weather spending, fair-weather debt. our top priority now must be to continue working on job creation until our economic prosperity is restored, until we have recovered from this great recession. and we must not sit still for lectures in fiscal probity from the party that ran up $9 trillion in fair-weather debt to fund a war that needn't have been embarked on, to fund tax cuts for the wealthiest americans, who didn't need them, and to pursue economic policies that led to the recession we are

trapped in now. those policies lit the fires that president obama still is fighting to put out. i thank the president, and i yield the floor. i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

a senator: mr. president? the presiding officer: the senator from florida. mr. nelson: mr. president, i ask to speak as if in morning business. the presiding officer: we are under a quorum call. mr. nelson: mr. president, i ask consent to lift the quorum call. the presiding officer: without objection. mr. nelson: mr. president, i ask to speak as if in morning business, up to 15 minutes. the presiding officer: without objection. mr. nelson: i don't think that there was any person who lives on planet earth that saw the clip on cnn this morning of dying children in haiti that did not have emotion overwhelm them.

as my wife grace and i, having been to haiti many, many times, saw the fact that children are dying in haiti because they can't get medevacked and/or cannot get medical supplies in, it's an inexcusable and intolerable situation. if you hear emotion in my voice, mr. president, you will understand that the nelson office has been working on this crisis for over the past week, since the earthquake hit,

because we've been talking to our doctors, and we've got so many of our florida physicians that are down there doing heroic work. a lot of the work is being done by the university of miami medical school. a lot of it is being done with their coordinated efforts of jackson memorial hospital in miami. and some of the childre childres hospitals in florida. and as we have been on the phone with the various agencies trying to cut the red tape so that the supplies can get in, or in the alternative that we can get the children th, the critically injd children, out, whether it be in a third country to another part of haiti or back to the united

states, critically injured, in order to save their lives. and we're still having difficulties. now, since we're not going to be voting on this debt ceiling raising that would be a critical vote here, i'm taking off at 4:00 in the morning with a bunch of doctors from a tampa charity direct into port-au-prince, where i will meet with one of the greatest heroes -- dr. dr. green, one of the lead physicians, a neurosurgeon from the university of miami, who's been down there since the day after the earthquake and has been begging for help.

and what i want to do, mr. president, is i want to cut through some of this red tape. now, i want to give you an example. here is the latest plea from dr. green. there are three critically burned haitian patients. one in our university of miami medishare hospital an and, and,n the u.s. hospice -- that's the naval hospital ship -- need to be medevacked to the rider burn unit tomorrow morning. this is an e-mail plea from last night. we need the okay from the embassy for patient 1 or 2 or 3 to authorize the u.s. military

to take on a c-130 aircraft. please help save their lives. i need immediate help to do the right thing. and we're trying to cut through this red tape. so if it takes me going down there to try to whack through it myself, that's what i'm going to do. and six of us are crowding into a little jet in the morning at 4:00 -- five doctors and me -- packed with medical supplies to do that. but i want to give you -- i know that the state department, the defense department, the department of homeland security, who we've been talking to all these folks, they've been trying. but bureaucracy gets in the way. let me -- plea let me share wit,

mr. president -- this is an e-mail back -- this is from the state department. now, get this: "thank you for your e-mail. we will provide information about your u.s. citizen constituent to the u.s. embassy in port-au-prince as quickly as possible." that's a standardized e-mail. that doesn't say anything. it doesn't give specifics. and i know they roll these things out, but don't send that kind of e-mail to me to try to placate me, because it doesn't. i want action. now, i want to give you another example, and senator levin of michigan is making a plea -- and he's called us -- when he found out i was going to haiti.

senator levin's office, they have a haitian who is in michigan, a dad. he's there legally. he's not a naturalized citizen, but he's there legally. and his daughter is critically injured. and i want to -- i want to read you this. this is addressed to me, and it's about getting this daughter airi-vacked out of haiti because she had critical injuries. "mr. nelson: due to the fact that samantha is neither" -- now this is from the department of state. this is a little girl, a

17-year-old, with a broken back, and she's being denied being put on an aincht "mr. nelson: due to the fact that samantha is neither an american citizen nor a u.s. lawful permanent resident, she would be ineligible to board an aircraft to the united states. currently all visa operations at the u.s. embassy in port-au-prince, including immigrant visas, have been suspended until further notice while our embassy focuses its resources on assisting american citizens in haiti." this little girl, samantha, she can't board an american aircraft because she has a broken back.

she needs to be medevacked so that her life can be saved. we have another child with a collapsed lung. dr. green told us about this child. he cannot save that child unless in a routine procedure that they can save people with collapsed lungs, but unless he can get the proper medical attention. and maybe they can get them out there onto that hospital ship. but this is the kind of bureaucracy that we are running into. now, the department of homeland security, who handles customs and border patrol -- and too talk to me about people trying to sneak into the states. we live with this problem in florida. we know what it is and trying to

make people legal in their immigrations. but the department of homeland security, customs and border patrol, is telling me that they -- their agents on the ground when these critically injured children come in, that they have the authority to give, in essence, what's called a medical waiver for a child that's obviously in etremis. and they assure us that that will be the case. well, i hope so. and that's why i've come to the floor of the senate. because i get these other e-mails, and i get these pleas from physicians like dr. green that are saying that kids are dying because they can't get them out.

now, we're not talking about a lot. we're talking about 200 that i know of right now in order to be able to get them out. i will continue to work this problem all the rest of this day until i get on that aircraft at 4:00 in the morning. and then i will work this problem out when i get on the ground in port-au-prince. mr. president, it is -- it is total chaos down there. the american military, the american civilian agencies, the state department, the department of homeland security, all the agencies -- they're doing heroic efforts, heroic efforts. and it is mass chaos because of a critically poor nation that has no infrastructure, and when

a natural disaster hits like this huge earthquake, it just turns into ultimate chaos. and out of that chaos, we're trying to bring some order. and i want to thank all those souls -- american and otherwise -- that are contributing to try to bring order out of this chaos. but times we lose sight of the goal because we get so wound up in our bureaucracy. and that's what we need to get through. and that's what i'm sure we will get through. at the end of the day, we will find that haiti will restore itself, although haiti's government is in shambles, haiti

does in fact have a president who deeply cares and loves its people. and president preval is clean. you can't say that for all the past leaders of haiti. i believe president preval is clean. i don't believe that all the people around him are clean. but i think he is. and so it's time for the industrialized nations. world to come together and to help these people rebuild, help them rebuild. the real crisis is right now with the dying and the suffering that we see in front of our eyes. and that has to be attended to.

thank you, mr. president. i yield the floor. a senator: mr. president? the presiding officer: the senator from minnesota. ms. klobuchar: mr. president, i ask for unanimous consent to speak as if in morning business for five minutes. the presiding officer: without objection. ms. klobuchar: mr. president, i rise today to speak in support of amendment number 3302, the bipartisan task force for responsible fiscal action offered by my colleague, senator conrad, and senator gregg. i have been an early sponsor of this bill from the beginning, from when i first came to the senate, and i want to thank them for their leadership on this issue. mr. president, under the previous administration, we saw the debt of the united states double. they were basically handed -- they were handed a budget surplus, and they turned it into an enormous budget deficit. over the next eight years, sadly, with no work, if we do

nothing, it is projected to double again. long-term projections vary, but it is clear that this course is not the course that we want to take. despite years of talk from both parties, little progress has been made, which is why i believe that to ensure the nation's future economic security, we need to establish a budget commission dedicated to examining this problemmed in detail and coming up with recommendations to address the long-term fiscal challenges of this country. and i don't want just to have, mr. president, a study that sits on a shelf. the american people deserve better than that. that's why i believe it is very important to have the statutory commission with an up-and-down vote on the recommendations of the commission. it has worked before for social security. and i believe that it will work here. i really appreciate the administration's work on this. the proposal they have nied have a presidential -- a presidentially appointed commission. that is a viable tern and i

think the better alternative is this one and that's why i urge my colleagues to vote for t mr. president, we can no longer afford 20 hide our heads in the sand hoping that the fiscal outlook will correct itself. we need to make changes and we need to act now in order to keep our debt from spiraling permanently out of control. difficult fiscal decisions have been put off for too long. we need to make tough decisions now because we're spending too much and the path that we are on is unsustainable. this of course was made more difficult by the economic crisis that we faced last fall. on a bipartisan basis, we had to do something to make sure we shored up the credit markets, to make sure we ensured financial stability for our country. we had to invest in america, invest in jobs with targeted investment. but now, mr. president, we cannot keep going on this course that we're on. gross debt is likely to exceed 100% of g.d.p. within the next few years, nearing levels not seen since the end of world war ii. each citizen's share of today's

debt is more than $38,000. the prior administration, as i noted, ran up the federal debt to the point where today we are forced to spend over 8% of our budget simply to pay interest on the federal debt. in 2008, american taxpayers paid more than 50 billion to our creditors in interest payments alone. that's money we're sending to other countries instead of spending it here in the united states. the more we spend to service our debts, the less we have for infrastructure investments, health care, energy, innovation, and other priorities that are so important to the american people. the threat that our debt poses to the economic security of the united states cannot be ignored. as this economic crisis has shown, credit can dry up overnight. with almost 70% of our debt financed by foreign countries and investors, our government literally couldn't pay its bills without the help of china, our biggest creditor. if faith in the american economy were to falter and foreign

countries stopped extending credit, we would be faced with a host of bad choices. even without another crisis, many of these programs will on the path to insolvency, and economic growth cannot make up the difference. these are issues that must be addressed. that is why it is so important that we step back and look at the long term. focus on this debt. at the same time, knowing that we have to have a safety net for the people of this country. we looked at the health care bill. we'll see what we come up with now as we look at changes to that bill. it actually saved the senate bill $130 billion on the deficit in the first ten years. $1.3 trillion over the next ten years. that clearly has to be a piece of this reform as we look at the cost to the american people, how we can deliver health care more efficiently. i believe it is time to change the way washington works when it comes to our long-term fiscal outlook. it is not about being a democrat, mr. president. it's not about being a republican, not about being an independent. it's about guaranteeing that we

get something done for the people of this country. this bipartisan fiscal task force provides a path to restoring our financial stability by creating a bipartisan commission to study our spending and make recommendations to effectively reduce that spending. now, when i first heard about this idea, i was at one of our bipartisan breakfasts. i just arrived in washington. i thought why would you need a commission to do this? why can't the people in this body just do this? and i have realized a few things over the years. one, we haven't seen that kind of improvement. two, we haven't been able to get the kind of bipartisan work going that i have seen. three, we have this idea of a commission that's worked in the past. so after being here for about a year, i decided you know what? this is not a bad idea. you can have experts work on this. you can come up with some ideas on a bipartisan basis for reducing spending, for bringing down our deficit, for bringing down the debt, and i've decided that this is the way to go because right now there is no

movement on this at all in this body or in the house. now, this is how this task force would work. first, it would be compromised of 18 members from both political parties, 10 democrats and eight republicans. 14 of the ten task force members would have to report the recommendations to ensure the recommendations the task force makes to congress have bipartisan support. in order to fast track the process, there is a set time frame under which the task force would make recommendations and a set time frame for ensuring that congress would give them an up-or-down vote. this task force would not be used to force legislation through congress. it would just force congress to come to the table and make a decision. now, let me address one final point. some are arguing that projections for the near term look so bleak that any talk of deficit and debt reduction should be sidelined. i disagree. everyone knows that when times are good, it becomes much harder to tighten the purse strings. this crisis has brought the issue of the deficit to the

forefront. the people of this country know it. they know that they have to watch their own checkbook. they know that they have got to balance their own checkbook. they want to see washington working on this. they understand we have an economic crisis. they didn't cause this crisis. people on wall street making bad decisions. people in government allowing some things like subprime mortgages to go through. there are a lot of people that can be blamed for this. they understand that we not only have to work on this short-term issue of investment in our country and transportation and that we had to do something to shore up the financial crisis so that our whole financial system wouldn't go down the tube. it's hard to swallow. when people think about it, they get that. but they also want to know the people that represent them are working on this debt for the long term. that we have a plan, that we're doing something to chisel away at this deficit, to bring it down. that's what they expect from us. they don't want to send all this money to china in interest. they want to be spending in the united states of america on roads and bridges, on their kids, on their families, on their kids' educations, on their houses.

that's where they want to be spending this money, not on interest over in china. so, mr. president, i urge my colleagues to vote for this bill. i understand it will be most likely coming up next week, i think it is. a very important effort going forward. i commend the white house for the economic work they have done. there is a group of us that has been working on this bill and trying to get this through. i think it is very important not just for this year but for the generations to come. it is time to look past the next election, mr. president, to the next generation. thank you, and i yield the floor. mr. president, i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

mr. dorgan: mr. president? the presiding officer: the senator from north dakota. mr. dorgan: i ask consent that the quorum call be vacated. the presiding officer: without objection, so ordered. mr. dorgan: mr. president, yesterday president obama made some recommendations that have caused quite a stir, especially on the morning shows today, on television. the president suggested something that watching television this morning was called "radical" by some of the commentators. he suggested that banks that have -- commercial banks, fdic-insured banks insured by the american taxpayers, shouldn't be essentially gambling, shouldn't be investing in risky instruments, risky securities on their own proprietary accounts. been going phon a long time.

it shouldn't have been going on but it president says, you know what? let's stop it. we've soon a financial wreck in this country in which this country'sy was steered right into the ditch. something like $11 trillion of value has been lost by american husband holds -- american households. and the president says, do you know what? we need to make some fundamental change. one change which isn't even, in my judgment, a significant change, at least not significant in the context of what must be done and what should be done. that is to limit the ability of fdic insured financial institutions to invest in and speculate in and buy and trade derivatives on their own proprietary accounts. that shouldn't have been going on at all. 15 years ago i wrote the cover story for the "washington monthly magazine" on this very subject. 15 years ago, the title of my was "very risky business." and i talked then about how fdic insured banks in this country

were trading on their own proprietary account in derivatives. at that point, i think there were $16 trillion of notional value of derivatives. i said, they are trading on their own proprietary accounts which puts the american taxpayers at risk. i said, they just as well put a keno table or a craps table in their lobby. it is just flat-out gambling. and the president says yesterd yesterday, let's have legislation that stops it. i agree. the president also said something else that is very important. he said, let us limit the size of financial organizations that are too big to fail. we have a category in this country, in this capitalistic system of ours called too big to fail. it's a category that is managed by the federal reserve board. they've got a list of which institutions are too big to fail. well, i thought capitalism, this system of ours, is that you succeed or fail based on your merits. but, no, that's not the case. we have now just exhibited or

witnessed in the last year or so, year and a half which institutions are not allowed to fail. we got people every day that go to work to a business they started with their own capital, invested everything they have and their family to run a shoe store or a hardware store on a gas station. and they open the front door and they're open for business that day. the risk is all theirs. and, by the way, they're allowed to fail, and they've failed all over this country during this economic downturn. but not the biggest financial interests. they are too big to fail. that's called no-fault capitalism. and they can do what they want. they can gamble in their lobby and the american taxpayer will pay the bill. that's what's been going on. and this president says, and he's absolutely right, if you're too big to fail, you're too big. let's begin limiting the size. now, this morning, i listened to some of these commentators have an apt plek particular seizure. -- an appoplectic seizure. and they said, well, if we can't

be bigger and bigger and bigger, how do we compete with the europeans? it is interesting, that is exactly what we heard 10 years ago, 10 1/2 years ago now, when the congress passed legislation that took part the things in place after the great depression and high finance that let this country right into the ditch, led this country's economy right into a colossal wreck. and the result of all of that has been catastrophic for the american people. the result of all of that has been trillions of dollars of lost value for american families and an unbelievable unemployment problem, people by the millions losing their jobs, losing their homes, losing hope. this president made two recommendations yesterday which i support and you'd think he was suggesting somehow that he was going to completely take apart the american free enterprise system.

it's absolutely absurd. so i decided this morning i want to give just a little bit of history because it is so easy for people to forget. let's understand how we got to this place and what causes these recommendations to be made. first of all, mr. alan greensp greenspan, chairman of the federal reserve board. now, he was involved in all of this. now, you know he wrote a book a little later suggesting or implying that he was exploring the surface of the moon or something while all this was going on. but he wasn't. he was actually chairman of the federal reserve board and he had responsibility to provide oversight and to rein in these excesses and he didn't. and here's what he said in the aftermath.in testimony before the congress. he says -- quote -- "i made a mistake in presuming that the self-interests of organizations, specifically banks and others, were best capable of protecting their own shareholders and their equity in the firms." that notion, that people will behave in their own self-interest and thereby protect the shareholders and

protect our country, was pretty unbelievable. because this occurred at the same time that the chairman of the federal reserve board and the federa federal reserve boarf had responsibilities to provide a regulatory oversight to what was going on in our financial system, at the same time that was the case and they were doing nothing, we had new people come to washington, d.c. in the aftermath of the passage of the disastrous bill in 1999, the financial services modernization act, it was called, we had people come to town to be regulators at the securities and exchange commission, at the commodity futures trading -- the ftct, all of those organizations, people came to assume those jobs and they were boasting they would be willfully blind. let us take these regulatory jobs and we promise not to look, we promise to close our eyes. and, by the way, we're now business friendly so do what you want, it doesn't matter to us.

iin fact, we had circumstances where people came to the securities and exchange commission with mr. madoff's issue going on and said, this guy is running a ponzi scheme, it's a scam. we had people show up to the s.e.c. and say investigate this, it's a massive scam, and the s.e.c. couldn't even investigate it when they had people coming and saying, here's what's happening. it's unbelievable. but during that entire period, we had regulators starting with the federal reserve board and mr. greenspan and others in regulatory capacity said -- boasted about not being willing to regulate. and the result is big financial firms in this country and a lot of others were engaged in just an unbelievable orgy of greed. and so let me just show a little of what was going on, and the fed should have been attentive to this. it was their responsibility, among others. we've all seen these ads. wake up and brush your teeth in the morning.

if you've got a television set on, you hear the ads. this was the biggest mortgage company in america, countrywide. countrywide mortgage said -- this is their advertisement -- "do you have less than perfect credit? do you have late mortgage payments? have you been denied by other lenders? well, call us." we'd like to loan you money. you a bad credit risk? call us. we've all seen those ads. and you think, well, how does that work, how can that work? well, it didn't work, this country went bankrupt. the owner of the company now is under investigation at long la last. went away with about $200 million, i believe. i mean, he left the party with a couple hundred million dollars. and, by the way, these advertisements, bad credit, come to us? this is the biggest mortgage company. this isn't some fly-by-night company. this one's an internet company speedybadcreditloans.com. isn't that great? what a country.

what a system. apparently somebody has a business model to advertise speedybadcreditloans.com. you got bad credit? no problem. you got no credit? no problem. been bankrupt? not a problem. get guaranteed bad credit personal loans now. does it surprise any of us, having watched a decade of this and more, that this collapses? well, millennium mortgage. i won't go through all of them but millennium mortgage: "12 months, no mortgage payment. that's right." they said. "we'll give you the money to make your first 12 payments if you call in seven days, we pay it for you. our loan program may reduce your current monthly payment by as much as 50% and allow you no payments for the first 12 mont months. call us." too good to be true? nah, get a loan from these guys. you don't have to make a payment for a year. they'll make the payment for you. they didn't tell you, of course,

they'll put that around the backside of that loan and wrap it around at higher interest rates. zoom credit. "credit ap -- credit approval is seconds away. get on the track with zoom credit. it will preapprove you for a home loan or credit card even if your credit is in the tank. zoom credit is like money in the bank. zoom credit specializes in credit repair and debt consolidation too. here's the key. bankruptcy, slow credit, no credit, who cares? we've all heard these for a long, long period of time and wondered how does this work? what kind of business model is this? it wasn't a business model. it was a scam and a scheme that undermined the american economy. and when i'm under the nose of, yes, mr. greenspan and so many others who promised us they were interested in being regulators.

and the list goes on and on and on. let me go back to 1999. we were told in this chamber -- and i was here then. we were told american has to modernize its financial system. for if we don't, the europeans and others are going to win this debate and win the economic competition. so we have to modernize. the things that were put in place after the great depression were probably important after some point but no longer necessary. we now have mr. greenspan protecting us and oh and it's a sophisticated system. so we need to be able to compete. what we need to do, they said, is we need to have a financial modernization system to allow very large holding companies to put together all of the financial systems, investment banks and commercial banks and real estate and securities operations. and, by the way, if we can do all of that, we can create one-stop financial shopping for the american people. now, i stood on the floor of the

senate at great length in 1999 and opposed this. i know it's a little cheesy probably to quote yourself, but i do want to provide some description of what concerned me prior to the passage of this legislation. and here are some of the things that i said at that point. i said "i'll bet one day somebody's going to look back at this, and they're going to say: how on earth could we have thought it made sense to allow the banking industry to concentrate, through merger and acquisition to become bigger and bigger and bigger; far more firms in the category of too big to fail? how do we think that was going to help this country?" may 6, 1999. the same day i said "i say to the people who own banks, if you want to gamble, go to las vegas. if you want to trade in derivatives, god bless you but do it with your own money. don't do it through deposits

that are guaranteed by the american people and by deposit insurance." same day i said "this bill -- the financial services modernization act -- will in my judgment raise the likelihood of future massive taxpayer bailouts. it will fuel the consolidation and mergers in the banking and financial services industry at the expense of customers, farm businesses, farmers and others." i said "i think it's a fundamental mistake to decide to repeal glass-steagall and allow banks and other financial industries to merge into a smorgasbord of financial services. those who were around to vote to bail out the failed savings and loan industry, $500 billion of taxpayers money, are they going to want to be around 10 or 15 years from now when we see bailouts of hedge funds putting banks at risk?"

i said "we also have another doctrine, the federal reserve board calls it too big to fail. they can't be allowed to fail because the consequences to the economy is catastrophic and therefore these banks are too big to fail. that is no fault capitalism. does anybody care about that? does the federal reserve care about that? apparently not." "fusing together the idea of bangerring which requires not just safety and soundness to be successful, but even the perception of safety and soundness with other inherently risky speculative activity is, in my judgment, unwise." and finally, these are about four or five speeches i gave in 1999. "we will in ten years time look back and say we should not have done that because we forgot the lessons of the past." and so here we are, trillions

and trillions of dollars. there have been, we believe, $11 trillion lent, spent or guaranteed by the federal government to try to keep afloat some of the largest tp-rpbgs firms in our -- financial firms in our country because they did what they wanted to do. they engaged in unbelievable amounts of risk. now, i showed the examples of advertising to people that come to get mortgages when they had bad credit. that wasn't just people who had bad credit. people who had existing loans were entreated by these companies to say are you paying 7% or 8% or 9% interest? come to us. we want to give you a loan in which you don't have to pate first pay -- pay the first 12 months. you don't have to document your income to us. come to us. we'll give you a liar's loan. they didn't call it a liar's loan but that's a no doc loan. come to us. we'll give you a loan where you don't pay any of the interest or

any of the principal. all of these were entreaties to people to come to these companies and redo their mortgages. what happened to these mortgages when they were put together? they wrapped them into a security, a mortgage security, and then the mortgage company -- country-wide, for example -- would sell it. they would sell it to a hedge fund or investment bank and it was rated by a security -- most of those were rated triple-a. what happened was those who placed the mortgages no longer had the risk because they sold the risk to others. they sold to a hedge fund and investment bank. all the brokers were making money. the people who were putting out the mortgages at the bottom, they were making $5,000, $10 thousand in brokers fees. the mortgage companies were awash in cash. i mentioned country wide's c.e.o. left with a couple

hundred million dollars, now under investigation. the hedge funds, they were making massive amounts of money. couldn't count it fast enough. the person just before the economy collapsed, the highest earner in the country was a hedge fund manager, earned $3.6 billion. $3.6 billion. think about that person coming home from work and the spouse says how are you doing? well, i'm doing pretty well. $300 million a month. by the way, i'm only paying 15% income tax because i get a special deal. i pay a 15% rate. nobody else does. i get to pay some of the lowest income tax rates in america, these folks do, because they have got a little deal called carried interest. so they were all making money. all awash in cash. giant bonuses. i mean, bonuses that were unreal. $15 million, $20 million a year for some of the folks that were running the security agencies, some of the sales people and others in these investment

banks. by the way, all these institutions would have collapsed and failed, even the ones this morning that are reporting record profits, they were about to collapse were in not for the generosity -- i shouldn't say generosity -- were it not for the american people that through their government saved them. now they're willing to complain about everything. they're ramping up a huge effort in this town to prevent any effort to change the way things work. this president said let's decide to stopt pernicious practice of having fdic insured banks trading in their initiatives. this president is right to try to stop it. they're gathering an army to try to oppose it. this issue of too big to fail, the president is right about that. absolutely right. this shows the house of cards. we've all seen it, and we saw it collapsed, or near collapsed.

were it not for the congress, the president, the american people in back stopping these largest investment banks, they'd be gone. and now all of a sudden they are reporting record profits, and they are on the edge and verge of providing record bonuses at a time when a whole lot of folks are on lines trying to get to a soup kitchen or on lines trying to find a job. now, mr. president, the president of the dallas federal reserve meeting at an editorial review in the dallas morning news said too big to fail is not a policy. it's a problem. too big to fail means too big. he's the president of the dallas fed. joe stiglitz who has written books about what has happened to this country recently -- i believe he is a nobel prize

winner. "we have too much -- excuse me. "we have much to gain by breaking up these behemoths -- talking about the large financial institutions. "we need to begin the gargantuan task of breaking out their commingled activities." now, mr. president, there's been discussion in the last couple of days about paul volcker, former federal reserve board chairman. i had an opportunity to meet with him in the last several weeks, and paul volcker has spoken very strongly in support of the policy the president has now embraced. paul volcker says "i would exclude from commercial banking institutions ownership or sponsorship of the the hedge funds, private equity funds. so should, in my view, a heavy volume of proprietary trading

with inherent risks." it is common sense for us to begin to shut down those types of activities. let me say i understand the need for financial institutions. i understand that. it's a very important part of this country's economy. but i also understand, having studied economics and taught economics ever so briefly that we have in this country for 200 years had kind of a contest about who rules the roost, those who produce thoers who finance -- or those who finance productions? in recent decades those who finance production have had an unreasonable amount of influence in this country. i don't think it contributes one thing to this country's economy to have big financial institutions trading synthetic derivatives. does anybody know what a synthetic derivative is? a derivative is something that derives value from something else. the value on the front end or the something else somewhere has some value, has something that's

tangible. a synthetic derivative is just wagering, just gambling. a derivative that is created with nothing on either side of it except you're making a wager or a bet. and that's going on in this country with respect to big financial institutions. it has in the past aggressively. that's where they made a lot of money, and continues to go on to this date. and it makes no sense. does anybody thinks that contribute very much to this economy? it doesn't. the fact is it darned near ruined this economy with that unbelievable amount of speculation, starting right down here at the broker that was placing loans that shouldn't have been placed, that created the subprime scandal and all the way wup credit default -- all the way up with credit default swaps and synthetic derivatives and all of us these issues. a colleague -- i guess a former colleague, i think, once described investment banks by

saying investment banking is to productive enterprise like mud wrestling is to the performing arts. i don't put it quite that way, but his point was a whole lot of what goes on is pretty worthless. a whole lot of what can go on and should go on is very important in investment banking. that's the part of our banking structure that provides loans in riskier categories. you put loans out there to businesses with ideas and so on. that's very important. community banks are very important. commercial fdic-insured banks are important. investment banks are important. my point is not to suggest our economy can exist without them. that is not the case. but i want to make a very important point. you look at the heyday of production in this country. i'm talking about when our manufacturing plants were humming, when we were turning products out, the best in the world. we were expanding the the middle class. we were putting men and women in factories with good jobs that

paid well with benefits. you look at that period of time in this country and ask yourself: under what kind of conditions did that exist? well, it existed before all of these changes were made to the financing system of this country that let the finance industries decide to coagulate and combine and create these behemoth organizations with so-called fire walls that turned out to be made of tissue paper. and so, these people that suggest somehow that we were old-fashioned prior to 1999 and we needed to modernize somehow to compete with somebody else to allow all of our financial systems to come together, to merge, to get bigger, to engage in all of these activities and create unbelievably exotic financial instruments, instruments that many of