quorum call:

the vice from nevada, the majority leader. without objection. the chair lays before the senate a certificate of election to fill the unexpired term created by the death of the late senator ted kennedy of the commonwealth of massachusetts. the certificate the chair is advised in the form suggested by the senate. if there is no objection, the reading of the certificate will be waived and it will be printed in full in the record. no objection. if the senator-elect will now present himself at the desk, the chairill administer the oath of office.

the vice president: will you please raise your right hand? the vice president: do you solemnly swear that you will support and defend the constitution of the united states against all enemies, foreign and domestic; that you will bear true faith and allegiance to the same; that you take this obligation freely, without any mental reservation or purpose of evasion; and that you will well and faithfully discharge the duties of the office on which you are about to enter, so help you god? mr. brown: i do. the vice president: congratulations, senator. welcome.

a senator: i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

ms. klobuchar: mr. president? the presiding officer: the senator from minnesota. ms. klobuchar: mr. president, i suggest the absence of a quorum. the presiding officer: we are in a quorum call. ms. klobuchar: thank you. quorum call:

quorum call:

quorum call:

a senator: mr. president? the presiding officer: the senator from delaware. a senator: i ask to speak for up to 30 minutes. the presiding officer: we're in quorum call.

mr. kaufman: i ask the quorum call be dispensed with. the presiding officer: without objection. mr. kaufman: mr. president, since the financial meltdown in 2008, american congress have remained stuck at a across roads. not since the great depression have we experienced a financial crisis of such magnitude that it forces us as a society and law-making body to reconsider the legal and institution underpinnnigs of our financial stpeupl. the history -- system. the history of our nation shows we have been at this crossroads before. at times we have made the right decision, but sadly at others we have made the wrong part. in the early part of the 20th century, the complacency of government and contrivances of powerful moneyed interests prevented us from achieving fundamental reform of our financial and monetary structures. the result was our history was replete with all-too frequent banking panics. regrettably it took well over a

century before we heeded the clarion call for reform. the shared experience of the great depression thrust us in the harsh reality that the status quo was bankrupt. out of the ashes that have crisis, we built a legal and regulatory edifice that has endured for decades. one of the cornerstones of that edifice was a federally guaranteed insurance fund to back up bank deposits. another was the glass-steagall act which established a fire wall between commercial and investment banking activities. other rules were imposed on investors to tamp down speculation like margin requirements and uptick rule on short selling. for the next five -- 50 years the united states experienced relative financial calm with the normal business cycle providing the usual ups and downs of course. the edifices built in the 1930's served us well until the 1980's until the savings and loan

crisis which was brought on by roll back of rules that applied to thrifts. unfortunately, the passage of time and even after the shock of the s&l failures, the ideology of market fundamentalism began to sweep across our regulatory environment erasing the lessons of history. those market fundamentalists argued our financial actors could police themselves, that their own self-interests in remaining financially viable would create sufficient incentive to do thorough due diligence. far exceeding the ability of regulators to limit excessive risks by rule making. systematically these fundamentalists worked to dismantle many of the prudential new deal era banking reforms, their crowning achievement, the repeal of glass-steagall in 1999. wall street and washington were possessed by the laissez faire edifice over the past 20 years but it was this philosophy and the fountain head of decision

that is sprang fred it that led us perhaps blindly down the path to our current crisis. even alan greenspan has now admitted this dominant concept of self-regulation was ill-conceived. in his staoefp one year -- speech one year ago, the former fed chairman of 19 years said he once assured wall street firms remain a buffer against insolvency failed. the complexity of trading instruments was he said -- and i quote -- "too much for the sophisticated market players to handle properly and prudently." mr. greenspan, perhaps more than anyone else, should have known better. but instead of playing the role of the market's fire chief, he played that of head cheerleader. for example, mr. greenspan

applauded the trend of financial disintermediation, declaring new innovations would allow risks to be dispersed throughout the system. he failed to realize that instruments like credit default swaps failed to let banks become empty creditors. of course, this was just the tip of the iceberg. despite having the power to right and enforce consumer protection standards the federal reserve did nothing to combat deteriorating origination standards in mortgage and consumer loans. mr. greenspan signed off on regulations that gave banks the ability to set their own capital standards. he allowed banking institutions to leverage excessively by gorging on self-term liabilities in the wake of wall street excess and the dereliction of

duty by its regulators, financial ruin descended upon our country. ultimately it took extraordinary action including a multibillion-dollar taxpayer bailout to prevent us from falling into the abyss of a second great depression. we narrowly avoid that fate, mr. president, but now when congress should be hard at work reserving the edifice it served for so many decades we're not. we're being lulled into a false sense of security. many of wall street's biggest financial institutions saved from oblivion by u.s. taxpayers have already recovered. in some cases they're even making record profits. and once again they're back to old tricks, in particular remaining fixated on short term profits with the help of zero loans to drive recovery. in fact, much of the competition was killed off in the crisis so that stronger banks are stronger

still allowing them to charge customers higher transaction fees from equities to bonds to derivatives. many on wall street are engaged in high-frequency trading strategies, as the chicago federal reserve branch wrote this week, posed a systemic risk. fair and transparent markets are the cornerstone of american democracy, but institutions on wall street are ridden by obvious conflicts of interest. as banks and nonbanks continue to profit even by taking positions directly adverse to those of their clients and too big to fail remains a critical problem. mr. president, many on wall street are telling us -- quote -- "it is too late to unscramble the egg, that we cannot separate banking and trading." mr. president, the nation is counting on the congress to do what's right. we must restore and preserve the credibility of our financial markets. we simply cannot fail to

undertake what should be a dramatic reformation of our financial regulatory system. especially as the depression, which is how today's economy feels to millions of americans who have lost their jobs, their homes, their retirement savings continues across this country, we cannot squander this time for fundamental reform. we can never let financial disaster happen again. so what must we do? mr. greenspan has called for heightened regulation of banks and other federal institutions, but that's not at all sufficient. that's why i was deeply gratified last month when the obama administration took an important step in pushing congress in a stronger direction. the president put forward a plan suggested by mr. greenspan's predecessor at the fed, paul volcker, it went well beyond mr. greenspan's call for mere heightened regulation. it would ban commercial banks from engaging in pro piery --

proprietary banking. banks would stick to banking, providing credit to those who need it and an efficient global payment system without, our worldwide economy could not work. banks should exist to serve their customers not as platforms where elite traders make their careers. sound advice, mr. chairman. remarkably, some on wall street an washington argued that proprietary trading did not cause the crisis even though the crisis began on wall street with the collapse of a bear stearns hedge fund even though all of the major firms the crisis built up major proprietary positions. as professor roy smith of new york university, a former goldman sachs partner said and i quote -- "those weren't client-driven trades. they decided to take them themselves.

the idea that proprietary trades were were thes losses of the bank is not realistic. unquote. this is a foam goaldman sacks partner. -- this is a former goldman sachs partner. they state that pot pry terry trading -- proprietary trading can't be mistaken for normal marketing activities. they add that customer money is invested alongside the firm's capital. it is even considered in congress they found arguments to undermine the spirit of the proposal. these critics would leave the decision making to the regulators. and i could not exist more. we should not leave decision make to the regulators. i applaud chairman volcker's direction. i believe we need to go further. we cannot pass the buck to our regulatory agencies. we have tried that before.

they punted their responsibilities to the credit agencies into the banks them and we were left with disastrous consequences, the big issue we face is not how to make regulation cleverer, but how to protect taxpayers from a huge bill when all of the precautions fail and a bank steps into the void. congress needs to draw a hard-line that gets directly at the structural problems that afflict wall street and our largest banks. we must draw lines that divide financial institutions which are too big to fail. and we must draw lines that end the conflict of interest that literally and inevitably served to corrupt some of our most important financial institutions. mr. president, i've been around the senate for 37 years. and i know the laws are usually not written with hard and fast lines. laws are product of legislative compromise, which often means

they're vague an ambiguous. and we have often justified our vagueness by saying that the regulators who we grant statutory authority are in a better position than we are to write the rules and then to apply the regulatory rules in a case-by-case basis. and many times they're right. this is not one much those times, mr. president. if congress fails to draw a hard line to deliver on real systematic reforms, regulators cannot be counted upon to do what is needed. we need brick and mortar, not human judgment to clean the banks from investment banks. we need stone walls to prevent institutional conflict of interest that bring financial disaster to millions of americans. we must create a system as the saying goes of laws, not men. while congress was by nature -- a major compromiser, we must do better than our usual

legislative ambiguity, we provide the fed, the cftc and others with a statutory clarity and the bright lines they need to enforce the law. that is why congress needs a bold, clear plan that ends taxpayer bailouts for wall street and eliminates the problem of too big to fail. in my view the core part of that plan must include three critical features. first, we must reimpose the kind of protections we had under glass-steagall. separating commercial banking activities from the activities of investment banks. second, we must impose size and leverage constraints on the nonbank players to ensure that they never again -- never again become too big to fail. and, third, we must address the fundamental conflict of interests in modern investment

banking that permits proprietary trading to come before -- i was proud to sponsor a bill that would reimpose glass-steagall those that have banking and security operations, we will go a long way towards fixing too big to fail. as important as reimposing the protections of glass-steagall, we must also understand that the financial world has changed enormously since it was last in place. investment bank is no longer an advisory business where small partnerships guard their capital. it is leveraged by high-leverage behemoths. while glass-steagall fire wall streets would eliminate the conflicts in combining commercial investment banking, it wouldn't eliminate the ability of a large firm like lehman brothers from creating

havoc in the financial system. for that reason congress must take other steps. we can begin with the other concept put forward by the obama volcker proposal. wall street banks were able to fly too high on wings by leveraging their capital base well over 30 times. that's 3-0 times. allowing a firm like lehman brothers to finance a trillion dollar balance street through short-term debt. i repeat, mr. president, we can't depend upon regulators and the discretionary judgments to esure that this does not happen again. instead, we need a strict limit on the size of investment bank's liabilities. there is a limit in place for bank deposits. no individual bank can hold more than 10% of the size of total national deposits. that deposit limit can be applied to nonbank liabilities such that no investment bank can

have liabilities equal to more than 10% of total deposits. with this limit we can ensure that never again with the -- will the so-called shadow banking system eclipse the real banking system. two other problems with a question quality of bank capital and risk based capital assessments. lehman brothers had more than double its required capital only days before it failed. in part due to a loosening of the definition of capital and in part due to unrealistic calculations in how lehman assets work. we can have a simple leverage requirement that is based on bank's core capital. that is to say that the common stock plus retained earnings, such a requirement would supplement regulators more highly calibrated risk-base assessments. it would provide a sorely needed gut check to ensure that regulators don't miss the forest

for the trees when assessing the capital adequacy of a financial institution. finally, as many of my colleagues know, i have focused on the problems associated with conflict of interest including those at banking institutions. one of the key problems is that proprietary trading poses an inherent conflict of interest. instead of seeking the best prices for their client's orders, brokers can trade against or even in front of them a potential profit motive that could avenge their customer and put them at a conflict of interest with their customer. given that, we need to think critically on how to address the conflicts in the modern investment model that replaces the securities underwriting under the same roof with proprietary trading, hedge funds and private equity investments. for example, under this model it's become commonplace for a

firm to underwrite securities and short them within a week. short them means sell them within a week to protect themselves. this and other problematic practices need to be restricted. chairman volcker is absolutely right that proprietary businesses are not appropriate for commercial banks. more to the point, it's becoming clear we need stronger protection against conflict of interest at investment banks who play a critical role in providing clients with mergers, equity offerings and debt offerings as well as providing liquidity. of course there are some who will claim all of these remedies are too prescriptive, that they constitute overregulation. that it's too late to unscramble the eggs they say, so let's move on. or let's leave it to the regulators to develop appropriate rules or remain flexible. mr. president, this is the road to another financial disaster.

if congress fails to impose needed structural and institutional change, the same systematic risk to our financial system will remain, indeed, they will get worse with each financial crisis because the federal safety net gets bigger and bigger and bigger. and when the next crisis occurs, and it will, the legislative pendulum will suddenly the shift and direction will fall hard on wall street. very hard. if we on wall street do not act together in a realistic and constructive spirit first. frankly, i'm always astounded that i continually hear the arguments about overregulation when in fact we've had precious little regulation at all especially since glass-steagall was regulated a decade ago. risk taking is a fundamental part of finance. without risk, markets just do not work. but the balancing act between safety on one side and growth and innovation on the other

cannot tell too far in the -- tilt too far in the wrong direction. if we don't act, as sure as i'm standing here, the short-term trading profits on wall street today threaten to become the losses borne by the rest of america down the road. as chairman volcker said at the banking committee hearing this week, if we do not heed this warning, the next disaster may not take place in this lifetime, but it will come and this will come back to haunt us all. the american people know this basic truth even if wall street does not. they may not understand the complexity of the banking system. only a handful of math ph.d. can follow th the trading profits. people do know that banks are not designed to be trading machines. they know that banks should make their money taking deposits and lending money, which, in turn, provides capital for growth,

creates jobs and provides opportunities for more jobs and more growth. you can call pop you'llism, but you can also call it common sense, borne in the lessons of hard economic times brought about by wall street excesses. common sense needs to return to a national financial system. we must shrink bankers outside sense of entitlement and return to more realistic vision of their role in society. bankers are not traders, nor should they be. bankers should be too safe to fail. not so large that we cannot permit their failure. we must structurally reform the conflict of interest that threaten to erupt again in crisis and great financial loss. we must build again the he'd physicals that will keep the american economy safe from financial crisis for decades to come. we must do it now.

americans deserve no less. i yield the floor, mr. president, and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

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the presiding officer: the senator from ohio is recognized. mr. brown: thank you, mr. president. i ask unanimous consent to dispense with the quorum call. the presiding officer: without objection, so ordered. mr. brown: a week or so ago, mr. president, we marked the earned income tax credit awareness day, a day to highlight a vital tool for americans working their way out of poverty. these are challenging economic

times. the costs of food, housing, transportation, basic necessities increase while wages stagnate. we know that for the last ten years, even before this recession, even in times of relatively -- relative prosperity where profits were up and there was growth in the economy, we know that most people's wages were flat even though costs went up. tuition especially, energy costs, health care costs. so these have been difficult times for a decade. obviously, more acutely difficult now. that's one of the reasons the earned income tax credit, one of the most important tax cuts for our nation, is so important. the eitc is designed to fill that gap that so many working families suffer from. it provides millions of americans, including hundreds of thousands of ohions, from belair to van wert to ash beulah to middletown, provides hundreds of thousands of ohioans earning low

to moderate wages a life-saving tax credit. if you work and play by the rules but earn low wages, the earned income tax credit can provide for your children, help you build economic security, help you extend your reach for the american dream. according to a recent study, the earned income tax credit has lifted more children above the poverty line than any other -- than any government program. now, the earned income tax credit, again, is available for people who are -- who have jobs and get a tax break as a result -- get a tax credit as a result of that job. 2005, more than 22 million u.s. households applied for the earned income tax credit. they received on average $1,800 a household. an estimated 2.6 million children were lifted above the poverty line because of the earned income tax credit. this, mr. president, is no handout. this is earned. it's the earned income tax credit because people in lower wage jobs are working hard and playing by the rules and doing the right thing.

the american recovery investment act has increased the earned income tax credit refund, expanding it to help thousands more ohioans. approximately 875,000 ohioans in a state of 11 million, 875,000 ohio families -- that obviously is more people than that -- 875,000 ohio families qualify for the earned income tax credit, but as many as 20% don't take advantage of it. they don't know about it or they don't know how to apply for it. that's 175,000 working families, from chilicothe to dayton to maumee to brian. 175,000 working families in my state have earned the earned income tax credit but are not receiving it. there are millions of dollars on the table, if you will, millions of dollars in tax cuts and tax credits for ohio's working families. if you earn less than -- these are the criteria. if you earned less than $48,000

last year, depending on the size of your family, you could be eligible to receive an earned income tax credit of up to $5,000. even if your income is lower than the treasure hold for filing taxes, file them anyway to obtain the earned income tax credit. that's all you have to do it. you earned it, you absolutely earned it. just ask for it. i encourage people who are not sure to call my office or call the offices of your senators or your congress men and women around the country. the presiding officer from illinois has been very active in this and his office is available also to make sure in his state that these families that work hard, play by the rules -- making they are making $20,000