other analysts have said that 40 to 60% loss is a more realistic number. how are you valuing your second mortgage portfolios now? and was the stress test and accurate estimation of the time and should it be a second stress test? >> i can take that. the evaluation, the guide of a particular asset is based on expected losses, and it is stressed and economic situation to see what the expected losses might be of that stress situation. and we evaluate based on what the expected losses will be. that market, the disconnect answer of the market is not in the base of the performance of the second but on the basis of equity that is in people's homes. we believe that there is a disconnect between the market

and what is in our books. and these things happen from time to time. markets disconnect with what is on the books. as we saw in the case of nonperforming loans last year. nonperforming loans were at one in and we had them at another and and they came, converged towards the end of the year to a point where it was very similar to what was on our books. >> a 15% loss of par 42nd mortgage you think is an accurate i do wish and? >> yes. >> my time has expired, mr. chairman. >> the gentleman from texas. >> thank you, mr. chairman. i have no doubt that in this economy there is a lot of pain and misery that has taken place throughout. i'm still curious though why we're examining a program that seemingly will bail out banks and make bad loans, people who may have purchased more home than they could afford.

yet someone who has invested 1000 or so of their 401(k) decrease by $100,000, you know, no plan for them. somebody who decided to rent their primary residence, invest money perhaps in a real estate investment trust him as a 100,000 off lost there. there is no program for them. so again, i question the fairness of this particular approach. again, noting that 94% of americans owned their home outright victory that as it may, i believe i heard the chairman said and others said they want to persuade you to modify more mortgages. i know in that regard there are a number of carrots and sticks floating around here, particularly one carat is having fha insured these mortgages to the taxpayer takes the risk instead of you. shirley we're all aware, soon we

may conference a capital markets reform bill that could have a lot to do with your bottled one. so i suppose there are sticks floating around there as well. but i want to talk a little bit about continue on with this particular metaphor about the organic carrots that already out there. i pretty served on the congressional oversight panel for the t.a.r.p. probe them, and in the testimony that we received before that panel, october-november i believe it was, a number of different academics and people familiar with markets it typically the average foreclosure could cost you anywhere in the neighborhood of 60 to $80,000. is there anybody on the panel who wishes to disagree with that assessment? good numbers, ballpark range? i see at least some headshaking

in the affirmative. does anybody care to shake their head? >> we have a very good record, but head shakes don't make your way into the transcript. >> mr. chairman, for the benefit i would note that this particular member at least i observed some affirmative head shakes. i guess that begs the question, there's already a built in incentive to modify a number of these. i'm not sure how much more taxpayer instead of you want to have, much less need. clearly there's a large concentration. i suppose among among the banks of second liens. i assume there is a fear of impairment of it regulatory capital, but i also question, is there a legal impairment or a practical impairment from the homeowner, the first lien holder contracting with the second lien holder in order for writing down some principle for them to receive a contractual equity

purchase a patient in any potential upside appreciation in the fair market value of the residential collateral? i think the gentleman from pennsylvania noted, arthur a number of market solutions? is that not a market solution but is there a legal or practical impairment or that this number out to be aware of? in a buddy who cares to handle the question? >> i think your point is a very good one. and that there is significant incentives already that exist for all of us to do what's right for our customers. >> thank you. recently there was an article in "the wall street journal," i will quote from it's to the moral hazard question, ever that at some bar was get the principle reduced, even borrowers who aren't behind will stop paying unless they get the same break, unquote, for argument sake, but it's in "the wall street journal" got it right. we kind of touched about the

moral hazard question that i don't think i've heard you address it specifically. does anybody care to comment on this particular article? >> congressman, the only thing i would say there is while that is, it is quite likely, a lot depends on how a principal reduction are a particular form of modification is affected that i'll give you an example that you could have a principal reduction what a vegetable is taken straight off or you could have a principal reduction -- >> but could it is not done properly. you can provide incentives for people to default who otherwise would not default? >> it can actually lead to the. but it was mentioned earlier, if there was some shared appreciation that perhaps that could be mitigated to some extent. but there is no doubt that it will lead to some issues spirit i see my time has expired. thank you. >> we may have a second round. i have a couple.

at the institution specific question i was going to ask, so we'll take a little more time. that taxes from gentleman? >> thank you, mr. chairman. mr. chairman, i would like to ask all the witnesses a question, and the question is was it appropriate and necessary for the government to intercede with the 700 billion-dollar bailout? if you don't think so and you think that we should have done nothing, would you just simply raise your hand? i'm going to take it from the absence of hands that there is a belief among the witnesses that there was a need for a bailout. that's the terminology that we are using nowadays, so i will be consistent so that we can communicate. mr. reid, i believe is, sir, you indicated that there is enough incentive to, i believe you

said, to do the right thing for your customers. maybe it's not read. height, excuse me. mr. heid, is there enough incentive for me to do the right thing for the economy? >> i guess the way i think of it is if we do right with our customers we are doing what's right for the economy. >> and if you find that it is not necessary to make modifications, then you have customers who go into foreclosure and that impacts the economy in an adverse way, have you done the right thing state? the fact that we have done a substantial number of loan modifications, the fact that within a substantial number of principal forgiveness loan modifications, i think says we're doing everything we possibly can to stabilize the -- what percentage would you consider substantial? >> in the course of the answer a different way, about 2% of the

overall portfolio on an annual basis is what ultimately goes, works it way through foreclosure. >> have you -- have you reached the 2% plateau? >> it's been pretty consistent between summer on an annual basis. >> 2% and foreclosures because 2% of the entire portfolios of americans tend to go through the foreclosure process but i understand that what percentage of your homes that are in foreclosure have you modified? >> a couple ways to answer that. if you look at the -- >> no disrespect, times of the as that i would like you to give a percentage if you would. of the many ways. >> i don't have a specific answer to your specific question. i don't have an answer to that right out the. >> i think most who examined these numbers have concluded that we have not significantly impacted the number of homes in foreclosure.

do you agree with this contention? >> no. spector you think of significantly impacted -- if you have it would seem to be you would be prepared to talk to us about how you have performed this significant feat. >> let me answer this way. i sorely, there's no question more needs to be done. >> more? more needs to be done? you say as though if we do something else we will make a great difference. out a lot more at there's to me should be done, because we are facing a lot more foreclosures. what are we going to do about them? let me just excuse myself from you for just a moment, if i may, please take no disrespect to you but i do have to go to bank of america. let me cover that you on this principal reduction program. i think that when businesses do well we have to acknowledge it. and you should be complemented. for what you have done. >> thank you. >> there will be no demonstrations. >> tell us briefly why you see

principal reduction, as a significant means by which we can impact foreclosures. >> because there are some borrowers for whom the offers that we have extended, so far, have not been generous enough. and in order to enable -- who truly want to stay in their homes -- >> let me move one step further because i'm about to lose my time. would this also impact the overall economy what you are doing? >> we believe that bring stability to neighborhoods, by ensuring those homeowners who want to stay in the homes can get to and affordable payment and have, through the vision for the future of that homeownership is important, at the same time we do believe that there are some borrowers for whom, as being able to afford staying in the home, is not a viable alternative and so we need to

work with them to transition them as a dignified way as possible. ideally without having to go through foreclosure, but a short sale or some other alternative into an alternative housing arrangement. >> thank you. thank you, mr. chairman. >> the gentleman from illinois. >> thank you, mr. chairman. and thank you to our witnesses for your testimony today. it was almost two years ago that we had a hearing about, what was then the looming foreclosure crisis in this committee. we were concerned about the debt to income races, loan to value ratios, which were unsustainable. and at that time, what we produce at the committee level was hope for homeowners program which i thought provide a proper balance between providing the least to those who found that cells upside down while also protecting taxpayers against moral hazard i requiring those that received relief to paid back taxpayers by sharing any upside in equity appreciation back with the government.

clearly for homeowners program has had little to zero participation. from organizations like yourself. so my question is, why? recognizing that there were some compliance issues that would later address about a year into the program. does that include the second link they been and how it's different than in the h.a.m.p. program? and i guess my other question would be, would you agree that a shared equity approach does tackle moral hazard by discouraging homeowners from intentionally default thing because they think of get a deal if they have to share equity later, that would discourage them but it also encourages those that are in a troubled situation to stay in the home because they have more realistic potential at some equity appreciation in some realistic future, just adding all the debt down at the end of the day. is there anything precluding you as services from already working

out your own share of equity arrangements with borrowers? is there something we should do and the h.a.m.p. program relative to the? and can we start with ms. desoer? >> homeowners had a lot of pisa to. >> please identify yourself for the record the. >> jack schakett with bank of america home loans. the hope ownership program, the theoretical point of you looks nice because the idea of share appreciation feature, giving oklahoma a chance for appreciation and invest a chance to share and that is appealing. but every program has operational concerns. what probably hurt hope for homeowners the most was because of a significant deviation from the standard fha program, the operational hurdle was the place has been very difficult to we've been working on rolling out hope for homeowners quite some time. we are still not there yet. you look at the new program for fha which on some is simpler

will be much operational easier to roll out a much more effective from that point of view. >> thank you. >> i would say that while hope for homeowners was a competent program in terms of how it could be executed, i generally tend to be a little bit more in favor of shared appreciation because i believe that unless there is some sharing of the outside, but the whole notion of sharing on the downside doesn't seem fair. i defer to my colleague to see if he has any comments on this. >> i am steve hemperly, citimortgage for the record. i would tend to agree with mr. schakett, took we look forward to introducing the new fha program as well as hope for homeowners. >> congresswoman, this is a very complex program, and one that we have wrestled with.

we are in the process of doing the necessary changes to our systems to be able to allow it. and we plan to launch it sometime this summer. >> thank you. >> i think the new fha announce program has some real advantages over the hope for homeowner. it's a simpler program. what we know of it so far it would appear to be using standard fha requirements. the approach between first liens and second liens is a more equitable sharing under the new program so it has real advantages to that as i said in my testimony, we intend to make sure that our second liens did not prevent these from happening. >> can i also just ask, by maybe a nod, is there anything precluding services from working at shared equity arrangements with borrowers are now? on your own. are you doing those in some situations? >> we really do need oral responses to. >> you can just say what you're doing them them are what you're

allowed to. >> we are not doing them but we introduced the concept of our principal forgiveness into our principal reduction program. okay. >> we couldn't have any programs, operational, that include share equity, but we are in the process of constructing some pilot spent all right. >> we currently don't have a program. >> and we have been using the principal forgiveness as part of the program starting in january 2009 as a way to get customers help. >> thank you. i see my time has expired. >> the gentleman from indiana. >> thank you, mr. chairman. in yesterday's "wall street journal," a bank of america spokesperson is quoted as saying quote efforts to avoid a foreclosure sale, then we do reserve the right to recover the unpaid balance on the second link is permissible by state law. however, our practice has been to only pursue recovery in situations where we believe the customer has sufficient

non-retirement assets to satisfy their debt obligation, end quote. now at this hour can you expand the process your bank goes through and determine which customers they deem appropriate? >> yes. is part of the in violation of underwriting to determine the hardship where we look at verification of income and other assets that the borrower might have a. and in order to mitigate the risk of moral hazard, try to draw that line to determine who is eligible for certain programs based on the hardship. and if they are not eligible for that hardship, then we might reserve the right to pursue other assets, or through income and their ability to afford the payment, the right to do so. >> i yield back. >> i'm going -- i have a question again. let me ask mr. lowman. i was approached yesterday i

believe in my office in newton by a turning who report to me he has got people who are in modification programs through chase who are still getting collection letters. i'm wondering if you are missed she had would know about that, how do we solve the? i assume it's not appropriate. >> we do make mistakes. we are dealing with a lot of customers and a lot of transactions. i would be happy to be days let me also, along the same lines, i've been told by a national organization, that they have had some difficulty getting some answers on some pending requests for modifications. is there a channel? what you people do when they don't get the answers that i thought they're going to get? who do they talk to? >> we have a special group that deals specifically with community groups, including nokia. and through those channels is how you would speak apparently

channels are working that is there an appeal i want to do after getting frustrated? >> company. >> are you, ms. she had. your first name is -- >> molly. >> molly sheehan. >> molly sheehan from chase. >> indicated that she can be the one who could be talked to on his. and the gentleman from texas. >> thank you, mr. chairman. there have been a number of editorials written about the approach of the administration on foreclosure mitigation. u.s.a. today wrote on the first of this month, quote, helps irresponsible lenders, barbers, unquote. "the wall street journal" the same day wrote, quote, instead we're heading toward your five -- year five of the crisis, to

prolong the agony, one senior bank trader calls it quote pretending -- excuse me, extending and pretending. the question i have, i spent part of the congressional recess over easter speaking to a number of private equity funds, banks, within the dallas metropolitan area, which i have the opportunity to represent, a section of the citi of dollars in congress. and there is great concern that the government is artificially propping up values in a market place that create uncertainty and leave private pools of capital on the sideline. now, i have met most of my evidence is anecdotal but i hear it over and over. that people are afraid to invest in pools of residential

mortgages, because number one, they don't know that the market has reached its true value. and second of all, they don't know what the next public-policy shoe to drop may be. and so at least in my mind, i'm not sure that washington is being helpful at the moment. they may be more hurtful. i would like any comment on the validity of the observations made by a number of people in the investment and banking community in dallas, texas. anybody care to comment? mr. heid? >> i would say as a general statement, uncertainty is certainly high. >> congressman, i would like to with your permission, it is somewhat of a sanguine view. we are actually seeing in certain markets there is implement and market, for example, markets in california. i think were at a point of

inflection right now in the market please. and that the governments role is welcome in terms of getting us all together. and i don't believe that it is interventionist insource goes to great artificial pools of opportunity for capital. i believe it is important for several in first or second mortgage it took us all working together. that's an important set of action that will make them more efficient. smack this will be my last question. i guess i'm looking to be persuaded as a member of congress, that this is a good investment of the taxpayers money. i know that there's a 50 billion-dollar pool of money here, and the chairman and i had this to change or do. i think as a matter of fact, the h.a.m.p. program was a creation of the obama administration, be that as it may. so there's a 50/50 billion dollar pool of money here.

we know that we are a nation that today is on an unsustainable fiscal path, not my language, i believe that comes from dr. elmendorf of the congressional budget office. chairman bernanke has echoed that. i think economist paul samuelson has said that we have a fiscal cancer that could threaten our nation. that's a paraphrase. i don't have the quote in front of me. but already we're looking at levels of debt to gdp going from 40% of the economy to 90%. we are looking at a budget that's going to triple the national debt over the next 10 years. we are looking at almost a trillion dollars of interest payments alone at the end of the decade. and so the question i have, when everybody from cbo to omb, the president of director of omb says we are on an unsustainable fiscal path, why don't we use

$50 billion to pay you guys to do something that you probably already our incentive to do as opposed to pay off the national debt? >> if i see no enthusiastic takers of the question, i will give back back to joan aspe before, i didn't get to pick the gentleman from eleanor will have the final question. >> thank you, mr. chairman. my last question was one of the things i hear to my constituent service folks in my district is that people who have been trying to get, a number of them have been approved for the temperate modifications while unemployed and on unemployment insurance. but then they are disapproved for permanent modifications because they don't have implement. can someone explain to me why

you would be able to get into a temporary and not full modifications? and should we be using the same criteria? >> yes. and there's a change in a program, so the only way i believe that that could potentially happen is if in establishing that customer into a trial modification, we ask what their income was, but maybe not the source of their income. and we verbally verified that they could meet the requirements, put him in a trial modification. than once we got documentation of income and understood the length of time that it was going to be in place. because the intent of the program is to make a long-term affordable payment, that that's when that disconnect would potentially happen. >> so is unemployed and come qualify in either case, or needed a? >> it is qualifying income, but

it is -- it is only for nine months. so you have to see the path to either another member of the household having income that would be part of the equation or not. so you have to understand the specific circumstance to give you something more specific, but that potential big. >> the program of fun upon interest to be considered but they have to at least nine months of unemployed insurance lead. as barbara said, potentially if they do state income and a first place now requires full documentation. we did know exactly the great come and we thought they qualified. we determined the only a six-month remain at the time of the permanent modifications and it would have qualified under h.a.m.p. >> okay. >> the same issue. pretty much with the same issue and i think that issue is significantly mitigate with a new program as barbara mentioned. >> thank you. >> the hearing is adjourned. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> here's what we're covering on c-span3 today. federal reserve chairman ben bernanke will be in a meeting to discuss the u.s. economic outlook. our live coverage begins at 10 a.m. eastern time. and later, live coverage of the senate commerce committee. they are examining a federal communications commission proposal for increasing the adoption of high speed broadband

internet. we'll hear about the plan from julius genachowski, the head of the fcc. you can watch it live beginning at 2:30 p.m. eastern time on c-span3. >> this weekend the first of three british election debates for the first time prime minister gordon brown, conservative party leader david cameron, and liberal democrat leader nik clegg will face off in a u.s. style debate. watch them in their entirety for three consecutive weekends. with the first election debate courtesy of ipd, sunday at nine eastern and pacific on c-span. >> the senate is about to gavel and and we will begin the day for a moment of silence for poland. in about an hour after general speeches, senators return to debate on short-term extensions for a number of expiring federal programs, including unemployment benefits. senators vote at 12:30 p.m. eastern on waiting senate budget rules that the bill contained

spending that is not offset by cuts or tax increases. 60 votes needed for the bill to continue. the senate is live now on c-span2. also the house is meeting in about a half an hour and will consider haiti debt relief, enforcement of new penalties for fake caller ids, and taxpayer assistance. see live coverage of the u.s. house on our companion network, c-span. senate will come to order. the chaplain, doctor barry black will lead the senate in prayer. the chaplain: let us pray. today, o god, bring our senators' hearts and minds into harmony with your will so that they may be assured that their

lives are fulfilling your high purpose. give them the incentives they need, the trust that is essential, and the joy that is possible as they face the duties and opportunities that lie ahead. lord, inspire them with the wisdom to correctly use the great power you've given them so that they and others may be blessed. bless them with your maximizing power for the challenges, decisions, and responsibilities of this day.

we pray in your holy name. amen. the presiding officer: please join me in reciting the pledge of allegiance. 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, aprl 14, 2010, to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby the honorable tom true call, a senator from the state of new mexico, to perform the duties of the chair.

signed robert c. byrd, president pro tempore. mr. reid: mr. president? the presiding officer: the majority leader is recognizedded. mr. reid: we're going to honor the people of poland because of the tragedy that occurred there a few days ago. i extend my condolences to the people of poland. it carried that nation's president and first lady as deputy foreign minister, lawmakers and so many civil yand military leaders, it's hard to comprehend. the tragedy and loss is unthinkable and america grieves alongside our friends. i want to commend senator durbin and for expressing sympathy, the senate formally states our condolences for the people of the state of poland. the presiding officer: under the previous order, the senate will now observe a moment of silence and solidarity with the people of poland.

the presiding officer: thank you to members of the senate. who seeks recognition? the presiding officer: mr.

president? the presiding officer: the majority leader is recognized. today following remarks by senators regarding the tragedy in poland and we appreciate very much their being here, there will be a peerld of morning business for one hour with senators permitted to speak up to 10 minutes each. the republicans will control the first 30 minutes and the majority will control the final 30 minutes. following morning business, the senate will consider 4851, the continuing extension act with the time until 12:30 equally and divided and controlled between the leaders and designees. at 12:30 the senate will proceed to a vote on a motion to waive the budget act. mr. president, i would say recognizing that she is here, one of the really remarkable moments of my career was a time a number of years ago that we were in poland, the delings was led by senator -- delegation was led by senator john glenn and we were meeting with a number of

dissidents in poland, people fighting against the repression coming from the soviet union. and senator glenn said a few words and then -- i ask that senator mikulski who is so proud of her polish heritage to say a few words to these freedom fighters in poland. it was one of the most remarkable speeches i ever heard. she was so powerful talking about her background in baltimore, her heritage. i've never, ever forgotten the statement made by the senator from maryland. it was one of the most remarkable statements i've ever heard in my professional career. mr. durbin: mr. president? the presiding officer: the senator from illinois is recognized. mr. durbin: mr. president, i ask unanimous consentheene proceed to the immediate consideration of senate resolution of 497 submitted earlier today. the presiding officer: the clerk will report. the clerk: senate resolution 479, expressing sip by that for

the peep -- sympathy for the people of p oland in after the devastating plane crash that killed the president, first lady and other civic leaders on april 10, 2010. the presiding officer: without objection, senate will proceed to the measure. mr. durbin: mr. president, i ask unanimous consent the resolution be agreed to the preamble be agreed to the preamble be agreed to, the motion to reconsider be laid on the table with no intervening action or debate and any statements related to the resolution be placed in the record in the appropriate place as if read. the presiding officer: without objection, so ordered. mr. durbin: mr. president, i also want to join senator reid in acknowledging the cosponsors of this resolution and i'm sure this list will grow as our colleagues come forward and ask to be added. but senator johanns thank you for joining me in this effort. i want to give special thanks to senator mikulski we know of her pride and heritage and her deep respect for the people of poland

and our shared grief to the loss of that great nation, senators kerry, senator voinovich, senator brown of ohio, senator cardin and others have joined me in considering this resolution. i come to the floor, mr. president, with a heavy heart. i express my sympathy to the people of poland to the ambassador becky who is here representing them. i shared a moment with him earlier this are morning when i heard the news of this tragic loss, my thoughts went back immediately to 47 years ago when we lost our president, john kennedy, and what it meant to our nation, how devastating it was. this city ground to a halt on that day and the bells began to peel in the church towers all across washington every hour on the hour as our nation reflected on this great loss. it was a time of great sadness as it should have been in our history as i'm sure it is now as people reflect in poland that on the morning of saturday,

april 10th, a plane carrying polish president, lech kaczynski, his wife maria and 94 other high-ranking government military and civil leaders crashed while traveling to a memorial service in russia that was to recognize and memorialize the dreadful katyn massacre. the tragic accident is a devastating loss to the nation of poland and to their friends around the world. this photo that i brought to the floor shows literally thousands of poles who gathered in warsaw on saturday evening to remember those that died. they were outside st. john's cathedral grieving for the loss of their president and so many great leaders. the pain is felt around the world, but especially in the city of chicago, which i'm honored to represent, it is home to more polish american families than anywhere else in the united states of america. what a proud heritage they bring to our city, our state, our nation and what a contribution

they have made and the grief that they feel today is a grief that we share. yesterday, as i mentioned, my fellow senators joined me in offering this resolution. the united states and poland share a strong bond of history, friendship and international cooperation. polish americans have become leaders in all walks of life. and in the senate senator mikulski and others of polish heritage have shown that their contribution to america continues to this day. we joined with poland in our revolutionary war and we are so grateful for those poles, who stepped forward to join us to contain our independence. when the time came many decades later and poland was seeking its own independence after the solidarity movement, the united states stood by their side. we know that president kaczynski was part of that effort and he was interned and imprisoned

because he fought for the democracy in poland. he was respected throughout his country for the role that he played and the leadership he brought to this modern, free democratic poland we see today. we stood by poland as the solidarity movement grew into a strong, vibrant democracy. we supported poland's membership in nato to defend the values which we share and in the european union where they have become a modern economy, a major leader in europe. poland stood by the united states as well in our nato efforts in iraq and afganistan. as poles struggle to come to terms with this week's tragedy, the united states will stand with them and will support their government as it works to overcome the loss of so many of its great leaders. the president and mrs. kaczynski and their delegation were on a mission to try so many years later to close a deep wound to the polish people of the katyn

massacre of world war ii where more than 20,000 poles were executed by soviet secret police an buried in mass graves in that forest. as the ambassador said to me this morning, that katyn forest is a holy and a cursed place because now this tragedy is added on to the memory of the losses that took place so many years ago. russia and poland have begun to deal with this tragedy and that is a positive thing. the russian prime minister putin joined conned tusk at a ceremony marking that tragedy. the first russian leader to attend that memorial service said -- quote -- "we bow our heads to those who bravely met death here." end of quote. it was the beginning of the closure of a critical chapter in the history of those two nations. this is the beginning of healing, which is long overdue. sadly the katyn tragedy has now been compounded by the loss of

so many poland's leaders destined to head to this location in memory of those who had fallen, aboard the plane were some of poland's highest leaders, the deputy foreign minister, the deputy of the national bank, two prominent civilian leaders were vocik and -- he was an influential member of chicago's community. what a bitter irony that mr. sevran's father died at katyn and it became his life's passion to honor his father's memory with beautiful memorial that's he built in the united states and in the location of the katyn forest. and then he lost his life journeying to this membe memoril occasion. throughout his life he brought awareness to the tragedy. he led an effort to construct a

memorial in remembrance of the katyn massacre, where the polish president was planning on visiting in a few weeks. he was a former dock worker whose firing in 1980 sparked the solidarity strike that ultimately overthrew the communist government. due in part to her inspiration, poland is a thriving democracy. poland shares a state partnership program with my home state's national guard, a partnership that has been in place since after the fall of the berlin wall. it is one of the many partnerships that our national guard has with warsaw pact nations. hundreds of national guard members have participated in exchanges with polish forces supporting the conflicts in iraq and afganistan and other military training and exchanges.

among those killed in last week's tragedy are officers well known to the illinois national guard. several troops in the illinois guard has served under the officers on president kaczynski's aircraft. these fine soldiers are in the thoughts of all of the people of illinois and the 13,000 men and women of the illinois national guard today. on saturday, i visited the polish consulate in chicago to pay my respects and leave my regards in the condolence book. the people were starting to flock to this site. people in chicago driving with polish flags proudly displayed over their vehicles to come to this consulate and express their own sorrow for this loss, to join in the long line signing the condolence book and to leave flowers at the flagpole bearing the polish flag right outside of the consulate. i have such admiration for the people of poland who have endured so many trials and struggles. what has brought them through time and again are faith and family, and those two enduring qualities will help them as they

try to cope with this massive crisis that is facing their country. as the ambassador said to me this morning, there is no doubt that poland will emerge strong, that this government is going to be stable, that it's going to move forward, and he can count as well that we will be at his side and the side of the people of poland as they rebuild their government and their nation from this tragedy. i urge my colleagues to join me in cosponsoring this measure and support the passage of the resolution which we just considered on the floor of the senate, and i yield the floor. the presiding officer: the senator from nebraska is recognized. mr. johanns: mr. president, let me start my comments today by thanking the senior senator from illinois. it has been an honor to join with him on this important resolution. i rise today to pay my respects to the people of poland, to acknowledge the great work of

their president, president lech kaczynski, to acknowledge the death of his wife and 94 other poles who died in the plane crash in western russia this last saturday, april 10. they were traveling to katyn, russia, for a memorial service to mark the 70th anniversary of the soviet killing of more than 20,000 polish officers in 1940. among the polish leaders killed in the plane crash last saturday were dozens of members of parliament, revolutionary heroes from 1989, senior military commanders and the president of the national bank. this is a terrible, heart breaking loss, not just for poland but for its close friend and ally, the united states. the tight bond that has been forged between poland and this

country has been one of the most welcome results of the end of the cold war. since the fall of communism in which the polish solidarity movement played a major role, poland has led the way in building a pro-u.s. free market democracy. poland's entry into nato in 1999 has led to invaluable polish contributions, to peace and stability around our world. polish soldiers have fought side by side with americans in iraq and afghanistan, including in key coalition leadership positions. we have suffered together when our troops took casualties, and today we grieve together. the foundation of our close partnership was laid by many polish immigrants to america. today, over nine million

americans of polish descent reside in the united states, including the state of nebraska, and i'm very proud to be one of them. my grandparents immigrated here from poland many, many decades ago. the polish are an important part of this great country and have been since the earliest days of our nation when they helped settle jamestown, virginia. i am very pleased to introduce this resolution along with the senior senator from illinois. the senior senator may not know this, but he represents some of my relatives in chicago and represents them well. i would like to join with him and all of our colleagues in a moment of silence as we have done today. i want to pay our respects to the poles, both in this part of the country and across this nation -- great nation and in

poland. and i want to also acknowledge the great contributions they have made to our country. mr. president, thank you. i yield the floor. the presiding officer: the senator from maryland is recognized. ms. mikulski: mr. president, i, too, join with my colleagues to rise to express my deep and heartfelt condolences to the people of poland on this unbelievable and tragic loss. i thank my colleagues, senator durbin, for organizing this and joined by senator johanns of nebraska. as one who notes the senate floor today, you see that we stand here not as democrats and not as republicans but as americans who want to extend our -- our heartfelt sympathy to the people of poland. i thank my colleague for

organizing this resolution and for all of his efforts in support of poland from the years of trying to get the truth out about the katyn forest to his very able and unstinting efforts to bring poland into nato and to advance polish democracy. so i thank him. mr. president, i rise here today as a granddaughter of a woman who came from poland over 100 years ago when women didn't even have the right to vote. when she got off of that boat in fells point in baltimore, she was a 16-year-old girl in search of the american dream. little did she dream that less than 100 years later, her great granddaughter would stand on the floor of the united states senate, advocating for democracy in poland, righting the wrongs of world war ii, and little did

i realize with the great honor the people of maryland have given me that i would stand on the floor of the senate and express sympathy at this tragedy of unimaginable magnitude. poland has suffered a loss where the wounds might not ever heal. the facts are now well known. poland lost their president lech kaczynski, a great leader with a lifetime of service to his country. the polish people lost their first lady, maria, beloved by the people for her good works and her good deeds. more than 90 other dedicated polish patriots perished that terrible saturday morning. esteemed and decorated military officers, the equivalent of their joint chiefs, experienced diplomats, elected leaders, the head of their central bank, and citizens who had put their lives on the line for poland.

all were polish patriots. my heart weeps for the terrible, terrible loss and for the people of poland. we know the terrible story of the katyn massacre that brought them to this site, this unbelievable site. for the last 70 years, saturated with incredible melancholy. in the spring of 1940, the soviet secret police executed over 20,000 polish prisoners of war. 20,000 polish military officers, and then there were other intellectuals from law, from science, from medicine. a whole generation of polish patriots and leaders were murdered in that terrible, terrible place. people who died for polish freedom. and part of the stalin's effort

to destroy the polish people was to destroy its leaders. the nazis then continued what stalin had begun. and then the world, after a brutal war, the terrible death camps at yalta and potsdam, the west abandoned poland and poland against its will was forced behind the iron curtain. but what do we know about the polish people? their nation never dies because their nation does live not only in a government, not only now under a rule of law and a constitution that is serving them so well at this troubled time, but poland lived within the hearts of its people, and no massacre, no iron curtain could ever take it away from them. during those dark years when poland continued to be under soviet domination, there were those who fought -- who worked

to tell the story of what happened attica tin. joining with my colleagues in the congress, i fought for many years to release the information about that horrific massacre, even contacting president gorbachev to be part of his glass motive and -- glasnost and perestroika to release all the information. finally in 1990, they began to do it now. but it was only now, last wednesday, one week ago in the site where the massacre occurred, the prime minister of poland, mr. tusk with mr. putin met in that forest where putin issued a former apology to the polish people and said all information and archives would be open. we were so filled with joy. it was a time of great reconciliation. and that's what saturday was about. it was the continuation of a great and grand reconciliation

between these nations. with president kaczynski traveling to bring the leadership there, and the leadership were people who had been trailblazers. mr. kaczynski himself had been a member of solidarity, his wife solidly at his side. and now as he was president of poland, forging new relationships, mending the wounds with the jewish community, it was a time of polish leadership, reaching out to the world at efforts of reconciliation and in this case russia reached back. one of the people who died, it was so poignant, was a woman named anna walentynowicz. she was in many ways the rosa parks of the solidarity movement. she was a crane operator in the gdansk shipyard. they fired her for trying to form a union. when anna stood up, so did lech

walesa. when solidarity was born and he leapt over that wall, he took the whole world with him. and now down came after years of martial law and occupation, we had solidarity and then ultimately a free poland. at this time of great tragedy as we honor those who died in the forest, in 1940 and those who died in the forest just on saturday, we can see that hopefully some good would come out of this. it's been a triple tragedy. the massacre of 1940, the cover-up by the soviet union, and now the saturday airplane crash. but out of this, we would hope, would come a new sense of cooperation. i want to acknowledge that the russian government has been working with the polish government to recover the bodies and send them home with dignity and honor. their promises of a complete investigation seem to be

unfolding, and they have invited polish officials to join with them side by side. we hope that out of this tragedy might further come other acts of great reconciliation. and that's what we need to think about, how poland continues to move the world to peace and to reconciliation. i want to acknowledge the people from poland and what they did for the united states. pulaski helped fight in their revolution, kasuska built west point, was one of the architects of the american revolution, and when he went back home to help poland be free, he left money with thomas jefferson to fight for the abolition of slavery. through all of the wars, poland has always been on the side of the west. during world war ii, those who would escape from poland led the armies in exile. they were at monte casino.

they flew in the squadron with the r.a.f. they have been at our side in iraq and afghanistan. wherever there is a fight to be made for freedom, the poles are there, and they need to know when they make those fights, the united states of america are with them. so for those who died on saturday in that terrible melancholy forest, our hearts go with them. to the people of poland, we express our sympathy, but we also express our pride in their stalwart, unrelenting, unflinching commitment to peace and justice in their own country and in the world. mr. president, i yield the floor. the presiding officer: the senator from illinois is recognized. mr. durbin: mr. president, i want to thank the senator from maryland. she is of proud polish heritage. when she spoke of her grandmother coming to fells point in baltimore, i couldn't help but think of my grandmother

coming to that same place 99 years ago from lithuania to become part of this american family, and i would like to acknowledge, too, on behalf of many lithuanian americans our gratitude to poland over the years. poland was first with democracy in the region and stood by the baltic states, particularly lithuania, its neighbor, as they reach their own level of democracy and freedom. the senator from maryland will be heartened to know that we have just been notified by the cloakrooms that all 100 senators have asked to be added as cosponsors of this resolution to show our solidarity with the people of poland. i thank the ambassador for his attendance this morning and hope he will express to his government and the people of this country our profound grief of this loss and our determination our strong friendship with poland continues. mr. president, i yield the floor and suggest the absence of a

quorum. the presiding officer: the clerk will call the roll.

mr. mcconnell: mr. president? the presiding officer: the republican leader is recognized. mr. mcconnell: mr. president, i'm going to give -- the senate is in a quorum call. mr. mcconnell: i ask consent that further proceedings o t quorum call be dispensed with. the presiding officer: without objection, so ordered. mr. mcconnell: mr. president, yesterday morning i came to the floor to point out, regretfully, that the financial regulatory bill the democratic majority plans to introduce in the coming days is fatally flawed. it not only allows endless

bailouts for wall street, it institutionalizes them. making them official government policy. this is truly astonishing. for nearly two years the american people have been telling us that any financial reform should have two goals. it should prevent the kind of crisis we experienced in the fall of 2008, and it should ensure that the biggest wall street banks pay for their own mistakes. the biggest wall street banks pay for their own mistakes. yet, the bill we're being asked to consider doesn't even begin to solve these fundamental problems. in fact, it exacerbates them. it's almost as if people who wrote this bill took the pulse of the american people, and then put together a bill that endorses the very things they found most repugnant about the first bailout.

now, pot opponents of this bill will -- now the proponents of this bill will make a lot of claims about what this bill does and doesn't do. but the american people didn't go through the financial crisis, didn't put up their own collateral to bail out wall street only to be deceived about the contents of this wall street bill. we need some truth-in-advertising here, so let's look at what this bill actually does. its authors claim that the bill gives the government the authority to wind down failing firms with no exposure to the taxpayer. but, as a factual matter, the bill creates bailout funds, authorizes bailouts, allows for backdoor bailouts from the fdic, treasury and the fed, and even expands the scope of future bailouts.

it does this, first of all, by creating a new permanent bailout fund, a prepaid $50 billion bailout fund. the very existence of which would, of course, immediately signal to everyone that the government is ready to bailout large banks the same way it bailed out fannie mae and freddie mac. so the same distortions, the very same distortions that developed within the housing market would inevitably develop in the financial sector. didn't like fannie and freddie? how about 35 to 50 of them? that's what this bill would give us. second, it authorizes bailouts for creditors, in other words, it's not enough to bail out a bank. the people who invested in the bank would get a bailout too. made a bad bet? no problem.

the government will bail you out. made a bad bet on a company that made a bad bet? no problem. the government will bail you out too. provided, of course, that you're among the creditors favored by the white house. this is great if you're on wall street. not so great if you're on main street. great if you're in a union. not so great if you're not. this bill institutionalizes the picking of winners and losers and gives the government broad authority in choosing which creditors get paid in full and which ones do not. third, the bill gives the government a backdoor mechanism for bailouts by extending to the federal reserve an enhanced lending emergency authority that is wide open to abuse.

it gives the federal deposit insurance corporation and treasury broad authority over troubled financial institutions without -- without requiring them to assume responsibility for their own mistakes. this means that unproductive firms, which would otherwise go into bankruptcy, would now be property up by government like zombies. fourth, this bill expands the scope of potential future bailouts. expands the scope of potential future bailouts. it does this by authorizing a financial stability oversight council to designate nonbank financial institutions as potential threats to financial stability and, hence, too big to fail. so a new government board based in washington would determine which institutions would qualify for special treatment giving

unaccountable bureaucrats and self-appointed wise men in washington even more power to protect, promote, or punish companies at whim. these favored firms would then have a funding advantage over their competitors leading to outsized profits and the extension of enormous additional bailout risks for taxpayers even beyond the largest banks. fifth, the bill does nothing to correct a mass ifl market distortion that we all know were created by fannie mae and freddie mac. job one in writing this bill should have been to address the inherent problems caused by these massive government-sponsored entities. this bill ignores that issue entirely. the american taxpayer has suffered enough as a result of the financial crisis and the

recession it triggered. they've asked us for one thing, whatever you do, they say, don't leave open the door to endless bailouts of wall street banks. whatever you do, the american people have said, don't leave the door open for endless bailouts of wall street banks. this deal fails at that one fundamental test. if there were two lessons we should have drawn from this crisis, it's that if investors are reckless, then they should pay for their recklessness. if investors are reckless, they should pay for their recklessness. the other thing we should have learned is that washington bureaucrats are horrible at seeing these kinds of crisis develop. it should be beyond obvious that more bureaucrats won't prevent the kind of problems that other

bureaucrats overlooked. if you need to know one thing about this bill, mr. president, it's that it would make it official government policy -- official government policy to bail out the biggest wall street banks. this bill would make it official government policy to bail out the biggest wall street banks. so if the administration is looking for bipartisan support on this wall street bill, they can can start by eliminating this aspect of the bill not because republicans are asking for it, but because community bankers -- community bankers all across the country and american taxpayers are demanding it. unfortunately the administration's evidently more interested in using this debate as a political issue than actually addressing on a bipartisan basis the many weaknesses that are currently

built into our economy. for example, it's been reported that the senior democrat senator from arkansas was working on a bipartisan solution to one of the key areas where reform is needed, but that she was told by the white house in no uncertain terms that it didn't approve her effort at forging a bipartisan deal. it's also been reported that the democrat chairman of the banking committee backed out of bipartisan negotiations under pressure from the white house. the white house spokesman was even more explicit saying late last month that the white house isn't interested in xre miezing on this -- compromising on this. the white house is clear, it plans to take on the same approach that it took on health care. put together a partisan bill and jam it through on a strictly partisan basis. it should go without saying that this isn't the kind of approach most americans want in washington.

and it's not the kind of approach they were told they could expect from this administration. we can do better. and we must. americans are still dealing with the fallout from the financial crisis, getting this policy right should be our first priority. this bill gets it very, very wrong. mr. president, i yield the floor. the presiding officer: under the previous oer, the leadership time is reserved. under the previous order there will now be a period of morning business for one hour with senators permitted to speak therein for up to 10 minutes each with the republicans controlling the first 30 minutes and the majority controlling the final 30 minutes. mr. lemieux: mr. president? the presiding officer: the senator from florida is recognized. mr. lemieux: thank you, mr. president. i come to the floor today to speak on a topic that i've addressed many times since i came to the senate in the fall

last year. and having come from running a business and having worked in state government, every day it is still alarming to me the way washington spends money. in no other place in america, and perhaps no other place in the world, is money spent by an organization without any reference to how much money is being taken in. and, unfortunately, mr. president, the situation has gotten to a point where it is completely unsustainable for this country. we open our newspapers today and we read stories about greece having to borrow money from the european union. being so far in debt that the forecast of the country's viability is in question. yet, our country is headed on the same path, but few come to the floor of this chamber and sound the alarm. mr. president, i will continue to do that for the remainder of the time that i have here in

this body. because the future of this country is at peril. and while we have spent too much for many years, the rate and patriots of that spend -- and pace of that spending now is beyond control. but it need not be. we need not continue in the ways of spending more money than we can possibly pay back. let me set the table, if i may, of the financial situation that we're in. here in 2010, we are about the business of setting up the budget for 2011. you would think the first question would we ask is: how much money could do we -- money do we expect to take in in 2011? well the number is abou about $2.2 trillion. yet the projected budget, how much we're going to spend is $3.8 trillion. we will run a deficit in this year alone of $1.6 trillion. now, these numbers are so big.

a trillion dollars. what is a trillion dollars? well, a trillion dollars is a thousand billion. one thousand billion dollars. a billion is a thousand million. the numbers are so hard to fathom. let me explain, if i can, in a way i have often talked about on the floor. if you put dollar bills side to side, you could cover two football fields with a million dollars. if you laid a billion dollars on the ground in $1 bills side to side, you could cover key west, florida, in my home state, which has a square area of more than three miles. you could blanket the city with with $1 bills with a billion dollars. a trillion dollars will cover the state of rhode island twice. and every one of these dollars is a dollar that has been taken from the american taxpayer, a

dollar that they could spend on their family, on their children's education, on their home, on needed repairs. we take those dollars and we spend them, and now we spend them beyond an ability to pay them back. so right now, because of the money that we borrow, more than than $200 billion a year, year, $200 billion a year goes to our interest payments alone. paying for the money that we shouldn't have spent in the past. at our current rate of spending, according to this administration, by the end of this decade, 2020, we will have another almost $10 trillion in debt, making our total debt debt $22 trillion. at that point, our interest payment each year will be

be $900 billion. and at that point, the budget breaks. at that point, what we call mandatory spending on entitlements like social security and medicare and medicaid will be all of the budget plus the interest. there will be no money for defense. there will be no money for homeland security. there will knob money for any of the other programs in government. so if we have this impending crisis, if we are driving the car towards the wall, why aren't we making any changes? well, today, mr. president, i'm filing legislation could enact a change, enact a mechanism, an architecture to have a discussion on this floor and on the floor down the hall in the house of representatives to find a solution to put america back on a stable financial path. and the bill is what i call the 2007 solution.

in 2007, the united states economy was still going strong. it wasn't until december of that year that we found ourselves beginning the recession. if i go home to florida like i did this past weekend and talk to floridians and say could you live on what you had in 2007, based on these difficult times, my constituents had more money in 2007 than they have in 2010. so why shouldn't the federal government be able to live on what we spent in 2007? why can't that be enough? and if we did that, if we froze spending across the board at 2007 levels, when the economy was still going strong, before we injected all this stimulus money, if we go back to a place of normalcy -- and trust me, there was plenty of redundant and wasteful spending in 2007, but let's just go back to that

as a framework, a benchmark. if we were to cap our spending at 2007 levels, by 2013, we would balance the budget, start running a surplus. by 2020, instead of having a a $22 trillion national debt that's unsustainable, we would have a $6 trillion national debt. we would have cut it in half. and we would have preserved the american dream for our children and our grandchildren. mr. president, you know, i have four small kids. we just had a baby two weeks ago. max, taylor, chase, and mad a line, 6, 4, 2, and 2 weeks. my greatest fear is that someday one of my kids is going to come to me when they are an adult, after they have gone to school, and say dad, we're going to move to india or brazil or ireland or

some other country because the opportunities in that country are better than the ones in the united states of america. because, dad, your generation and the generation before so mismanaged this government that you ruined the american dream. our taxes now are so high to pay for the debt, for things that you spent in the past. our entitlements are so weighty that we can't afford them. so we're going to leave. this solution, this 2007 solution would solve that problem. so how does it work? every year under this bill, the majority leader of the united states senate, the majority leader in the united states house of representatives would have to come to the floor and file a procedure to allow for 50 hours of debate on this floor and on the floor of the house of representatives to decide how we are going to make cuts to stay within 2007 levels. and if the majority leader doesn't do it, the minority leader has the opportunity, and

if the minority leader doesn't do it, any senator can do it. and then we will have to for the first time have an adult conversation about priorities. maybe then we would call in the agency heads of the different agencies of government who have had 10%, 15%, 20% increases year after year in their budgets for more than a decade, and we would say can you make some cuts, can you do things more efficiently? american businesses right now for the past three years have been making tremendous cuts because they have to. we don't make cuts in our agencies. our agency heads don't meet with the members of their organizations, the tens and thousands of workers who work in these different agencies and say can we do things differently, can we do things more efficiently? this morning, i had the opportunity to speak to a friend of mine who is about to become speaker of the house of the florida house of

representatives, a man by the name of dean cannan. right now the florida legislature is in session, and guess what? they have to balance their budget. a very unfamiliar notion here in washington, d.c. they are cutting billions of dollars from the florida budget, as they did last year, as they did the year before, because revenues are down because the economy is hurting. so they have three choices. they can make cuts, raise taxes, or find new sources of revenue. and right now, they're going through the process of cutting because they have to, and they're making responsible leadership decisions. that process does not happen in washington, d.c., but under this bill, a framework would be provided that would require that debate, require that discussion, would require that focus. the majority of my colleagues in this chamber are more interested in new programs than making the

programs we have run more efficiently and effectively. we can't afford new programs. we can't afford the programs we have now. and if we keep blindly looking off and pretending like we don't have this crisis, the car is going to hit the wall. our children are going to be in a situation where they can't fulfill the american dream. so the 2007 solution says look, we're just going to have a debate for 50 hours on the floor of this chamber every year about how we could get back to 2007 levels. and it doesn't specify where the cut should be. should we make some cuts in the defense department? do we need to reform our entitlement programs? is there waste, fraud and abuse in medicare? we would have those discussions. it would be our governing, focusing principle for at least 50 hours. do we not have 50 hours to figure out whether or not we can run government more efficiently and effectively? mr. president, there are

hundreds of billions of dollars, hundreds of billions of dollars that we could cut out of the federal government and not impact our constituents back at home. i'm convinced of it. do we not think that there is 10% waste in our federal agencies who haven't made cuts for more than a decade? if we cut 10% across the board in our federal agencies, we would cave more than than $100 billion a year. 20% gets us close to to $300 billion. businesses, families, state governments are doing this right now and have been doing it for years. so the 2007 solution, which i hope my colleagues on the other side of the aisle will embrace, just says let's have a discussion. let's have the architecture in place to get back to a level of sustainable spending. and if we did that, if we were principled about it, we could save this country. it is really to that point.

the debt is cascading out of control. mr. president, i came to this body in september of last year. i stand here on the floor of the united states senate in april, and we have gone $1 trillion more in debt since i arrived at the united states senate. $1 trillion in just a six or seven-month period. it took us until 1980 in this country's history, from 1789 to 1980 to go $1 trillion in debt. and we just did it in six, seven months. our spending is out of control. we need a solution. we need a framework for a governing leadership discussion, and i believe that this 2007 solution bill can do that. mr. president, i hope my colleagues will embrace this provision. i hope that we can create an architecture to put america back on the right path. i know that there are people of

good conscience on both sides of the aisle, including the man who sits in the chair today, who care about this spending problem, and if we could get past partisanship, if we could get past rhetoric and focus on this issue, we could save america. with that, mr. president, i yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

mr. reid: mrmrs. murray: mr. pr? the presiding officer: the senator from washington is recognized. mrs. murray: i ask to speak as if in morning business on the democratic side. the presiding officer: without objection, so ordered. mrs. murray: last sunday at mi midnight, thousands of people in washington who lost their job through no fault of their own had the rug pulled out beneath them. that's because those who wake up each day and send out resumes and travel to interview after interview, had the unemployment benefits that they count on suddenly cut off. and in losing that critical support, they lost an important

source of security that they need to help them stay in their homes or make rent. and the stability that allows them to continue to afford to look for work. mr. president, over the last two weeks i've traveled throughout my state talking to my constituents and discussing our economy and working to support job creation efforts. and i have to say the frustration is very clear. it is written on the faces of so many in my state who just can't seem to get a break. who have come close to being hired, but have been told at that time just isn't right. they should come back next month, next year. these are people struggling, job seekers and they don't hold back when they describe what they continue to face. it is an emergency. it's an emergency that affects their ability to pay their bills, their ability to put food on the table and their ability to keep their job search going. it is an emergency that time and again we have worked hard here to respond to.

but time and again we have faced opposition to do that. mr. president, before we left for the recess, we had an opportunity to pace an extension of the -- pass an extension of the unemployment benefits. to respond to that emergency in our job market. and to avoid the uncertainty that job seekers across the country now face. democrats put an unemployment extension out on the table. it was a proposal that was similar to extensions we've done routinely in difficult time. and, as we'll all know, times have seldom been more difficult. but it has become an all-too familiar story now, those on the other side of the table, aisle, said no and put obstruction before assistance and politics before people and point scoring above the needs of those who lost their jobs. you know, mr. president, this week we have a chance to make things right here. the legislation that we are trying so hard now to pass this week is very straightforward. this bill will get unemployment

insurance to millions of struggling families who rely on it to meet their basic needs and pay their mortgage and afford school. it will restore the safety net that is critical to keeping our economy stable. it will give those people who are looking for jobs the means to afford to keep looking for them. and it will keep our economic turnaround on course. it is aimed at helping real families with the reimburse problems they face every -- real families with the real problems they face every day. but make no mistake, the consequences of not reaching a compromise and not passing this bill are just as real. today families in every single one of our states are sitting around their kitchen tables trying to figure out how they're going to make it through the weeks and months ahead without these payments. oftentimes they've spent their day calling employers and going to job fairs with long lines and very few opportunities, filling out more job applications.

these families are now looking to us for the help they need in a time of crisis. but every evening these families are turning on the nightly news to hear another story about gridlock in our nation's capital. they see this senate being forced to jump through procedural hoops and endure endless delay tactics to get even emergency legislation passed. they see politics clouding policy, obstruction impeding process, and you know what is this they're really getting sick of it. so, mr. president, today i urge all of us to come together and move forward with the same urgency that those who have lost their unemployment have. that we join together the way we did to pass the children's health insurance program or fair pay for women in the workplace or small business tax cuts. we need to restore the faith of the american people and pass this critical extension. but, mr. president, for those who are fighting to get back to

work and support their families once again, unemployment obviously is not enough. we need to be taking every step we can to improve the job market unemployed workers wake up to face every morning. because while there certainly have been signs of improvement, we have a lot of work left to do. and i certainly believe that that work starts with helping our small businesses, which are the heart an soul of our economy. you know, growing up my dad ran a five and 10-cent store on main street, actually main street in washington. all six of my brothers and sisters and i worked there, from an early age, we stocked the shelves and worked the register. when small businesses like our struggled, we all knew the consequences. we saw it in the till a at the d of the day. we saw it from families coming to buy things from my dad. small businesses really were the economic engine of main street then, and you know what?

they still are today. what i hear time and again today, while wall street is doing a whole lot better, main street is still really struggling. than the small community banks, which are a major source of capital in all of our communities aren't lending. and when small banks, which are the lifelines of our small businesses don't lend, then credit isn't flowing, businesses aren't hiring, and recovery is not coming to main street. that'that's exactly why i have w introduced to have tarp funds to help free up their credit and get them lending to our small businesses again. we've done enough for wall street. it's past time we concentrate on helping our small businesses and local employers. mr. president, another way to help improve local job markets and all those who are looking for work is to, of course, lessen the tax burden on our small businesses so they can

afford to hire new workers. over the recess i had the opportunity to talk to owners of local bakeries and motels an marketing companies -- and marketing companies and a lot more throughout our state and you know what? they told me the same thing. they want to hire and they want to expand. they even see new opportunities. but the risks for them are just too great. what they need from us is certainty and security. and i told them that we are working to provide them with just that. i told them the health care reform bill that we passed includes a 35% tax credit that small business owners can receive immediately to help them cover their workers. i encouraged them to hire unemployed workers that have been out of work more than 60 days because we now are giving them an exemption from their payroll taxes for those new employees. i told them now's the time to make big purchases that you want to because we have work now to

pass legislation that will allow them to write those purchases off immediately. and i told them that we have worked to ensure that the small business administration is increasing their local lending efforts. but i also told them, of course, we have more to accomplish. and they, the small businesses need to be the focus of recovery efforts from this point on. mr. president, another central 10 enter of -- tenet is the health reform legislation that we passed into law last month. it expands care to communities across the nation. what has gone less notice is that the bill also greatly expands access to health care careers to help meet that new demand. mr. president, i was -- demand. mr. president, i was the senator in the "help" committee that was responsible for the health workforce section of the bill we passed and i worked to make sure

that we made numerous investments to create and sustain good-paying health care jobs. our bill that is now signed into law includes incentives like loan repayment programs, scholarships, grants to all help encourage students to go into high-need feeds and work in underserved areas. it invests in education, training and retention efforts not just for new health care workers, but for those already working to provide quality care in our country. because investments in our health care workforce create jobs. they ease the strain on overworked health care professionals and it's going to keep americans healthy so they can be productive on the job. finally, mr. president, i believe that we need to pay particular attention to our efforts to hire our nation's heroes, and that, of course, is our veterans. right now the unemployment rate for veterans who are returning

from iraq and afganistan is over 21%. more than one in five of the men and women who went and fought for our country are returning home only to have to fight to find work. these are disciplined, technically skilled, determined workers who nonetheless have to stand at the back of the line or have their resumes lost in a stack somewhere. over the past few weeks i talked to many veterans in my home state of washington about what it is that is keeping them from finding work. frankly, what they told me is shocking. many veterans told me many times they leave off the fact that they are veterans on their resumes because employers are looking at it as a negative rather than a positive because of the stigma of invisible wounds of war. national guard members talked of coming home to find they've been

laid off because their job no longer existed at the company that they left behind when they went to serve our country. other veterans told me that the pentagon and v.a. transition programs just aren't working for today. and that they struggle to have employers understand how the technical skills that they learned in the military will translate to help them in the civilian working world. well, what i heard was unacceptable. and it has to change immediately. so, mr. president, next week i'm going to be introducing a bill on the senate floor that will take a look at why our vet -- our military skills aren't translating into skills that gets them jobs when they come home. it will help our veterans get into apprenticeship programs an careers where i know they will excel. it will improve the military transition process and we will setup a veterans business center within the veterans administration center to help our veterans get the skills an

resources to start their own businesses. mr. president, this week on the senate floor we have a chance to keep our unemployed workers afloat. it's an unemployment extension that is a lifeline. as it lifeline that will help allow unemployed workers to continue looking for every job opportunity and to support their families in that process. but ultimately we need to get these workers into the boat. we need them to get good, stable jobs, and that means supporting our community banks, reducing the tax burden on small businesses, and expanding opportunities for health care workers and for our returning heroes, our veterans. now, as i said earlier, the american people are watching us. they want us to have the same urgency that they feel in their lives every day. they want to know that their dinner table debates are our floor debates. they want to know that creating jobs is our number one priority. and that we will be at the back

of those who are trying so hard to get back to work. so, mr. president, i come to the floor today to urge everyone to come together to pass this important extension of unemployment benefits, put politics aside for a couple of weeks an months and -- and months and help us all work together to create job opportunities and get americans back to work. thank you, mr. president. i yield the floor. i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: the senator from connecticut is recognized. mr. dodd: mr. president, i would ask consent that the call of the quorum be rescinded. the presiding officer: without objection, so ordered. mr. dodd: mr. president, i rise this morning to try and set the record straight, if i can, on some of the rhetoric that i have heard in the last 24 hours or so regarding when it comes to the financial reform efforts that i have been engaged in along with my colleagues on the senate banking committee for the past 38 months. i became chairman of the banking committee in january of 2007, about 38, 39 months ago. since that time, of course, we have held countless hearings and meetings to deal with the financial crisis, beginning in january and february of 2007. in fact, the very first hearings

were held by the foreclosure crisis in the nation. we tried to get the attention of the previous administration. secretary paulson and others to pay attention to the question that was emerging that our economy was collapsing and that too many people were losing their homes, that an economic catastrophe was looming, and frankly there was not the kind of attention paid initially to this issue by the previous administration. but nonetheless, we worked forward. so today we find ourselves on the brink of making an effort to deal with this problem but listening to some of the rhetoric of the last 24 hours, i wonder if we have been in not only the same chamber, in the same city but on the same planet when it comes to the efforts that have been made to try and reach a bipartisan agreement to deal with financial reform. i have almost unlimited patience as many of my colleagues know, but that unlimited patience is being tested by some of the comments i have heard, and so i felt incumbent to respond this morning to respond to some of

these accusations about the effort being made to achieve a proposal on financial reform that might attract broad support in this chamber. unlike other efforts that have been made over the past several years. as i have said repeatedly over the many months we have been working, mr. president, on this important legislation, these are complex issues. we have gone through the most serious financial crisis since the great depression. that's how serious this is. the words of our financial leaders and elsewhere, we are on the brink of a meltdown of the entire financial system of this country, and we came perilously close to having that occur. for those seven million to lost their homes, or the 8.5 million who have lost their jobs, there might as well have been a financial meltdown. not to mention retirement incomes that have evaporated and of course the loss of confidence in our future, along with health care and a variety of other things that have happened to working families in this country.

however, mr. president, that debate, as critical as it is on these complex matters that make up the structure and the architecture of our financial system. it is critical to the future of our economy and the livelihoods of millions of middle-class americans across this nation that that debate should not be sullied by misinformation soar derailed by those who would try and make it just another partisan game. playing politics with this issue is dangerous indeed. unfortunately, the talking points deployed by the wall street lobbyists in an effort to protect the status quo leave my constituents and many americans vulnerable to yet another economic crisis. those arguments are littered. they are made with falsehoods, outright falsehoods that i regret to say are now being repeated by people who should know better and frankly do know better. so said and this morning, mr. president, i wanted to set the record straight, and i want to start by tackling another one

of the wildest and frankly most dishonest objections to this legislation, which is the notion that it is somehow a partisan document. i consider the minority leader and the ranking member of the banking committee to be good friends. they are patriots with whom i have worked over many, many years on many issues. senator shelby and i have been working together for over a year on these issues, and i cannot for the life of me understand how anyone could claim with a straight face that what i have tried to achieve with this bill is a partisan effort. i have spent the last year seeking bipartisan consensus. in february of 2009, over a year ago, with the new obama administration freshly sworn in, i insisted, mr. president, from the very beginning that senator shelby's staff be included, that meetings with the white house and treasury department on all financial matters. i had the opportunity to take over the chairmanship of the "help" committee, rather, the committee charged with the responsibility of providing the

health care legislation, i chose to stay as chairman of the banking committee. in no small part because i received commitments from senator shelby and others that we would work together on this legislation on financial reform. i introduced a discussion draft of this proposal back in november, almost six months ago. senator shelby indicated that we had bipartisan consensus on at least 70% of the bill back in november, to get closer to a full agreement, i created four bipartisan working groups almost six months ago, mr. president, each of which was charged with achieving real and meaningful progress in various sections of the bill. and even when senator shelby and i found areas where we could not agree, i continued to reach out to other members of the committee, including my friend and colleague from tennessee, senator corker and others, spending weeks working to try to achieve a consensus on financial reform. it's not even a slight

exaggeration, mr. president, to say that we spend countless hours, phone calls, meetings, emails, discussions, day after day, week after week, month after month, to try to get closer and closer to a proposal here that our colleagues could support. you can see the results. the bill that we marked up in our committee last month is a much-changed proposal. the proposal i made in november with a discussion graph to reflect the work that had gone on over those many weeks and months, and the ideas brought to the table by colleagues of both parties by members of that committee and others. my friends on the other side of the aisle may not like every line in the bill that will now be before us in a few short days, but at the very least, let's not pretend that the bipartisan work that produced this legislation didn't happen. it did happen. that's a disservice to yourself, those who make these allegations and your good staff who worked hard over these many, many weeks

with my democratic staff and others to produce this product. if members want to vote against the bill, they can do that. that's their right to do so. they can go on record in support of leaving your constituents vulnerable to more lost jobs, more foreclosures, more shuttered small businesses, more wiped out retirement accounts. that's up to each individual member to decide for themselves that that's the vote they want to cast when it comes to this. but the outcome of this debate will mark -- will mark -- mark my words, will affect the economic security of ordinary americans, and they deserve to know the truth of what's happened. so today i want to talk about bailouts. nobody likes them, mr. president. under our proposal, they will never happen again. as the president said in his state of the union address, bailing out some of the large banks whose own mismanagement caused the crisis is about as popular as a root canal, to quote him exactly. that, of course, happened under the previous administration, i

should note, but serious legislators of both parties realize that we had no choice. our system was so broken, these companies had become too big to fail. if we did nothing, nothing else, our entire economy would collapse, we were told. you would t -- think if you wanted to avoid more bailouts, you would oppose efforts to protect the status quo. but wall street's special interests need a way to defend the broken system. after all, for many of them, the kind of mismanagement that cost of millions of jobs is the way they pad their profits and pay their lobbyists. and so they turn to grang luntz, their -- frank luntz; their political strategist. let me tell you what mr. luntz came up, and i quote, that was leaked from mr. luntz and others. let me quote the partisan memo. the single best way to kill this legislation is to link it to the big bank bailout.

end of quote. no matter what is proposed, no matter what's in the bill, the protections it includes, call it a bailout. it's a naked political strategy, mr. president. and if it succeeds, and this legislation goes down, and another crisis sinks the american economy, then the next recession, and all the damage that it will bring to the working families in this country, will have happened for the sake of that false talking point that mr. luntz has been proposing. now, i don't expect frank luntz to care about the truth of what we're engaged in here. that's not his job. he's a political strategist. he's to provide political talkintalking points to people n you want to defeat something. i don't expect the bank lobbyists or special interest to care about the truth. they don't seem to worry about that. but the american people serve better from us in this chamber, and that's why i've been so dismayed over these last 24 hours to hear members of this body repeat the falsehoods

concocted by special interests whose jobs and pensions are plenty secure, thank you very much, that this bill would lead to more bailouts. frank luntz suggested that allies of the big banks say, and i quote him, "if there's one thing we can all agree on, that's the bad decisions and harmful policies by washington bureaucrats that in many ways led to the economic crash must never be repeated." end of quote. the minority leader speaking yesterday, let me quote him. "if there's one thing americans agree on when it comes to the financial reform, it's this -- never again should taxpayers be expected to bailout wall street from its own mistakes. we cannot allow endless taxpayer funded bailouts for big wall street banks. and that's why we must not pay financial reform bill that's about to hit the floor." end of quote. remember what frank luntz said -- quote -- "the single best way to kill any legislation is to link it to the big bank

bailout." end of quote. mr. president, it's straight from the wall street special interest talking points. that's what they're determined to do to defeat this bill. by suggesting somehow that there's a bailout provision in this bill. nothing could be further from the truth. the bill, as drafted, ends bailouts. nothing could be more clear in the legislation. and let me tell you how we do it. first, for the very first time, mr. president, our nation will have someone with the job of monitoring the risks to the financial system in sounding the alarms before those risks can take down the entire system as it almost did. and the bill imposes tough standards on wall street firms that create those risks. our bill establishes a financial stability oversight council to monitor risks and requires the federal reserve to write strict rules including stronger requirements including capital, leverage, liquidity and risk

management on the largest financial companies making it hard for them to get too large and limiting the risk they represent. cracking down on the biggest players is critical to ending bailouts. and if a wall street firm does become too large or too complex and poses a great threat to our financial stability, the federal reserve has the power to restrict its risky activity, restrict its growth, and, mr. president, even to breakup those institutions. let me repeat that. if a wall street firm becomes too large or too complex, the federal reserve has the power under our bill to prohibit those activities including even breaking up those institutions. additionally our bill extends oversight and dangerous nonbank financial companies like a.i.g. that could pose a risk to our financial stability as it did. and it prohibits banks and other financial institutions that own banks from engaging in

proprietary -- second our bill eliminates the federal reserve's ability to prop up individual institutions using what is called the 133 authority. another way to stop banks from thinking that they could be bailed out if, in fact, they engage in activities that cause them to begin to fail. the fed's leading authority is strictly restricted. not expanded as some have claimed. third, mr. president, our bill sets up predictable, orderly and safe processes for shutting down dangerous wall street firms that fail without endangering the entire economy. no financial firm will ever again be too big to fail. quite the opposite here. we insist upon it that the provisions be in place so they can never once again make that claim that they are too big to fail. large, complex financial companies will be required to submit plans for their own

shutdown. we call them living also. if the company goes under. companies that fail to produce a realistic plan will be hit with tougher capital requirements, restricted on how much they can grow and even can be broken up. most large financial companies would be resolved through normal bankruptcy processes. that is the presumption in our bill, receivership. but where bankruptcy is not an option, the bill creates a mechanism for the fdic to unwind those companies. the management will be fired, shareholders will be wiped out and creditors will take their losses. and middle-income families on main street won't have to pay a penny. the largest wall street firms would have to put up the money, $50 billion in our bill, to fund the -- to cover the cost of liquidating their financial firms and any shortfall be made up by the largest an riskiest financial firms. why should the american taxpayer have to pay for unwinding these

companies? they should put up the money themselves so they're at risk of failing, let them pay for that unwinding that goes on. don't charge it to the american taxpayer to do it. and our bill includes those provisions. now, wall street doesn't like this fund. and they're plenty content to let taxpayers to continue to pay the price for industry mistakes. but let me be clear, mr. president, despite what their apologists may claim, these funds can be only used by the fdic and only used to liquidate the failed company, not prop them up. the bill imposes tougher standards on large, risky wall street firms. it eliminates the federal government's capacity to bail out financial companies and it requires that the financial firms write their own shut down plans an even pay for the liquidation process if it's needed. here's what i have to say to wall street, mr. president, if you have a better idea, let's hear it. if you have other ideas, let's debate them. if all your -- if all you have

up here is a -- is a black and white talking points that bear no relation to reality, don't reflect the efforts that have gone on for months to try and produce a proposal here that might attract prod support in this chamber where serious senators have done serious work and nothing but write it off somehow by quoting a -- a political strategist talking points that all of this effort i wonder what's been made for over these many, many months. senatosenator shelby, i'm told y staff and i, have dealt with 42 pieces of legislation in 30 months. i'm told 37 will become the law of the land because i made a determination as chairman to work together whenever possible to achieve common points. so my history is to try to achieve that whenever possible and i take great offense at the suggestion that it has been otherwise. the outcome of this debate affects the economic security of every single american an every single american family.

and what we've been through we should never have to go through again. and our bill takes steps to try and achieve that. not that we're going to stop every economic crisis in the future. that would be a foolish suggestion. but we have done is to fill in the gaps that allow this crisis to occur, provide tools for the coming generation so they can address a future economic crisis and still allow for the vitality of a financial services sector to produce jobs, create wealth, allow credit to flow and capital to form so an economy can prosper once again. trying to achieve those three goals is a hallmark of what i tried to put together in this bill along with my colleagues on the bank committee. i believe we've done a good job of achieving that i would be the last one to claim perfection. if others have an idea to do that, that's what a process of this is for. to cassit cassity gate and it lt is not partisan debate.

and to perpetuate it's too big to fail is po -- now the door's still open, mr. president, we're not on the floor debating this bill. i will be tong have meetings with senator shelby and others. but my patience is running out. my patience is running out. i've extended the hand. i've written provisions in this bill to accommodate various interests, but i'm not going to continue doing this if all i'm getting from the other side is a suggestion somehow is this a partisan effort. we've been through it over and over again on this floor for the last two years or year and a half, rather, and i think the american people are sick of it. they want to see us work together to achieve results that benefit them, not some political party, not some narrow ideology and certainly not the narrow interests on wall street. so in the coming days, i'll give you a bill i think you can vote for and stand up and proudly support and more importantly one that we can go to the american

people will not -- we'll not have to go what we've been through for the last two years and not again will another generation have to face what we did because of the financial existence in the structure. with that, mr. president, i yield the floor. mr. presidenti ask consent, by the way, i've been quoting from frank luntz's memo. i ask that the memo be put in the public record. i want the public to read what's been quoted on the other the presiding officer: without objection, so ordered. the clerk will call the roll.

quorum call: a senator:

mr. president? the presiding officer: the senator from delaware is recognized. mr. kaufman: mr. president, i ask consent that the quorum call be south bend with -- be dispensed with. the presiding officer: without objection, so ordered. mr. kaufman: i ask consent to extend morning business. the presiding officer: without objection, so ordered. mr. kaufman: mr. president, i have come to the floor several times now to discuss the problem of too big to fail, which i believe is the most critical issue to be addressed in any financial reform bill. financial institutions that are too big to fail are so large, so

complex and so interconnected that they can't be allowed to fail nor follow the normal corporate bankruptcy process because of the dire threat that would pose to the entire financial system. the largest six bank holding companies, bank of america, j.p. morgan chase, citigroup, wells fargo, goldman sachs and morgan stanley, are certainly too big to fail. the term may also cover a larger set of institutions. after all, last year's much vaunted stress test for the largest bank holding companies covered 19 institutions and even that exercise didn't include many other systemiccally nonbank institutions such as fannie mae and freddie mac, insurance companies, derivatives clearinghouses and hedge funds. while many in government industry want to eliminate the term too big to fail, the fact is that these too big to fail financial institutions are bigger, more powerful and more interconnected now than ever before. only 15 years ago, the six

largest u.s. banks had assets equal to 17% of the overall gross domestic product. the six largest u.s. banks now have total assets estimated in excess of 63% of gross domestic product. that goes from 17% of g.d.p. just 15 years ago to 63% of g.d.p. now. while some still argue that there are benefits to having very large financial conglomerates to make sure they are, firstly, everyone agrees that the problem of too big to fail still needs to be addressed. the disagreement is how this should be done. i was interested to hear senator mcconnell on the floor yesterday say we must never use taxpayer money again to bail out too big to fail institutions. no one wants to do that. no one is thinking about that. no one is planning to do that. the question is what is the solution to prevent these institutions from failing in the first place? the other party has put forward no solution, and doing nothing is by far the worst solution of

all. the minority leader came to the floor today and said the bill before the senate is good for wall street and bad for main street. that is simply an astounding statement to make, mr. president. main street wants congress to act. main street wants congress to ensure that wall street never engages in reckless behavior again, and yet what solution does the minority leader offer? despite the experience of lehman brothers, the minority leader apparently believes we should do nothing and simply stand back in the future and let these mega banks fail when they take risks that go wrong. the minority leader said yesterday, and i quote -- "the way to solve this problem is to let the people who make the mistakes pay for them. we won't solve this problem until the biggest banks are allowed to fail." end quote. astounding. his resolution of too-big-to-fail banks need to be dealt with in the bankruptcy process. in my view, that approach is dangerous and irresponsible.

if we do nothing and wait for another crisis, future presidents, whether republican or democrat, will face the same choices as president bush. whether to let spiraling, interconnected, too-big-to-fail institutions like a.i.g. and others collapse like a contagion, sending the economy into a depression or step in ahead of bankruptcy and save them with taxpayers' money. if that happens, the choice of allowing bankruptcy will mean tremendous economic pain on main street america. instead of some congress in the future will similarly be faced with another tarp-like decision which in the fall of 2008 many in both parties believe they had no choice but to support, including the minority leader. mr. president, relying on bankruptcy law is not the answ answer. the approach by many conservatives and those on the other side of the aisle to simply let them fail and let u.s. bankruptcy law, where shareholders get wiped out and creditors take a haircut,

reimpose the discipline in the financial system that was lacking in the run-up to the crisis. for example, peter wallaceon and david skiel have argued in the "wall street journal" -- and i quote -- "the real choice before the senate is between the fdic and the bankruptcy courts. it should be no contest, because bankruptcy courts do have the experience and expertise to handle a large-scale financial failure. this was demonstrated most recently in lehman brothers' bankruptcy." if bankruptcy was the cure in lehman brothers, it was one that almost killed the patient. when former treasury secretary hank paulson decided to let lehman brothers go into bankruptcy, our global credit markets froze and creditors and counterparties panicked and headed for the hills. instead of imposing market discipline, it only prompted more bailouts and almost brought down the entire financial system. it ultimately took 18 months to close out the case on lehman brothers, an eternity for financial institutions that market-to-market and fund their balance sheets on an intraday

basis. bankruptcy is even more an unattractive option when one consider lehman was an investment bank, while today's megabanks operate under the bank holding company umbrella. it is virtually impossible to have an integrated resolution of a large and complex bank holding company. the bank subsidiary would go into fdic resolution, the insurance affiliates would go into state liquidation procedures, the securities affiliates would go into chapter 7 while other affiliates and the overall holding company would go into chapter 11. a plan this unwieldy is no plan at all. in fact, the only way to truly eliminate the problem of too-big-to-fail banks is for congress toage. it is true that i believe we should go further than the current bill. i would break these banks apart and limiting their size and leverage. given the consensus of failing to do enough to prevent another financial crisis, the safest thing to do today is for congress to put an end to too-big-to-fail. if you believe these megabanks are too big, if you reject the choice of bankruptcy that would lead to a recession or

depression, then breaking them up is the logical answer. that's the only way that greatly diminishes the future probability of another financial disaster. the great depression of the 1930's must be avoided at all costs. two years ago, permitting lehman brothers to enter bankruptcy brought about the great recession, the most painful economic downturn this country has seen since the great depression. if we were to let other institutions fall into bankruptcy, adopting the minority leader's approach, the horrors our economy would have faced would make the realities of the past two years pale in comparison. i certainly don't want to rely on bankruptcy to break the boom-and-bust bailout cycle. i believe congress should break the cycle today. we should not follow an abdication of regulatory responsibility with an abdication of democratic government. as representative of the people most hurt by the financial crisis, congress should act decisively to ensure that we benefit again from decades of financial stability.

not do nothing, which most assuredly would leave us to live on the precipice of another financial disaster, as the my in order leader would have us do. mr. president, we need a full and straightforward debate in the senate about what congress must do. in my view, the mere existence of too-big-to-fai-fail instituts per pitch what's a long boom-and-bust cycle of bailouts. we need to clearly and decisively preemptively deal with the problem of too-big-to-fail now. as senator levin pointed out this week when he kicked off the permanent subcommittee's hearings on investigation on the financial crisis, there are ma many, many eerie parallels between this crisis and the one in the late 1929's and early 1930's. in both cases, bankers were derelict in their duties while drawn to disruptive and excessive speculation fueled in part by their compensation arrangements. does that sound familiar? bankers were derelict in their duties while drawn to disruptive and excessive speculation fueled in part by their compensation

arrangements. in the 1930's, in response to these problems, we built an enduring regulatory framework that put our entire financial system on stable footing for decades. we simply cannot afford another financial meltdown. the choice is clear. but it is also clear the worst thing we can do is to take the dangerous task -- risk of doing nothing. to me, the choice that is best for the american people is cle clear. mr. president, iield the floor. a senator: mr. president? the presiding officer: the senator from virginia is recognized. mr. warner: mr. president, i ask unanimous consent to continue to speak as if in morning business. the presiding officer: without objection, it is so ordered. mr. warner: mr. president, i also have nine unanimous consent requests for committees to meet during today's session of the senate. they have both the approval of the majority and i minority leader -- and the minority leader. i ask unanimous consent that these requests be agreed to and these requests be printed in the record. the presiding officer: without objection, so ordered. mr. warner: mr. president, today

i also rise to discuss financial reform. and to be blunt, to try to set the record straight about some misleading statements that have been made on this floor about both the process and the substance of the bill that the banking committee reported out recently. under chairman dodd's leadership and working with ranking minority leader -- ranking leader -- minority member senator shelby, i've worked hard since coming to the senate to understand the root causes of this crisis, the crisis that we are beginning to emerge from economically, but to recognize that we've got to have a robust solution in place to make sure that we never again are confronted with the type of crisis and the lack of preparation that this nation faced back in the fall of 2008. i also come to this body, mr. president, as i think you know, as somebody who spent an awful lot of time around the capital markets.

and quite candidly, i'll put up my free market credentials and pro-capitalist credentials against anybody in this body. and i come as well to the floor today as somebody who's tried to recognize that the financial crisis braps more than any other -- perhaps more than any other issue that we address doesn't have a democratic or republican root of origin nor does it have a partisan solution set, and that we've got to recognize that perhaps on this piece of legislation more than ever, we've got to have a bipartisan basis to establish a long-term financial framework for the next hundred years. i'm very clear of the fact -- i'm very proud of the fact that wive worked so -- we've worked so far in a bipartisan way. i particularly have appreciated over the last year the partnership i've built with senator corker from tennessee where we both recognize that while we both had backgrounds in business and both had experience and exposure to the capital markets, the complexity of trying to rewrite the financial rules not only in a sense for

this country but because the rest of the world will follow what america does, for the whole world, would require a great deal of humility and a recognition that we have got more to learn. so senator corker and i, starting early in 2009, started holding a series of seminars, in effect, where we brought in established financial leaders, invited members of both parties to come and just learn with us as we tried to put in place rules and regulations governing the financial system. and while i've been disappointed particularly by the republican leader's comments yesterday, i'm not naive. i still believe there is a path to a bipartisan bill. what we simply need to do is lower the rhetoric and do what is needed for the american people: put in place a robust set of rules and robust regime of reform that will ensure that

never again will the american taxpayer have to bail out firms that are too-big-to-fail. now, this is one area -- perhaps there were differences that we had on how we approached health care, this is one area where i think, whether it's a liberal blogger group or a tea party convention, where you get unanimity of opinion that never again should the american taxpayers be put at risk because of the financial interconnectedness of large firms. soon the senate will consider the bill that chairman dodd has put together. and while there are bits and pieces that different folks will disagree with, this is a strong bill that vastly improves regulation and structure of our financial markets. let me repeat, senator dodd has put together a strong bill. one part of the bill that senator corker and i have been

particularly engaged in is on systemic risk in ending the notion of too-big-to-fail. and that was the subject yesterday of some wildly inaccurate statements on this floor which i'm here to address. i have to admit that i'm deeply invested in this section and that investment comes in no small part because of the months of work that senator corker and i put into this area. and let me acknowledge at the front end, there are parts of this section that both senator corker and i will want to change and amend. those changes and amendments we could probably reach agreement on within five or ten minutes. but the basic structure that we set up is one that i believe will lead to meaningful financial reform. now, let's go to what we're talking about. we recognized at the outset that never again can we allow the financial system and the interconnectedness of this financial system to come to the brink of crisis and, in effect,

the regulatory system and the legal system have no recourse and rules on how we deal with an impending crisis. one of the things we started with and recognized at the outset was that in the past, there was very little collaboration and coordination between different regulators. you might have the prudential supervisor that's looking at the dpoz to her institution -- depository institution having one view of an institution. you might have the regulator looking at the bank holding structure having another view. because these complex institutions may also have securities aspects, you have the s.e.c. over here. there was no coordinated place where this collaborative view beyond the stove pipes and beyond the silos could all come together and recognize that while the institution's single actions and a single sector might not pose a systemic risk but in toto, though, these risks when aggravated together put our financial system in jeopardy.

so what do we propose? working with senator corker and experts from the industry, we propose creating a systemic risk council that would, in effect, be the early warning system for our overall financial system to spot these large systemically important institutions, in effect, put some speed bumps in their path. i may not even agree with some of the members on my own side of the aisle that we ought to go out and proactively break up these institutions just because they're too large. size in and of itself was not the problem in certain cases. it was the interconnectedness of their activities and the fact that if you started to pull on the string of some of these activities, there were -- the effect that had basically collapsed the whole house of cards. it was not size alone. it was interconnectedness. and recognizing how we spot that interconnectedness at the front end and put speed bumps on these large systemically -- systemically risk eye institutions is terribly important. one of the things that we pound in our investigations was that

oftentimes the regulators does not have current, realtime data on the extent of these transactions and this interconnectedness. so a part of the bill that really has received very little attention is the creation of the office of financial research that will aggregate on a daily basis all of the status of transactions of all these institutions and allow us to have at least the transparency at the regulator level to know what's going on and allow the regulators never again to say, well, the last piece of data we had was the last quarterly report. this information will flow up to the systemic risk council. the systemic risk council will then be able to put in place what i call speed bumps on these systemically large institutions. increased capital. one of the questions that comes back time and again from financial experts, we need to increase the capital reserves

levels of many of these large institutions. we've got to look at their liquidity ability. in certain cases, the institutions that failed during the crisis were not insolvent but there was a rush because of fear in the system and liquidity crisis is caused. so how do we make sure we use liquidity in a better way? leverage. traditional financial institutions -- and i look at our neighbors in canada -- about a 20-1 leverage ratio. we saw in some of the off-balance sheet operations not 10-1 or 20-1 traditional rules but 50-1 and 100-1 rench ratios. we put if place -- something advocated by the folks at the fed -- a whole new set of financial structure in these large institutions that will be -- that will convert to equity in the precursor before a crisis takes place. in effect, shareholders will be diluted by this contingent

capital requirement, putting again more pressure on management, not to make undue risks. we believe these speed bumps, while they may not prevent any future crisis, will be huge impediments to these large systemically risky institutions taking undue risk and outrangeous actions. we've also put a new requirement in place, one that again has not gotten a lot of review. but we will literally require the managements of these large institutions to put in place their own funeral plans, their own plans on how they will unwind their institution through an orderly bankruptcy process. i believe there were large systemically important institutions in the fall of 2008 in effect came to the regulators and said, we're so big and interscected that we wouldn't even know how to unwind ourselves. never again should we allow that

to happen. we allow the regulators to work and in fact bless the funeral plans that these systemically large institutions will put in place. now, we think that we have put these appropriate barriers that will restrict some of the unduly risky activities on these large institutions, but you can't predict, you can't foresee every crisis. so what we need to do is set a framework on how we would address the crisis if these speed bumps and this early warning system doesn't fully function. i don't actually -- can't completely agree with my colleague from delaware. i do believe we need a strong, robust bankruptcy process that gives predictability to investors so they know what will happen through the normal dissolution of a firm that's made mistakes in the marketplace. and we need to ensure that bankruptcy becomes the normal default process.

anderings again, as i mentioned, having these -- and, again, as i mentioned, having these firms write their own funeral plans, their own bankruptcy plans, that have to be approved by the regulators, will give us guidance on that path. we also have to realize when there may be a management team that doesn't see the hand writing on the wall or when a firm, even with awful these checks, is falling into the potential of its failure causing systemic risk, we have to have the ability to act. but let me state very clearly -- the resolution process that was put in the dodd bill, no rational management team would ever throact choose because -- no rational management team would ever elect to choose because it will lead to extermination of the firm. the share's common equity will be wiped out, the firm's management will be wiped out. resolution will never be chosen as a preferred route. bankruptcy will be the preferred

route. even in that case we still put additional protections in place so no future administration, having seen the blowback from the public on using resolution in 2008 -- i can't imagine any future administration actually wanting to use this mechanism, but to ensure again -- and senator corker and i spent a great deal of time on this -- we have again protection so that resolution is not misused. we put very strict criteria before it can be implemented. we require three keys in effect to be turned simultaneously. the nuclear option analogy of different keys being turned before this tool could be used. we require the chair of the federal reserve, the fdic, and the treasury secretary in consultation with the president to all agree that we have to act to move a firm into resolution rather than going through bankruptcy. but that's, again, not all. senator corker i think rightfully pointed out that we

need, in case there was an overaggressive administration, a judicial check as well. so we put an additional judicial check in place before resolution could be implemented. so resolution only as the last resort, only as a path to make sure that the parts of a systemically important firm can be transferred to some other existing entity, not preserved -- the firm will be wiped out -- but that the functions that are important don't bring down the overall financial system. one of the most curious comments of the republican leader yesterday was the critique that if you invoke resolution, the question becomes, where's the money going to come from, and who's going it pay for it? what i found very curious from the republican leader's comments yesterday was that we -- and

this was by no means a -- set in stone, put in place a $50 billion fund that would be prefunded by the industry, not the $150 billion that was in the house bill that could rightologicarightfullycreate mo. but a dollar amount up front -- and it could go down lower -- that would keep the lights on at these institutions until the fdic could go out and in effect borrow against the unencumbered assets of this firm to get the real i dollars in place to keep the resolution process going in an appropriately functioning way. $50 billion the right number? may not be. reasonable people can disagree. $25 billion might be the right number. but there may be even other paths. senator cork ertd and i worked on the notion of a trust -- senator corker and i worked on the notion of a trust that could be created. but what i find curious is no

one in the financial sec at the that we have spoken to -- in the financial sector that we have spoken to think this will be an adequate amount of capital to resolve the whole crisis. the funding to resolve the whole crisis will come from the ability we give the fdic to borrow against the unencumbered assets. if there is a better way to get there, we're all for it. at least i can say from my side, i'm willing to look at any other option. but what i find curious is i believe that if we had not put up this industry pretundzed amount in effect to bridge until we can actually get the fdic floss place, we would hear criticisms at least from some who are saying not putting up any industry prefunding would allow taxpayer exposure. and one of the things we want to make clear is that taxpayers, again, are never, ever spoked to the kind of risk -- never, ever, exposed to the kind of risk that cook place in 2008.

i would alsod that whatever these prefunds, trust instruments, or even the funding that would come from borrowing against the unenchem beard assets, we -- the unencumbereddate assets, that any of these firms will be rebuked based upon those institutions that benefited, those institutions that also were part of the causation. again, let me stress all of these funds, whatever will be repaid -- and, again, whatever funderses are invested in these institutions in the interim will not go in as what happened in 2008 shall as common equity, as an effort to neivelg prop up the -- in an effort to, in effect, prop up. but will go in to top the creditor process, debtor and possession financing. did we go to this perfect?

no. there are ways we can improve. but the framework we put in place, the almost uniform response we have received has been, we have taken a gigantic step towards ending too big to fail in a rational, thoughtful approach. i see my colleague, the senator from tennessee, has arrived on the floor, and i again want to compliment him for his work, the fact that this is been -- both of us said at the outset that neither one of us was this religion. we just need to get it right. if we have to ruffle a new feathers on both side of the aisle so that never again are the american taxpayers put in the position they were in 2008 rveght then so be it. i appreciate the senator from tennessee's good wor work on ths effort. i appreciate our working together on a preference toward bankruptcy that we have to have the initial check, that we can't go out and grab firms

willy-nilly. i ask my colleagues from both sides of the aisle to lower the rhetoric a bit, to recognize that this can and still should be the place where this senate shows it can work in a bipartisan fashion to put a set of rules in place so that we can witput the appropriate speed bus in our financial system for those firms that are systemically important. that we do put financial rules in the road for the 21st century. that we do allow america to continue to be the financial capital of the world and the innovation in financial products capital of the world. i think we can still get there and i look forward to working not only with my friend from tennessee, but colleagues on both sides of the aisle to get it right. mr. corker: mr. president? mr. warner: i yield the floor. the presiding officer: the senator from tenton. mr. corker: mr. president, i'd like to speak for a couple of minutes.

i think i have permission to do that. then i within deared if i could have permission from the president, mr. president, to enter into may be a couple-minute colloquy with my friend from virginia. the presiding officer: is there objection? mr. baucus: reserving the right to object, mr. president, i might inquire as to under the current procedure, when is the bill expected to be reported? the presiding officer: the bill should be reported at this time. mr. baucus: at this time? the presiding officer: at this time. mr. baucus: mr. president, i suggest regular order be followed. mr. corker: okay. the presiding officer: is there objection to the request? hearing none -- is there objection to -- mr. baucus: [inaudible] -- these senators to speefnlgt i ask that the bill be reported and that the senator then being rebbed to speak. the presiding officer: without objection. mr. baucus: senator corker first and then senator

lemieux. the presiding officer: is there objection? without objection. morning business is closed. under the previous order, the senate is -- will resume consideration of h.r. 51, which the clerk will report. the clerk: calendar number 323, h.r. 4851, an act to provide a temporary extension of certain programs and for other purposes. the presiding officer: under the previous order, the time until 12:30 will be equally divided tweend the it would leaders or their -- between the two leaders or their designees. the senator from tennessee is recognized. mr. corker: thank you. i had not planned to come to the floor today but my great friend from virginia, senator warner, is here, and i did want to clarify a couple of things. i didn't hear awful his comments. i -- i didn't hear all of his comments. i very much appreciate the work we've been able to do together. i think what's happening on this financial regulation bill is a lot like what happened during

the health care debate in many ways. there's something that's being focused on and some of it is sort of being blown out of proportion. but i did want to clarify something. senator warner spent a lot of time talking about a couple of titles in the bril bill that ser dodd has put forward. there are other places in this bill that do in fact create an opportunity for large institutions that fail to continue on. treasury got involved in this bill a couple weeks before it came -- about a week before it came to committee and there are some loopholes in this bill that give treasury and the fdic the ability to allow large institutions to continue on without failing. my sense is, the senator from virginia knows what those are. my sense is the senator from connecticut, who is the chairman of the committee, knows what

those are. and my sense is that on those topics -- and they do exist, so criticisms about the dodd bill, criticisms about the dodd bill allowing potentially creating some loopholes for large institutions not to go through orderly liquidation or bankruptcy, they're valid. but the fact is, i think we could fix those in about five minutes. my point is i think everyone understands what treasury did. i think everybody understand ises what the fdic did -- understands what the fdic d i think we could come to conclusion in solving that very, very quickly. i just wanted to say that that was not part of the title that senator warner came up w the focus has been on the $50 billion sphundz. i think senator warner eloquently talked about. there was a lot of gaivment the fdic wanted $50 battalion as a debtor in