prosecuted. >> publishing in the newspaper, the proper authorities will no, someone who is in a position to do something? >> guarantee you, aware of the fact that we do these things. this is something i have been doing for several decades. >> i have to relinquish my time. >> the chair recognizes mr. wilson. ..

we would look at these levels and understand why we tripped above a certain trigger. some might have been volatility, some might have been because the hedge didn't work, some might have been because change of diversification. one of the biggest moves in our risk appetite was our changing, our own diversification benefit. we took exactly the same portfolio, gave a lower rating to the diversification benefit, i forget the specific appetite, let's say from 3,000,000,006 to 4 billion, that was all our

doing. it wasn't that we had bought something and in all fairness, given the market the way it was, you could have the same position from one day to the next, and because of volatility and triggers and interaction of hedges, that in itself, exactly the same position, could change your risk appetite. and in response to that we reacted in a very strong, aggress of way and brought down those vulnerable securities, residential mortgages, leveraged loans, that was our focus. >> a lot of risk and really increasing gamble. do you gamble mr. fuld? >> not the way you're asking, no. >> because some would say the behavior that went on at lehman as more that of a gambler than an executive on wall street.

>> i think that those that don't have the information and the accurate information might say that. >> do you feel that with the information that you had provided that it wouldn't look like as much of a gamble, is that correct? >> the information that i provided today is a tiny microcosm of who we were. please understand, i hesitate to say this, because you will -- whatever. we were risk averse. commercial real estate, i know, i know -- >> how can you say that? >> i walked right in to that one. commercial real estate was an area, where over the last seven to eight years, terrific team, very talented, smart decisions, and i will tell you, that the decisions that we made and the properties that we bought in

commercial real estate, strong management teams, strong properties, strong locations, i will look at you though and tell you terrible timing. bad timing. no. terrible timing. >> i'm glad -- i have a couple other questions i'd like to get in. before lehman bankruptcy, treasury secretary paul wallison, the federal reserve chairman bernanke, told us our financial system could handle the collapse of lehman. it is clear that that was not true. and from this report, it appears to me that the company knew that. why? do you agree with that? >> i'm sorry, you say the company meaning -- >> lehman. >> we told secretary paul wallison on that fateful weekend

that if you -- because we had been mandated, we didn't choose, we had been mandated by the fed to dechair bankruptcy. -- declare bankruptcy. we told secretary paul wallison, if you do that, -- secretary paulson, if you do that, there can be no orderly winddown, there will be massive repercussions in the swab and derivatives market that you will not be able to control and this will be a disaster. >> do you believe that there were people inside the lehman organization fighting for government help besides your conversation that you had with paulson? >> not that i'm aware of, sir. >> the gentleman's time has expired. >> thank you, mr. chairman. thank you, mr. fuld. >> thank you, mr. chairman. mr. lee, at the end of every quarter, transactions were

temporarily removed from the balance sheet. when were they put back on? >> it's a continuous probable zest, we peaked at the end -- process, which peaked at the end of the reporting period, so if you read the examiner's report, it's like a 10-day stretch. there's not a set number of days and there was always a level base, one if five, that was on all month long. >> so, mr. fuld, with you were talking about any given day, there were a number of sales transactions. is it fair to say that at the end of the quarter, with repo 105, it was completely different than the rest of the quarter? >> i would say that the examiner's report had a very interesting chart, which showed that it spiked on the quarters. >> do you know why it spiked on the quarters? >> on the quarters' ends i should have said. >> again, i will say, i was not

there for structure or creation of these, but i will say that these transactions were not created by lehman brothers. they were created and modeled after faz1 from. -- faz140. i do not believe that faz-140 created this rule to give firms the ability to create a gimmick, mislead. >> let me ask you this. do you think that the use of repo 105 transactions, do you think when you use those, it fairly reflected the condition of lehman brothers? >> i do, because there was if fact, and this is a piece that was said before, which i did not have a chance to respond to,

given what i said of our ability to sell not monthly or weekly, but daily, $50 billion -- >> right but -- >> if i may, sir, please. >> i'm just trying to save as much time as possible. go ahead. >> i'm usually pretty quick. i apologize. we really could have sold 50 billion a day and we did. the reason that we took these back, there had to have been a business purpose. and the examiner i am self talks about a -- himself talks about a business purpose, because even if this sales transaction, there was an implied spread. the examiner talks about it himself. there would have been no other reason to buy these securities back. they could have sold 50, 50, an another 50. >> let me ask you this. did the chief financial officer or the chief risk officer or the head of capital markets product control, did any of those folks tell you about the existence of

repo 105? >> as i said before, not to my recollection at all, did i have any conversations. >> mr. cruikshank, with did you first become aware of repo 105. just a quick, with did you find out? >> during the examiner's investigation, when he interviewed me. >> ok. mr. fuld, in talking about risk averse, at 30-1, did you think that was risk averse, a leverage figure? i mean, is there any leverage figure that crossed your risk averse concern? >> i think the 30-1 is a misconception. 50% of our balance sheet was a match book. not to get technical. >> no, that's fine. >> match book was a series of short-term financings, where we would sell securities to clients, buy them back and finance them. they were a series of three, five, seven day transactions,

with very little, if any risk. so i looked at our balance sheet without. >> so you feel those 30-1, 40-1 references, those are not fair in your mind? >> correct, sir. >> all right. now let me ask you this. do you think that packaging no dock loans, no document loans, do you think those are solid products? do you think it made sense to be involved in those? >> i can only tell you that at the time when we made those loans or, actually, more important, not so much we made the loans, but we bought, as a conduit that our investors -- i'm put this differently. we never created a package thinking that our investors were going to lose money. that's not what our firm was about. >> so let me ask you this. no document loans, interest only loans, in some mezzanines that

you look and you go, how could they ever repay, were you -- was anybody in the firm aware of the fact that each step of this made it much more likely that these bonds or loans could never pay off? >> when we operated our own origination platforms, we stepped in, we changed management, where we thought it was appropriate. we changed underwriting standards, where we thought they were lax, we discontinued certain products where we thought there was vulnerable. -- vulnerablebility. i believe that we did take a very solid and prudent approach to -- our goal was not to sell securities that were going to hurt clients or hurt those people that were taking mortgages. we didn't want to be in the repo session business. that wasn't our goal.

>> let me ask you one last question and going back to your initial remarks. about there was not a capital hole, but it still -- lehman still went away. was it a loss of confidence, was it a -- i mean, if the capital was there, the $26 billion was there, why did we wake up and see lehman gone? >> why did we wake up? >> yeah. >> why, if the $26 billion is there, you got your board of directors firing away, working hard, how did it go down finally? was it a loss of confidence, everybody calling in on you at once? >> i think it was a loss of confidence. i think people have heard me talk long enough about naked short sellers. i don't want to do it again. i think that we could not convince the world that we could not convince the world about the

condition that we were in. that we had collateral, and we had capital, we had a solid plan, and we did in fact have a solid plan. we could not convince the world -- s&p came out with a report, don't hold me to a date, but a week or 10 days after, and said why was lehman single a? they talked about our strong franchise, they talked about our having raised capital. they talked about our ability to earn money. they talked about our liquidity. they talked about those things. we lost, i don't know, $25 billion of liquidity in two days. >> thank you very much. thank you, mr. chairman. >> thank you. sure. >> thank you, mr. chairman. mr. fuld, tens of thousands of people in my district are out of

work, have lost the opportunity to build classrooms because they invested in investment grade lehman brothers stocks and bonds. they've lost it all. now i have no consolation in the fact that you may have to live with that every day. that's not good enough. why is it you sold your home in florida to your wife for $100? >> that was -- that was misrepresented. long before lehman had any problems, -- this is a little bit personal, but you've asked me the question. >> it's public information. >> you've asked me. kathy decided to sell some her

art, and so that we had equal assets, it was her art, in her name, i put the house in her name to rebalance that. very plain, very simple. that was decided long of before lehman went down. >> but it took place in october -- >> loan way out proportion. >> it took place in october, after lehman had fallen. >> i had made the decision back in may and june. >> all right. let's move on then. >> i'm sorry. in all fairness, these things don't get done overnight. >> you've answered the question. let me move on to another question. you said in your testimony that you feel vindicated by the results in mr. valukas' report and yet mr. valukas clearly states over and over again in his report, that there are colorable claims that can be made against lehman for misrepresenting the 10 -- 10k

and the sk document, in fact, he says, billions of lehman shares traded on misinformation. so there's nothing in this report that vindicates you. there's plenty of information in this report that suggests that the s.e.c. did not do its job, that the fed may not have done its job, but that you in fact misrepresented lehman's status. now, you had said that you did not know anything about repo 105, and yet, pay cording to mr. valukas having looked at five million e-mails, he says that there's every reason to know that you did. having said that, you have to be concerned as the c.e.o. of the company, with the rating agenc agency's rating of lehman, correct? >> yes. >> that's got to be number one on your priority list, to make sure they continue to rate your

company and your products as investment grade, correct? >> on my list, but clearly not number one, but on my list, yes. >> was it number 10? >> i can't quantify. my number one concern was protection much our capital. and shareholder equity. >> and shareholder equity has everything to do with whether or not the rating agencies are grading your products as investment grade. >> that's actually a very interesting question. the rating agencies reacted more to our stock price than they did to our timeliness. the rating agency's focus on debt is the timely ability to pay back debt. they reacted more to our stock price where they heard the

rumors about the hole in l balance sheet and thought that we couldn't raise equity. one of the real shortfalls was our ability, with i said we couldn't convince the world, there was so many rumors about lehman's condition that people thought that given that hole, we wouldn't be able to raise equity, when in fact we had the equity. >> mr. fuld, excuse me, but my time is about to run out. let me ask you one last question. have you ever shorted securities that you were selling to the public? >> i myself? >> pardon me? >> i myself? >> your company. >> not that i'm aware of. >> thank you.

>> thank you, mr. chairman. there's been several things that you've answered today or answered to the bankruptcy examiner, not that you're aware of, or not that you recall. did you review any documents in preparation for today's hearing? >> yes, ma'am, i did. >> and what were those? >> i don't even know how to begin to answer that. >> did you practice your answers for today's hearing with any kind of a murder board? >> i'm sorry, with a who? >> did you rehearse, did you go over some practice questions? >> i wrote questions for myself. i thought about them. >> engage in a murder board preparation, where other people asked you questions? >> a murder board?

>> you've not heard that term before? all right. move on. >> excuse me. let me ask you, 15 seconds, i don't want to leave that hanging. a murder board is what they call in administration, when they prepare a potential -- a nominee who is facing confirmation to appear before a senate committee and be attacked. >> a separate group? >> no, i would -- i actually wrote out a number of questions myself. >> so with -- did you consider that we might ask about the warnings mr. paulson gave to lehman about the state of lehman's balance sheet, did you review that? >> no, i didn't. >> and do you recall mr. paulson's warnings? >> i read his book, i'm embarrassed to say, but i read his book. >> do you recall mr. geithner's concerns and urging that lehman move to a more conservative

place with this balance sheet? >> president geithner and i had a number of conversations regarding liquidity, potential capital raised. i do not recall a warning from him. >> ok. do you recall a warning from the office of supervisors that with the arch done deal, that you were maturely overexposed? >> i do not. >> do you recall the concerns of madeleine or michael gillman or matthew lee with respect to the risk management of -- risk levels of lehman or offbalance sheet accounting? >> start backwards. i saw matthew lee today, he

reminded me that he and i had met at a social event, so i was not familiar with him. michael gelvan, longtime member of the firm. i will only tell you that the day after mr. gelvan left the firm, the senior officer that took his place, came to see me, told me that we were overexposed in leverage loans, i said how bad is it? he took me thank you it. -- through it. i said what's your recommendation. he said, let me bring it to executive committee, but i'd like to bring it down. i said, bring it to executive committee, start to bring it down today. and from that point, we took it down to something like from

45 billion thrars to $7 billion. >> and in any of his discussions of lowering your exposure or lowering your leverage, to include lowering leverage specifically for a quarterly report to investors, with the s.e.c., but specific targets of lowering your leverage for the quarterly reports for the investors -- >> i'm sorry. are you asking me, did i ever set a specific target? no. >> and you continue to say that you do not recall engaging in any decision making or even hearing about the use of repo 105, with respect to that quarterly report? and moving them on or of off-balance sheet to improve how far that balance sheet looked for those investors? >> i recall no conversation and i recall seeing no document. >> did you -- do you recall an

individual by the name of, i believe, david einhorn? >> i know his name. >> were you concerned with what short sellers were saying about your company? >> yes, i was. >> and was he one of those short sellers? >> i believe he was. >> and were you aware of the speech that he gave to a high level group of investors in which he criticized your first quarterrer report and questioned the numbers in your first quarter report, first your 10q filing? >> i don't have all the pieces of that, but i was very much aware that he was claiming that we misrepresented items in our -- i forget, cdo and cdl's, claiming that they were all mortgages. they were not. they were corporate loans. we tried to tell him that, he

ignored that, he continued to talk about lehman. i'll be kind and just say in an unflattering way. >> well, in any of that discussion and taking a look at what the reasons were for maybe some of these discrepancies, did the use of repo 105 come up at all? >> not at all. >> and -- i'm over time. >> well, not as far as some other members, but yes, somewhat over time. the care does thank all the witnesses for their testimony today. the chair notes that some members may have additional questions for this panel, which they may wish to commit in writing. without objection, the hearing record will remain open for 30 days for members to submit written questions to these witnesses and to place their responses in the record. this hearing is adjourned.

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[inaudible conversations] >> here's what we're covering on c-span3 today. first, health and human services secretary kathleen sebelius is on capitol hill, to discuss her department's annual budget. our live coverage begins at 10:00 a.m. eastern time. and at 2:15 p.m. eastern time, the senate budget committee, as they work on the fiscal 2011 budget resolution. watch it live on c-span3 or on our web site. c-span.org. >> and the u.s. senate about to gavel in. first up, an hour of general speeches. then two judicial nominations, chris schroeder to be assistant attorney general, a vote on his nomination expected by early afternoon and the nomination of thomas venasky to the third circuit court of appeals, another vote expected today. of off the floor, continued work on financial regulations, a hearing today, a mockup hearing

in the agriculture committee, that's underway now and you can follow it on c-span.org as they look at derivatives, and that bill may be on the senate floor early next week. now live senate coverage here on c-span2. eternal god, thank you for being our strength and shield, for we trust you to guide our steps. bring unity to our lawmakers so they will be a force for good for the american people and the world. refresh their faith, renew their vision, and rekindle their

courage so that they can find common ground and glorify you in the living of their days. stir their hearts with the presence of your spirit, preparing them to be instruments of your will. we pray in your sacred 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., april 21, 2010. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable tom udall, a senator from the state of new mexico, to perform the duties of the chair. signed: robert c. byrd, presidet pro tempore. mr. reid: mr. predent the presiding officer: the majority leader is recognized. mr. reid: following leader remarks, the senate will be in a period of morning business for one hour. during that time, senators will be permitted to speak for up to ten minutes each. the majority will control the first 30 minutes. the republicans will control the final 30 minutes. following morning business, the senate will turn to executive session to debate the nomination of christopher schroeder to be an assistant attorney general. there will be up to three hours for debate prior to vote on confirmation of this nomination. upon disposition of the schroeder nomination, the senate will consider the nomination of

thomas vanaskie, united states circuit judge for the third circuit. there will be three hours for debate prior to vote on confirmation of vanaskie. mr. president, i would note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. reid: i ask unanimousconsenm be terminated. the presiding officer: without objection, so ordered. mr. reid: mr. president, every one of our service members deserves the unqualified appreciation and admiration of the united states senate and our entire nation. today, i want to salute the service of one such soldier, a man who first answered his country's call in world war ii and hasn't stopped. bob o'malley served our nation with distinction in the tenth

mountain division in combat in europe. he was a sergeant, a squad leader who led his men bravely and with honor. he put his life on the line on many occasions to protect his men, fight for freedom against nazi germany. he was recognized with his squad's admiration, combat infantry badge and, because he was wounded, a purple heart. but he hasn't stopped serving his country. bob came to washington in 1965, worked for congressman robert sweeney before starting a 27-year career with the doorkeeper of the house of representatives. that's where i first met him as a young member of congress. the doorkeeper mr. malloy and mr. o'malley had this suite of offices and it was kind of a hangout for democratic members of the house and especially it was a way for new members of the

congress to become acquainted with what was going on over there. they were very caring about the new members and always pointed us in the right direction. i have always remembered those two men for all the many good deeds they did on my behalf. his was a 27-year career with the doorkeeper. as i indicated, that's where i met him. by the time the war in afghanistan started in 2002, bob had retired from service in the house of representatives. most retirees may be content to seek a well-earned life of leisure but sergeant o'malley did not. he signed up for a new and worthy mission, waking every day to serve our nation's wounded warriors. when the war started, he went back to work as a volunteer, again a volunteer, supporting and caring for the men and women

of the tenth mountain division, his old unit. he has made countless visits to walter reed, the great medical center where these wounded warriors come to recuperate. on all these visits to walter reed, he would take countless hours, talking and sharing stories about the division and taking his fellow veterans to ballgames and other events, including the sharing of meals on many occasions. when many of these wounded warriors couldn't make it home for the holidays, bob would reach into his own pocket and pay for thanksgiving, christmas, and new year's dinners for soldiers and their family at some of the finest eateries in the washington, d.c., area. bob says that helping soldiers recover from their war injuries has added years to his life.

we know it's added years to the lives of those he helps also. bob o'malley would be the first to tell you that this is not a one-man mission. he has had help from many different areas. when he decided to help those wounded on the battlefield, though, for example, he enlisted the help of another veteran, don viscani sr., an original member of the tenth mountain division of world war ii. he asked dom to help and dom was happy to help entertain and support these troops. many of bob's friends soon joined the cause as well and they are a constant presence upon the soldiers, whether they are here or at home. our army would not be the best place in the world without the work of veterans like sergeant o'malley whose life has been synonymous with service, sacrifice, and selflessness. his inspiration to me, to our armed forces and our country. he is a hero, and i'm proud to call him a friend. would the chair announce morning business now?

the presiding officer: under the previous order, 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 ten minutes each, with the majority controlling the first 30 minutes and the republicans controlling the final 30 minutes. mr. reed: mr. president? the presiding officer: the senator from rhode island is recognized. mr. reed: thank you, mr. president. first, let me join majority leader reid in saluting these incredible americans who are with us today, wounded warriors and bob o'malley. as someone who has served 12 years in the united states army, my appreciation and respect is profound for what you have done and what you continue to do. thank you very much. ifer a circuitous connection to the tenth mountain division. my classmate from west point commanded the tenth mountain in afghanistan. i was there to visit those great soldiers several times. so thank you for your service and thank you for your inspiration.

mr. president, i'm here today not only to salute these great americans but also to talk about the urgency of bringing the issue of financial reform to the senate for open debate and final passage. we have witnessed the worst financial crisis in the history of the country. we have seen wealth, trillions of dollars of wealth evaporate because of this financial crisis. and to hear people now talking about well, you know, this is not a good bill, the question is not whether we should delay further or go forward. the question is going forward with purpose, amending the bill on the floor if necessary, in an open and transparent way so that the american public can see that we're moving forward on perhaps their number one priority, related to the economy.

economic recovery and financial reform are integrated key elements, and we cannot have long run economic success without fundamental financial reform. and so we're here today to essentially urge that the anticipated vote on monday be affirmed overwhelmingly. send a message to the american people that we're on the job for them. we're doing the work that we have to do. we have to deal with a complex and significant legislative measure, but we have to do it now, and the time for discussion, the time for consideration privately has passed. now we have to act. and i think we have to act because we should recognize that the status quo is unacceptable. and those on the other side who then say not now, not now, not now are essentially defending

the status quo, and we have to ask several questions. who does the status quo favor? well, it favors the remaining big banks and other financial institutions. we have seen over the last several days that these banks are reporting record profits. mostly based on trading. here is another irony because of the system we have today. we are in desperate need of economic activity on the local level. the fusion of capital and lending, all those things. where are the banks making their huge profits? on trading. essentially taking their money and other people's money and going in and not investing in new productive capacity but betting on financial products. that is not, in my view, what we should be doing at this moment

entirely. we have to recognize that if we do nothing, the banks will continue to operate as they have, and that, i think, has to be corrected. the second question is what activities are protected by the status quo? and i'll tell you. exotic derivative trading. we just saw this week where the securities and exchange commission has made allegations against goldman sachs. now, that will be determined in a court of law, but the complexity of the transaction, the synthetics debt obligation, which could translate was essentially picking out some representative mortgage bonds and then betting on them. somebody took the side that said they'd still pay. somebody took the side they'd

default. what did that add to our economic capacity? in fact, one of the ironies of this whole crisis is there was such a proliferation of these toxic mortgage bonds that they no longer could sell them on a profit so they started essentially creating virtual securities, these synthetics. again, what has it added to the economic productivity of the united states? not much. in fact, some would argue nothing at all. we have to have a financial sector which performs one of the essential functions of any financial sector, the allocation of the capital to productive uses: highways, building, education support, all those things that not only return a profit to the investor but also build up our capacity and build up our wealth over the long term. the third question i think -- well, going forward with the

activities protected, not only derivatives trade, dark pools of money, huge private equity funds that are shadowy in terms of their investment strategy even to regulators. and then we have to also look at the credit rating agencies. they're continuing to operate and, frankly, you have to say that their performance in the last several years was disappointing, and that's being very diplomatic. but they will continue to operate as they have in the past because we will not get to the reform that's so necessary. and, of course, the wall street salary structure, the incentive compensation. what they do will continue to be unaffected by any type of structural change in the financial sector. so for all these activities, if you're comfortable with them, then vote against the motion to proceed on monday evening. if you're uncomfortable with them, if you don't want to see

the remaining banks continue to operate as they have, then you have to vote, in my view, to move forward to debate and engage on this issue. now, the third question we have to ask is, what does the status quo do for consumers and taxpayers? and the answer is, very, very little, if anything at all. we have saw in this whole situation consumers who were i think in some cases misled, in some cases it was obvious that they couldn't afford the credit arrangement they were signing on to. but the incentives on the other side was not to look behind the veneer of the borrower but simply to get the loan sealed and then sell it off to a securitization -- through a securitization process. we have to change those incentives, and if we don't move this legislation, we don't have a chance of doing that.

so we have to move forward. and some have claimed, the republican leader and others, that this is just a partisan exercise. it has not been a partisan exercise. we have been, under the leadership of chairman dodd, engaged in this effort for months and months and months. some people might have forgotten around here, but we started a markup of the financial reform bill november 19 of last year. we had a bill, senator dodd brought it to the committee. we started opening statements. and then everyone said oh, we haven't had time enough to do this, we want more discussion. senator dodd, even with the urgency of moving on this measure, said fine, i respect my colleagues, i respect the process, we'll stop, we'll start talking. well, the negotiations went on and on and on. it was clear that there was no sense of urgency on the other side to move to decisive votes.

and then he engaged other members, senator corker and others, in a discussion. i've been discussing derivatives in a very thoughtful way with senator gregg for months, but we've reached the point now where we have to take deliberate action, we have to move to the floor to debate and votes and final passage. this is something that's -- we have to continue to move forward. and the way to move forward to vote on the motion to proceed on monday evening. now, we've heard claims that this is a bailout bill, which i think would be a huge shock to many of the -- my colleagues on the committee who've been working on this for months and months and months, and senator corker and senator warner particularly who crafted this position. i mean, the reality is that if we do nothing, which is the

effect of voting against the cloture motion, if we do nothing, we could have a crisis next week. greek sovereign debt. there's huge turmoil in europe about greek bonds, the ability of the greek government to pay, the need for support. if those talks collapse and suddenly throughout the financial system there is a rush from sovereign debt, not just greek debt but other countries -- and sometimes unjustified -- we don't quite know, i suspect, who's holding all of this, what are the systemic effects. we have to be prepared for something like that. and the notion that we're -- this crisis has passed and we can just go about our merry way without dealing with these issues i think is -- is -- is naive. and the way to deal with it is to establish a resolution mechanism, and senator warner and senator corker have done a

remarkable job in crafting one. and the question within that resolution is: who's going to pay? mr. reed: and, frankly, they stepped up to the plate today and said let's put the banks on the line for the first $50 billion. that makes sense to me, because it's clear who's going to pay. not the taxpayer but the banks. but in any case, we can't really engage on this discussion of the mechanism and how it will finally come out until we bring the bill to the floor, debate it and vote upon amendments or changes, and that's what we have to do. but this legislation is clearly not a bailout for the banks. if it was, they would be supporting it. frankly, all the newspapers i read suggest the intense lobbying efforts against it, which, coincidentally, favor those who want to vote against taking the bill up.

so i think we're in a situation where we have to proceed forwa forward. as i said, if we don't move forward, we are going to have a significant issue of confidence by the american people and stability in our financial systems. these are complex, intricate issues. these require debate, discussi discussion. i don't think anyone should be presume husbanpresum husband iso stand here and say ours -- presumtious enough to stand here and say ours -- we know what to do and we're going to do it without the input of our colleagues. and that comes ultimately with debate on the floor, debate and discussion. now, again, where are we if we don't take up this measure next week? well, a $600 trillion market in derivatives will remain opaque, complex, confusing and a potential vulnerability for our financial system. and i say $600 trillion, because when you talk about derivatives

markets, billions are, you know, that's a rounding error. it's trillions of dollars. and a miscalculation, mistake, misjudgment in that market has huge consequences. the big banks who sell these complex toxic instruments to pension plans, essentially taking savings and trading them, gambling with them in some respects, they will continue to do that. they'll not only take pension savings but they'll take municipalities' money in fancy bond arrangements where they essentially create an auction, switch through interest rate swaps, a variable rate for a fixed rate, but suddenly in the mix of this crisis the options collapsed and many municipalities and public entities ended up paying the default rate, which was much higher than they would ever pay in a situation of an initially issue of a fixed-rate bond. all of these things will continue. unregulated mortgage lenders who

will i continue to go out and operate under the originate-and-sell model which has led to so many problems. payday lenders, who are charging in some cases 900% interest, will be unregulated. credit card companies, even after our efforts with the credit card legislation, are trying to circumvent the rules to maximize their profits. the bottom line is the people who benefit from delay, from taking the course of action of delay and denial, i would say, because this urge that this is a bailout bill is denying the facts of the bill, delay and denial will benefit only these financial institutions and not consumers and not taxpayers. so as a result, mr. president, i would urge all of my colleagues on monday to vote to proceed to this bill. again, you have to ask three questions, and this will be decided on monday evening.

status quo favors the banks. if you want to favor the banks, then vote against cloture. status quo operates to allow all sorts of arcane activities which we've known have posed significant threats to our financial system. if you want these activities to continue unimproved, uncorrected, vote against cloture. status quo disfavors consumers and taxpayers. so if you want to see them continue to be on the short side of the sale, vote against cloture. i would urge we vote for clotu cloture, we move forward, we reform our financial system, protect consumers, strengthen our economy and move forward to prosperity and growth. and i would yield the floor. mr. cardin: mr. president? the presiding officer: the senator from maryland is recognized. mr. cardin: thank you, mr. president. mr. president, i rise today to express my congratulations to israel on its 6 2nd

anniversary of its independence. this week america's closest ally in the middle east, israel, commemorated independence day one day after memorial day and one week after holocaust remembrance day. while independent day is about celebration for the people of israel, this memorial day was marked by somber ceremonies and national grief over the loss of their soldiers. nationwide, sirens and moments of silence emphasized the sacrifices all israelis have made living in their thriving, free and democratic state. these intensely personal losses in such a small country underscores the continuing threat faced by israelis. the scale of their efforts, and the importance of a jewish homeland. i commemorated last week's observance of yom mishoa in baltimore where i joined fellow

members in a movie to commemorate the 50th anniversary of adolf ikeman's capture and trial. he was a premier architect of the holocaust. rather than dealing with such a war criminal through forceful vengeance that would have been understandable, israel prosecuted ikeman by following the rule of law and his trial was a model of transparency and justice. this display of our shared values of law, justice and fairness help to illustrate why the united states and israel continue to build upon our special relationship for six decades. i observed israel independence day, an event focused on the growing threat of a nuclear iran. if iran acquired this capability, it would be unequivocal game changer in the middle east and, indeed, throughout the world. an undeniable threat to israel and the united states, a nuclear iran cannot become a reality.

we must, therefore, do all in our power to prevent iran from acquiring nuclear capabilities. one of the first steps we should immediately take is enactment of powerful and effective economic sanctions against iran and the foreign companies that do business with this rogue nation. while we work to minimize the key threats to israel's security, we must also focus on opportunities for peace in the middle east. israel has always been prepared to pursue these opportunities and to make peace with its neighbors. over the past six decades, despite diplomatic gestures, multiple arab countries have repeatedly attacked israel. we should not forget that it was the palestinian leaders who walked away from the negotiating tables at camp david in 2000 on the eve of what would have been an historic breakthrough for peace. today it is israel who continues to acknowledge the necessary framework for any peace agreement, a two-state solution.

while israel has shown willingness for direct negotiations, the palestinians continue to be unreliable partners in moving forward towards peace. how could israel make peace with a partner whose so-called moderate fattah leaders are not willing to meet directly with israeli leaders and whose parliament is controlled by hamas and organizations still sworn to the destruction of israel? i am proud to have joined 75 of my colleagues in reaching out to secretary of state clinton in a recent letter which included a reaffirmation of this fact, as well as a reminder that not only do the united states and israel share common values but also common interests. top among those interests is restoring the peace process and preventing iran from becoming a nuclear state. this is precisely why the role of the united states in this process must be an honest broker. president obama must not place

wrongful or unreasonable pressure on israel or worse to put forward a proposal about israel's consent. since israel's founding 62 years ago, every american administration has worked to strengthen the bonds between the united states and israel. this has been vital for israel and the nation is under constant threat of military and terrorist attacks, economic boycotts, and diplomatic hostility. often, merely due to the fact of its very existence. at this critical moment when iran is moving forward with its nuclear program and absolutely hezbollah's capacity to attack israel, it is imperative that the obama administration say in clear, unambiguous language that we stand with the people of israel and we'll do all in our power to protect our shared values and national bonds. as israel celebrates its

anniversary, let us all proclaim that the united states continues its unbreakable alliance with our closest ally in the middle east. thank you, mr. president. with that, i would yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. udall: mr. president? the presiding officer: the senator from new mexico. mr. udall: i would ask to vitiate the quorum call. the presiding officer: without objection, the senator from new mexico is recognized. mr. udall: mr. president, i rise today to pay tribute to a man who served new mexico and the entire country with distinction for more than three decades in washington, a man who dedicated his life to being a champion for the least among us. that man is senator dennis chavez, the nation's longest serving hispanic u.s. senator. this month we mark the 122nd anniversary of his birth. in everything he did, senator chavez showed his concern for

the underdog. he fought for public education because he knew what it could do to help the children of struggling families become successful adults. he supported farmers because he knew how difficult life can be in the small communities where the trains don't stop and the roads don't go. and he fought for civil rights because senator chavez believed that equality of opportunity is the core of the american creed. dennis chavez fought for the underdog because he was an underdog. born into poverty in valencia county, new mexico, chavez walked a long and difficult road to the pinnacle of political power. a child of an isolated small town, he would see the world and help to shape it. a high school dropout, he earned a law degree and became a lawmaker. a victim of ethnic discrimination, he wrote legislation that would

eventually make employment discrimination illegal and then unthinkable. dennis chavez was a man of conviction. he also was a man of courage. at the height of the anticommunist sentiment in the 1950's, senator chavez was one of the first to denounce the activities of joseph mccarthy. here's what he said on the senate floor during the mccarthy hearings in 1950. "i should like to be remembered as a man who raised a voice, and i devoutly hope not a voice in the wilderness at a time in the history of this body when we seem bennet upon -- seem bent upon placing limitations on the freedom of the individual. i would consider all of the legislation which i have supported meaningless if i were to sit idly by, silent during a period which may go down in history as an era when we permitted the curtailment of our

liberties, a period when we quietly shackled the growth of man's minds." my father who died last month served in the u.s. congress with dennis chavez in the late 1950's and early 1960's. he always said what he saw in senator chavez was a visionary and a man of courage. when senator chavez left this world in 1962, he was eulogized by vice president lyndon johnson. in that eulogy, vice president johnson remembered senator chavez as, quote -- "a man who recognized that there must be a champion for the least among us ." and four years later, when the u.s. congress placed senator chavez' statue in statuary hall, reverend john spence summed up the man nicely." senator chavez was ever a champion of the underdog, the poor, and the oppressed."

but it's the quote inscribed at the bottom of the statue that best reveals the pbgc legacy of senator dennis chavez. written in three languages, spanish, english, and navajo, it reads simply he left a mark that will never be forgotten in the hopes that others will follow." el senator makes me proud to be a new mexican and humbled to follow in his footsteps, representing the great state of new mexico. america is a better place because of senator chavez. for that, we honor him today. thank you, mr. president, and i note the absence of a quorum.

mr. udall: i would vitiate the quorum call. the presiding officer: the senator is recognized. mr. udall: i would ask unanimous consent that randy farm billnit, a detailee to senator reid, be granted the privileges of the floor for the remainder of the 111th congress. the presiding officer: without objection, so ordered. mr. udall: mr. president, i note the absence of a quorum. the presiding officer: the clerk will call the roll of the senate. quorum call:

the presiding officer: the senator from south carolina is recognized. mr. demint: i ask the quorum call be suspended. thank you, mr. president, and good morning. today i rise in opposition of the piece of legislation that chairman dodd is calling financial reform. all republicans want to reform our financial system and fix the things that have caused so much

financial distress in our country, but rather than address the underlying causes of the 2008 financial crisis, this bill would institutionalize government bailouts for those it chooses are too big to fail. if democrats were serious about financial reform, they would work with republicans to permanently end too big to fail. to curb the power of the federal reserve and to address the government distortions in the mortgage market that led to the financial meltdown. this bill does none of these things. instead of focusing on solving these problems, the democrats have eagerly crafted another massive bill designed to increase centralized government planning, and they are vilifying anyone who dares to oppose it. without bringing any more accountability to the government actors who contributed to the causes of the financial crisis,

this bill simply represents additional regulation without real reform. despite a recent poll stating that more than 80% of americans support ending bailouts, this bill ensures they will continue. the bill requires the government to keep a list of financial companies it considers too big to fail, and it provides these companies with a $50 billion slush fund to help them when they get in trouble. in one respect, the democrats may be right in saying they won't let the bailouts take place like they did in the past. if their bill passes, the next tarp bailout won't even be voted on by congress. that's because this slush fund empowers the treasury, the federal reserve, and the fdic to purpose money to ailing banks without asking for any permission from congress.

there have been rumors this slush fund could be removed, and i hope it will be, but even if that is done, the bill will still perpetuate too big to fail policies. additional programs in the bill will still allow the fdic to guarantee the debts of financial companies in trouble, and they will as well allow the treasury to still selectively bail out the creditors of failing institutions. the bill also fails to stop the federal reserve from propping up financial companies like it did a.i.g., and it additionally expands the fed's reach by creating a new consumer protection bureau inside the federal reserve. with its extensive jurisdiction and its unchecked ability to micromanage lending, it really should be considered the

anticonsumer bureau. this new bureau will have sweeping authority to regulate almost anything it regards as financial activity. from car dealers to other companies that offer financing for their products to software companies that help people manage their money, this massive new bureaucracy is certain to increase the regulatory burdens on community banks, credit unions and many others who had no role whatsoever in the financial crisis, as well as to raise consumer costs and kill jobs. before we rush to give the feds more control over our economy, we need more information about its activities surrounding the 2008 financial crisis. even to this day, the fed refuses to provide information about the extent to which they have used taxpayer money for the bailouts and it's unacceptable to keep this kind of secrecy.

legislation to fully audit the fed continues to enjoy widespread support, and i will continue to champion this audit of the federal reserve. i would also like to see this bill bring some much-needed accountability to fannie mae and freddie mac. these entities who dominate the mortgage market and hold hold $5 trillion in debt were ringleaders in the chain of buying, securitizing, and spreading toxic subprime mortgages that led to the financial collapse. since the government took them over in 2008, taxpayers have been forced to give them them $127 billion so far, and there is no end in sight. the obama administration handed them a blank check last christmas eve by lifting the the $400 billion cap on government aid, ensuring endless bailouts in the future.

real reform would address the ongoing crisis that fannie mae and freddie mac. although the democrat bill is completely silent on this issue, i intend to see that we find a way to reduce their holdings and divorce them from government ownership. we cannot deny the fact that these two government entities were a major cause of the financial crisis, yet they are not even mentioned in this so-called financial reform. reform wouldn't be complete without also addressing the underwriting issues that led to the explosion of risky lending that fuel the housing bubble. this bill leaves the community reinvestment act in fannie mae and freddie mac's affordable housing goals untouched. each required significant increases in mortgage lending to lower income borrowers which led to a decrease in the underwriting standards to make more loans to folks who couldn't

afford to pay them back, and these bad practices became contagious in the industry. if we don't deal with these housing policy problems that led to unsafe lending as well as fannie mae and freddie mac's sizable ability to sustain demand for such loans by still buying them, we risk continuing a boom or bust housing cycle that saddles taxpayers with the consequences of mortgages given to borrowers who likely can't afford to pay them back. meanwhile, fannie mae and freddie mac keep getting bailed out by the taxpayers. that's the kind of impervious backing a reckless bank could only dream of getting, and that's the same kind of deal that democrats are now offering to the big banks they pretend to despise. despite all the rhetoric coming from my democrat colleagues, this bill doesn't crack down on wall street. in fact, wall street loves it. .

it turns the relationship between wall street and washington into a provide freeway. the best way to get tough on wall street would be to make sure those banks have the same freedom to fail as the banks who didn't get bailed out by the government in the last few years. ruling out special treatment for these big banks would be the harshest punishment possible. so instead of ending too-big-to-fail, democrats are constantly inventing new ways to break down barriers between washington control and wall street. that's not how you stand up to big banks. that's how you deal them in. mr. president, it is important that we fix the problems that caused our financial meltdown. but it's even more important to recognize that this political vehicle that is being called financial reform is just a lot more government control, a lot

more government takeovers, an overreach by the obama administration with very little financial reform. this is not fair to the american people. it perpetuates too-big-to-fail, it essentially guaranteed future bailout, it doesn't fix the core causes of the problems, and, again, expands big-government control over thousands of community banks, credit unions and businesses that had nothing to do with this financial crisis. i'm afraid it's just another crisis being used as an excuse to expand government without solving real problems. republicans are standing by and eager to work with chairman dodd and other democrats to fix the problems in this bill so that we can present real reform to the american people, and i urge my colleagues on the other side to stop trying to stick another bill down our throats and down the throats of the american

people and work with us to do what the american people expect. with that, mr. president, i yield back and note the absence of a quorum. the presiding officerthe preside senator withhold his request? mr. demint: yes. a senator: mr. president? the presiding officer: the senator from wyoming is recognized. a senator: thank you very much, mr. president. mr. barrasso: mr. president, i come to the floor today as a physician who has practiced orthopedic surgery in caspar, wyoming, for 25 years. and i come to offer a second opinion on the health care bill that was recently passed and signed into law. and my opinion on this bill, very different than what i've heard from the administration, from the speaker of the house, from the majority leader, because my opinion is that this bill, now law, is going to be bad for patients, bad for the patients all around this country, bad for health care providers, the doctors, the

nurses, the folks who work in our hospitals, the therapists. and i believe it's going to be bad for payers, the taxpayers, the people who are going to be left with this large bill, to pay for a bill that isn't to save a health care system but to create new entitlements and new obligations. and, as i look at this, it really struck me, mr. president, last week when they were having the i debate in england. they're having an election and the candidates for prime minister were having a debate. it was the first nationalized -- national televised debate ever in england in an election. they compared it to the kennedy-nixon debate when people were up there debating and discussing. and the question presented to the prime minister of england was, what about the national health service? those of us on my side of the aisle have been very concerned, mr. president, that with this new law we are going to be seeing a national -- a nationalization of our health care in a way like we're seeing in other countries, whether it's

canada, whether it's england, and a system that i think is not what the american people want. but i wanted to read to you from the transcript of the debate, because they asked the prime minister, gordon brown, about the national health service. and he said, "my priorities for the health service are that we give people personal guarantee guarantees" -- so this is what he's promising -- "personal guarantees that every individual patient will know that they will get a cancer specialist seen within two weeks, if needed. they'll get diagnostic tests within a week, and the results to them. they will also be able to know that their operation" -- so now they know they have cancer -- "that their operation will be in 18 weeks if you're any patient in need of an operation." so here you are, you've had your opportunity to see a cancer doctor, you've had your test, you have your diagnosis, and what is the best that the people of england are being promised by

their prime minister, the best that they can expect is to have an operation within 18 weeks. the question here is, how many americans, how many members in this body, how many people across this country are going to see that as satisfactory? because that's where we're heading with this health care bill that's now signed into law. how many people want that? you'll have your operation in 18 weeks. so here you are, if you're diagnosed next week in the united states, if this were the situation they have now in britain, you would be looking at having your operation in september. see you in september, come back for your operation. now, you can worry about it, you can worry about your diagnosis of cancer the rest of april, all of may, all of june, all of ju july, all of august. that's what the candidate for prime minister and the current prime minister of england is promising the people of that

country with their national health system, a system that is a model of many on the other side of the aisle of what they want american medicine to be like. this story once again demonstrates that coverage does not equal care, because everyone in britain has coverage. but they sure can't get care. then you ask yourself: does it really matter? does 4 1/2 months, 18 weeks of waiting for your cancer surgery really matter? not just the emotional worry of is that cancer spreading within my body, should i leave the country of england and go to the united states, where i can get immediate care? but you have to worry about bece the statistics back up the fact that the care in the united states is much better than in the england. , not that the doctors are any better here than they are in england. but the timing when you can receive that care from those qualified professionals is much better in the united states. so if you take a look at the

statistics behind this, the researchers that look at this -- and i'll just go through it, because my wife is a breast cancer survivor. she's had a series of three operations, been through chemotherapy twice, and she is now surviving six years after her diagnosis. and i'm grateful that she was treated in the united states, where the day after the diagnosis was made, they wanted to get in immediately to do the operation. so let me just tell he, mr. president, it says, "today the united states leads the world in reading to cancer." scientific studies. "with breast cancer, for instance, the survival rate after five years among american women" -- so a woman diagnosed in the united states with breast cancer and treated -- "83% still alive five years later. for women in britain, 69%." where do you want to get your care? the bigger question is: when do you want to get your care? mr. barrasso: for men with prostate cancer, the survival rate, 92% in the united states, 74% in france, 51% in britain.

american men and women are more than 35% more likely to survive colon cancer than their british counterparts. and in an article from the august 2008 edition of "lance he will oncology," the cancer -- "lancet oncology" the united states is number one again. in almost every category, americans survive cancer at higher rates than patients in other developed countries. american cancer patients have a higher survival rate for every major form of cancer than patients in canada and in britain. american women have a 35% better chance of surviving colon cancer than british women. american men have an 80% better survival rate for prostate cancer. american survival rates are also better than france. and you can go on and on with this, mr. president, but it is imminently clear, imminently clear, that the timing on when one gets their care is critical.

now, it is interesting to me, mr. president, that just this week, just this very week, the president has made his nomination for a new director of the portion of health and human service department that deals with medicare and medicaid. the president's been in office for 15 months. we have had a debate and discussion in this body for almost all of that time on health care. this body, the democrats have voted to cut medicare by $500 billion from our seniors, who desperately depend upon medicare. why is it that the president has waited 15 months to finally nominate someone to be the head of the part of government that oversees medicare and medicaid? the president has put 15 million to 16 million more people on medicaid, has cut medicare, has told us that we can trust him on this, but yet he would not put somebody up to go through the

confirmation process to head medicare and medicaid. why? well, in my opinion, he didn't want anybody to answer the questions because they're tough questions. why wouldn't you nominate somebody for all of that time, leave the post open essentially and not have somebody to come to congress and say, what are the implications for the american people of -- of dumping another 16 million people on to medicaid, of cutting $500 billion from medicare? well, because the person he put in has a long history of a love of rationing of care. it's dr. donald burwick. he has a history of support for government rationing of health care resources on the grounds of cost. not on the grounds of quality, not on the grounds of survivability but on the grounds of cost. and he has said, as recently as last june, "the decision is not whether or not we will ration

care." he said, "the decision is whether we will ration with our eyes open." so here we are, the newly nominated person has said, i'm going into this to ration care. now, he's a big supporter of what they have going on in britain right now. it's -- they -- in britain they call it nice. stands for the national institute for health and clinical excellence. well, this is what dr. burwick has said about it. he said that "those organizations are functioning very well and are well respected by clinicians, and they are making their populations healthier and better off." well, let me tell you what a london doctor, a colon cancer specialist, had to say. this doctor said, "a lot of my colleagues also face pressure from managers not to tell patients about new drugs." said, "there's nothing in writing, but telling patients open's up a pandora's box for

health services trying to contain costs." he further went on, this now again dr. burwick say "nice," thithis grittish group, "is extremely valuable and conscientious, an important knowledge building system." what did the bbc, the british broadcasting group, say, they say that doctors are keeping cancer patients in the dark about expensive new drugs that could extend their lives. a quarter of the specialists, 1-4 specialists polled by a journal on melanoma in the united kingdom, said that they hid facts about treatments for bone marrow cancer that -- that many -- that may be difficult to obtain from the national health service. doctors said they did not want to distress, upset or confuse patients if drugs had not yet been approved by the national health service drug's watchdog

called "nice." so you take a look at the british health care system. 18 weeks of a wait, which is the promise from the prime minister in the debate last week, 18 weeks from when you're diagnosed with cancer until you have your operation. that's their ation expirational goal. it makes you wonder what it is now -- that's their aspirational goal. it makes you wonder what it is now. it has to be a lot longer than 18 weeks. so, mr. president, it's no surprise that the latest polls that are out this morning, the quinnipiac poll, a poll that was done just this past week, "do you support passage of the health care reform bill?" less than 4 in 10 americans, only 39%, approve what this body crammed down the throats of the american people. whereas over half of all americans disapprove of what this administration, this president, harry reid, nancy pelosi and this congress has now forced upon the american people. the american people have great

cause to worry about what they are going to face in their health care, in their health care decision, if they are going to be able to keep the doctor, their wife seen, those are the questions and those are the concerns of the american people. and now, mr. president, you get my second opinion on the health care bill that we were told by nancy pelosi you have to pass it before you get to find out what's in it. thank you, mr. president. i yield the floor. mr. corker: an inquiry of time. i know senator hutchison is here. the presiding officer: the republican side has eight minutes and 27 seconds. mr. corker: i need about four minutes. if you want to go first, that's fine. mrs. hutchison: then i will split the remaining time, unless is there any further time or

what is the order of business after the eight minutes? the presiding officer: after the expiration of morning business, we will proceed to executive session. mr. corker: it is my understanding we might extend to ten more minutes with permission, is that correct? the presiding officer: that's correct. if there is unanimous consent, that's correct. mrs. hutchison: mr. president, i ask unanimous consent that we extend morning business for ten minutes and that the remaining remaining -- the added time be split between senator corker and myself, and if a member of the majority comes forward, we will certainly agree to allow the equal time. the presiding officer: is there objection? without objection, so ordered. mrs. hutchison: thank you. the presiding officer: the senator from texas is recognized. mrs. hutchison: mr. president, then if there were four minutes and we added ten, i would have

nine minutes and senator corker would have nine? the presiding officer: the senator is correct. mrs. hutchison: thank you. thank you, mr. president. i thank the senator from tennessee. mr. president, i rise today to speak on financial regulatory reform. during the current economic downturn, we have seen far too many americans lose their jobs, homes, and their savings disappear. today 15 million of our citizens are still out of work, and national unemployment continues to whoever near 10%. it is this uncertain climate in which we consider now financial reform legislation. the crisis is going to remain in the forefront of our national consciousness for years to come, mainly due to the immense government intervention that was pushed through over the past year and a half, attempting to

stabilize our frozen credit markets, but instead accumulating massive debt that threatens to harm our economy much worse than the original problems. the current legislation continues the government's failed too big to fail policy. too big to fail perverts free market capitalism, suggests that entities can privatize their profits, yet socialize their risks, and taxpayers foot the bill. the american taxpayer should not be forced to pay the gambling debts of risky bets made by large financial institutions. republicans and democrats alike agree that we must end too big to fail, but the bill that is being proposed does not do that. chairman dodd's bill provides both the fdic and the treasury department emergency authority to provide broad debt guarantees in times of economic distress to

struggling firms. as written, it is foreseeable that the fdic or treasury could step in to prop up a firm under any circumstance, all without seeking to resolve and unwind the firm. the chairman's bill authorizes continued emergency lending authority for the federal reserve but conceivably only for large banks. under the dodd bill, the federal reserve would retain super advisory -- supervisory authority over bank holding companies with assets over over $50 million. the federal reserve supervision essentially predesignates the firms that are too big to fail. these banks would have the implicit backing of the government and the taxpayers, and with a competitive advantage, giving it access to cheaper credit from lenders expecting to be made whole. this puts our nation's community and independent banks at a severe competitive disadvantage.

i will offer an amendment if this bill comes to the floor to permit community banks to remain under the supervision of the federal reserve. if the fed supervises only the largest firms, it will gear monetary policy toward these large financial institutions, effectively leaving out the voice and real-time experience of community bankers in my state and across the country. while the large financial institutions were making bad bets on subprime mortgage markets, community banks were banking home and business loans to local customers. local community banks provide the lending and deposit services for our nations small businesses so that they can operate, invest, create jobs and drive our economy. it is the business lending that will help create jobs and grow our economy. tom honan, president of the

federal reserve bank of kansas city, said recently -- "our nation's largest banks would be well served to take lessons from our community banks. why? because community banks have been committed to providing the credit and services needed for small business, they know their customers, and they can make good, solid loans that are supportable." in texas, richard fisher, the president of the dallas federal reserve bank, said -- "the provision in the bill would leave the dallas federal jurisdiction -- federal reserve jurisdiction with only one or two bank holding companies, down from 36 member banks or or $74 billion in assets that he now has supervisory authority over. the fed should know the needs and the economic conditions throughout the country, not just new york and washington, d.c." it is precisely the ability to foster bottom-up growth through small businesses that sets

community banks apart from other financial institutions. unlike the big financial institutions, we see in the headlines bailouts and bonuses, community banks don't have a systemic risk to our financial system, and they are not identified as primary contributors to our latest crisis. however, community banks would soon be subjected to a considerable amount of new costs and regulatory burdens as a result of this legislation. community banks are already regulated. they are well regulated. adding additional layers of federal bureaucracy with limitless authority would only be a burden that would only serve to hamper the ability of community banks to effectively provide depository and lending services to america's consumers and small businesses. community banks should not be

punished as a result of this legislation. we should preserve and enhance our dual banking system, not impose additional federal regulations that stifle their ability to serve their communities. mr. president, i'm also concerned about the direction of the regulation of over the counter derivatives. in the wake of the collapse of the mortgage market where the use of derivatives and even derivatives of derivatives helped cause great losses to banks and nearly brought our economy to its knees, it is important that federal regulators have a greater understanding of this derivatives market. we have members on both sides of the aisle who are negotiating these terms. republicans and democrats have the same goal. we want to end too big to fail. we want to end bailouts.

we want to assure that our community banks still have the capability to serve main street customers. the bill before us that is not being brought to the floor because it did not have any input from the republican side does not achieve those goals. so, mr. president, we are now meeting in small groups. we are meeting with the secretary of the treasury and others in the administration to try to come to terms that would do the right thing and meet the goal that we all agree is the goal. that is what is going on right now in the united states senate. it is my great hope -- and i see my colleague from tennessee who is also on the banking committee with me, and he, too, is a part of the negotiations that wants to bring this bill to the floor. we can do something good for our economy. passing the bill and letting it

come to the floor and roll out of here in its present form would not achieve that objective. so i welcome my colleague from tennessee who has been a major player in this debate. he has been a major reason that we are coming to a point at which i think we can have a successful bipartisan bill. i will say that our chairman and ranking members chairman dodd and senator shelby have been meeting for weeks to try to come to these terms, so i think everyone is sincere at this point that we want a bipartisan bill. financial regulation is not political. the consequences of passing a bad bill are huge for our country, for every american. we can do this. so, mr. president, i welcome the comments from my colleague from tennessee and look forward to his leadership continuing so that we can have a bill that

will help the consumers in our country, that will stabilize our economy and most of all will bring that unemployment rate down from 10% so that more americans can go to work. thank you, mr. president. mr. corker: mr. president? the presiding officer: the senator from tennessee is recognized. mr. corker: typically when i come to the floor and it's time to speak, you don't like to wait for another senator to speak, you want to speak and go back, but i'm so glad today to have the opportunity to hear the senator from texas. i want to say that both of the federal reserve leaders, both in kansas city and dallas, i think have added tremendously to this debate and no one has been a more -- more of a supporter -- supporter for community banks than the senator from texas. everything you said, senator, regarding the fed keeping community banks, i could not agree more with. my sense is that by the time the

bill comes to the floor, it will either have that in it or let me just say to you right now i will cosponsor the legislation or the amendment that you bring forth because i think you're absolutely right that the federal reserve should keep the smaller state-chartered fed members, and the fact is that this rearranging the deck chairs serves no purpose. so i could not agree with you more. i also agree with you regarding the derivatives, which leads in -- i notice you have the microphone. if you want to make a comment. i'm going to lead into comments based off what you just said on derivatives. but, mr. president, if it's okay, i would like the senator from texas to be able to respond. mrs. hutchison: well, mr. president, i appreciate the senator from tennessee's remarks because i think that, of course, course, -- i welcome your cosponsorship of the amendment. it is essential. i couldn't support this bill. if we should the -- shut the fed off from texas and tennessee and

california by just saying that the top 50 bank holding companies are the systemic risk, then we might as well all move to new york. well, new york doesn't want any more people, i'm sure. they are well populated. but most of all, i want to make sure that the main street bankers and the small businesses of all of our states are known to the fed, and the way they are known to the fed, of course, as you know is that their local fed banks know their issues, know their problems, know their needs because they have the ability to serve those banks, which is not allowed in the bill before us. so thank you for your leadership, senator corker, and i will look forward to coming to, i hope, a result that we can all be proud to support. mr. corker: which brings me right back to where i want to be. thank you, senator. the fact is that there is a lot of people coming down to the floor, there are a lot of things being said in the press. first of all, i think we're going to end up with a bipartisan bill.

i think we're going to end up with a bipartisan bill before the actual vote to notice to proceed takes place. i believe that's being led by certainly senator dodd and senator shelby. they are the point people. you can't have eight negotiators. but i believe that's where we're headed. so when i hear a lot of the rhetoric on the floor and other places, you know, i think it's just rhetoric. i think at the end of the day, we're going to end up with a really solid bipartisan bill. i hope it's one that i can support. obviously, i'm giving input into that, but that's where i hope we end up. which leads me to this. there have been folks that have come down to the floor talking about -- about us supporting wall street, republicans supporting wall street by not supporting the dodd bill in its present form. that's just ridiculous. what's happening -- and some reporter i think mentioned -- made comments yesterday at lunch

to republicans and slammed the dodd bill. that's not true. i was very emphatic about two things. number one, republicans are not representing wall street. candidly, when i look at this bill -- and i bet my friend from delaware will actually agree with this -- there is not much in this bill that is very offensive to wall street, to be candid. i mean, this bill, you know, focuses on three topics. what i have said to my colleagues is this -- is that whenever we have regulation, the big guys get bigger, right? and the small guys are the ones that end up bearing the brunt of regulation. what we all are trying to do, as senator hutchison just laid out on our side of the aisle, is to make sure that this legislation deals appropriately with community bankers and manufacturers in iowa and texas and other places. the fact is that there are some issues with this bill that we need to work out, but candidly to say that republicans are representing wall street

couldn't be further from the truth. there is just not much in this bill that's very offensive to be wall street, to be candid. i'm not saying that we should go out of our way to be offensive, but i think anybody looking at what this bill says would know that there's not much in this bill that's that offensive. the fact is we're putting derivatives on clearinghouses, which i hope happens. i think that's a good thing. i think we need to get as much of that done as possible, where if somebody's money bad, they have to put money up that day. it alleviates some of the systemic risk. we -- we deal with resolving a firm that fails. i think that's an appropriate thing to do. and hopefully we'll get consumer protection back in the middle of the road. by the way, that's a section of this bill that if it's not handled properly, it won't affect the j.p. morgans and the citigroups and the bank of americas. what it will do is affect community bankers. so all we're trying to do on our side of the aisle -- and this is what i was very emphatic about

yesterday -- is we're trying to make sure that this bill is in balance. and i think we can do that. but, look, there's not much in this bill that's particularly offensive to wall street, and to say that those of us who want to get it right for everybody else in the country are defending wall street is just way off the mark. just not true. the second thing i would say is, there are many things in this bill that are good. there's some things that aren't so good that i think are being worked out right now. and that's typically what happens when we have a bipartisan discussion. we -- you know, each side brings their particular strengths to a bill, right? i mean, we all represent sort of different points of view and when we work together, we end up with a good bill. but one of the things that does trouble me, and i was very emphatic yesterday about this, is -- and again today and tomorrow and have been for a long time -- is this bill doesn't even deal with underwriting. i mean, at the end of the day, at the end of the day at the bottom of this upside-down

pyramid, the crisis began because we had a lot of mortgages in this country that should have never been written in the first place. that's at the core of this issue. and then we had firms that were way overleveraged that were doing that. and then we spread the pain through $600 trillion in notional value around the world. right? but it started with the fact that a lot of loans were written that shouldn't have been written, and i don't think this bill even addresses that. so i think that's a little bit of an issue. and, you know, if we come to the floor with a template that deals with consumer protection, that deals with systemic risk, that deals with derivatives, i hope that my colleagues on the other side of the aisle will join in with many members on this side of the aisle to correct that. i mean, at the end of the day, if we continue to write loans that shouldn't be written and we continue to securitize them and

if we continue to spread them around the world, we haven't done much in this legislation. so have i been emphatic about that and have i wanted these two pieces of the legislation in balance as it relates to the rest of the country and making sure that our underwriting is done appropriately? do i believe that those are things that are important? yes. do i think we're going to address those? i hope so on the underwriting. i hope so. i'm not sure. i can't tell if people are really willing to make sure that americans across this country have to live in a semidisciplineed way as it relates to mortgages. i'm not sure. i hope we get someplace there because i think it's important. i think though, in closing, let me come back and say in spite of all the rhetoric about bailouts and not bailouts and this wall street and not wall street, i think that what's happening in rooms and offices around this --

this hill, i think negotiations are taking place that are going to get to us a place where we at least have a template, a piece of legislation that can be embraced in the beginning in a bipartisan way. and then what i hope will happen, and i know my friend from delaware is going to be highly engaged in this because i know he's been focused on this for a long time, what i hope happens after that, after we get this base template together, is we have a vigorous debate on this floor about where we need to go from there. there's some other pieces, there may be that -- i would actually consider them to be central, okay? but i'm okay with legislation coming to the floor where we have a balance between resolution, derivatives, and consumer protection, and then let's go from there and let's have -- let's have the kind of debate that i think our country would love to see us have in public, focused not on rhetoric, because this is one of those issues where we've got plenty of

substance, right? but on substance. and let's -- let's do something that will stand the test of time. i think we're going to do that. as a matter of fact, mr. president, i know my time is up, i think that this bill, this bill has the in the next few days, and once we begin to debate on the floor, which i hope will happen in a bipartisan way, i think this bill is potentially the beginning of us being able to function in an appropriate way in this body. that's what i hope happens. that's why for -- for weeks and months i've been saying that i think at the end of the day, we're going to end up with a bipartisan bill. i hope, i hope it has some important elements in it, like the ones i just mentioned, that will allow me to support it. whether that happens -- i hope it happens. whether that happens or not, i hope we have a vigorous debate and end up with a good product. mr. president, i yield the floor. the presiding officer: morning business is closed. under the previous order, the senate will proceed to executive

session to consider the following nomination, which the clerk will report. the clerk: nomination, department of justice, christopher h. schroeder of north carolina to be assistant attorney general. mr. kaufman: mr. president? the presiding officer: the senator from delaware is recoiz. mr. kaufman: mr. president, i rise today to express my support for chris schroeder's nomination to be assistant attorney general for the office of legal policy in the department of justice. before i go any further, i want to state for the record that chris schroeder is a longtime colleague and a great friend of mine. not only did we work together for senator biden, but for the past 20 years, we've cotaught a course on the congress at the duke law school, a course for many of those years was cosponsored by the law school and the sanford school of public policy. chris is currently the charles

s. murphy professor of law and professor of public policy studies at duke as well as director of the duke's program in public law. chris was born in springfield, ohio, received his b.a. from princeton university, a master's in divinity from yale, and his j.d. from the university of california at berkeley, where he was editor in chief of the california law review. he's married to the wonderful katherine t. bartlett, former dean of the duke law school, and currently the kenneth -- a. kenneth pie professor at duke. chris and kate have three wonderful children. during his legal career, chris has excelled in private practi practice, government service, and academics. following his graduation from law school, chris practiced law in san francisco, gaining valuable experience in a wide variety of both state and federal practice. in 1979, he became law professor

at duke, where he has been a respected and prolific scholar and an invaluable administrator, and a committed and effective teacher. he has authored and edited several books, including a leading casebook on environmental law, environmental regulation, law, science and policy, which now is in its sixth edition. he also has published countless articles in law reviews and journals on an impressive range of topics, including environmental law, federalism, federal courts, executive and legislative power, and national security. chris's teaching is just as broad and deep as his scholarship. over the course of his career, he has taught environmental law, constitutional law, comparative constitutional law, administrative law, civil liberties and national security, federal policy making, the

congress, government business and public policy, and environmental litigation clinic, toxic substance regulation, land use planning, water law, philosophy and environmental protection, property and civil procedure. chris is a true renaissance man. i can personally attest to the quality of chris's teaching, having cotaught with him for 20 years. here in this senate, we have many former students doing excellent staff work on both sides of the aisle. chris has also contributed his legal and policy expertise to practical problems affecting the health and safety of the community. he served on the national academy of science and institute of medicine committees to evaluate the use of human intentional dosing studies by e.p.a. and the adequacy of the u.s. drug safety system. duke has also recognized chris's

considerable administrative skills. in addition to serving as cochair for the center of the study of the congress with me and in the director of program and public law, chris has chaired the committee's appointments committee, served on the dean selection committee, and served as a member of the university's judicial board. in the 1990's, while at duke, he took several leaves of absences for positions in public service. as a result, he has considerable experience in government, which will stand him in good stead at the office of legal policy. he served in several capacities in the senate, including special nominations counsel and then he was the number-one staffer on the judiciary committee as chief counsel for the judiciary committee. he has also served in numerous positions in the department of justice, including counselor to the assistant attorney general of the office of legal counsel, deputy assistant attorney general, and acting assistant attorney general. in short, chris schroeder has the experience, the intelligent

electricity, and the judgment -- intellect, and the judgment necessary to be a superb leader of the office of legal policy. just as important, he has the character and integrity to help attorney general continue to restore the public faith in the department of justice. the office of legal policy, o.l.p., has a wide range of important responsibilities within the department of justi justice. let me read from the description on the department of justice web site. quote -- "the major functions of the office of legal policy are to develop strategies and programs to implement legislative, programmatic and policy initiatives; to serve as a liaison to the executive office of the president and other agencies on policy matte matters; to conduct policy reviews of legislation and other proposals; and support and coordinate departmental efforts to advance the administration's legislative and policy agenda.

to assure policy consistency and coordination of department initiatives, briefing materials and policy statements. to provide support and policy expertise in conjunction with other components to implement effectively major departmental and administration initiatives in the criminal and civil justice areas. to assist the president and the attorney general in filling all article 3 and certain article 1 judicial vacancies. to coordinate regulatory development in the review of all proposed and final rules developed by all department components. to serve as liaison to the office of management and budget and other agencies on regulatory matters. to track and coordinate departmental and implementation of statutory responsibilities and reporting requirements. end quote. in sum, o.m.b. is responsible

for developing the high-priority responsibility initiatives for the department of justice. the attorney general serves as the primary advisor to the attorney general. o.l.p. is the place within the department where critical long-term planning gets done. o.l.p. also handles special projects that implicate the interests of multiple department components and coordinates the regulatory development and review of all proposed and final rules developed by the department. finally, o.l.p. advises and assists the president and the attorney general in the selection and confirmation of federal judges. chris' extraordinary career and exemplary character render him uniquely qualified to lead o.l.p. as we saw from his confirmation hearings in the judiciary back in june, chris has excellent credentials and broad experience

in law and government. he fully understands, he fully understands the special role at the department of justice and is deeply committed to the rule of law, and he has broad support from lawyers of all political and judicial philosophies. just as an example, a.b.copahouse, former white house counsel to president reagan, gave chris a ringing endorsement, describing him as having -- "the requisite maturity, experience, and confidence to work constructively across institutional, interest group and party lines to advance the public interest." ken starr, sympathy enthusiastic, saying -- "chris has a particularly keen and nuanced sense of what the founding generation was seek to go achieve, balanced government." from both capital experience and engaged scholarship, he understands deeply the

coordinate role of the branches." before i conclude, i'd like to give my colleagues a little better sense of chris schroeder outside of his professional life because i think his model character is something we should all bear in mind as we consider his nomination. chris has deep roots in his durham, north carolina, community. he and his wife kate have been members of the pilgrim united church of christ for 30 years. this is a church in which indicate -- in which kate and chris have raised their three children and it has been an important part of their family life. chris has been a member of every electorate board or committee of the church. he has been the chairman of the fellowship committee several times, a job he cherishes because of the simple pleasures that come from providing good meals and hospitality at church events of every description. chris has also taught sunday school for over 20 years at pilgrim, most often a bible study class. chris has also been a member of the board of directors meals on

wheels program in durham which supplies lunches to elderly and shut-in members of the durham community. besides having served in a leadership position for meals on wheels, chris and colleagues from duke university and faculty drive one of the meals on wheels routes every friday. they have been doing it for more than 20 years. chris and his children have also been active in the crop walk, an annual event in durham and many other cities around the country that raises funds for local as well as international food programs. chris is proud of the fact that the pilgrim united church of christ is regularly among the leaders among churches its size in raising funds in the crop walk. in selecting chris schroeder, the president has chosen wisely. based on our long association, i know him to have a piercing intellect, impeccable judgment and unparalleled integrity. i am proud to call him my

friend, and i urge my colleagues to confirm him without delay. i ask unanimous consent that any time in a quorum call during the debate on the schroeder nomination be charged equally to both sides. the presiding officer: without objection, it is so ordered. mr. kaufman: mr. president, i ask unanimous consent that five minutes be set aside for the chairman during the debate. the presiding officer: without objection, it is so ordered. mr. kaufman: mr. president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. burris: mr. president? the presiding fir:he senator from illinois. mr. burris: i request that the quorum call be vitiated. the presiding officer: without objection. mr. burris: thank you. mr. president, may i have unanimous consent to speak as if in morning business. the presiding officer: without objection. mr. burris: thank you, mr. president. in early 1933, just after franklin roosevelt was sworn in as president, the great depression was at its worst. the american economy had been shaken to its core, financial institutions had closed, people life savings had evaporated, and

no one knew where to turn. that's when the unthinkable happened, much of the american commercial banking system collapsed. president roosevelt and his colleagues in the house and senate sprang into action. congressman henry siegel and senator carter glass, both democrats, worked president to write sweeping reform legislation that set out to get the economy back on the road to recovery. the resulting law, known as the glass-steagall act of 1933, helped lay the foundation for sensible bank regulations in this country. it would come to define america's financial landscape in the decades that followed the depression. mr. president, it is in this spirit that i've asked my colleagues to join me today in supporting major financial reform and making sure that the

volcker rules is included in our final legislation. if we pass that bill that has been introduced by senator dodd, we can help prevent another economic crisis and reinstate some of the basic protections included in glass-steagall. almost 80 years ago, this legislation established the fdic, which still insure banks' deposits, and it drew a sharp distinction between commercial banks and investment banks. in the wake of the economic collapse, congress recognized that these dueling roles often came with massive conflict of interest n. some cases -- inter. in some cases, this resulted in risky behaviors and others, fraud. so glass-steagall designed their bill to set up a barrier between commercial banks and investment banks. the law prevented these two actives from mixing and kept financial professionals honest and accountable. much of the next half century,

as our economy recovered from the great depression and prosperity returned to america, the system worked just as it was intended. as a former banker, i can personally speak to the significance of the glass-steagall act in helping to keep our financial system on an even keel. this important law was established to the stability of our economy right up to the moment when my republican friends repealed it a little more than a decade ago. in 1999, the republican congress decided that there was no longer a need to keep commercial and investment banks separated so they passed a bill that rolled back key portions of glass-steagall act. unfortunately, president clinton signed it into law, and with the stroke of a pen, the walls between commercial banks and investment banks was torn down.

almost overnight, commercial institutions started to move into this fresh territory. they started to underwrite c.d.o.'s and mortgage-backed securities. then they began to trade them. mr. president, commercial lenders even created new investment vehicles which brought these very -- which brought these very same securities. without the glass-steagall act, it was a free-for-all, and as soon as the regulations were removed, big banks swooped in without regard to responsible lending practices. conflicts of interest sprang up everywhere, fraud was allegedly committed by some of our largest and most respected institutions. and then two years ago, our economy went into a massive downward spiral, and a great recession from which we're still trying to recover, mr. preside mr. president. the repeal of glass-steagall certainly did not cause this financial crisis on its own but many believed it was a contributing factor.

and unless we can take action to close this regulatory gap, the absence of glass-steagall would expose our economy to major systematic risk in the future. so today, as the senate stands on the verge of considering major financial reform, i would urge my colleagues to reinstate some of these protections. we must prevent big banks from engaging in these irresponsible practices ever again. that is why i'm proud to support the volcker rule which my friend, senator dodd, has included in his financial reform bill. this provision will prevent traditional banks from making private equity investments. it will stop them from running hedge funds. it will help keep them from placing bets on the market. mr. president, as a key part of senator dodd's bill, the volcker rule would essentially serve as a modernized version of the glass-steagall act, and it would stop short of reinstating the old law of 1933 but it would

help to prevent fraud, discourage conflicts of intere interest, and keep large banks from engaging in reckless behavior. it would also allow us to regulate mergers among our biggest banks so that we can prevent the market from becoming too concentrated or incurring systemic risk. mr. president, i believe thes these -- i believe each of these key components is a necessary part of any financial reform bill. that's why i'm proud to join senator dodd as well as president obama in supporting the volcker rule. colleagues, let us learn from the events of history. let us impose fair and reasonable regulations so that a handful of banks won't be able to undermine the american economy with a few foolish decisions. let us pass financial reform bill that includes the volcker rule. thank you, mr. president. i yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call: mr. burris: mr. president, i request that the quorum call be vitiated. the presiding officer: without objection. mr. burris: mr. president, i have consent to read on the floor here. i have nine unanimous consent requests for committees to meet during today's session of the senate. they have the approval of the majority and minority leaders. i ask unanimous consent that these requests be agreed to and that these requests be printed in the record. the presiding officer: without objection. mr. burris: thank you, mr. president. i ggt thabsence of a quorum.

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

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