and what we're focusing on is wage shares. the stagnation of wages before the recovery in the united states tried to back a generation. with a new generation of stagnant wages and writing economic insecurity working people. this has run to the weight relationship. wager has been falling for 30 budget but it's falling faster in europe than it is in the united states. it's a little artificial because we include our ceo pace and wages, and it's falling faster in japan that it is in europe. know it's in the world, the imf, where they have measured numbers in those countries the world now wage share is falling. we cannot have broadly shared prosperity. we cannot generate a sustainable recovery. and we certainly not going to be able to create the kind of equity that we need in this world and the peace that follows behind that if we don't find a way to close this gap. this was something that both the

oecd and the labor ministers were focus on very much in the central long-term challenge and i will close by saying, this cannot be done. by education alone. as important as education it is because wage shares, college educated workers have been falling as well. this is going to require a wholesale change in many economic policy, but the to i want to making it is we have got to repair the labor market institutions that support, put a floor underneath wages and working conditions. as the professor mentioned, minimum wage has lost 30% of its value. it doesn't cover anybody anymore. it ought to be one half to 60% of the average wage from nonproduction worker, is my standard for this. that would put a floor underneath wages at the bottom. and we need to restore the fundamental rights of workers, if they so choose, freely associate with the fellas at

work, bargain collectively with employers, and claim their fair share of value added enterprise. and, finally, and i think most importantly, for preparing wage share is we go to something close to phone plug. the only three years in the past 33 decades in which there was some closing of the gap between wages and productivity was in the late '90s. that was partly due to the very good policies that john was talking about earlier, but also due to the fact that we had tight labor market that wages had to be maintained. so i was a full of fun or something close to it, meaningful floor underneath wages and worker conditions, and restoring the rights of workers to bargain are key ingredients of realizing the future we want. >> thanks. have it, you've been spending a lot of time going through the demographic data in the labor market. what if you found how to has changed in response, both in the great recession and to the

hollowing out of wages that came before? >> thanks, greg. i just want to start by echoing ron's point that we can't emphasize enough the full applet is the key to so much of this of wages. but let me go on to your question, greg. you know, one of the things is we talk about the hollowing out of the middle and look at david's paper and see that this is a long-term trend. but just look over the past few decades, what i want to talk about is the way that workers and families have responded to this trend. and theirs are the three basic ways that families have responded that the first of course we all are well aware of the fact that as men and compounds have seen a hollowing out, they've taken on more debt. that's a big piece of what we've been talking about to enter the financial crisis and all that. i'm going to set that aside now because we're talking about labor today. the second with the families have coped with a long-term hauling out is that they have worked longer. it seems increasing labor supply for older workers. that's proven charges that for the labor market because as

unemployment has risen older workers as workers 55 and older have exceptionally high unemployment rates, higher than it ever seen in the post-world war ii period. so many of them are trying to stay in the labor market because their homebodies have lost over ththeir retirement port louis arquette and the need to work longer. but a third and fundamentally transformative way that families have responded to this hollowing out of the middle is to have adult family members work more. and by that i mean especially the increased labor supply of women and especially wives and mothers. we have seen this long-term trend towards the increase employment of women, and as a couple of implications about that are important to think about the long-term structural changes of our economy and some important policies we need to be thinking about as a piece of how to re-create more vibrant middle sector of the economy. it's now the case that more than 60% of adult women are in the

labor force and we've seen this as a long-term trend. of course, as the recession has played out, men have lost the bulk of the jobs since the recession began in decembe december 2007. right now cumulatively they have lost nearly seven out of every 10 jobs. on the first year of the recession the men lost all the jobs, but then as the recession move forward we see more equity in job losses. but as we look forward, one of the things that we see is that the increased labor supply has had a couple of big implications for our labor markets overall. one, as we look at the kinds of jobs that the bureau of labor statistics predicts to be the ones that are going to great numerically the most net new jobs in our economy, a significant chunk of these jobs are in the kinds of things that women, especially wives and mothers, used to do in the home. so if you look at the bls

projections, the top 30 occupations that great the most jobs over the next decade, over one-third of those are jobs in what we can call in person care services. things like child care, preschool teachers, home health aides. this is a vast and rapidly growing and important sector of our economy. and one that has jobs that have skills that tend to be at the bottom end of the labor market. i will come back to that in a second would talk about policies. but one of the second kind of surprising things about looking at the job projections is that if you look at these top 30 occupations that are supposed to -- that are estimate to create the most net new number jobs, most of the two-thirds of workers in those jobs are women workers. so there is a sort of developing been going on the we've seen this increased supply of women workers in our economy. we see women getting more and better education than men, as david doctor in his paper. and moving forward we are seeing an increase in the kind of jobs

that women hold an increasing demand there. so this has a number of invitations or how we should be thinking about what is happening for families. there's also of course we need to be think about what's going on with me. this whole story could be a status accomplishment for women, but the flipside to that is what is going on with men and male workers that is leading to these long-term secular smaller declines of male employment and increases in women, but still the downward trend. of course, for families is very challenging because men tend to earn more so women are bringing home are more likely to be in the labor force, that doesn't mean a rise in income. psychopathy is we need to be thinking about that pertain to the hollowing out of the middle. a lot these jobs are being created in a caring services or the jobs that are dominated by women are not good jobs in that they don't necessarily pay well. i will circle back to ceci's point about the importance of education from day one. pre-k., we could only one in five families today as a full-time stay-at-home k. give

them to caregiver. they are in pre-k., believe not devoted the kind of resources to making sure that those children are getting that kind of quality education that they need to vote for the kids devoted but also to help those families because they have all the adults in the labor force. the point that i was like to make about that is we subsidize public universities more so than we tend to child care, but the college student can get a part-time job to help those parents out. but the toddler probably can't. at least in our economy. and in the second broader point is as we think about these new challenges for families, that have more until there was and labor, we need to make sure that as with any labor standards and thinking about what that means for the 21st century, we need to acknowledge that most workers also have care responsibility. and that is a key of the puzzle as well. we need to rethink their neighbors standard act, and that plays a role in i'm hollowing.

rebuilding the middle-class. >> had a, before move on, could you touch a what's happened to the racial composition of the workforce in the last year and how various racial groups have dared speak with certainly. a couple of things. i mean, typically, and going to look at a chart here so i don't miss speak. because i'm an economist. of course, i never go anywhere without my charts. you know, one of things that typically happens in an economic downturn is that the unemployment rate of nonwhite rises faster than those of white workers. typically the unemployment rate for african-americans is about double of white workers. that sort of held steady over decades in good times and in bad. so of course we've seen unemployment rises shopping for african-americans that it's risen child for hispanic workers. these are some of the workers that were hardest hit at the beginning of the recession with the demise in construction were.

it was quite starting as an economist to watch these numbers, because you saw construction output falling but you didn't see construction employment falling by as much as budgets early so that showing up in the surveys. but one interesting tidbit on the issue of race and differences across different groups, this has been an equal opportunity recession in many ways. it as is the case that white men are one of the demographics that now has seen unemployment rates higher than any point in the post-world war ii period big unemployment rate for african-americans and hispanics has risen but it has not surpassed the early 1980s level. it's not to say that the unemployment rate for nonwhites are not higher. this early are higher, but the relative pain has been a little bit akeley distributed than in prior recession. that's not necessarily, it's not good for anyone to lose their

job, but in terms of thinking about the policies, this has not been concentrated in communities that have long had underemployment. it's been widespread across the united states. >> i like to get a conversation with a panel by asking a bit about the question of mobility. i think we're thought of the niceties as one of the most mobile countries in the world. i like to think of the fact that there are thousands of ghost towns scattered across the country as an eloquent sight of the fact it went jobs go way people get up and go someplace else. one of the courage we've had in the last two years is with so many people unable to move because of the decline in their homes values is that perhaps not right now, but the structural factors is burdening our economy. i'm wondering if anyone has some thoughts on the, what policy solutions are on the. anyone want to tackle that one? there is? >> i may be better on talking about the problem that on solutions. [laughter]

>> so what greg says is certainly correct. the u.s. has always been a country of people who moved geographically to seek better opportuniopportunity. you know, weather was originally a country of immigrants and then people move to the west. and historically, certainly if you look at since we've had good data, since world war ii, large amounts of the adjustment to economic shocks in the u.s. have a card from people moving geographically from declining areas to areas with expanding opportunity. in fact, typically in some work, looking at some of regional evolutions, in the u.s. you see everything that typically gets hit by a negative employment laws, jobs pretty much go for ever. but unemployment doesn't stay high for ever in that region. almost all of the adjustment after a few years has been through migration as people, you know, move out of rust belt

areas to sunbelt and others. that has always been part of our faster recovery unemployment, but that is clearly slow down, starting in the '90s and the 2000s, and those recoveries and the migration numbers in 2008, we don't have the 2009 numbers, look at the lowest we've ever seen since the great depression. so it's not surprising in the midst of the current labor market that people are not moving, given there isn't a lot of opportunity in most places outside of north dakota. but a big issue will be going forward is if we do not get the sort of, you know, mobility that we usually get, is unlikely that jobs, even with the good policies that they talked about, i going to come back exactly where they have been in the past. we've always had lots of geographic migration of workers, and we're going to need to do with the housing market problems. and we also have not really

confronted, over time, something that, heather, the growing share of 200 families and how that plays in to us as a migration when one is sort of out of work and the other is an. and that may be part of the long run trend of mobility that being in a we may need to take more about policies as well as help you with migration. >> this is the first massacre of unemployment where you had a majority of families with two earners. and in a lot of cases she still has his job he doesn't. it's like to we move to find both of us a new job are doing kind of stick it out here? you see some job losses due to these structural changes. i think one of the policy things that people will be talking bout is how do you connect people in communities where there's high unemployment, we may not know about opportunities nationwide. we could be doing a lot more to the employment service, department of labor to make those connections, and space in

the really hard hit high unemployment areas. we know the way that people find a job for the most part is through knowing somebody. again, as economists would like to tell you stuff and by no did you find a job and you knew somebody. but if you don't know anybody in north dakota you are not likely to find that jack up our whatever the jobs are. we need to be doing more on the internet, that's a fact is tool. >> the administration is certainly doing things to try to keep people in their homes, but i think the reality is a lot of people may not be facing foreclosure are still underwater in the homes so they will want to stay just to be able to recoup the value. again, getting the economy growing again i i think is going to be the biggest solution to this. but speaking to the job matching issue. this is something i completely agree with larry and heather. as the economy starts to come out, we need to make sure that we're reducing the friction between employers and workers as much as possible. and a perfect opportunity to be really thinking these things

through is where currently talking about the reauthorization workforce investment act, which is one place where these sorts of matching functions happen to our employment services to the one stop, and were actively trying to think of ways to engage, to really understand from both what the employer needs, how do individual search and what are the data that one stops in local areas need to we can do a better job and make sure the data are available for workers and for employers. >> i just wanted to mention, one of the things that makes this crisis so hard to understand and so dangerous is the interaction of a continued decline in housing prices that and, therefore, deeper underwater. the loss of jobs and the lack of lending. i think that the administration has done a lot on the housing side, and not enough. i think the banks have to be forced to take some hits here and take part of the losses for

this bubble that is growing up. the labor movement supported very early on a moratorium on foreclosures, which would give people a right to stay in their homes which would give the banks a meaningful incentive to renegotiate the terms of these contracts. so that they took their share of the hit that has to be taken as this bubble comes down. that would certainly relax the constraint on the mobility of labor, if there were jobs somewhere like north dakota. >> what's wrong with north dakota? great golfing. three months of the year anyway. [laughter] >> i would like to bring the audience in a. if you have any questions please put up your hand. there are some roving microphone state and i would ask that before you ask your question, you state your name and your affiliation. while i wait for the microphone to get there, i do want to throw this question, because certainly when you read a lot of the commenters, there are questions being raised about some of the policy steps that have been

taken have actually may be contributing to structural unemployment or raising the natural rate. and i'm speaking specifically of the repeated extension of unemployment insurance benefits. and i was wondering if anyone on the panel wants to sort of tackle what we can say about that. everybody wants to talk about that. [laughter] >> ceci, why don't i start with you? >> a lot i would say is based on larry's research. [laughter] >> larry love to share. >> sure. i think the minimal wage is still pretty low historical level. firms have the ability to use subminimum wages which they don't take up clearly indicating this is not really the big constraint on the hiring of young workers. the minimum wage increase went in well before the large labor market, downturn and didn't seem to be any real impact on the employment. at a time, i mean, the big

picture is minimum -- you could surely have a minimum wage high enough that it would have significant adverse employment effects. the u.s. minimum wage even with the last two increases still much lower than it was, say, in 1979 or was in 1973, real value. it's on the margin of improving earnings opportunities and not do much on employment. that's not a first order question at these days. firms to act like that's a big constraint that the extensions of unemployment insurance, you know, there's a historical research, much of it i did or were smart and i did, that found something that economists like to do. there are incentive effects. people label themselves as unemployed if you give them benefits more so if they don't. and on the margin, in a recently well functioning labor market, giving people a bit more unemployment insurance makes them picture and probably, yeah, less likely to take a job. but the key point is that when

you're in a world with five or six unemployed workers per job, the search effort of the unemployed is not the first order issue of why there is so much unemployment. second, the aggregate effects of extending unemployment insurance, you know, to improving the consumption of the unemployed, and there is very important work that john gruber did in the '90s when the consumptions moving benefit of unemployment insurance, far outweigh the search effort in the terms of raising aggregate demand and employment. three, even when, you know, insured unemployed don't search as hard, that opens up more jobs for the on -- other unemployed. mostly the effects on unemployment receptions are offset by faster job of finding. finally, most of the estimates of the adverse effects of unemployment insurance on raising unemployment durations, out of the '70s and 80s, and just a very different world where most unemployment

insurance recipients are on temporary layoff and is operating to the incentives firms are calling it. that's just not relevant. today, and finally, it was in a world of much, you know, shorter unemployment spells then we are seeing now. not as difficult job problem as in the current downturn. and, finally, the linkage, you know, what we see now is extending unemployment insurance leads people to consider themselves still attached to the workforce to have identities of workers, to think they're searching, they have requirements to search. and as i noted earlier, the huge worry about the long-term unemployed is is and psychologically give up. they stop looking, they consider themselves, for example, many who are 40 to 65 often apply for disability benefits. once they leave the workforce and move on to disability benefits, they're pretty much long-term loss to the labor market. even on the fiscal grounds, keeping of unemployment insurance is both a humanitarian

and a fiscally sensible policy. it may affect how many people call themselves unemployed versus discouraged workers. but it's not a first order factor in the actual level. true unemployment. >> but that's not real unemployment. i think we have a question there. >> thank you. can you hear me? my name is annabelle. recently retired professionally trained clinician. i hope to stay retired. i kind of like a. i've been on unemployment throughout its of my career where i have not done my career. taken other jobs. i think unemployment insurance being extend so much longer i don't know if most people know, that is taxable income. so next year the irs will come to those folks who have been on unemployment.

so recognize if you're collecting unemployment insurance for over a year, so tax man will, next you. my question is a two-part question. when it comes to jobs come what impact do you all, i think, i don't know who -- do you feel that the outsourcing of jobs to other countries has had on the decrease of jobs here in the united states, whether they be any, unit, low-paying, middle, high-paying jobs, i've worked in health care and i've also done retail and cleaned houses to make a living. and the second part, what impact if any regard to jobs and education do you believe the teachers unions or whatever stymieing those from going on to higher education level or

prevent alternate choices for just getting a ged or going to be committed to college. and i have worked in boston, mr. katz. >> ronde, celtic perfect question for you. if you can addressed not just the extent that she has about of unemployment but they have also contributed to the polarization of wage that david was speaking about earlier. >> yeah, i think -- i would say combined effect of globalization and what i recall financialization over the past period of time. it's changed the balance of power bargaining for workers with their employers for wages and benefits. whether those workers are organized or not, i come out of the private sector, and witnessing in my unit that nafta was already -- the last card employers play. if we demand more they would threaten to close the plant. and language is pretty hard to

misunderstand. but more recently it was the first card they play. the spirits the private sector workers know that they're in direct competition with some of the poorest and most depressed workers in the world, and the threat effect of that has eroded wages and benefits in that sector. and destroyed many factory jobs. 2 million before the crisis happened as a result of outsourcing. this is not something that just happens. it's going on because u.s. corporations are relocating their production from developed countries to less-developed countries. wage, tax and rated for arbitrage expands their profit margin and allows them to pay their shareholders. >> i feel i do have to sort of say brought raw and free trade globalization. [laughter] >> that said, is there a way we have our cake and eat it too?

is there a way, that we can still move forward with a free trade all the things we know positive things we know that it gives us, and without the negative impact on wage trends? anybody have any suggestions? >> i do want to be misunderstood and say we're against trade. we want to trade. but the rules of trade have to be such that the benefits of that trade, the benefits of the workers of the world. >> larry? >> well, i think you could certainly imagine, you know, a world with lots of, you know, trade and where work is done in many different places where you have a well-educated workforce with very good infrastructure, that are basically, you know, more broadly shared winners and not just where we sort of compete on sort of innovation on having high quality workers and on doing the sort of tasks that

are not so easy to offshore and outsourced that you can't imagine an economy with a strong manufacture, strong innovative sector, high quality workforce, workers have some clout at the workplace, firms want to do business here because of the quality of the infrastructure workforce that one could imagine a very strong, you know, there will still be a hollowing out of jobs in middle management and production jobs, but a large in person sector of services, whether they are caring jobs, whether they're redesigning people. kitchens that would not be outsourced that use high skills were workers have clout. one can have a nursing home with professionals. one could have there's no with minimum-wage workers. one can imagine an economy that traits that provides the right sort of tools to workers and bargaining power, where there is widely shared prosperity. we are not close to being there right now, but i think some steps the administration are taking and hopefully will move forward to could get us there.

i think that's going to be a more promising outcome, not to just say that we can keep the exact structure that exists now, but that will provide the tools and opportunities to have an open economy, but one that invest in its workers and invest in its infrastructure. >> a number of the jobs that larry just mentioned are also the jobs were there's a connection between the job quality and our investment in the public sector. and so making sure those are good jobs, visit private sector, but there's also a public financing component to it. >> there's a question back the there. >> diane, i may concern citizen. doctor, as someone who graduated from a small town high school where most of my colleagues were prepared for pumping gas, i suppose, and when i get to a major university, i found myself

completely unprepared for the academic rigors of the major university. i really appreciated your comments, and i'm not surprised that we're not turning out more people who are competitive in the workforce. i'm wondering what the current administration has in terms of plans for increasing the standards for our current workforce. and in particular, are there any discussions for a national curriculum? i recognize there are a lot of challenges, because each state sets their own curriculum, but i can't imagine that there's anything that can be done unless something is done at a federal level. thank you. >> thank you for that question. this is something that president cares a lot about, and particularly is secretary of education cares, probably double the more. so there are -- this is really i think your edition of the secretary duncan. first of all, in the recovery

act lead the race to the top fund, and that was designed around getting states to get together to think about innovative ways to generate these career standards that -- you're right, we're not going to mandate from the federal side, but to encourage states to work together to develop higher level standards. and then the follow on that is through the reauthorization of the element and secondary education idea of the fda. last laugh

is very much to address that issue. >> yes? >> my name is richard perry. i'm money manager in new york. my question is for you, ron. during the financial crisis, one of the things you mentioned potentially the governments around the world save 20 million jobs. one of the places u.s. saved many jobs was in the auto industry. two of the big three were nationalized. in order for that nationalization to take place the government mandated not to plans which the original ceo's offered but they said, we are going

to demand very carry pass through labor rates with the rest of the world. why did it take that nationalization for us to become competitive with the rest of the world? and are there any other situations that are going around in labor unions today to say, let's avoid the next nationalization. let's us be more progressive in terms of saying how do we become competitive with the rest of the world so we don't have to go through a general motors bankdk a chrysler bankruptcy or some of the disruption that we just went through? >> i don't think i sharry your premise that it was workers who had to be threatened with nationalization in order to make concessions. collective bargaining actually works both ways. it is flexible mechanism deciding how to sharry the pain in cases like auto industry and sharry the

benefits when the economy and company are growing. i would, the other problem there is of course we have some of the skilled auto workers in the world. they contest that in germany and japan but i still think we do. they don't run these companies and they don't design these cars. they have to build the cars that they're asked to design and these companies were terribly managed and corporate culture that were completely conflicted and ossified that is the reason why it took crisis at kind that it was in order to force changes that took place. you will notice when the decisions had to be made, collective bargaining delivered the results. now they're hoping because they took a lot of concessions in order to make these cost effective but they took an equity position in those companies. future of those workers heavily depends on success of those companies because they took company stock. when they took it was first nothing, to build, what hope their families have for retirement security.

so i think the administration can speak for itself but i believe what they did, they did to keep this, what was, at that point a very serious recession from opening the door to the great depression. they couldn't absorb that amount of job loss if they let these companies fail. >> yes, gentleman there. >> [inaudible] warren greene berg, professor of health economics at george washington university. let me inject health care here. 60v: million americans get their health care coverage from their employer. that's what we're talking about at this session here. the employers and employees. i would ask perhaps ceci and professor katz this question. do we have any data, i haven't seen too many published articles on job block. the fact that people are locked into their jobs, fear of getting another job because of a preexisting

condition and also ceci, with the president's new program perhaps this can ameliorate some of these problems that we've had before? i guess that's one question i would ask. also, i think we have to be careful about, you tacked about great he mobility. one problem about greater mobility depending on labor force we do, there is no incentive for the employer to provide good health care preventative benefits when the benefits are going to accrue to the next employer since mobility is still an average of four years per employer in this country. i guess two questions on the health care as far as potential productivity and potential quality of care that we're getting. >> because we're running short on time i'm actually going to be a bit heavy-handed here and actually narrow that to one question. i think you have actually looked at this question of health care and job block, haven't you? >> yes. we have.

first of all health care bill passed into law does address job block in the sense one of the first pieces of it is to make it illegal for insurance companies to disallow, to make it illegal to have preexisting conditions. that is really source of the job block for individuals. empier i canly, we see some evidence of it. literature. compelling examples include. but no question it is a potential workers for keep workers in their job. importantly also the health care bill also has strong incentives for insurance companies to include care and thinking holisticly about their workers. >> thanks, next question, you, sir. >> second time i've asked this question. the first time in last panel i was told i was asking the question to the wrong group. i was talking to a

demandside and should be talking to the supplyside of the panel. rephrase my question. by the way i'm john koval at institute of latino studies at university of notre dame. we spoke spoken about we need a world class labor force. what is to prevent us from becoming a third class labor force when the projections are for economic growth of minorities, that they will result in about 55% of our labor force by 2050? as i said, last time around, when we recognize that african-americans and latinos have been by and large marginalized economically, politically and educationly, for generations, if, that 55% has same economic educational characteristics as the minority does now, our labor force, our country is in a massive economic dump. no one is even talking about the issue. i'd like to know why in the hell not.

>> heather, do you -- you did talk about that you want to talk some more. >> [inaudible]. >> certainly we talked about unemployment, how that plays out across race but we also talked a lot about education policies. i think a lot of the focus on that is making sure that communities are, that every community is being served by those education policies. i would leave education policy stuff to ceci. i think that is a critical piece of the question. not necessarily the case that all of, some of the trends that we're seeing in terms of the demographics of the labor force true, expected to be minority-majority country in 2048 keeps changing. some of that is due to folks here. some of it is due to immigration. a case lot of folks come to this country are not in less educated but reflect the brethd of the educational distribution. there is no necessary reason to think that. there is probably not the

outcome. ce central florida. i wants to talk about that. >> [inaudible]. >> look at education progress the test scores of minority students have been increasing. a lot of what we're trying to do through esca is address those dropout rates and no longer accept there are chronically failing schools. we need to go in and do something hard and make tough decisions there. we certainly are trying to address this and but i, maybe as hope springs eternal. i don't think there is something structurally says because we're having influx of minorities our pop wlags -- population labor force means we'll have low productivity. i reject that. >> we're running short on time. like to get one more question in here. like to go to the woman at the back here. >> thank you. my name is anita and i work with a consulting company called tech vision 21.

one of the things that gives me hope in this big question i work with technology developers, small, medium and very, very large and every week there are amazing ideas i come across that have so much potential for building real sustainable wealth in our economy and i should say also that every company i work with has at least a prototype. what is preventing these companies from creating jobs at every point on the skill spectrum, every point on the skill spectrum is access to capital, pure and simple. and, i'd like to put a point on that by saying when you talk to the solar energy companies that are picking up their operations from here and moving it to china and you ask them why they're doing that? low labor cost is not the first thing they say. it might be mentioned but it's usually about the third thing that they cite. and what we find is that the companies we're dealing with, are putting in hundreds of

man-hours to seek federal funding because god knows there is no private financing available for anything. and meanwhile they have people from the government of china coming to them saying, you want a factory? here are the keys. and that's what we're up against and i wonder, if you might address that please. >> ron? >> one of the things we were doing on wall street was demanding that banks get back in the business of lending money dpen instead of speculating and making wall street the servant of the real economy again instead of its master. also the third demand they stop fighting reform of our financial markets and financial reform here in washington. huge amount of money pouring into this city to prevent meaningful financial reform. but i think, i think the real constraints on small and medium-sized businesses which are, enormous generators of jobs is access to credit. that is the part of the employer community that is constrained by access to

credit. we have proposed that some part of returned troubled asset relief program money be used for extension of credit to small and medium-sized businesses. i was recently on a panel with representative from the nfib, small business association here in washington, describing this to him and he was kind of indifferent to that. he said what you really got to do is do something about mortgages because, a lot of small businesses are financed by equity in homes. he said if you don't solve that problem, you're going to really constrain the growth of new enterprises as well. >> i think we're out of time now. it's been a great conversation. heard a lot of interesting stuff here. i'd like to thank the panelists [applause] i think we'll take a 15-minute break and come back for the next.

>> we're waiting to bring you live coverage from washington of a conference being held by the anti-defamation league. some of the issues expected to be covered today, are anti-semitism and in america. iran's nuclear threat and israeli-palestinian peace process. among the speakers former bush presidential speechwriter david fromm and david henderson, who heads leadership conference on civil and human rights. we'll bring you that in a moment. senate comes in at 2:00 p.m. eastern and will continue debating a bill to overhaul financial regulation. house won't be in for legislative work until tomorrow at 2:00 p.m. eastern. members will then consider a measure to rename the department of the navy to the department of navy and marine corps. then on wednesday and thursday, the house will

consider a $6 billion rebate program for energy efficient construction in homes. and also, a measure to provide trade benefits for haiti's earthquake recovery. live house coverage is always on c-span. [inaudible conversations]

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>> good afternoon. good afternoon.g7i good afternoon. welcome to the 32nd annual national leadership conference of the anti-defamation league. the nash's premier civil rights and human relations organization dedicated to fighting anti-semitism and bigotry in all its forms. we're very pleased that several hundred activists from across the country have come to our nation's capitol to listen, to learn and then to lead our agency, our community, and our country in building bridges of understanding and promoting mutual respect.

on your tables are pins saying, we are a nation of immigrants. they are designed to communicate that adl's belief, hate and demonizing rhetoric have no place for hate in the debate in our nation's immigration laws. [applause] we hope you're aware them tomorrow as you visit capitol hill. we will also have extra pins for you to leave behind. now gives me great pleasure to call on larry miller, national executive committee member from boca raton and chair of adl's regional operations committee to introduce our distinguished panel and the topic we will discuss next. >> . >> thank you, pam. before we actually get into the discussion, we have a

video to kind of set up ands[! frame the topic and some of the vitriol we've been watching. i think it give as good background, so if we could, roll the video. >> this woman thought a fellow tea partier's poster went way too far. >> i wasn't degrading him at all. i was just saying -- >> comparing somebody to adolf hitler you're degrading them. >> reads like something brought up in the early 1930s in germany. >> adolf hitler called his program the final solution. i kind of wonder what we're going to call ours. >> support the policy as obama has, expressly supported this polic supporting? >> only people yelling here are calling names it is obama telling the american

people to shut up. it is nancy pelosi attacking the american people. it is democrats calling, comparing them to nazis. democrats are doing that. >> oh, yeah. i tell you honestly i think a lot of people who are yelling in these town hall meetings, do have some problems with misinformation. >> what misinformation? what jelling? i see, i see fathers with their kids in wheelchairs. i see veterans that are speaking. is there passion? yeah there's passion. you know maybe they don't -- >> they feel. >> they see their country going bankrupt. they see every promise been made has been broken and being attacked and called nazis by people supposed to be public servants. >> there needs to be a level of civility. that is what is lacking in this debate. >> nancy pelosi -- maybe first place between she needs to look is between her own -- [applause] >> apologize to the dead and

their families we haven't voted sooner to end holocaust in america. [shouting] >> that nothing like political heat on arizona governor january brewer. -- jan brewer. pushed by opponents and supporters of toughest anti-immigration law in the country. >> i do not know what a illegal immigrant looks like. >> roger mahoney, head of largest catholic archdiocese and called it mean-spirited and compared it to repression. >> here is how he described zona.in e arizona law is like nazi early about any. absolutely reminiscent of

second class status of jews in germany. prior to world war ii when they had to show their papers and have them with them all the time and they were subject to routine inspections suspicion of being jewish. i fear arizona is headed for a police state. boy, i'm glad somebody said it. arizona sure is putting the az in nazi, aren't they? we're talking about some sort of a equivalent to the holocaust? holocaust museum, they have got to be in works to document horrors of arizona's immigration law, don't you think. i'm sure abe foxman at anti-defamation league is working on bless release right now make sure he commends jerrod. palas how much illegal immigration is like, termination six million jews. working on that, abe? i'm sure you are. are you typing away right now? [laughing]

[applause] >> so that, frames a little bit of the discussion. >> i don't type. [laughter] >> adl has been spotlighting an undercurrent of rage sweeping across the united states as well as resurgent anti-government, a resurgent anti-government militia movement. each of us has watched anger-filled town hall meetings on health care. and each of us has seen the steadily rising level distrust of government, fueled by conspiracy-haunted theories, rumors about gun confiscations and, yes, fema concentration camps. and each of us has witnessed angry protests including those which you have just seen on our video replete of with images and comparisons to nazi germany. indications are that this rage is spreading from the

fripgs of our society, into the mainstream. from the extremes of the tea party, where protesters accused the president of treason, for subverting the constitution, to town hall meetings disruptions which we've just seen over health care. the wave of anti-government animus has taken many forms. throwing bricks through windows of congressional offices, taunting and spitting on african-american elected officials, and, anti-semitic threats are not constitutionally protected. and every such instance requires a strong response. the election of the first african-american president, a deep economic and housing crisis, double-digit unemployment, a broken immigration system, and public scapegoating as well as vilification of immigrants, combined with faster, better means of

communication among like-minded extremists yielded a perfect storm of grievances to inspire and promote hate group organizing. we at adl get that. there have always been extremists in our society working to exploit fear to recruit new at here ants to their cause. but now after this potent mix, the passion and hyper partisan debate and you have incubator for the kind of outbursts captured in this video. our democracy sparks, robust, vigorous debate around issues like iraq war and health care reform. respectful discussion is a hallmark of democracy and it is vital in our diverse society. but as we've learned speech and words can hurt and yet they're the very cornerstone of our country's democratic belle being. over the last months and years there has been much talk about who is a real american. litmus and other testing abounds. but it is becoming quite

clear that one constant component that definition must now include leadership in refocusing very nature and method of our discourse. that discourse should be focused on issues that matter to all of us. we need leadership today to reaffirm that real americans use political means rather than violence, intimidation or threats, to resolve policy differences. so this afternoon's session is devoted to examining the decline in civility in politics and in our public discourse, and to identify ways to move forward toward a future that embraces our best democratic traditions. because we are optimists, we see this as a teachable moment, a chance for people of goodwill and civic leaders of both parties to condemn the hate and stand together to demonstrate a new commitment to civility going forward. that commitment is in turn a commitment to the very health of our democracy.

for our discussion today we're honored and delighted to have with us four individuals who live this issue and whose thoughtfulness and passion will guide what we know will be a very interesting and constructive discussion. immediately to my left is david frum, a prolific author, who has written six books, including most recently, "com back." conservatism that can win again. he is contributing editor and columnist for several publications including "the weekly standard", the week and newmajority.com. served as senior fellow at american enterprise institute and at the manhattan institute for public policy research. as a former speechwriter and special assistant to president george w. bush, and senior advisor to the rudy giuliani presidential committee, david is a veteran of political campaign war rooms and white house communication shops. most recently david made

national news, calling on politicians to step away from what he called, overheated talk, hysterical accusations and pseudo information. about health care reform legislation. seated at the end is wade henderson. cherished friend of the anti-defamation league and president and ceo of the leadership conference on civil and human rights and the leadership conference

civil and human rights. frank sharry to david's left is the founder and executive director of america's voice, a newly founded organization that is at cutting-edge of addressing head off on the public atmosphere that poisoned the well of immigration reform debate. adl has enjoyed a close partnership with america's voice as we have worked together to beat back those who are poisoning the immigration debate with bigotry. frank is trusted partner and adl has cherished frank's wise counsel and his passion over many years. and we are also delighted, the third to my left, to have on our panel our own national director, abraham foxman whose life experience is a reminder of how words and demonization can and do have real world consequences. his life's work exemplifies the faith that we can write

a very different history here in our country when we stand up to those who are marge alized. please join me in welcoming our panel. [applause] i thought we would begin with the video that we just, just saw which many respects actually shocks the senses. as all of you are seasoned observers of political debate, what would you say has changed, if anything, and is shown in that video? >> well, the great catholic writer, gk chestertown once said people were complaining things had deteriorated. he said no, things are the way they always were just that the newspapers have gotten better. what has happened we have, more possibilities of bottom up as well as top down communication. it is possible for people to

find each other in all kinds of new networks. that makes possible all kinds of amazing, positive transformative social events. almost all of the results of this kind of tech lodgeal communication change is good. but there are some prices that you pay. and that means people who used to be town crank, who used to write their messages on mimi owe graphed stationary and i'm old enough to receive them they find each other. they form networks and have e-mail and they can have web sites. but also at the same time, as you are on guarding with that, important not to allow messengerers, bad mentioners contaminate good massages or valid messages worth hearing. one of the things, to 10er the immigration debate, one of the things you want to be careful of, i think many of us will remember the tremendous explosion of debate about crime that occurred in the 1960s and '70s when there was truly a crime wave in the country.

a lot of things were said at time. bigoted and racist and angry. there were some who tried to deal with that by ruling the crime debate out of public discussion all together. to say even to talk about it and to acknowledge it was somehow illegitimate. i think you want to be very careful about blending, obviously people shouldn't be angry, they shouldn't say, they shouldn't dismiss the marginalized. at the same time you don't want to tell people that they have to be accepting of illegal immigration or that they have to be unconcerned about the negative costs to the economy of the wrong kind of immigration policy and as one who believes we are running the wrong kind of immigration policy in the united states, takes too many unskilled and too few skilled immigrants. i think underneath the anger i can hear some truth as well if you listen to the crime debate in late 60 east and early '70s. . .

>> even if the debate is legitimate, he is using the hour of primetime on cable news network to misrepresent, distort, and lie. he made the accusation that leep leprosy was on the rise something he got from a professor who was specialty was

renaissance literature. it's not factual. we had to make a decision. we were approached, our we going to make a campaign that's going against cnn? we believe strongly with free speech. we're okay with all sorts of debate. you know what, this is beyond the pail. you know what, we joined the campaign. what was remarkable to me was how quick the response was. after months of pointing out the buys and distortion, cnn decided to buy them out. these are tough calls. where the line? the one thing they said about the environment today, we were involved in speaker at it, march 21, we had a rally for immigration reform. up the hill it just happened to be the day of the final health care debate.

there were 2,000 tea party activists there spitting and swearing and so forth. all of the media attention was on the 2,000 tea party activist. the cameras couldn't rip themselves away from the frothing anger to photograph the families that just wanted to be american. that says something to me about a media culture that is so driven in order to drive up ratings that leaves little room in the middle for sensible solutions. >> we're in the midst of what's been called the media revolution. and for a community that values freedom of speech,edom of expression, great deal of communication, we're in a quandary. because on one hand, it's wonderful. more people can talk to each other, more people can express their views, communicate. but what we've -- what we are witnessing as a phenomenon

nonwhich i'm not sure we're yet able to assess and that's the dark under belly of this communication revolution. it provides a new highway of legitimacy for a lot of expression which was in the extremes. we always knew that there were bigoted people and bigoted expressions and bigoted institutions. but it really never made it into mainstream. and so there were the adls and other organizations that monitored the extremes to know what's out there and our concern always was when it filtered into mainstream. with the communication revolution, the ability for everybody to write the column, to be a pun dant, all of the

sudden much of the views is now coming into mainstream. then of the advent of cable vision. again, good. you can see news all the time. how good is it? what are the pressures to provide news all the time? it grew with -- adl is about to -- i'm not sure celebrate 100 years, at least to commemorate 100 years of the existence. i'm not sure of the fact that we're still around after fighting bigotry is something to celebrate, but if you were to ask me and give me one example of one thing that the adl did that really made a significant change on hate, after protesting, i'd finally say to you, well, in the '50s we were in the front of drafting

legislation for the state of georgia which was called the anti-mask law. a piece of legislation that was passed in georgia which basically said the constitution provides you with the right and ability to be a bigot. if you want to be a bigot, you have to take responsibility for it. and therefore, you want to march with hate signs, burning crosses, fine. we move that mask. and if there's one single law that helped to break the back of the klu klux klan, that's what it has been. that mask has put the mask back on the bigots. and that it's atmosphere which fuels, fuels the ability of people who express themselves in

ways that they used to whisper. and it wasn't proper. and we're seeing a lot, a lot more of it. it's not new, some of this language. but it's new to see it as openly. now if we did the research for you, if we provide you on what's on the internet, it would really be shocking. and we would have difficulty, you know, selecting whatnot to show you, because most of it would be so horrific. so it's -- it's -- part of it comes in the good news. we can communicate in ways we've never communicated. the unintended consequences of that is to aid and abet uncivil expressions, dialogue, et cetera. >> fascinating. thanks for the question. it's great to be here. as you introduced me, you mentioned that i have the leadership conference which is a coalition of 200 national organizations working to build

an america that's as good as its ideals. we believe that advancing civil and human rights isn't an partisan issue, it's a national issue. we rely on the support of both democrats and republicans to move anything that we want affirmatively, and while we can stop issues that are problematic with the votes of only one party, we can't advance affirmative goals without the votes of both party. whether it was the passage of the matthew sheppard hate crimes prevention action which adl played a very important role in helping to advance or reauthorization of the voting rights or other affirmative legislation, we do need the votes of both party. i'm here today in two capacities. i not only had the leadership conference, the joseph l. raul, professor of public interest law at university of columbia school

of law, the david and clark school, they take a slightly nuanced view than some of our colleagues, even though i agree with much that you said. i think the notion that we are somehow restoring, we are talking about restoring civility to american policy discourse is a little bit of a mischaracterization. because historically, civility has never been an integral component. if anything like truth, civility has often been the first casualty of the pursuit of policy issues in that country. and so one can go back to the days of the founding fathers to see the kinds of characterizations that were made of one another, the kinds of raucous discourse, the kinds of uncivil attacks that were raged against colleagues. in fact, i think one of the more famous of the uncivil attacked was the caning of charles sumner

on the floor of the united states senate by a representative from south carolina who challenged him for disparaging remarks made about south carolina and slave-holding states and charles sumner apparently had criticized his relative by mocking him because of a physical disability. now that led to him being beaten senseless on the floor of the senate by a fellow member of the legislature. so i mean there's a romantic notion that we have about the restoration of civility in the issues involving slavery and race, involving gender, involving the treatment of native americans. i could go on. it's only in more recent times have we focused on the issue of civility and i think to some degree have over stated the history. secondly, i'm a card-carrying

member of the aclu. i believe in the first amendment. i know if there would have been no first amendment, there would have been no civil rights movement. without the first amendment, those who advocated for social change would not have been able to do so on the kind of restraint that opposed on the ability to challenge the government. and yet for that reason, i believe that one should be reluctant to promote government solutions to problem that is involve speech, particularly where civil society with play a very important role. i was especially pleased, for example, that members of both the left and the right ken star and others spoke out in craze -- criticism of lynn cheney when she crossed the line on illegal representation of the view of partners in the taliban. she crossed the line because he

went to the place where justice and attorneys providing legal representation regardless of the nature of the crime alleged by those that they represented is at the very essence of what the american legal system is about. and i was pleased that both the left and the right joined together and challenging her position. i was disappointed, how far, when civil society failed to reputeuate joe wilson when he yelled from the floor of the house, you lie at president obama during his state of the union address. because the truth is, he crossed the line. it was denigration of the presidency, not just the president, and while it might have been an appropriate for those in government to speak to that issue, certainly civil society should have had some response beyond simply clucking their tongues at what was obviously the bad manners of one congressman. when i saw that film that you showed at the beginning of this

congress, i was remined of the -- reminded of the fact that using terminology drawn from the holocaust, talking about nazism, talking about policy pursued in the domestic context that rivaled what was done by nazi, germany, not only crosses the line, but diminishing the events. so, yes, i would have expected adl to speech out -- speak out against it. i also expected other to join that it's inappropriate to take that posture. in my complicated world, i recognize that we need the support of both democrats and republicans with a majority of which are decent people on both sides of the aisle. i think that, you know, organizations like the tea party, which i remind you is a k

street manufactured initiative in a promoted by dick army and a host of others have had no legitimacy at the outset, but has now become a voice representing the interest of the right that are being manipulated, not reflected a true view of american politics in my judgment. they need to be questioned on that by those of us in the civil society that have the ability to call them up. when they use and invoke imagery that is inappropriate, and other experiences that have been experienced by those in our country, they should be called out on it. in the context of the immigration debate, we need to establish certain program steres on what's acceptable in civil society. that's brood. -- broad. when you cross the line, you know it. we should call them out on it.

that's the standard that we seek to apply to all of the issues that we address. >> you don't feel the way, if i may, that there is a cause for angering or any great concerns about? >> no, i think look. it's a great question, larry. i think there's a difference between the america of the 19th century and the america of a 20th century. we are in a postcolonial world in which the dominate is not @ challenge between east and west and communism and democracy we are in the world in which the predominant challenge is how do you manage diversity? an ever more complex world? how do you prevent demography from becoming destiny when we are attempting to balance interest. the genocide that took place in rwanda in 1994 and by the way, i

understood you honored the bulgarian government yesterday for its effort in world war ii to protect the entire population of jews in bull bulgaria, about 20,000. wouldn't that be something to celebrate? we didn't. instead, now we are dealing with some of the broader effects of that. in my view, the effort to manage diversity has been a challenge. i look at france, for example, trying to outlaw and other european countries attempting to address the question of how you integrate muslims into predominantly christian votes? -- societies? those are the challenges. we will have a population in 2050 in which there is no majority, but only the population of the rich ethnic diversity that we celebrate in this country. i perceive that to be a

challenge that requires our best evident. it's not that i don't believe the responses are problems that have been identified are serious. in fact, i agree with abe when he says that the media revolution has transformed access to a shared information between fringe groups that helps to facilitate the growth of serious risk in a democratic society. i think that's true. i think if you look at reports of organization like the southern poverty law center, the documentation of the growth and fringe and militia organization, there is concern. i think the response to the concern is more advocacy on the part of civil society in an attempt to draw the line. there should be a bright line between somewhat can be debated on even the most emotional issues and when you cross the line. and so when you compare advocates of health care to

nazis, you cross the line. and that should be obvious. >> but the classic response to bad speech in our world has been good speech. more good speech. is it working? >> well, i'll start. arizona state law has had a fascinating couple of weeks. abe and i first met during the campaigns in proposition 187 california. there was a big issue. most in the jewish community were supportive of the ballot initiative. adl came out against it because it had this clause, they read it carefully, they said if you are suspect you can get turned off. here we are in 2010 a new law in arizona, if you meet some undefined responsible

suspicious, you can be asked for your papers. i watch with interest. first of all, i would surprised -- i think some of the access in the language and the swastika and way beyond the pail and highly inappropriate. there's also been a lot of intelligence debate about the issue. i've been very pleased a number of people have spoken up against it. i think thought david frum was the only courageous conservative i knew. other folks have spoken up, jeb bush, carl rove, rick perry, i think we should honor that. when people have the courage to say, you know what, yes, there's part of our party that really wants to show how frustrated they are. but you can't put -- declare open seaso on 30% of the population in arizona, legal or not. just because you are angry.

you can't trash american values and degrade arizona's representation in order to deal with the legitimate problems. there is a legitimate problem. the question is not if we're going to deal with illegal immigration, but how. and there's the debate. the idea that the state would introduce an un-american and unconstitutional wrong, you are thinking wrong. i'm glad so many people have spoken up. i'm surprised because the easy thing to say is what part of illegal don't you understand? it's them. now we're having a debate about what are we going to do about it rather than extreme arizona? >> i hope we also want licensed integration of people that support the law as i do. if the law is flawed, but one of the things that is going to come out of this law that is very positive, there's been tremendous resistance to what is the real solution to the this problem. and that is a bimetric card that everybody applies for the job

that will have to have that will validate the legal status to work. one the things that i take with great comfort has been the police can't stop you on suspicious. they can only stop you on the amendment of the law, in the course of a valid traffic stop. they using the model of the methods of mayor ghoulianny used in the new york to get the illegal guns off of the street. if they have reason to think you are not present, like not speaking the language and not have a valid driver's license, then they can ask you for your papers. i was born in canada. i've gone through the migration system. since 1952, every immigrant is required to carry the green card. it's already the law. this is not a new thing. i agree the mistake to do traffic stops and only ask some people. i think we have now the process that open up in the workplace,

you should ask everybody and be some way of checking everybody's legal status. that's a good thing that could immerge from this law. but on the larger question of speech, since i've mentioned canada, let me invoke something. i have been very active in the canadian jewish community, i know there are other people here you know the experience. the canadian jews became very active in supporting the human rights law that began with discrimination in hiring and housing and has worked into a network of rules governorring what maybe said. the reasons were originally supposed to suppress in canada has the united states quite minute danger of neonazi speech. what they have become is an umbrella that does not share the

canadian values and wage warfare againsts people that don't uphold the values. that's a con restaurant between the description of the great victory of the adl in banning masking in georgia and wade henderson's comment about the danger from france banning masking. the french had many of the same concerns about the people of georgia had in the 1950 with the prevalence of masking. it cannot be the case that one is a tremendous victory for human victory and the over is tremendous victory for bigot -- bigotry. >> god bless the aclu. i'm not sure they are going to like that metaphor. they were the ones challenging the anti-mask law as being unconstitutional limiting freedom of speech. every 20 years or so they come up to try to declare it

unconstitutional. which is ironic. >> there are several questions to answer here. i want to go back to abe's question about good speech negates harmful speech. but i also want to respond to david's observations about these changes in the law of arizona and the significance of those changes in ensuring the law is against racial profiling in a way that would be harmful. i grew up under the first 15 years of my life on the construct of separate by equal. the supreme court had articulated the standard which would guarantee equal treatment, albite in a separate circumstances. surely, david, you would agree that the experiences of those of us who lived under the construct of separate but equal was anything in equal in terms of how the law was actually enforced. in spite of the characterization, it had a fundamental at heart and that is the law does not apply equally.

regardless of what it said on the surface, you couldn't ensure that the law would be enforced fairly. that is the same problem in my view that applies to arizona. notwithstanding the change of the law, we know how racial profiling works. we've seen it before. we have likely to see it again and notwithstanding the assurances to the contrary, i have ever reason to believe the law will not be enforced in the manner in which the law has been outlined. now, with respect to the first amendment and its protection of religious liberty in the con restaurant to the engage in harmful behavior. the notion of religious freedom entitling one to wear issues regarding one's religious belief is of course a matter of great concern. in french schools, recently the government outlawed the use of head covering to the no-called nocob, but they also banned

other symbols of religious. they banned crosses because they carry overt views of christian identity and to the extent that they could, they sought to limit symbols of judaism as well. so my point is that was an attempt to be even handed in the removal of religious symbolism. in the context of georgia in the 1950s, these were not religious beliefs. what were being pursued was illegal activity associated with criminal behavior witch had been outlawed at the federal and the state level and this was an effort to pursue that policy to achieve that result. so there's a distinction between within the first amendment as you know regarding religious liberty and religious freedom. the question that goes to the issue of whether good speech can negate bad speech, i can only cite two examples. first, as frank sharry mentioned, the lou dobbs

example. he had gotten out of his box. he had cross the line and was engaging in a misstatement of truth and fact regarding some of the most important policy issues facing the country today. a courageous according -- organization started a campaign in which nay solicited support to encourage individuals in civil society to speak out against what lou dobbs was engaged in. that campaign of criticism and factually and accuracy of lou's program that led cnn to remove him from their. that's an example of speech negating bad speech. there are other examples. >> now we may run for office. >> yeah, well, you know, -- >> sometimes you get what you ask for. but, you know, i think the truth is these things helped. i cited the example of lynn

cheney having launched a campaign to demonize attorneys in the department of justice, and it was because of those on both the right and the left that campaign gained no traction. i've seen real examples of good speech negates bad speech, that is the preferred approach, rather than government intervention from my perspective. >> what is the difference between what lynn cheney did that you disapprove and what la raza did that you approve of? both cases people were trying to mobilize. i think what you'll discover is the neutral principal that you think you are relying on is snapping in your own hand and that there is no way to get beyond in that realm of boycotts beyond one person has one view, another has a different view, and they will deploy and develop what political muscle they can. >> no, i think there's a neutral

principal, david, i think there's a very neutral principal. i think with regard to the issue of lynn cheney, i think -- >> you do mean liz cheney. >> liz cheney. i'm sorry. i think liz cheneyaiicis that gy heart of the american judicial system, that is the rule of law. we premise our system on the fact that everyone is entitled to representation and in criminal context because our constitution demands it. and even the most appalling figures are provided legal representation under our system. and i thought that what liz cheney -- yes, liz cheney, what liz had done was to cross the line because it went to the very integrity of our judicial system. i thought that those on the right who deserved lots of credit for their courage, joining those on the left to speak out against it made absolutely the right sense in the case of janet, there was no boycott. janet did not urge a boycott

against cnn. what she did was to raise her voice in criticism of the substance of a cnn on-air personality who misstated and distorted facts for purposes of achieving a political objective. and she succeeded by puts together a criticism that was sufficient to get him removed from the air. that was not a boycott. >> la raza was trying to get somebody they didn't like fired, and liz cheney was trying to get somebody she didn't like fired -- >> you can reduce to that. these things look very similar. >> let's -- if we can, frank, you made a point it sounded like media access where you have two responsibly well attended demonstrations or protest for something similar, crowds, and yet the media went to the quote perhaps for vocal for

controversial crowd. is that part of the issue? is there an access issue? >> yeah, of course. i think ultimately, there is where -- i like what david is saying in that in the democracy, so much of it is about mobilizing your troops. either you win or your lose. there has to be room for that. i was reading the article that willie did recently about the politics 20 years ago because there's sharper distinctions between the two parties. but the problem that i have with it is the media environment does make it a lot easier to communicate and mobilize your base. spanish language media was a very powerful force in producing from a half a million people this last saturday in rallies in 94 cities. it's always remarkable to me. because i spent a lot of time monitoring spanish language media, how people who obviously don't is like where did that come from. there's a strong media in the

same way there's the right wing and left wing blogosphere and the problem that i have with it is that in politics today there's so much focus on mobilizing your base or touching your base is that it's so hard to get any kind of con consensus. i think david frum andould make a bill that was work, i would have to make some concessions and he would. we would never mobilize enough people to get there. we learned that in 2007. wade was counseling the few of us supporting the bush/kyl/kennedy/mccain approach. most of the left was shooting arrows and most of the right was up in the up roar about amnesty. it wasn't a perfect bill. trying to solve a tough problem, it was like the air was going out of the balloons as the energy from the mobilized bases

got stronger. so i'm not being equivalent here. the energy was much stronger and intimidated many republicans from voting against the bill that had been negotiated by the bush white house. what bothers me is that, you know, okay, we learned the lesson. we're behind the rallies this last saturday. you have to mobilize your base. how can you have a mobilized bail and responsible negotiations so that you solve tough problems? that to me is the challenge. if the only way you can win, which it seems these days is you can impose enough fear on your opponents to vanquish them. i don't know that's really makes for a healthy solution to tough problems. >> david, just in coming back to some of the things that you mentioned, is it what you are talking about could be deemed an

overreaction that media coverage is one component but perhaps our ringing our hands maybe the overreaction? >> as we said, the problems of the present always look larger than the problems of the past, even if they are bigger. the charles sumner case is a good example. it's a sitting vice president of the united states shot dead, former secretary of the treasury , and. [laughter] >> and the president of the united states trying to have him brought back and managed for treason even though he probably was guilty. american history has been pretty livid at times. i think -- i would think our two things that if i would speech to the -- speak to this group, i

would be concerned about. if you are a liberal and you balance on the left-hand side solutions, you are entitled to have that point of view. you don't have to dress up your references as processed reference. you could can i think we should have immigration amnesty. other people a oppose that. i can say that the forthright and direct without directing the argument without the concern of the tone of the society. the second thing, this is what i have to say speaking as someone who's been involved in the jewish community life, i think jewish groups can be consumed by problems coming from the wrong direction. i am haunted by the canadian examples and examples comes from europe in example to snuff out the last members of the neonazism, they have becomes weapons. and they have been used by very

unscrupulous people. if you are concerned with the kind of issues that the adl is concerned with, and i am passionately concerned with them, the safety and security of the integrity of the jewish people, i don't think those threats tend to come from the people where it is most concerned. those are not the people beating up jewish school kids in paris, those are not the people who are putting armed guards in front of our synagogues on high holy days. i would urge the jews, i think jews are also entitled to speak for up themselves and for their own communal interest and say this is a community that is more physical danger, not so much in north america, but very much many europe than it has been at any time since the war. jews are entitled to be concerned about that problem. they don't have to wrap it into a bigger problem. they can address directly their safety, our safety, our security

and where it is in the challenges and threats to the safety and security come from. >> i agree very much, let me say that working on the hate crimes bill in this country, this was a recognition that speaking out and denouncing violence, that's what we're talking about. we're not telling you speech and symbolism, we're talking about action that leads to violence. when we talk about that, we can't divorce it from the political context in which it occurs. there was an apparent fighting in hate crime activity directed towards african-american in the wake of president obama election . there has been a spike in the hate crime violence in the wake of heated rhetorical deindicate about immigration. there is -- debate about immigration. there is that kind of concern. that's one we should be concerned with. let me give you an example of

where -- i think again the role of civil society comes into play. it is inappropriate in my view as a biproduct of a political id logical between the parties, democrat and republicans to use the systems of government to frustrate the process from going forward in a way that ultimately cast on the legitimacy of government. an example. there is apparently a decision by some in the republican leadership to use the filibuster to great degree and attempting to block the conformation of obama judicial appointments and other appointments to administrative office. the administrative appointments has been in the past been considered routine. when a decision has been made to block the confirmation, whether it's head of the equal employment opportunity commission or a civil rights office and the department of

justice or in some of the office has a general matter that's inappropriate unless the candidate has a flawed background that would justify that effort. with respect to judicial nominations, it's especially egregious in this 111th congress. everyone that comes up for review is subjected to filibuster. yet when the filibuster is broken by the cloture, the individual is then confirmed for 89-1, 83-1. applying that there was no real opposition to the candidate. that kind of abuse of the filibuster process in the past that was challenged by a group of 14 senators who became known as the gang of 14, who wanded together to oppose any kind of filibuster. it would have been terrific if there was a gang of 14 to speak out about the confirmation of

appointments in this administration and failure to do that requires civil society to step into the gap. so that's what we are looking at in terms of how this process works. my fear is that this attempt to integrate government at any level, to suggest they have no role until the lives of america is simply wrong. when someone yells take your government hands off my medicare, i mean obviously these are not informed audience that is making that statement. i think you'd agree. right? [laughter] >> my point is there has to be some way of having civil society engage the mistruths and misstatements, other than it -- otherwise it ultimately damages the government. >> david, and then i have to follow up. >> the question is do you have confidence in the washington to do the right thing. it's going to be the oldest in polling. we have answers on the question

going back into the early '60s. we can see confidence. it's not a one way decline. it spikes. it spiked in the middle 1960s and 1970s and 1990s. what make it is go up? prosperity? when the government is doing a good job, people have a lot of confidence. the steepest increase in the government of people, took place in reagan. in the recession of 1982 and 1983. when you show the lack of disconfidence in congress, it is not an irrational response. how good of a job did the government do? how did the government intensely regulate the housing? did they go good job or bad job in did they do a good job or bad job? do you have confidence in the people that do a good job? they do a very bad job. if they want my confidence back,

the answer is to start doing a better job. if they do, you will see the numbers rise in the middle '60s and late '90s. one things with the filibuster, it's gone berserk. it's been used in ways it never should have been been done. this is where i think people can rightly speak for themselves. yes, it's worse now than george bush, but it was worse under bush than clinton, and worse under clinton than bush. because of the erosions of the norms in the senate about what is legitimate and what is nonlegitimate behavior. you do not have to create the case of some kind of unique falling off from the stands of the civilization the past couple of years. there's so things we can do to make the filibuster the president and appointees. we need to staff all of the agencies and getting the filibuster reform in the

important part. so by the way are reforms to disclosure. because the amount of disclosure you have to do. i've been through. it's insane. including every foreign trip in the past 15 years to the date of departure to the date of return. i challenge anybody in the room to come up with that list from themselves. >> wait, just for clarification, perhaps, when you refer to members or components of a civil society, -- >> who am i referring to? >> that's a good question. >> you know, i think this is civil society, guys. the leaders of the anti- defamation league, this is a young leaders gathering. regional leaders for the adl and a variety of places around the country. you speak out on the policy issues that confront your organization on the daily basis. you are civil society. the organization that we represent whether it's the

ncaacp, the national counsel of la raza, organizations representing persons with disabilities, you are part of civil society. when the adl and the leadership conference and a host of other organization joins to speak up on strengthening federal hate crimes law, yes, there was a self-interest element there. because obviously all of the communities has been touched by the increase level of violence. there was also to put themselves in the issues of another. there was the first civil rights bill that protected enforcement to representatives of the gay, lesbian, bisexual, and transgender community. no one should be subjected to violence because of some characteristic that should be other than protected by law. and civil society was needed to raise his voice to make that happen. so, no, i think there should be

-- look, government regulation, by the way, plays an important part. i think we kid ourself when we suggest otherwise. i agree with david. your observations about the general of the housing crisis. but, you know, the subprime community, the subprime markets, rather, where the housing crisis began because of the systemic discrimination against african-american and latino and poor households, households that might other than been sent to the paper loans that were fair and balanced would in this instance be sent to subprime loans. it was a systemic violation of fairness and discrimination under law and it should have been regulated. largely wasn't. was this effort at financial reform that's now pending in the senate would attempt to do is to regulate the markets in ways that work to the interest of of all. ben bernanke, i like bernanke, i

supported his reappointment. when ben bernanke says the federal government did not do his job, he's simply being candid. his recognition that there was need for additional regulation simply confirmed the obvious. i do think there's places for reform. i think sometimes there's a mischaracterization or exaggeration of what the government can and should do. i think we should be thoughtful and sensible. >> abe, just moving slightly off this subject, we spoke out recently about the banner at the tea party rally here in washington which was held by members of the crowd. it showed piled up corpse of the holocaust. it seems the use of holocaust

related imagery has been has bandage prevalent or is on the increase, why? >> well, there are several reasons. some of it is ignorance. i think we are 70 years since the beginning of the war, 65 years since the end of the war, so we have three or four generations who don't really know -- never really were taught, don't understand what nazism was about, who hitler was, which is why you see them in, you know, all kinds of manifestations. so that's one element of ignorance. the other element is memory. you know, people just don't remember, it's not as relevant. but what i find more distressing is, you know, when the use of

hitler imagery, nazi imagery comes from extremist groups, it's one thing. what we are seeing is it comes from legitimate mainstream -- a cardinal, and who knows? some cartoonist, congressman polish, he's a member of our board. he's knowledgeable, why do they feel it necessary to resort to this type of extreme imagery. i don't know the answer. but i also find it troubling that glenn beck becoming our advocate. he's our support. [laughter] >> you know, nobody nobody -- he misread us completely. that's nothing new. not the first time, won't be the last time. but ironically, he's right. he's right what he says. it's hard to do this. don't these people know that there is no comparison?

and there are no other voices and that is very -- almost almost -- the only ones out there. everybody in this panel agrees. but, you know, nobody comes out there and says what are you doing? we saw is it in health care. we're seeing it now in immigration. and so the only reasons i see is ignorance or lack of memory and in some instances, it's insensitivity and it's because of bias. but most of it is just who cares? you know? >> abe, i mean you think you raise obviously a very important incentive point. and that issue of holocaust imagery, nazi imagery, in most instances is inappropriate. let me offer a different take. i know mahoney from los

angeles. he's a caring, enlighted, but deeply religious individual who is very troubled about the nature of the immigration debate in the country today. any reference that he may have made to nazi imagery i was not out of sensitivity or certainly not hostility or not even out of ignorance. but what has been the casual utilization of some of these images in the past by others to make a point of emphasis. which was done here. it's inappropriate. and having said that, how do we respond to it? what do we do about the things? certainly it seems to me that communication among friends is transgressing on issues like that, what do you do, you pick up the phone, you give them a call, you try if necessary to

engage in a showing of public support around a particular point of action against civil society. and in any judgment, there are many ways of handling that. certainly, i any a country as diverse as ours, there is a lack, a fundamental lack of knowledge of our government working. there has to be restoration of civics, for example, in high schools to help bring people of diverse backgrounds, immigrants and americans alike around a core set of values and it's important that we understand it. we don't do enough that have. so i think there are many steps that one can take to address the issue. but i certainly think we have to go beyond the problem. and i think that's where organization like the leadership conference, adl, america's voice and others can play a very important roll. i think they have what we can do. >> i've got -- we're going to move to some questions andenses. before we do that, abe, i think

you had an announcement that you wanted to make. >> okay. i think we're getting to a point, maybe we started on the point which is civility is not something that we can legislate. civility is something that we've talked about, about getting the civil society to be able to speak out. and we've been looking for vehicles and ways to raise the awareness. we came up with a statement which i will share with you which we hope you'll be able to take back with you and share with civic leaders, politicians, elected officials, but again it's to try to build an awareness and the sensitivity to what's happening. we've stopped caning in the senate. but the very fact, the for fact that it's on our agenda and we

have there for two days and there are a lot of pressing issues and the very fact that-issue now so engages us and troubles us says to us that there is something different than it was. and even though we can look back at horrific times, there is a different mood and different atmosphere which we find very distinguishing. -- disturbing. let me get a very simple statement and share with the first few signature any tours for it. statement and civility on national public discourse. we stand together today to call for the civility in our national public discourse. let our debate on the issues of the moment be thoughtful and recent. let us look to our elected leaders for leadership whether or not we support their poll -- policies. let us of us encourage advocacy

that pointed but not hostile. we reject racist and prejudice, we reject call to violence in our national public discourse in 2010 let us cast american democracy in the best possible light. the first two of -- who have signed this statement are the two directors of political entities within the jewish community. the first one is the ceo of the national jew ibidem great tick council. aye are foreman, and he's here -- ira and he's here in the room. where are you? the second one who signed it, not necessarily in that order is matt brooks, director of the

republican jewish coalition. that's the beginning of our effort. thank you. [laughter] [laughter] >> thank you, abe. i know that wade had a bit of a time constraint. if you have questions, there's three microphones here in the room. we may have bunch up. i'm dying for somebody to ask about redistricting. but go ahead. >> hi, michael ross from chicago. i'd like to commend the panel for their civility in today's discussion. we talk a lot about civility. most of what is in terms of contents. there's been some touching on process. it must be considered in terms of process. what disturbed me so much is where you have meetings where people were shouting down the speakers, it was a tactical approach to prevent speak, abe pointed out the classic recipe or response to bad speak is good

speech. what are the appropriate responses when one party to the discussion has a tactic and goal preventing the other parties from speaking. >> frank do you want to? >> sure. well, there is where i thought people who had town hall meetings and let that happen should have been fired for political malpractice. you know, if you are a politician -- i'm sorry. i'm not addressing what you are really hoping for probably which is how do we restore civility to the town halls? what i'm saying is that a political speakers have to understand how to manage these things. from my point of view, and i also thought the media, the truth is and wade probably knows this better than i do, in the town hall throughout the summer, most of them were dominated by supporters of health care and very civil and the few times people -- but the media loves those shots. and they cleared it in all of

august. and it actually distorted of the reality of the town hall meetings. but at same time, there is where, i think, my friends in the democratic party flew up. as much as i'd like to stand up and shout at meetings, i'd like for more political actives who know how the game is being played these days to get ready for staging events, get your message out, i didn't like it, but if you'd ever had a town hall meeting like that, david? >> never. >> exactly. so sorry that was more of political answer than civility answer. but at the end of the day, you have people who use that. i think our political activist have to be smarter about how they do it. >> an example of shouting down which should be of concern as to what happened of michael orr --

oran, i just blanked, town halls tending to very sedates affairs. the university campuses, and the people who are the most frequently targeted by are friends of israel, people connected with israel in some way. let's talk about -- again, i don't think you have to wrap your concern about what happens to proisrael students in the larger box of an issue that isn't there for 99 summers out of 100. >> i'm bill mallet, i'm from the pacific northwest region. what is the purpose of the civility? to create a climate of safety and respect so that people can think -- >> you can continue to follow

this conference on our web site span.org. the senate is coming in now for legislative work. more debate on the bill to overhaul financial regulations. no voted expected for today. live coverage here on c-span2. the presiding officer: the senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. eternal god, the source of our being, you have given the

members of this body the opportunity to do justice and mercy, to give aid to the oppressed, to lift the burdens of the weak, and to comfort those who live in sorrow. today, pay their words and deeds reflect an ernest desire to build on a tradition of equity and truth. in the voicing of their convictions save our lawmakers from harboring resentment, as you infuse them with the spirit of your peace. we pray in your merciful name. amen.

the presiding officer: please join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington, d.c, may 3, 2010. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable mark r. warner, a senator from the commonwealth of virginia, to perform the duties of the chair. signed: robert c. byrd, president pro tempore. mr. mcconnell: mr. president? the presiding officer: the republican leader. mr. mcconnell: ordinarily, the majority leader would go first.

he will be here momentarily. i will go forward with my opening staivment. the presidin-- i will go forward with my opening statement. the presiding officer: without objection. mr. mcconnell: we're all worried about what's going on in the gulf coast. the entire nation is bracing itself for the full impact of the disaster which could get far worse. our focus at the moment is on stopping the leak and mitt gailting the damages as quickly as possible so we'll be paying close attention to the administration and to local officials on the ground to assist them in these efforts as the oil comes ashore. we're all hoping that the coordinated efforts of local, state rs and federal officials along with b.p. workers will prevent a worst-case scenario. no one is ignorant of the impact this could have on the environment, the economy of the gulf or on the thousands and thousands of individuals of families and individuals whose

lives and livelihoods are rooted for generations in the fish and wildlife that live in these coastal waters. it is heartbreaking to think of those who flif the region and during yet another tragedy but were inspired by their resilience and tireless efforts of those engaged in the repair and recovery efforts. tragedies like this are a reminder of the daidges dangers so many americans enduring every single day in the work of keeping america moving and of the fragility of the environment. our prayers remain with the families of those who were lost in the initial explosion. we'll also be keeping the repair and recovery workers in our thoughts as we continue to monitor the situation. once the flow has been stopped and help is on the way, there will be a full investigation into what went wrong and what can be done to prevent anything like this from ever happening again. meanwhile, a potential tragedy appears to have been avelletted

over the weekend thanks to the vigilance of ordinary citizens and the quick response of law enforcement officials in new york city. we were all alarmed to learn of the attempted car bombing in times square but relieved that it failed to go off. all of this was a vivid reminder of the continual threats to our security and of the need to remain vigilant and to never drop our guard. nenew yorkers responded to this attempted attack just as we'd expect them to: within hours times square was again full of tourists and on broadway every show went ahead as scheduled on sunday. so we applaud the people of new york and the local and federal law enforcement officials who snapped into gear to disarm the car bomb and who continue to investigate the situation. here in the senate, debate continues on the financial regulatory bill. i'll just note, as we continue this debate that a consensus seems to be emerging among the experts and the public about two things.

first, that it would be deeply irresponsible to rush a piece of legislation this far-reaching without fully understanding its potential impact on ordinary americans who had absolutely nothing to do with the financial crisis. second, any bill that comes out of the senate must actually address the core problems that led to the crisis. this should be obvious, but the fact is, a lot of people are increasingly concerned that this bill could actually miss the mark completely. not just as a result of what it does but as a result of what it fails to do. one example is federal housing policy, as embodied by the government-sponsored enterprises fannie mae and freddie mac. in my view, it is simply not acceptable for some on the other side to suggest that we have to rush this particular bill through congress but that it's okay to wait another entire year to address the g.s.e.'s which we all know played a central role in the financial crisis. so republicans will work to make sure that bill actually

addresses the problems at hand and that in an effort to rein in wall street this bill doesn't actually end up hurting those who had nothing to do with the crisis. mr. president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: quorum call:

quorum call:

the presiding officer: the senator from vermont. mr. dodd: mr. president? the presiding officer: the senator from connecticut.

a quorum call -- mr. dodd: first i i ask unanimous consent the call of the quorum be rescinded. the presiding officer: without objection. mr. dodd: as i understand it, the senate is going to resume consideration of s. 3217, the wall street reform bill. i'm told there will be no roll call votes during today's session of the senate. the presiding officer: that is correct. under the previous order, the leadership time is reserved and the senate will resume consideration of s. 3217, which the clerk will report. the clerk: calendar number 349, s. 3217, a bill to promote the financial stability of the united states by improving accountability and transparency in the financial system, and so forth and for other purpose mr. sanders: mr. president? the presiding officer: the senator from vermont. mr. sanders: mr. president, before i talk about financial reform, i did want to say a word about the disaster in the gulf coast now and the oil spillage there. obviously all of our hearts go out to the families of the 11

workers there who have lost their lives and to the thousands and thousands of employees in the region who are going to lose their jobs as this terrible contamination spreads all over the gulf coast. but i hope very much that we comprehend in the midst of this disaster that when you're dealing with technologies like offshore drilling or in fact nuclear energy, you cannot be 99.99% successful. and, unfortunately, as human beings, 100% success is a goal that we often don't reach. and that is why, in my view, as someone who has long opposed offshore drilling, i think it is absolutely imperative that we understand that as a nation if we move aggressively to energy efficiency, if we move aggressively to such clean, sustainable energies as wind,

solar, biomass, geothermal, that we can in fact break our depends on foreign oil and fossil fuel in general. we can create millions of jobs as we become energy independent without having to deal with the calamities that we are experiencing today. mr. president, either tomorrow or shortly after, i hope, tomorrow, i will be offering an amendment which deals with transparency at the fed, and i did want to say a few words about that. at a time when many americans are dispirited by the intensity of the partisanship which they see in congress, this amendment demanding transparency at the federal reserve does something which is quite unusual. it brings together some of the most progressive members of the u.s. congress -- and i consider myself in that fold -- with some

of the most conservative. it also brings together some of the strongest grass roots progressive organizations in the country with some of the most conservative. so what we are seeing in this amendment is a coming together of millions of americans who have very different political ideologies but who agree that it is absolutely imperative that we bring transparency to the fed. this amendment is virtually identical to legislation that i've offered on the subject that now has 33 cosponsors. and in order to give you an indication of the diversity of ideological position, let me just read to you who they are. they are senators barrasso, bennett of utah, boxer, brownback, burr, cardin, chambliss, coburn, cochran, cornyn, crapo, demint, dorgan, feingold, gramm, grassley,

harkin, hutchison, isakson, landrieu, leahy, lincoln, mccain, murkowski, risch, wicker and wyden. this is a very broad cross section of ideological opinion in the u.s. senate. mr. president, in the house of representatives, a similar process has taken place, and this concept has been cosponsored by 320 members of congress. that is a lot. that very rarely happens. and that legislation was authored by republican congressman ron paul and democratic congressman alan grayson. the amendment that i will be bringing to the floor of the senate has 15 cosponsors, republicans and democrats alike, and i very much appreciate their support. mr. president, this amendment is simple and it is straightforward. at a time when federal reserve

has provided over $2 trillion in zero or near zero-interest loans to some of the largest financial institutions in this country, this amendment requires the fed to tell the american people who got the money. now, i don't think that's a very radical concept. this amendment would simply do two things. number one, require the nonpartisan g.a.o. -- the government ability office -- to conduct a comprehensive audit of the fed within one year. secondly, require the federal reserve to disclose the names of the financial institutions that received over $2 trillion in virtually zero-interest loans since the start of this recession. mr. president, in terms of progressive grass roots organization, this amendment enjoys the strong support of the americans for financial reform,

a coalition of over 250 -- 250 -- consumer, kphraoe employee, investor and civil rights groups, including the afl-cio, which represents millions of american workers, and the aarp, which is the largest senior group in this country; representing tens of millions of seniors. so what we are looking at are grass roots organizations representing a huge part of our population that say it is time for transparency at the fed. there are also many conservative grass roots organizations who are supporting this amendment, including the campaign for liberty, the rutherford institute, the eagle forum and many other groups. mr. president, this amendment is not a radical idea.

as part of the budget resolution debate in april of 2009, the senate voted overwhelmingly in support of this concept by a vote of 59-39. that's a strong sign that this senate wants transparency. in the house of representatives, this concept passed the house financial services committee by a vote of 43-28 and was incorporated into the house version of the wall street reform bill that was approved by the house last december. so a provision very similar to what i am offering is already in the house bill. so we're not talking about some kind of fringy idea. it has widespread support in the senate. it is already to a significant degree incorporated into the house bill. its concept has the support of the speaker of the house, cincinnati is i pelosi, who has said that -- of the house nancy

pelosi, who said congress should ask the fed to -- quote -- "put the information on the internet." in other words, what she is saying is that if you look at the tarp bailout, you've got all the information you want from who received that money, how it was paid back, et cetera, et cetera. it is out there on the internet of the treasury department, and that is where it should be. and we want to bring that same type of transparency to the fed. this concept, interestingly enough, mr. president, has already been supported by two federal courts. two federal courts that have ordered the fed to release all of the names and details of the recipients of more than $2 trillion in federal reserve loans since the financial crisis started as a result of a freedom of information act lawsuit filed by bloomberg news.

mr. president, the fed has argued in court that it should not have to release this information, citing, according to reuters, and i quote, an exemption that it said let's federal agencies keep secret various trade secrets and commercial or financial information. end of quote from reuters. however -- and this is important because this is not bernie sanders speaking, but this is a federal court -- a u.s. appeals court in new york disagreed with the fed's assertion. here is what a unanimous -- underline unanimous -- three-judge appeals court panel wrote in their opinion -- and i quote -- "to give the fed power to deny disclosure because it thinks it best to do so would undermine the basic policy that disclosure, not secrecy, is the dominant objective. if the board -- the fed --

believes such an exemption would better serve the national interest, it should ask congress to amend the statute." end of quote. that's what a three-member u.s. appeals court unanimously said. mr. president, this appeals court decision upheld an earlier ruling by the southern federal district court of new york that also ordered the fed to release this information. in other words, we now have 59 senators, 320 members of congress and two u.s. courts that have all told the fed in no uncertain terms "give us transparency. tell us what happened when you put at risk trillions of dollars of taxpayer money." mr. president, i believe that what we are trying to do based

on the kind of grass roots support that exists in support of my amendment, i think the overwhelming majority of the american people want that transparency. and it's our job to give it to them. mr. president, i do understand that this amendment will not be supported by every member of the senate. some of them may come up and say it's not accurate, so i want to deal with this right now. and they say they may come up and state that this amendment would take away the independence of the fed and put monetary policy into the hands of congress so that every other day could be a great debate here about whether or not we raise interest rates, we get involved in every detail of monetary policy. that is absolutely not what this amendment does and the language in the amendment is very, very clear. this amendment does not take away the -- quote -- "independent" of the fed and

does not put monetary policy into the hands of congress. this amendment does not tell the fed when it cut short-term interest rates or when to raise them, it does not tell the fed what banks to lend money to and what banks not to led money to. it does not tell the fed what foreign central banks they can do business with and which ones they cannot do business with. it does not impose any new regulations on the fed nor does it take any regulatory authority away from the fed. in fact, the amendment prohibits congress and the g.a.o. from interfering with or dictating the monetary policy decision making at the fed. we are very, very clear on this on the amendment. this amendment simply requires the g.a.o. to conduct an independent audit of the fed and requires the fed to release the names of the recipients of more than $2 trillion in taxpayer-backed assistance. so, mr. president, there's a lot

more to say and i look forward to saying it when the amendment gets to the floor. but let me conclude by saying this, i don't remember the exact date, perhaps a year ago or so, as a member of the budget committee we were addressed by ben bernanke, the chairman of the fed. when he came before the fed, i asked mr. bernanke if it -- if he would release the names of the financial institutions who have received trillions of dollars an -- on near zero interest loans. he said he would not do that. on that day i introduced the legislation which now has 33 cosponsors. so, mr. president, i look forward to hopefully tomorrow to bring this amendment to the floor. i'm proud of the kind of tri-partisan support we've gotten. i'm proud of the fact that we have people from every

conceivable ideology for transparency and i hope we can win this amendment and let the american people get an understanding of who has received trillions of dollars of their money during the bailout period. mr. president, with that, i would note the absence of a quorum and yield the floor. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: the senator from arizona. mr. kyl: mr. president, i ask rthe consent that proceedings under the quorum call be dispensed with. the presiding officer: without objection. mr. kyl: thank you. let me address the amendment that we're going to take up, first, i gather, on the so-called regulatory reform bill, the boxer amendment. the boxer amendment, as i understand it, is a declarative statement that taxpayers will not be responsible for any wall street bailouts. my understanding is that is it not a provision that would

enforce itself or would in any way be enforceable in the legislation, but it certainly expresses the sentiment that i assume every senator would share. the problem, however, is not just the fact that we're concerned that taxpayers will be responsible for bailouts, but the fact that bailouts will exist in any event and how that might affect people who have invested in or lent to an institution, what shorty it would give to the united states government an whether or not such a provision would apply as well to perhaps the biggest, fannie and freddie, the two government-sponsored enterprises that do hold the vast majority of the mortgages that are unsound or on less than strong financial footing, put that way. so the question is not so much whether taxpayer dollars will be used. though this amendment while

expressing sentiment doesn't operatively prevent that. but, just a much, whether wall street will still be bailed out, but in a different way. will the appropriate policies and institutions that should be in place to prevent this be amended into the legislation? if all we want to do is ensure that failing institutions are liquidated, we could have a bankruptcy regime. many people believe that's an appropriate regime. as it tradition of law. everyone knows exactly how it works and where you stand and ordinarily has been successful in liquidating firms that cannot pay their obligations. after the layman bankruptcy -- lehman bankruptcy and contingent effects surrounding that, some believed that bankruptcies were not suited to these kinds of large institutions.

it may be that traditional bankruptcy may have to be modified in order to apply to the liquidation of a financial institution that large. one of the things, though, that we need to do in figuring out exactly what the right process should be is making sure that creditors aren't receiving special treatment. for example, the way they did when the auto companies were bailed out and some other firms were bailed out. otherwise, we'll be increasing moral hazard rather than decreasing it, which is part of the exercise here. a government compelled fund that takes money from successful firms an transfers it to a failed firm, for example, regardless of how you seek to justify it as an assessment or recruitment or a tax or whatever you might call it is still a bailout. and the question is, therefore, ultimately who will pay for it, but also how does it scramble the obligations and the prioritization of obligations compared to what bankruptcy

would do? the people who bear the cost of propping up a failed firm, for example, have nothing to do with the fact that that firm failed with the poor decisions of that firm. so if instead of the american people, you're going to make other entities in its area, for example, a bank begins to fail so you're going to make the other banks prop that bank up, how is that fair to the shareholders or investors in the bank that has to do the propping up or the group of banks? they didn't have anything to do with the poor decisions made by the management of the failed firm. whereas you can argue that the henners to the failed firming -- lenders who to the failed firm and managers of the failed firm all had something to do with the direction that the failed firm took and because of that fact the bankruptcy laws have set out priorities as to who ends up bearing the risk of the failure of that firm. the lenders and the investors in

failing companies lose control of the money they invested. and whatever resources remain are channeled by the bankruptcy court into productive endeavors or to pay the people who have lent the money to the firm. now, that's exactly the opposite of a government-sponsored fund does, in transferring the resources from a productive to unproductive purpose. here if it's not the taxpayers who fund it is fellow banks or fellow financial institutions, again, people who had nothing to do with the failure of the entity being acted upon. fortunately that's process which can address the process of failing firms that does move resources into more productive areas and at the same time holds those directly responsible for the mistakes accountable. there are different names for this and it can take different forms, one of them is speed bankruptcy. in other words, a form of bankruptcy which recognizes that in certain institutions you're

going to need to quickly take a hold of them and in order to prevent contagion in the market shore up the financial situation so they cannot affect others and therefore cause a larger failure that relates to that particular company. a firm becomes insolvent when its liabilities, which could be payments to bondholders, it could be payments to suppliers, it could be repaying loans, are worth more than the associates that the company has. assets such as capital, accounts, the valuable of intangibles, even things like reputation. over the last couple of years we've seen a collapse or near collapse of several well-known firms. for example, the g.m. and chrysler company, bear tense, a.i.g., and fannie mae and freddie mac which are projected to be dependable on government

assistance for the forseable future and ultimately by that we mean the taxpayers of this country. in the examples that i cited above the government response was in effect to prop up the failed firm with taxpayer funds. the so-called speed bankruptcy and iterations of the idea would instead convert a portion of the longer term debt of the company into equity. and there are a lot of benefits, as you can see, to such a proposal. for example, a large, complex firm that is in financial trouble, a lengthy process could create the kind of uncertainty that would otherwise undermine the ability of the company to continue once it exits from from the resolution process and could affect for others its area. a speed bankruptcy, on the other hand, would permit the firm to remain in operation, keep running. there's a paper that's been written on this i think is very

interesting. garrett jones at the george mason the university actually writes that this kind of proposal would leave bondholders of something of value so they're not entirely wiped up and retain the potential to regain some of their losses if the equity shares they receive in lieu of their bonds remain of value here's what he writes in the recent paper, friday's bondholders become monday's new shareholders and the banking conglomerate can continue to borrow and lend much as before without little possibility after short-run crisis. it's a little bit like debt or possession financing in a bankruptcy but it matters where you get the financing, in this case creditors of one kind become creditors of a different kind, trading bond for equity. investors directly tied to the troubled firm bear the financial costs of the restructuring of

the firm. and, third, since many of the bonds are publicly trade and, therefore liquid, the process would be transparent and the reason the process could occur so quickly is because of that conversion. and, fourth, a connect to -- a debt to equity leaves deposits untouched. now, what steps would operationally be necessary to make this work? well, first an insolvent firm would be able to convert its long-term debt specified in advance and restock in order to recapitalize and strengthen the institution. under such proposals regulators would need to declare that the institution is at risk. second the firm would need to breach a certain specified capital level. once this occurred, the restructured firm would emerge healthier with less debt and more equity without any taxpayer money being used or without any money being used from other

banks or their financial institutions. for example, persian square capital management released a proposal to convert $75,000 of fannie mae's $55 million senior unsecured debt into equity. for every dollar of senior unsecured debt the bondholder would receive 90 cents in new senior unsecured debt and a 10-cent in value of new common ectcy. as a result the new fannie could take advantage of its new capital. it has a dollar to expand its underwriting. it -- it can utilize increased cash flow to absorb expected losses and in the future once conditions improve, to reduce its balance sheet by gradually selling some of the mortgage associates on its books. john b. taylor writes in "the wall street journal," in an

article "how to avoid a bailout bill", you do not prevent bailouts by giving the government more power to intervene in a discretionary manner. you prevent bailouts by preventing firms to go through bankruptcy without causing disruption to the financial system and to the economy. end of quote. mr. president, here is the summary of what i'm saying here. most of us here do not want to see taxpayer bailouts of these firms which have made poor management decisions, have invested poorly, have made mistakes and for which taxpayers should not be responsible. that's the genesis of the boxer amendment. but for the boxer amendment to really be effective, two things would have to be done, and perhaps we'll have suggestions on how to change it here. first it would have to be operational. it would actually have to be enforceable. as i understand it, as i said, the boxer amendment is oratory language. the taxpayer funds should not be used for bailouts.

something we can all agree to. but we also know around here that a sense of the senate resolution is nothing more than that, a sense of the senate. it needs to have operational enforcement language for it to have meaning. it's my understanding that this language does not. but secondly, the real question is whether or not instead of a bailout where government -- i don't want to use the word bureaucrats here, but officials representing the united states government in one of two or three different entities could on their own with very little direction in congressional legislation determine that a firm now needs to be taken over or bailed out, and without very many legislative criteria to direct them as to how to do it or the circumstances under which it's to be done could begin to unwind that firm, infusing perhaps taxpayer money that's later recouped or perhaps funding from some kind of a tax or assessment on other banks, for example, to infuse capital

into the entity to keep it from going out of business. this is a way in which bankruptcy would orderly work except that bankruptcy works according to a set of rules and traditions that have been developed over a couple of hundred years that everybody is familiar with and which people were -- which people took into account before they made investments in or lent money to a company in the first place. if they became a bondholder, they knew where the bondholders would be and the order of priority in a bankruptcy. if they lent money, it's secured, they know they have one level of security. if it's unsecured, they know they are pretty much going to be at the bottom of the totem pole when it comes to distributing the assets of the bankrupt company. their investments or lending is based upon or predicated upon their understanding of these well-known rules and principles. moreover, they understand that a judge will be in charge, that he will put people under oath and cause them to testify so you know exactly what the assets are

and you can understand what it would take to keep the company running, or in the event that it does have to be liquidated, how the funds would be disbursed. a trustee is appointed and a trustee has a fiduciary obligation under the rules of the court to management the business to either come back out of bankruptcy in chapter 11 or if it's a liquidation to ensure that the rules of the bankruptcy and the rules of the judge are carried out. now, that's the way a bankruptcy works. it is a proper way to unwind or to liquidate most businesses in this country. and i think those who say well, these financial institutions are different, we need a different set of rules first have an obligation to tell us why, what is it that's different about these entities that the bankruptcy laws simply don't work. what would cause them to have to have a different set of treatment? and if there are some things -- and i can think of a couple of things that distinguish them, then how could we modify the

bankruptcy rules in effect to take into account those differences? one difference one could posit i think is the fact that a large financial firm could easily have an effect on others who are invested in or who they invest in and therefore in effect cause a domino effect in markets, and that that could happen very quickly. and therefore, when you see signs of a problem, you need to be able to move very quickly. that's where this idea of this speed bankruptcy comes from. but it doesn't take a government bureaucrat or a government entity set up for this purpose to figure out that that's what needs to be done and how to do it. it can be done within the context of bankruptcy today or with relatively modest modifications in the bankruptcy code, we could make those changes. the fear that a lot of us have is that people who are not elected, who are not constrained by any particular power, except the limitations the congress imposes upon them and in this

bill those limitations are very, very general, that those people could make decisions to put somebody into this process to decide who gets paid how much without any reference necessarily, for example, to the bankruptcy code, who gets privileged and who isn't and with whose money. if you look at the example of the two auto companies, you find that labor unions were substantially privileged to the exclusion of other investors. a lot of people thought this was wrong. it was contrary to the way it would have evolved had they been in bankruptcy court. so what most folks would like to see is a process that you can count on, that you have rules of law that have been established over time in the bankruptcy law that enable you to rely upon and not some unspecified, unclear process that's run by some agency of the united states government. and while it is certainly a step forward to say that taxpayers should not be on the hook for this, it's not enough to say

that. a, because that's not operational or enforced, but b, because there are other ways to do this that represent a closer adherence to the rule of law, that would be better at promoting investment or lending in the first instance because of the clarity and the predictability of the way the situation would be treated in the event of a bankruptcy, and finally, that people who are not responsible for the bad management decisions would not have a liability when that company is then liquidated or comes out of a bankruptcy operating again. rather, the people who had been involved in the company in the first instance would bear that obligation. this is just one idea. it's one of many that have been posited here as an alternative to the specific provisions in the legislation rg and it's my -- and it's my hope that as we continue debate about this portion of the bill we could come together on a set of principles that would adhere more closely to the rule of law established in the bankruptcy code to the concept that those

responsible should be the ones who end up bearing the burden, and that in any event, as it appears that most of us would agree, that taxpayers should not be responsible for the decisions that were made by management of a failing firm. mr. kyl: mr. president, i was just wondering whether one of my colleagues wanted to speak, or i would note the absence of a quorum here? my colleague from illinois. mr. durbin: mr. president? the presiding officer: the senator from illinois. mr. durbin: mr. president, let me basically set the stage what we're doing in the senate today and why it's so important. this bill which senator dodd of connecticut has worked on for months with his staff, 1,407 pages, is basically a bill which

has been designed to create financial stability in the united states. this great economy that we have and all the great financial institutions and businesses notwithstanding, this recession has brought us economic pain that many of us have never seen in our lifetimes and only remember vaguely from our parents and grandparents describing the great depression. and so what senator dodd and the banking committee sat out to do was to basically change the law to establish more oversight of financial institutions to make sure we never get into this mess again. it took quite a few pages to do it, and now this week we start considering amendments to this bill. efforts to improve it, change it, delete sections. it's the senate in its historic role as a deliberative body. today, there are no votes. that's why there are few members on the floor, but amendments are

being offered and the votes will start maybe as soon as tomorrow if senator dodd and senator shelby, the ranking republican, can reach an agreement. but it's worth a moment's reflection to understand why we're here with a bill of this importance and magnitude which may take a week or more -- probably more -- before it is completed. the pew financial trust recently -- pew financial reform project, rather, recently summarized what we have been through in this recession. it's a painful reminder, but it's worth noting as we start this debate. this is what they estimate to be the devastation caused by the recession that we're in. $100,000, the cost to the typical american family in combined losses from declining stock and home values. $360 billion, the estimated loss in wages due to slow economic

growth from october, 2008, through 2009. that is a loss in wages of over over $3,250 for the average u.s. family because of this recession. $3.4 trillion, the total loss in real estate wealth from july, 2008, to march, 2009. roughly, on average, every household in america that owns a home lost $30,300 in value. 5.5 million, the number of additional jobs lost due to slow economic growth. we know that. eight million americans unemployed. another six million discouraged, not looking for work. 500,000, the additional number of homes foreclosed upon during the most acute phase of this crisis. $7.4 trillion, the total loss in stock wealth from july, 2008, through march, 2009.

that's more than $66,000 per household and was usually felt in retirement accounts and savings accounts of families all across america. these are indications of what we have been through and to some extent are still going through. we're emerging from this recession, but it was a devastating loss to families and businesses across america and a loss which many are still trying to recover from. senator dodd took on the unenviable task of taking a look at the laws that we have on the books and saying how can we strengthen them to avoid this from happening again? and, of course, there are several things that stand out. why did the united states get in the business of stepping up and saying we're going to take taxpayers' dollars to save private businesses? that's what we did. a.i.g., the largest insurance company in the world. initially, the federal reserve came in with some $85 billion when they were about to fail,

and if i'm not mistaken, over the course of time added another another $100 billion given to this one entity to keep it afloat. why? because they had basically guaranteed with insurance policies business contracts at every level in the american economy, and they were about to fail. they didn't keep an adequate reserve, and so as these contracts started to fail, this insurance company couldn't pay off as promised, and the feeling was that the whole economy would collapse on itself if we didn't prop up a.i.g. to keep it in business. the same thing was true for major financial institutions, institutions which dreamed up securities which had never existed before. they decided to start packaging mortgages, so the mortgage that i entered into in springfield, illinois, with my local bank could have been sold off to another bank and then some other financial institution and then

chopped and diced into pieces, those pieces each going to a separate security and people were investing in them, guessing whether me and my wife were going to make our mortgage payments. and as they went along the way, these rating agencies that are supposed to look at these securities and decide whether they are good or bad and give them ratings were giving them sky-high ratings, aaa ratings, as good as a government security. why? because there weren't many defaults in real estate mortgage and historically real estate values went up, and so they said this is a safe investment. meanwhile, there were people on the sidelines looking at these same securities known as derivatives, saying we think this may be too optimistic, and we think that maybe people are being loaned money for mortgages who might not be able to pay. and as we dug into it deeper, that's exactly what happened. a lot of banks and financial institutions were offering mortgages to people under no-doc

loans, no-document loans, which basically meant that if you said well, i'm making $100,000 and my wife is making $100,000 and we have got maybe $50,000 in debt, they would say that's all we need to know, let's go to closing. you think to yourself, well, where are the income tax returns, where are the documents to prove it up? they weren't worried about that, because they would go through the closing, get the mortgage, and quickly sell it off to somebody else. that's what created this house of cards which eventually tumbled. what senator dad and the banking committee are trying to do is to make sure that never happens again, that we never get in the position where the american taxpayers have to be called on to prop up banks, financial institutions and insurance companies, which if they fail could bring down the economy. now, the first amendment we have is from senator barbara boxer of california, and it's been referred to by the republican minority whip, senator kyl, in his opening remarks. he referred to it and described it as kind of a sense of the

senate offering. for those who are not familiar with how the senate works, we at the end of the day have a long list of resolutions that we offer for winning basketball teams and national dairy -- ice cream dairy month and fair play for paragraph way, all sorts -- for paraguay, all sorts of things, and these are the sense of the senate, we kind of express our warm feelings about all kinds of good things happening in this country. this offering by senator boxer is not a sense of the senate resolution. it is an amendment to this bill. it's so short and direct that i want to read it because it consists of three sentences. listen to these sentences in clear, plain english and you'll understand why senator boxer's amendment is the right amendment for us to start with. fist, all financial companies put into receivership in this title shall be liquidated. no taxpayer funds shall be used to prevent the liquidation of any financial company under this title. second paragraph, "all funds

expended in the liquidation of a financial company under this title shall be recovered from the disposition of assets of such financial company or shall be the responsibility of the financial sector through assessments." and third, "taxpayers shall bear no losses from the exercise of any authority under this title." this is not a greeting card. this would be a law with teeth prohibiting the taxpayers of america from ever being left holding the bag again when a bank has made stupid decisions and faces liquidation. that is not a sense of the senate resolution. it would be a law and the first thing we should pass. senator boxer listened to the debate back and forth about taxpayers' bailout and she said to me and others, i'm going to make this clear. i'm going to put it in as clear of language as i can think of to make sure at the end of the day, we never go through this again.

her leadership on this amendment, it is right, would be the first subject to be brought up here. and those who dismiss it on the other side as not being powerful enough need to take the two or three minutes it would take to read it. and if they read it, they'll understand it's powerful, direct, understandable language and says we're never going to let the taxpayers and treasury face this kind of obligation. it's not the only provision in this bill. there are many others, others that have been worked on for a long time. senator dodd negotiated with the other side literally for months trying to reach a bipartisan agreement. i know he tried and he tried hard with senator shelby, the ranking republican, with senator corker, a member of the committee, also a republican. he came and held a committee hearing, if i'm not mistaken, at the committee hearing the republicans offered 400 amendments, something of that nature, and when the time came to call the amendments so there would be an open debate and the bill could be changed one way or the other, they made a decision not to call any amendments, not

to offer any changes to the bi bill. so i would say on behalf of senator dodd, he has shown a good-faith effort to try to make this a strong, bipartisan effort. it's not too late. as we start the debate this week, we have a chance to reach i hope some agreement and make this a strong, bipartisan bill at the end. but when i listened to senator kyl of arizona talking about the goals of this bill and what we want to achieve, i'm worried. you see, the republicans issued their summary of their substitute bill, a bill that they want to offer to replace this. and within that summary, there's one thing that stands out. there's not a single provision in the dodd bill here which the republican substitute would strengthen. there is no language we can find in their summary where they say we're going to make sure that we protect families and businesses and consumers more. each and every section of their substitute weakens this bill,

strengthens the banks, removes the oversight and transparency requirements in so many different areas. when you take a look at the powers that the dodd bill provides to the federal reserve, unfortunately this republican substitute does not even give those same powers so that the federal reserve, which could require, for example, more leverage requirements so that a bank would have more money in the bank to back up investments they'd make, liquidity requirements. those are all weakened by the republican substitute. time and again their approach to this bill to avoid an economic disaster is to water it down. last week, they had a different strategy. their strategy was a filibuster strategy to stop us from even coming to this bill. when they couldn't sink the bi bill, they decided they would let us move forward but try water it down. i don't think that's a move in the right direction for the

american economy, and i hope that we will stand up against amendments which weaken this bill. it's estimated that the financial industry is spending over $100,000 a day in washington on lobbyists who are trying to get us to weaken or defeat this bill. you know, you may not see them as you walk around capitol hill. believe me, they are busy at work on the telephones and visiting the offices, asking members to weaken this bill. i hope that we have the fortitude to say no, because this is something that needs to be done, this bill needs to be passed. if anything, we need to strengthen provisions of it. there's one section in here that means a lot to me on consumer financial protection. i'd offered a separate bill on the subject before it came up. historically, we gave consumer financial protection to a lot of different agencies. sadly, none of them took it too seriously. i can recall when the chairman of the federal reserve, ben bernanke, was up for

reconfirmation just a few months ago, i talked to him in my office and said, over the years, the federal reserve was given powers to protect consumers. what happened? he said, we never used them. recently, we've started to, he said, but historically we didn't use this authority. and so you had a situation where when it came to the safety and soundness of banks, they were doing their job, trying to make sure the banks had enough in reserve, that their practices were meeting the law. but when it came to protecting the people, the customers of the bank, they really didn't apply themselves to that. and that was repeated in several other agencies. what senator dodd has done is to create the strongest consumer financial protection law in the history of the united states of america. he is not creating a massive bureaucracy, which his critics say, but, rather, he is saying we will have one agency with its own funding and its own authority which will be able to look at legal documents that

americans and their families and businesses deal with every day to protect us from the tricks and traps that we can run into. there will be more complete an important document, like a mortgage, credit card agreement, a student loan, an automobile loan, retirement plan so that individuals will be empowered across america to look at the facts and make the choice that's best for them. we are not going to create any kind of guardian angel society here. people may still make a bad decision, but they will do it with their eyes wide open. instead of being lured into a document which has a secret clause that ends up exploding and hurting them financially. it happened not that long ago. you may remember, if any of you have been through real estate closings, sitting down in that bank office with the table with your spouse, two ballpoint pens in hand as they turn the corners on the documents and you signed

away for about 20 or 25 minutes. and about halfway through, you say, "ah, what is this again?" oh, don't worry, standard, boilerplate, just required by the government, been through it all, done it a thousand times. off you go. and at the end of it, put the ballpoint pen down, stand up, shake the hand, take the check, hand it back to the bank, get the keys, go to the new house. but you never know until some later time whether there's a clause or a provision in one of those agreements that could come back to haunt you. and let me give you an illustration. in the days of subprime mortgages, people used to be lured in to take a mortgage on a house because the payments were so low. the first couple years, you mean my monthly spaiment going to be half of what of -- payment is going to be half of what i've been paying and i can have this big house? it's a deal. the third year there's going to be a change but, you know, these homes go up in value, you know, you do this and do that and off you go and you sign up. and some people didn't seriously take into consideration that

things might go bad for them personally -- losing a job, the value of the home may not go up as promised, or the interest rate may go sky-high and they can't handle it. well, in the early mortgages, they had a prepayment penalty in there and that clause, that one sentence meant that those people at that moment in time would face the worst economic situation of their lives, because instead of being able to renegotiate a different mortgage with a different bank with affordable terms, there was a penalty built into their original mortgage that cost them tens of thousands of dollars they couldn't pay. and they ended up in foreclosure and they ended up losing their homes and they lost their down payments, many of them lost their life savings because of one sentence in that stack of closing documents. the purpose of this consumer financial protection agency is to make sure we shine a light on those provisions so that people

whn they make a decision, what that decision means. now come the republicans and they have come up with a substitute. at least their leadership has. i don't know if it speaks for all republicans, they may not agree with it. and in their summary, it appears that they start carving out different groups that will not be covered by consumer financial protection. do you know those -- we've got them in my hometown of springfield, illinois, you and may have them in yours too, these payday loans, title loans, where you come in and hand the title to your car over and they give you a basic loan and say, well, we're not going to take your car away. and the next thing you know the interest rate's going up and you're refinancing the loan and pretty soon you may even lose your car. well, it appears that the republican substitute decides that those folks in their business ventures shouldn't be covered by the consumer financial protection act. go figure. some of the has beeniest credit operations in america -- some of the shabbiest credit operations in america are going to be exempt under the republican approach to this bill. i don't think that makes much sense. they also, when it comes to check cashers, currency

exchanges, debt collectors, some of the used car dealers, they start cutting out exemptions. these lobbyist loopholes that are carving out different financial institutions which will not be subject to this kind of consumer protection. now, that's a step in the wrong direction. we ought to make sure that everybody's onboard. the groups that have come to me from illinois and said, "could you just really acknowledge the fact that our operation's been clean, everybody loves us, we're good neighbors?" no. everybody should basically play by the same basic rules of disclosure and honesty. and good businesses can live with that standard. those that aren't so good, maybe they shouldn't be in business. and when it comes to the attorney generals -- attorneys general in the states across america, the republican substitute says they can't enforce the provisions that we're putting in here. that's a step in the wrong direction. that weakens this good bill. and i hope that we don't succumb to that proposal. there are a number of other things in here. i won't go through it in detail,

because as one of the staff people referred to it as a term paper, it goes on for page after page summarizing what the republican substitute will do, but it basically weakens credit agent -- credit rating agencies, that i mentioned earlier. remember the ones who gave the aaa ratings to the bad securities? well, senator dodd starts addressing these with review of their practices. and the republican substitute weakens that. how can that be any good, to weaken that after the experience that we've been through? so that's the debate that we're going to face. i hope that my colleagues during the course of this week will have an opportunity to take this good bill, this strong bill and make it even stronger. i'll offer a few amendments along those lines. and those on the other side of the aisle who want to join in that effort, i welcome to see what they have to offer. but if those who come to the floor are offering amendments to weaken this bill, to weaken the oversight, to have less transparency and less security, they are virtually eliminating a cop on the beat that we need on wall street to make sure we

never, ever experience the kind of economic crisis we're currently experiencing across america. mr. president, i yield the floor. mr. dodd: mr. president? the presiding officer: the senator from connecticut. mr. dodd: mr. president, first let me thank our -- my colleague from illinois for his predictable eloquence. and he's not a member of the banking committee but i began to think he was listening to him talk. he had a wonderful awareness and knowledge of the legislation, and i appreciate very much that because it's obviously a complicated area of law. and the fact that he has spent as much time analyzing what's in the bill and the important work that's been done over the many, many months we've been involved in this debate is something i appreciate very, very much. and i thank him for his comments. and i know my friend from kentucky is here as well. i will not take long, i say to senator bunning. just a couple of comments, if i can. i am one who is supportive of the -- of the boxer amendment when it will be offered tomorrow. its a fairly straightforward, and the senator from illinois has read the amendment. what i think is important is

that -- is that you, at the very first language, it says, "at the end of the title 2, add the following." at the end of title 2, which is the resolution title. and as the senator from illinois has, this is not a sense of the senate resolution. title 2 of the resolution, title is a title that the presiding officer, senator warner of virginia, senator corker of tennessee were the principal authors of on a bipartisan basis back in november or december. i asked a number of my colleagues if they were interested in working on various sections of the bill, and senator warner and senator corker had a strong interest in the resolutions section, title 1 and 2 of the proposed expldges how we could -- proposed legislation and how we could end the too-big-to-fail concept, something which i believe every member of this chamber endorses. none of us ever again want to see the situation that unfolded in the fall of 2008 when we saw a check for $700 billion be written out to stabilize a number of large financial institutions in the country.

the good news is at the end of all of that, we're getting money back, but obviously it was traumatic to go through all of that, to watch institutions that should have been far more cognizant of the difficulty they were getting into that when they got into deep trouble, obviously in order to stabilize the economy or have what the chairman of the federal reserve and the secretary of the treasury and others warned, that if we had not stepped in, could have caused the entire financial system of this country of ours to melt down, to use their words exactly, in the fall of 2008. so all of us here collectively starting with how we write a piece of legislation that'll minimize the events that have unfolded over the last several. once again i think the statistics gets repeated frequently on the floor, but they are deserving of being repeat. the 8.5 million jobs that have been lost, the 7 million homes that went into foreclosure, the 20% decline in retirement incomes, the 30% deklain in home

values, the $11 trillion to $13 trillion in loss of household wealth. senator durbin enumber rated a number of those statistics more on an individual basis or family basis. so we're determined, as we begin this process, that we begin with titles 1 and 2. the titles of the bill don't always reflect priorities, but had this case they do. there's mog more important -- there's nothing more important we do in this bill than to end the too-big-to-fail concept. the negs if you get in trouble as a financial institution, whatever it may be, that the federal government will bail you out when that happens. so we have worked very, very hard over many, many months to craft the language here that will work, that will actually bring us to that conclusion. the rare case resolution, in most cases bankruptcy, receivership, where management gets fired, where creditors lose, shareholders lose their

market value or the value of their shares. there's a tremendous decline there. this is a very, very painful process to go through, but a necessary one. what senator boxer has crafted is merely in a sense restating what we have in the legislation in title 1 and title 2, but to knack more clear, more emphatic, utilizing all of the tools we've written this that significant section of this bill with a tremendous amount of input from people who have knowledge this background in this area was critically important. i want to thank senator leahy, the chairman of the judiciary committee, because our colleague is correct. there were issues involving bankruptcy that we had to work on in this legislation ads, and with the cooperation of the judiciary committee as well, we were able to fashion what we have in this bill. to end too big to fail. senator boxer's amendment emphasizes that point when she says in her amendment very clearly that all financial

companies put into receivership -- which is what all the language of title 1 and 2 does -- under this title shall bely quit dadded. shall be liquidate. not maybe or we hope you are, or wouldn't it be a nice thing if you were. you shall be liquidated. what words do my friends not understand in that sentence? in taxpayer funds is the second sentence -- no taxpayer funds shall -- again, those who know the english language, that's not "may," -- shall be used to prevent the liquidation of any financial company under this title. i don't know how much more clear you can be? i commend her for the language because i think it is the kind of language that anyone ought to be able to understand. and that all yo funds spended in the liquidation of a financial company under this title shall be -- or shall be the

responsibility of the financial sector through assessments. in other words, they shall pay. not the taxpayer. again, i don't know how much more clearly you could write the language. what we did through page after page and chapter after chapter and title after title, if you will, was to legally a tell you how we do this. senator boxer has then put an exclay makes point on it but saying, let me just tell you what all of this means in case anyone fails to understand it. third, the third sentence, "taxpayers shall bear no losses from the exercise of any authority under this title of the bill." well, i applaud and thank my colleague from california for the language. and again we think we've done that. again who tells you that they've written the perfect bill, be careful. i've never seen the perfect bill. maybe there are additional ideas and senator shelby of alabama, my partner in this committee, he is the ranking republican

member, former chairman of the committee, we're working on some additional language here that some have raised as way of either tightening this down further should there be any doubts. my hope is that very shortly, maybe as early as tomorrow ring weelg a be able to present a united front on how we do that even to the further -- to further allay the fears or allay the further fears that some may have that these title 1 and title 2 don't quite complete what we're designed to achieving in this legislation. i look ford to that. i am a supporter of the boxer wheament it comes up. the other parts of this bill we've talked about a lot, senator kyl talked about various other ways of dealing with the bankruptcy. he's correct to point out, it is complicated. it is just a straight, normal bankruptcy. because there are counterparts -- that other people, other institutions, that may be in very good shape, not in danger at all, of coming undone who could be adversely affected by

the financial collapse of another firm. so you want to be careful as you begin that process of liquidation that we don't put the country at greater risk, as would be the case with the single company or the single institution going into receivership. so there are aspects of this that have required some very, very thoughtful process, thoughtful thinking, that again the presiding officer -- and i commend him for it, senator corker -- and others who have been involved in this -- have been able to work on over these many, many months. this was not a bill drafted over the weekend or a few days. there's been a tremendous amount of work that's gone into this. my shop that as we gather in the coming days now on this bill, we'll be talking about what's in this bill and thousand works, rather than emlistenning to some talkingpoints out of a political document about what they hope might be or not be in the bill in order to arrive at some political judgment about this. this issue is far too serious.

if we fail in this effort over the coming days, then we will neeleave this country of ours so exposed with the very exact situation we saw in the fall of 2008. we know in the world in which we live today, it isn't just a matter of what happens here in our own country. all the headlines we've read about over the last several weeks after small country in the mediterranean -- greece -- going through great economic difficulty has always after sudden put europe at risk. the euro has declined in value. the debt instruments have lost their value. the i.m.f. has lost its value. let me be a warning to people, we're not living in a situation in this world any longer where an american institution, an american bank or some financial institution gets in trouble. we're now talking about a world in which we live, what matters happens in shanghai, in europe, in shaw small countries.

it can affect all of us f we don't recognize we're in the 21st century, the rules we're operating on were written 100 years or more ago. we need to update those rules and regulations. the next comprise will come. when it does occur, we'll be able to deal with it effectively early on so as not to watch this explode across this country and cause as much devastation as the present events over the last two years v that's what this effort is all about. it's not more complicated than that, although the answers can be complicated as we try and fashion them in a way that makes sense. i pray that this will not become an ideological or political debate. we bear far too great a responsibility to our fellow citizens to give it our best judgment on how to resolve these matters. it ought not to be a question of who wins and who loses six months from tomorrow, which will be election day. six months from now is november

4 -- may 4 to november 4 -- is election day. i know there is a great preoccupation with that. i don't deny that. our efforts on this bill ought not to be wrapped around that conclusion. we ought to be trying to do our very best to fashion the steps, the rules that will allow us to minimize the effects of another economic crisis. and i can't imagine walk away from this section of congress, after all the effort that's been made to bring thousands point, not sit down and resolve these matters in a way that allows us to move forward. so, mr. president, i expwen to be supportive of the boxer amendment. i hope -- i believe senator shelby and can i come to an agreement on a second set of ideas to present to our fellow colleagues here tomorrow. then i listened over the weekend -- we've worked very, very hard with autumn inform our colleagues, both democrats and republicans, who've come up with additional ideas that they'd like to incorporate as part of this bill. we're working with them. my hope is we can lay those out in the coming next days to reach agreement on some of those

matters. there will be some matters that we can't resolve. if that's the case, then you have a good healthy debate for an hour or two and then vote, decide whether to accept or reject various ideas. that's the way this institution was designed to work. so in the coming day, i intend to be standing at this very spot acting as the manager of this bill, along with senator shelby and again the members of the committee who've spent so much time and effort over the last number of months to be part of this discussion. they offered their intelligence, background, information that i think will enlighten and inform not only the membership but the country as well as to what we're trying to achieve here. so, mada mr. president, i wouldk forward to that debate. we'll begin in the next 24 hours. and i hope over the next week or so we can conclude that debate, have that good kind of civil conversation, partisan at ver yaws points, as i'm sure its eight apt to be. but also remending oche who aeach other that we -- but also

reminding each other that we share a joint responsibility to see to it that the american people have a good answer, at least the best answer we can give them under the circumstances as to how to minimize the events that have caused so much harmed and damage to our country over the last two years. with that, mr. president, i thank my colleague from kentucky for his patience, and i yield the floor. mr. bunning: mr. president? the presiding officer: the senator from kentucky. mr. bunning: mr. president, i come to the floor to speak about the financial reform and the bill the senate is considering right now. i have made no secret of my desire to pass a strong financial reform bill and rein in excesses of our largest financial companies. no senator in the banking committee or in this chamber has been a stronger voice against financial industry enable irrelevance at the -- financial

industry enablers at the fed than i have been. i have fought every bailout as well as the bailouts that the federal reserve and both the bush and the obama administration put in place without the approval of the congress. i want to pass a bill that ends bailouts and puts strong restrictions on reckless activities and our financial sector. unfortunately, the bill before the senate not only fails to end bailouts, it does just the opposite and makes them permanent. this bill will also lead to future financial disasters because it ignores the root causes of the crisis and, thus, fails to put the necessary handcuffs on key parts of the financial system. the primary goal of this bill should be, can bailouts and the

idea of too big to fail -- to end bailouts and the idea of too big to fail. instead, the bill makes too big to fail a permanent feature of our financial system. it concentrates regulations of the largest financial institutions at the federal reserve and removes only small banks from fed supervision. the fed failed as a regulator, leading up to the crisis, and should not be the regulator of any banks. but now federal regulation will be signed that a firm is too big to fail. on top of the new fed seal of approval, our largest -- for our largest financial companies, this bill creates a new stability council that will designate other firms p for the

fed to regulate and, thus, too big to fail. federal regulations of the largest financial firms are -- is not the only way that this bill makes too big to fail and bailouts permanent. the largest bank holding companies and other financial firms will now be subject to a new resolution process. any resolution process is, by definition, a bailout because the whole point is to allow some creditors to get paid more than they would in bankruptcy. even if the financial company is closed down at the end of the process, the fact that the creditors are protected against the losses they would normally

take will undermine market discipline and encourage more risky behavior. that will lead to more bear stearns, lehman brothers, a.i.g., not less. the bailouts in this bill come with a cost beyond the moral hazard created by protecting creditors. despite claims that the financial industry will pay for the bailouts, payments in the bailout funds are tax deductible, which means taxpayers are directly subsidizing the bailouts. the bailout fund is not the only way this bill keeps taxpayers on the hook for future bailouts. first, the bill does not shut off the federal reserve bailout powers. while limiting some powers --

while some limits are placed on the fed, the bill still lets it create bailout programs to buy up assets and pump money into struggling firms through -- quote -- "broad-based programs." second, the bill creates an unlimited new debt guarantee program at the fdic that can be used to prop up firms instead of closing them down. both of these bailout powers puts taxpayer directly at risk and make bailout a permanent part of the financial system. instead of putting all of these bailout powers into law, we should be putting failing companies into bankruptcy. bankruptcy provides certain and fairness and protects taxpayers.

under bankruptcy, similar creditors are treated the same, which prevents the government from picking winners and losers in bailouts. shareholders and creditors also know up front what losses they are facing and will exercise caution when dealing with financial companies. later this week i will join several other senators in offering an amendment that will update our bankruptcy laws to deal with modern financial firms and with -- and permanently end bankruptcies. excuse me -- and permanently end bailouts. if this bill is not going to take away government protection for financial companies and send those that fail through

bankruptcy, then it should make them small enough to fail. small enough to fail. decades of combinations have allowed a handful of banks to dominate the financial landscape. the four largest financial companies have assets totaling over 50% of our annual gross domestic product. and the six largest have assets of more than 60% of our total gross domestic product. the four largest banks control approximately one-third of all the deposits in this country. this concentration has come about because creditors would rather deal with firms seen as

too big to fail, knowing that the government will protect them from losses. i would rather take away the taxpayer protection for creditors of large firms and let the market determine their size. but if that is not going to happen, we should place hard limits on the size of financial companies and limit the activity of banks with insured deposits. any financial company that are over those size limits must be forced to shrink. this will lead to a more competitive banking sector, reduce the influence of the largest firms and prevent a handful of them from holding our economy and our government

hostage ever again. along with not solving too big to fail, this bill does not even address the housing financial problems that were at the center of the crisis. first, there is nothing in this bill that will stop unsafe mortgage underwriting practices such as zero down payments and interest-only mortgages. there is a lot of talk of making financial companies have skin in the game, but when it comes to mortgages, the skin in the game that matters is that person who borrows. second, the bill ignores the role of government housing policy of fannie mae and freddie mac, which have received more

bailout money than all others. the bill does not put an end to the g.s.e. taxpayer guarantees and subsidies or stop the taxpayers from having to foot the bill for their irresponsible actions over the past decade. on friday, the "wall street journal" reported that over 96% of all mortgages written in the first quarter were backed by some type of government guarantee. 96%. that's unbelievable. where is the private sector? until we resolve the future of the g.s.e.'s, the private mortgage market will not return, and the risk to the taxpayers

will continue to increase. this bill does, also does nothing to address the biggest single factor in the current financial crisis and most our crises in the past. flawed federal reserve monetary policy. nothing in this bill will stop the next bubble our collapse if the fed continues with its easy money policies. cheap money will always distort prices and lead to dangerous behavior. no amount of regulations can contain it. as i mentioned earlier, the bill concentrates regulations of the largest financial firms at the federal reserve despite the fed's long history of failed regulation. leading up to the crisis, the

fed already favored the interests of the large banks, and by only removing its supervision of small banks, the fed will even be more of a cheerleader for wall street. i don't think that's what we want to do in any bill that we wreath. in an earlier -- any bill that we write. in an earlier version of this bill, banks and consumers' protection regulations were removed from the fed and placed in a new bank regulator. unfortunately, that was undone in the current version, and the fed gets more power for both jobs. no one has criticized the fed more than me for its failure to use its consumer protection powers to regulate mortgages, but i just cannot understand

keeping consumer protection inside the same fed that ignored the job we gave it in 1994. and this bill takes a dangerous approach to consumer protection by separating it from the safety and soupbtness of financial companies. it also goes even further by letting the federal reserve reach into businesses that have nothing to do with the financial crisis. finally, i want to mention the credit rating agency portion of the bill. our goal should be to reduce investors' reliance on these agencies. instead, the bill will give investors a false sense of security by setting new standards to get certified by

the government. also allowing the rating agencies to be sued will discourage new agencies from entering the market and further concentrate in the hands of the largest agencies that have performed the worst. i have many, many other concerns about the bill that i will not mention on the floor today, but they are explained in detail in the minority views section of the committee report. as the bill stands today, it will not solve the problem in our financial system. it is regulation without reform. but i hope and pray we can work together to get a bipartisan bill that will put an end to too

big to fail. i thank the chairman, and i yield the floor. mr. kaufman: mr. president? the presiding officer: the senator from delaware. mr. kaufman: mr. president, i rise to discuss wall street reform because we must get this bill right if we are to prevent another financial crisis like the last one which almost destroyed our country. the newspapers are filled with reasons why this is so important. in europe, because the sovereign debt crisis is threatening to become a full blown crisis, the governments of the e.u. are using taxpayer funds to bail out

greece. in hearings before chairman levin's permanent subcommittee on investigations have rivetted the nation on fraud at the heart of the financial crisis. the widespread use of fraudulent stated income loans by washington mutual, the abject failures of the bank regulatory agencies, willful neglect of the credit rating agencies and the hopelessly conflicted actions of goldman sachs which put its own trading activities above any sense of duty to its customers. in particular, over the past few weeks much has been spoken and written about solving the problem of banks that are too big to fail. senator brown and i, along with senators casey, merkley, whitehouse and harkin introduced a bill to place strict limits on the size and leverage used by systemically significant banks and nonbanks alike. we are now offering this legislation as an amendment to the financial reform bill because we believe that congress

must reduce these mega banks to a manageable size and cap the leverage they may use in order to limit the risk they pose to our economy. we should never again have banks that are too big to fail. as a recent investigation by chairman levin, the financial crisis inquiry commission and others have shown even the best intentioned regulators are no match for gigantic financial institutions which are structurally complex, functional opaque and global in scope. just as importantly, these financial institutions purposely operate to evade regulatory oversight by means of regulatory arbitrage, accounting and reporting practices that frustrate transparency and so-called financial innovation that regulators have no chance of fully grasping in real time. to surrender our nation's economic security to unelected

and mostly unconfirmed regulators is both unwise and undemocratic. it is also a gamble. for those of my colleagues who do trust the current set of regulators and have faith in them, i trust our fellow regulators but i ask the question: who will be the next president? which regulators will he or she name to oversee the largest banks? what will be their regulatory philosophy? and how much determination and enthusiasm will they bring to the task of forecasting bank reufpl and reufpl to the -- risk and risk to the u.s. economy? i submit no one can answer those questions. while resolution authority is necessary, why would we believe that it will work for a $2 trillion mega bank with operations in more than 100 countries? as we saw just months ago, such banks don't simply fail on their own. the very problems that affect one mega bank, such as falling

on the backs of widely held assets will affect every other big bank at the same time. that is what happened in europe today. the e.u. decided to bail out greece before the panic spreads to portugal, ireland and spain. that is why to me the choice is clear: we must do more to act preventably. making the largest banks smaller is a necessary but not sufficient proposal. it is a complementary idea to the regulatory solutions contained in this current bill, which is a good bill. this is a complementary idea. in the 1930's, this body had the courage and foresight to enforce laws to maintain financial stability for generations. but a decade ago too many forgot the wisdom of those laws and that is our challenge today for our senate. we can either do nothing, which could be dangerous and irresponsible and i don't think

anyone's saying that's the right thing to do. or we can direct regulators to do a better job, which may work for a time. or we could build a strong, clear, safeguard to protect the american people from ever having to bail out mega banks again. as i said, the current bill has many provisions that i support. but as moody's supports and i -- quote -- "the proposed regulatory framework doesn't appear to be significantly different from what exists today." the brown-kaufman amendment is not as dramatic as it seems nor is it fraught with unintended consequences, very large banks -- very, very large banks will still exist under this built but they won't be so big they're too big to manage and too big to regulate as former fdic chairman bill isakson said. in the leverage they use the ratio of capital assets which is the basis of how risky they

become will be statutorily capped. the extra layer of protection is the least we should do. under brown-kaufman, big financial conglomerates like will have $1 trillion, about half their current size. in other words -- listen to this. in other words, citigroup would be the size that it was in 2002 when it was still very competitive in the u.s. and overseas. the balance southeast an investment bank like goldman sachs would be scaled down fro from $850 billion to a more reasonable level of just above $300 billion o or $450 billion if goldman exits the structure. in 2003 goldman sachs assets did not exceed $100 billion. that means that under the worse case in this bill their assets will be three times as big as

they were in 2003. the firm currently well over 10 times the size it was when it went public just 10 years ago. a recent report by andrew holdein, the financial director of the financial stability bank of england has two charts depicting the incredible growth and concentration that occurred within our financial subpoena over the last 10 to 15 years. the first chart shows how the average size of a commercial bank relative to g.d.p. has triple over 15 years. tripled. look at this. by the way, i point out this looks very much like the chart that we had on housing prices right before the big crash. housing prices went like this and went down like this and then went down like this. this is the same thing. look at that exponential growth. 1999 is right there. that's when we passed the repeal

of glass-steagall. of course this was driven by the growth of mega banks, not by the growth of community or regional banks. the second chart shows how concentrated the u.s. banking system has become in 10 years. the top three banks represent 20% of overall bank assets in 1999 right here at the time of the repealed glass-steagall. look what happened after the repeal of glass-steagall in terms of bank assets. in fewer than 10 years the percentage doubled with these top three banks now representing -- now representing more than 40% of total bank assets. and the government's response to the financial meltdown has only made the financial industry bigger. this is pre -- none of thin cliewdz what happened during the melt -- includes what happened during the meltdown. during the meltdown j.p. morgan

swallowed -- wells fargo bought with a cove a. why would we want financial institutions this gigantic? people are telling me how do you unravel this? the first thing we're going to do is now the finance is set, undo these things that we did during the financial crisis. but that's not for me to decide. what we should do is put the limits thrup and let people decide how they're going to reach the limits. the last two years proved beyond dispute that management and risk and america's most prestigious firms were unable to track and mitigate their exposures as alex holdein noted, risks outstrips the bank's ability to manage them in. large banks grew to comprise three distinct entities, when

failed it was one million open derivative contracts. robert rubin admitted and i quote -- "there isn't a way for an institution with hundreds of thousands of transactions a day involving something over $1 trillion that you are going to know what's in those position books. end of quote. that is robert rubin. one of the smartist individuals i have ever met on the finance and the government's approach to finance. i don't agree with him on some things, but this man is brilliant. if leaders of these financial institutions have no idea regarding their systemic risk, what hope do regulators have? the truth is these financial institutions have become so large that regulators rely upon the banks and the markets to self-regulate. under the basil-2 capital accord, it became dependent on the judgments of rating agencies and increasingly the bank's own internal models. modeling is fine as long as the

bank stands between bright lines which should be drawn by the congress. otherwise if regulators issue rules governing capital requirements that depend on the banks to use their own models to determine the capital licke liqy than it has no meaning. it has long had all the tools they need to increase capital and restrict banks that propose a risk to the safety or soundness of a bank holding company. but they fail to do it. the regulators fail for many reasons. but they failed in part because so much of the risk is hidden and difficult to understand. institutions like lehman and citigroup brazenly engaged in accounting gimmicks. they didn't only brazenly evade

the regulators, they evaded their own shareholders. lehman implemented lehman 105 to hide the true extent of their liabilities at the end of each reporting quarter. at the end of each reporting quarter they came up with something so they could take liabilities off the balance sheets so regulators and shareholders did not know what their true economic position was. in the second quarter of 2008 alone it moved -- lehman brothers moved $50 billion temporarily off its balance sheets without telling regulators, its own boards or the shareholders. the s.e.c. -- now, remember this was going on we had s.e.c. and federal reserve regulators in lehman brothers. and the lehman c.e.o. claimed he never knew about it. isn't it amaying the c.e.o. of a corporation, all the money he's making, $50 billion each quarter off the balance sheet being

hidden and he never knew anything about it. at the same time citigroup and others held more than $1 trillion in offbalance sheet vehicles to avoid capital requirements for lending. when market conditions soured tens of billions of dollars in liabilities suddenly appeared back on the balance sheet to the surprise of regulators an shareholders alike. some argue that's the quality of these regulate tristandards that must be -- regulatory standards that must be improved to affect the behavior of the large banks. mark barr noted that markets will evolve beyond what any law says, but he says that regulators are pushing for global standards that will -- quote -- "be more robust, higher quality and include global agreement on a leveraged ratio." that will be very, very helpful. but it is not a solution. the history of financial regulation is proven that strong

and sweeping statutory standards are tougher to evade than technical regulations that set requirements. the financial times reported recently that banks are already developing new ways to arbitrage the global capital standards to which secretary barr refers. in other words, they are finding ways around the rules before the rules are even finalized. that is why we need statutory standards on the leverage and size of these megabanks as provided in brown-kaufman safe banking act. while some say they are blunt tools, i say that is precisely the point. the amendment provides a clear line that banks can evade -- can't evade and regulators can't ignore thereby making both accountable. the federal government cannot continue to subsidize these megabanks and permit them to grow by taking on greater risk

and speculation. the center for economic policy and research compared the baroing costs of the 18 largest banks all of which have ove over $100 billion in assets to smaller ones. they estimated that the effective government subsidy because the implicit guarantee that they are too big to fail, result in the 70 to 80 basis point borrowing advantage over smaller banks, ruling in lower borrowing costs equal to approximately $84 billion. we're not saying they're too big to fail. what the market is saying if the market makes it look like you're too big to fail, you can borrow for 70 points to 80 points less than smaller banks. fed chairman bernanke noted that this is unfair competition to smaller banks. i agree. i wish i would hear more from the smaller banks. they're paying the price. as a result less money flows to local communities and small businesses have trouble getting

affordable loans. there are those who argue that we need megabanks. that there are economies to scale to allow $2 trillion banks to service large global corporations and help us compete globally. they offer no evidence to support this claim because there is none. i haven't been able to find any. i can find no academic studies proving that banking is bigger is better and proving efficient beyond $100 billion in assets. while they need to access large capital, wall street banks form syndicates to spread the risks. and while megabanks have large balance sheets that might allow them to take on a large amount of underwriting risk it is not clear if it is good for the customer or the financial system as a whole. by having lots of smaller institutions participate in

underwriting, the corporate customer is apt to get better pricing because it will access a wider variety of institutional distribution channels. the financial system is safer by not having larger concentrations of proprietary positions and loans and securities. or even worse to have the larger institutions hedge the exposure with esoteric products that no one understands and often hidden off the balance sheet. nor is there the research to have the large banks. six of the 50 largest banks in the world are based in the u.s. many have a history of government involvement. virtually all of these banks benefit from implicit or explicit government guarantees. many including the largest bank on the list the royal bank of scotland have been recipients of massive bailouts. ireland is in the midst of a

painful process of bailing out its largest banks. switzerland put together a $50 billion bailout for u.b.s. u.k.'s bailout support for its banks exceed $1 trillion. the case of iceland provides a cautionary tale for all nations on how a government can be completely overwhelmed by the collapse of its financial institutions. and while french and german banks enjoyed modest bank bailouts through e.u. provided to greece, these banks received a massive indirect government bailout. "the wall street journal," reports that german and french banks carry a combine combined $119 billion in exposure to greek borrowers and more thans $900 to greece and ireland and portugal and spain. french banks -- german banks have $45 billion exposure to the country.

given these circumstances other countries face just as urgent need to break apart their megabanks. what about canada many ask. its large banks did well during the last crisis, but there's significant differences in our two countries between the united states an canada. first there was no wave of financial deregulation in canada. canadian banks are subjected to tight mortgage origination standards an tough leverage limits. something u.s. financial institutions and their regulators completely ignored in the last decade. in canada, the government insures the most risky mortgages, and i don't think we want to go back to doing that. finally, not one of canada's largest banks is near the size of any of the five largest u.s. banks. in fact, the largest canadian bank is not even a third the size of the largest u.s. bank. what's more, under the limits of brown-kaufman, our megabanks would continue to be much larger than the largest canadian banks.

some have argued that most observers think that breaking up the big banks would lead to more risk not less. that bigger banks are more diversified and less risky than a smaller bank. that makes no sense to me. as the governor of the bank in england, mervyn king recently observed, and i quote -- "banks who think they can do everything for everyone all over the world are a recipe for concentrating risk." and i agree. that is one of the reasons why he, too, favors breaking up the megabanks as a solution to too big to fail. i believe the view of most observers is best summarized in the review of the literature in 13 banks. the book by simon johnson and james clark. breaking up the banks is not a populist idea in the pejorative sense of the word. it is supported by smart and foreign people outside the washington wall street corridor who understand what is happening, including three presidents of the federal reserve bank and a host of economists and academics.

even alan greenspan in his recent speech to the brookings institution, looking back on the crisis, stated clearly, and i quote --" for years, the federal reserve had been concerned about ever larger size for financial institutions. federal reserve research had been unable to find economies to scale in banking beyond a modest sized institution. a decade ago, citing such evidence, i noted that megabanks being formed by growth and consolidation are increasingly complex entities that create the potential for unusually large systemic risks in the national and international community should they fail. regrettably, "alan greenspan said again in his quote," we did little to address the problem." anyone can come up with reasons for maintaining the status quo,

for allowing oversized megabanks to continue to be too big to fail, but given the most recent economic disaster, the burden of proof should fall on those who want to retain our currently dangerous concentration of financial power. repeating the mantra of u.s. competitors in the idea that this is not about size but about risk and their connectedness are only excuses for thain unjustified failure to act. the question is what we must do to ensure that a financial crisis like the recent great recession, which continues to cause millions of people to be out of work and out of their homes, never happens again. the brown-kaufman amendment would add another layer of protection to our financial sector, and it would make it much less likely that u.s. taxpayers will ever be asked to bail out wall street again. brown-kaufman is a modest, even conservative proposal to restore the size of banks to where they were just a decade ago. it will also impose a statutory

leverage limit to prohibit megabanks from taking on too much risk, a fact about our amendment that is often overlooked. sometimes, like with harry truman, the buck must stop with congress. in this case, the buck must stop with the senate. we can take strong steps to undo the harm of the last decade where we can punt responsibility to the very regulators who failed us in the first place. either way, the american people will hold us responsible, so let us act responsibly and protect them from further harm. they deserve no less. mr. president, i yield the floor. i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. warner: mr. president? the presiding officer: the

senator from virginia. mr. warner: mr. president, i ask the proceedings of the quorum call be dispensed with. the presiding officer: without objection. mr. warner: mr. president, i wasn't planning on speaking today, but i have had the opportunity to preside for the last couple of hours, and i heard my friend and colleague, the senator from arizona, earlier today make some comments about the finance reform bill, and i wanted to address them. before that, i want to commend the presiding officer for his comments this afternoon, comments that i may not fully agree with. i think he makes a very persuasive and i think interesting case about how we get this right and whether the challenge clearly that we have to make sure as we set our goal is setting rules and regulations that will stand the test of time. we have got to make sure that we end the notion of too big to fail. i know my presiding officer's approach is to look at size. i think the committee's

approach, the chairman's approach which i share has been more to look at interconnectedness to give the regulators that ability to unwind organizations. if they can't prove that they have a rational way to be unwound through a bankruptcy process. it's where reasonable people can disagree, but we can -- we absolutely agree on the goal as making sure that, again, the american taxpayer never, ever has to hear too big to fail, particularly too big to fail where the american taxpayer has to pay the bill for that challenge, so i thank my presiding officer for his comments and i know this debate will keep going. earlier, though, today, my friend, the senator from arizona, spoke on the bill, and as somebody who has been involved in portions of this bill for a number of months, again, i think the senator from arizona and i share common goals. we want to make sure that taxpayers aren't exposed, that we end bailouts, that we put

rules of the road in place for the 21st century for our financial system. my hope is that some of the workings between chairman dodd and senator shelby, that they will find some common agreement on titles that senator corker and i worked on where they might be -- might improve the initial draft. what i hear time and again from all of our colleagues is a commonlyity of goals -- commonalty of goals. i hope at the end of the day we will have legislation that will have broad bipartisan support. let me go back to my colleague from arizona's comments. he had a strong preference for bankruptcy. my understanding was his concern was that bankruptcy in every case can take care of every financial institution's unwinding. bankruptcy provided predictability. he mentioned in passing a new concept called speedy bankruptcy, cited certain scholarly articles written on that. speedy bankruptcy that had some portion of a -- of a -- certain

aspects of a capital structure that would convert certain debt into equity in the event of this process. and he made the comment that resolution, even having resolution in the process would always lead to bailouts. i respectfully disagree and want to take just again a moment here that -- to further point out what chairman dodd's bill does in terms of how we approach -- how he approached in a bipartisan way these same issues. first of all, we do believe -- the chairman's bill reflects this -- is that the default option should always be bankruptcy. bankruptcy is a clear and established set of rules. it gives creditors, it gives equity holders a predictability about what happens in the event of a firm getting into trouble,

getting into potential insolvency and gives a path towards going out of business. but what we have seen at least to date is that bankruptcy sometimes is neither speedy nor, at least in its current form, hasn't always been able to take care of these enormously large, complex financial institutions. right now -- i believe it was just the end of last week, there was a story in either "the new york times" or "the wall street journal" that pointed out that the lehman bankruptcy process is still ongoing. with fees in excess of of $400 million or $500 million being charged to try to still unwind this firm. one of the things i have heard is if a firm goes into bankruptcy, there are these dollars that are still going to be needed to unwind the firm in an orderly process. those of us who drafted the bill

said that this unwinding process , if we are going to use resolution instead of bankruptcy, should be prefunded by the financial industry themselves who would benefit. my colleagues believe that perhaps we would be better if the treasury borrowed or some other institution borrows money and then gets repaid from the financial industry itself. again, reasonable people can disagree whether we prefund or postfund, but the facts remain that unwinding of any firm takes time and takes resources. and at the end of the day, we have to make sure that the taxpayer is protected. point number one. point number two, i agree with my colleague, the senator from arizona, when he says that a new tool that we could use for these large systemically important firms to make sure there was a price of them getting too large and that there was an ability to make sure they could be unwound in a regular process would be

the creation of a new form of debt in the capital structure, debt that in the event of a crisis would convert into equity, dilute existing shareholders, be in effect a check on management because they would also be diluted in this event. well, i would urge my colleague, the senator from arizona, to recognize that we have put that into the bill already. we have created a convertible debt component that all of the systemically important firms would have to build into their capital structure and in effect would allow this to be triggered even prior to a crisis point, so that rather than being used only at the moment of crisis could actually be used as a speed bump in chance of one of the early signs of a crisis coming.

again, one of the reasons why we have created a systemic risk council that allows whether it's higher capital requirements, focus on leverage, focus on better risk management plans, putting this new capital contingent debt structure within the -- within the overall capital structure of the institution, and the funeral plans or the plans where we're asking again these large institutions to outline how they will unwind themselves through a bankruptcy process, and that process has to be approved by the regulators, a process that if the rerts don't approve, they could actually use and reach -- and come to the conclusion that there is no way to unwind this firm during bankruptcy, and consequently could actuall actuo what the officer requires and say this -- what the presiding officer requires and say this firm has to be downsized or certain international operations

have to be spun off because there is no appropriate way to unwind this firm in the event of a bankruptcy process. so again, i think the goal of -- of my colleague, the senator from arizona, the goal of making sure there is an orderly, planned approach through bankruptcy to unwind these large firms is in place. so we agree there. the fact that there is the creation of this new debt structure within these large firms that would be debt that would convert to equity is in the bill and actually it's in the bill even better than i believe what my friend, the senator from arizona, has proposed because it could be triggered even before a crisis. or i guess i -- where i guess i differ from my colleague, the senator from arizona, is that while we strongly believe in the

bankruptcy process and the preference towards bankruptcy, we believe that in certain extraordinary cases, and if we've done our job, hopefully extraordinary cases that may rarely, if ever, happen, you still have to have an ability to have a resolution authority. why is this the case? well, as we saw in the crisis in 2008, there were times when perhaps the balance of the industry realized that the firm was rapidly falling into insolvency, but as the firm went down this path towards insolvency, the management of the firm refused to recognize that. and consequently potential putting -- potentially putting the firm, not only the firm in jeopardy but the fact that if that firm, in effect, fell fully insolvent could actually threaten the whole safety of the

system. so after conversations with folks from across the political spectrum, we thought that in these extraordinary times, there needs to be this kind of trigger of last resort in terms of using a resolution process. this resolution process put appropriate guards -- guardings in place, requiring the treasury, the head of the fdic, the head of the fed to all act in concert. to put a judicial check in place so that, again, no future administration might use -- overuse this -- this power. and, as senator boxer's amendment will further reaffirm, resolution will mean the firm will go out of business. the equity will be toast, that management will be toast, that unsecured creditors will be toast. this will be the

effectiveness -- this will be an effective death panel for a financial institution. as my colleague, the senator from arizona, has pointed out, at least if a firm chooses bankruptcy, they may emerge on the other side out of the bankruptcy process at least semiwhole. if you go into resolution, you're not coming out the other end. this would be like the once you check in, you never check out. your firm is going out of business. there may be parts of that firm that, because they're systemically important, a clearing process or some other systemically important part of this institution may have to be redeposited elsewhere and it has to be done in an orderly proce process, but the firm as it was priorly construed will no longer exist. never again will we do what we did in 2008 where the american taxpayer came in and shored up these firms in their current

status. now, resolution will never be chosen by any rational management team or any rational group of shareholders. so i hope my -- my friends who want to make sure that we end bailouts, who want to make sure that we have an orderly process will again recognize that -- and there may be ways to improve upon it, but we've put together a bill that has a strong preference towards bankruptcy, that puts in place a requirement that the regulators have to bless this bankruptcy plan no matter how complex you are, and if you can't get that blessings, then maybe parts of your institution need to be spun off in advance. we've already adopted the component of contingent debt that would convert into equity. and, again, that threat of converting even in advance of a crisis will be a check on a management team that wants to take undue risk. no existing shareholders will

want to face what could be significant delusion even in advance of a resolution even if the systemic risk panel said you've gone over the tripwire, you're going to get converted, you're going to get diluted. again, another check on the management team. so i do believe we have created a strong framework, but to ignore the fact that, as we saw in 2008, that there may be times when either a management team fails to read the handwriting on the wall and declare bankruptcy or the crisis comes perhaps because of not even management malfeasance but because of a coordinated cyber attack or some other kind of catastrophic event that puts at jeopardy the system. to say that never, ever could there be the time when we need an orderly resolution process to maintain the safety and soundness of the overall financial system i believe would

be shortsighted. so i look forward to continuing to work with colleagues on both sides of the aisle to try to get this right in the coming weeks. i commend the chairman and the ranking member, senator shelby. i hope they're having those conversations even as we speak. i look forward to continuing the conversation with the presiding officer on how we, again, kind of prevent these kind of actions from even taking place in the first place. how do we put your approach of actually downsizing these institutions with bright-line rules or our approach that tries to look perhaps more at the interconnectiveness but still grants that ability to the systemic risk council if there's no way for an institution to demonstrate how it will unwind itself through bankruptcy. you know, again, reasonable folks can disagree, but none of us should disagree with the ultimate goal: ending too-big-to-fail, making sure that we -- we no longer have even the potential of taxpayer exposure, trying to bring more transparency and fairness to this financial system.

and, again, as the presiding officer and i have talked about before, making sure that whatever comes out of this chamber can stand the test of time so that we can give the market the predictability it craves but also the security to the american people that we've built a financial rules of the road for the 21st century that will truly work. with that, mr. president, i yield the flr d note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

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