greece falters and it affects other countries like portugal, spain and ireland. europe and other banks have massive exposure in these countries. german and french banks carry a combined $119 billion in exposure to greek borrowers and more than $900 billion to greece and other vulnerable countries including ireland, portugal and spain. well, people say to me how can we compete if these big banks -- remember, we're only reducing citibank down to the size of 2002, but how do we compete with europe? why do we want to compete with europe? why do we want to go in with their megabanks? why do we want to deal with the problems that they have? the royal bank of scotland had a balance sheet basically 1 1/2 times of the size of the u.k. economy. see these numbers up here. 63% right now are -- our six

largest banks make up 60% of our assets of gross domestic product. the royal bank of scotland was 1 1/2 times the gross domestic product of europe when it failed. people say to me, oh, look, the big banks didn't fail -- it wasn't the big banks that failed. it was the small banks that failed. i keep hearing that j.p. morgan and bank america didn't fail, it was washington mutual. they say there's no correlation. well, just look at spain, where you have a bank that was 150 times the assets of the -- of the country and they failed. and megabanks, like citigroup, only survived through massive capital infusions, regulatory forbearance and federal monetary easing. even j.p. morgan has benefited from not having to write down its second lein mortgages and commercial real estate. the next thing they say is, when washington mutual failed, there was a bigger, how about that, that was a smaller bank?

that wasn't a big bank? the reason why that went down is because we knew at the time when it failed that j.p. morgan chase would come in and grab it. i just ask the question: who's going to bail out, if something goes wrong with j.p. morgan chase or bank of america or any of these six large banks? remember, going back to citigroup, citigroup essentially failed and had to be bailed out three times in the last 30 yea years: 1982 because of the emerging market deck,1989-1991, because of commercial real estate, and 2008-2009 because residential real estate. mr. brown: could the gentleman yield again? i appreciate that analysis in europe. i hear, as we've talked about the brown-kaufman amendment, and it's gotten increasing attention because increasing number of people have said too big to fail is too big and that if we allow these six banks, that chart you showed originally, that -- that

six banks, the largest six banks in the united states and 15 years ago were 17% of our g.d.p. and today they're 63% and -- and growing, as you mentioned. and if you look at the rate of growth as they've -- the -- i mean, it's -- they didn't grow a whole lot until the last 10 years and then you look what happens, and they're going to continue to grow since glass-steagall repealed. but i hear opponents to our amendment, the argument they use most frequently is, well, we don't have the largest banks in the world anymore, there are larger banks other places. and how are our banks going to compete with these huge banks? and i -- i'm intrigued by that because our banks are trillion-dollar banks. if -- and i know there are studies that banks with assets of $300 billion and $400 billion and $500 billion have all the economies of scale. mine, you can't -- economies of scale don't work forever, into

infinite, and so a bank that's $200 billion or $300 billion or $400 billion has all the economies of scales, a trillion-dollar bank, so this point they make about european, we can't compete international, but, i mean, it was clear from what you said. all of our banks when they were smaller, and smaller than the largest banks in the world, could compete internationally 10 years ago, there's simply no reason they can't compete like that today. and i've found that it's the, you know, the huge, lumbering bureaucracies, whether they're a bank or whether they're the center for medicare and medicaid services, they aren't and flexible and nymph expwel can't keep up with the -- nimble and can't keep up with the market nearly if they're that bad. so the brown-kaufman amendment, again, doesn't apply to many institutions. no more than five or six will be even unwound a little bit. they're not going to -- we're not going to split them all up so that they're small, little community banks. but they're still clearly going to be able to compete. there's just no question about that, under the brown-kaufman

amendment. we give -- we give three years to these banks to sell off some of they're assets or to spin off a line of business or to -- to sell their regional operations they may have in one area of the country to comply with this amendment, but it -- it's clear that as increasing numbers of people say, too big to fail is too big, that if we allow these banks to keep getting bigger and bigger and bigger, and we see this chart where the six largest banks in total assets end up about 70%, 80%, 90% of g.d.p., it's hard foit's hard for me tot if one of them stumbles, that we're going to led them fail, that the government is going to let them fail, because of the huge economic repercussions that these large institutions have. mr. cawfer man: we all agree that the present bill is a good bill and it has a good resolution authority. it's been worked on for years. my basic concern is we need a little prevention in the mix on this. mr. kaufman: as i said before, when people say we can't compete overseas, do we really want to go where the royal bank of

scotland went? the royal bank of scotland was 1 1/2 times the size of the u.k. economy whether it went down. when it went down. do we really want to get into this mix in europe? is this the place we want to be? , with these banks, based on the problems they're going to have right now, as we went through earlier? is this the place we want to be? i think we go back to what senator dorgan was saying earlier and the then we go backd i'd like to end with just a couple comments, and one is that once again i quote alan greenspan. he said, too big to fail, too big. too big to fail, too big. and the idea that we should turn this over to the regulators and let the regulators set the rates, that's the alternative. the alternative is let the regulators do it. and we've got good regulators now. i think that's fine.

but just remember several things. number one, the regulators did nothing. the regulators had the power to do the kind of things we're talking about, most of what we had to talk about, and they did nothing in the past. and the second thing is, we could have a new president come in and adopt the same policy as before that self-regulation works, hire a bunch of regulators to go in there, like the regulators we had in a number of regulatory agencies who basically believed there was nothing -- they weren't bad people, they were smart people but they just basically believed self-regulation works and to quote alan greenspan for the third time in the speech, he said i really thought self-regulation would work. i'm dismayed that it didn't. so you could have it come back. there's still people today that believe this is -- you hear -- you hear that sometimes on the floor. we just don't need these regulators. the example i always use, it's like a football game where somebody gets up and says, you know, these referees keep blowing their whistle and stopping the play. let's get the referees off,

let's just play football. that's went on around here. there wasn't oversight, as many of my colleagues on the other side have pointed out, there wasn't oversight -- enough oversight of these regulators. but you pull the football referees off the field, what do you think -- maybe the first pileup won't be bad but by the time you get to the second or third pileup, i just don't want to be in them. so i think we should go back to what our colleagues did here in 1933 and we should regulate not for five years or 10 years or 15 years, we should regulate for generations. and i think much of the stuff in this bill does regulate for generations. but we should put in the bill hard-line, adopted by us to send a message for generations that this is not going to happen again. bear stearns is not going to be able to go to 40 times capital. that's what we need to do. we need to legislate for generations. thank you, madam president.

a senator: madam president? the presiding officer: the senator from tennessee. mr. corker: thank you, madam president. i'm here today to speak about the consumer protection title in the dodd bill, but i do want to say that while i disagree with my friends from connecticut and ohio in their approach, i certainly appreciate the way they've conducted themselves. and actually, i think the debate we've had on this floor over this bill, i will say to the senator from connecticut, has been of the highest level i can remember in a long time. and i want to thank him for setting that tone. i want to thank my caucus for i think offering nothing but constructive amendments. and people on both sides of the aisle i think have tried to do that. i think, you know, it took awhile to get here but we're on the floor, and obviously there are a lot of improvements that people would like to make to this bill, but i think people are really focused on doing that. and, again, i want to thank you for setting that tone. at the same time, i do want to talk about the consumer protection title. that is one i would like to see

vast improvement on. i want to say that, look, i -- i'd like to ski consumer protection take place. protection take place. i think everybody in this body would like to see that happen. but i really believe that the consumer title that exists in this bill is one that really gets back to the essence of what the white house has said many, many times and that is never let a good crisis go to waste. i think the consumer protection title in this bill is a vast, vast overreach, and it's my hope -- i know we have a vote maybe later today on a different title. if that's not successful, maybe there will be some surgical attempts to deal with some of the problems that exist in this title, but let me just speak to a few. number one, for the first time ever in our country's history, we will be giving vast powers to an individual to be involved in almost every aspect of any type of financial transaction. i will say without a board, without any kind of check and balance. the dodd bill creates somewha se

heading consumer fleaks has no one -- no one -- that has a check and balance. this person's going to be able to write rules and this person's going to be able to enforce those rules over our entire economy as it relates to financial transactions. i know there is a process by which if a rule is felt to be problematic after it's put in place, not before, after a rule is put in place, there's the ability of a board to actually look at those rules. but the fact is, a standard is set so high, it would be very, very difficult to ever overturn the rules that would be put in place by this consumer protection agency. it has a vast budget. it sets its own budget, i might add. again, congress has nothing whatsoever to do with that. some of the biggest problems with the consumer protection agency aren't just the fact that it has no check and balance, it

writes rules, it enforces rules, it sets its own budget. but on top of that, it overturns the way our national banking system has worked for years. congress years ago decided that we wanted to have a national banking system, that we wanted the ability of banks to operate across our country in a way that they had consistency, they knew under what rules they would be operating. what the dodd bill does is overturn that, and what it does is say that there is no federal preemption anymore, that if states want to write -- change laws, write laws, you could have a bank that operates in 50 states that has 50 different sets o of regulation if this bil passes. that is highly problematic for banks that operate across our country serving companies that operate across our country. you can imagine a bank trying to adhere to all of those state

laws that might come up as a result of this bill. in addition, this bill then unleashes 50 attorney generals on these banks. that is something, again, that is not the case today. this is a huge, huge overreach and it's going to be highly, highly disruptive to our banking system. what it's going to do actually, because there is no federal preemption, what it's going to do now is actually encourage general assemblies, state legislators across this country to then become hyperactive. one of the things that state banks, not federal banks, not national banks, one of the things that state banks have liked about our existing laws -- and by the way, state banks aren't these huge megabanks that my friends from delaware and ohio were just talking about. one of the things that they have liked about our existing banking laws is that because of federal preemption, general assemblies

and state -- the presiding officer: may we have order in the chambers, please. the senator from tennessee. mr. corker: the chairman of the banking committee is creating disruptions. thank you. thank you, madam president, i appreciate that. [laughter] i actually wish i could hear what they were saying. [laughter] can somebody in this body remind me as to where i was? okay. i think that state banks across the country have enjoyed -- again, these are the smaller institutions -- they have enjoyed the fact that there is something called federal preemption. because what that does -- what that has done is discouraged hyperactivity on behalf of state legislators to create laws that might be populist in nature, that might be done to, in essence, ute ours financial usem for other ends. one of the things that i think is most disruptive about this legislation is that if you can imagine this -- i think all of

us realize that what led to this last crisis was the fact that we had very poor underwriting on loans. i mean, that was the essence of this last crisis. it got spread around the world, the fact that we had incredibly poor underwriting. i hope to fix that, by the way, with an amendment in a few days. i hope it comes up and hope it passes. but what the dodd bill does is give to a consumer protection agency loan underwriting, loan underwriting standards. now, if you can imagine that, i'd like for people in this body to think about that, but a consumer protection agency being involved in setting underwriting standards for loans has to undermine the safety and soundness of our financial institutions. to me -- to me, that is a huge problem. so madam president, what i'd like to say is look, all of us would like to see consumer protection take place. all of us would like to see it,

i hope, take place, though, in a way that is balanced so that the consumer protection laws that are put in place are put in place in a way that is balanced against ensuring that our financial institutions across this country are safe and sound, that people know they can go to those institutions and are going to operate. i believe that the dodd bill as it relates to consumer protection is a vast overreach. i know that people on the other side of the aisle have come up to me and said look, this is problematic, and if you guys can help us figure out a way to peel this back, we would like to be able to do that. we're going to have a chan later today to vote on a consumer protection bill -- or amendment that has certainly brought this more in balance. there may be other ways of getting at it. i would urge the chairman to consider looking at ways to peel this back because i do believe that -- that again we're going to wake up in this country -- if the dodd bill passes in its

present form, we're going to wake up in 10 or 15 years and realize that consumer protection has gotten out of hand, that consumer protection has been used in many ways, used to create social justice, if you will, on our financial system. and to me, madam president, that's something that's very, very dangerous. so i thank you for the time. i hope we have the -- let me just add one other thing. there is a new word in this title that's undefined. it's a word that says they will also be looking to see if practices were abusive, but nobody knows what that means. nobody knows what that means. and under this bill, by the way, if some were to come in after the fact and find that something -- quote -- was abusive, it would negate the financial transack that was entered into. so you could have a zealous consumer advocate come in and say i'm sorry, this loan that was made between two parties was

abusive and it would negate that transaction. so madam president, this bill is a huge overreach. it obviously goes right along the lines of the white house saying that you should -- you should never let a good crisis go to waste. this bill is going to be around for a long time if it passes, and i hope that what we can do over the course of the next several days, during this time where we are having one of the most civil debates i think we have had in the senate since i have been here, a high-level civil debate. i hope we'll be able to put this back in balance. i know the madam president is from a state where people care a great deal about their financial institutions. i hope to work with her and my friend from minnesota and others to try to achieve that balance. madam president, i yield the floor. the presiding officer: the senator from connecticut. mr. dodd: madam president, i have eight unanimous consent requests for committees to meet during today's session of the senate. they have the approval of the

majority and minority leaders. i would ask unanimous consent that these requests be agreed to, these requests be printed in the record. the presiding officer: without objection. mr. dodd: last, mr. president, let me say i will respond a little later because my colleague and friend from minnesota is on the floor to be heard. just to say on this bill, a lot of work went into this. i must say over the last number of years, you don't have to wait ten or 15 years to find out what can happen. we watched painfully what can happen over the last seven years when the very people, the prudential regulators should have been standing up and saying no-doc loans are wrong and dangerous. in fact, it was consumer groups that warned about the real estate bubble. we were told everything was safe and sound because people were making money, and it looked like it might go on forever. of course we painfully learn now everyone has 20-20 hindsight looking back as to what occurred. had we had in place someone saying no-doc loans, no down

payments, adjustable rate mortgages at fully indexed prices, we're going to fully cripple people's ability to meet those obligations, we wouldn't be in the situation we're in today. but seven agencies that have jurisdiction over consumer protection, none of which are doing their job very well. i will address more specifically the alternative idea being suggested. let me also say i have never claimed our proposal is perfect on consumer protection. i acknowledge that the word abusive does need to be defined. we're talking either about striking that word or defining it better. deceptive and fraudulent i think covers the ground pretty well but i thought abusive was a good exclamation point because that's what happened, it was abusive, common language. i will come back later, but i wanted just to acknowledge that we have a number of organizations that have -- have endorsed this bill of ours, strongly support our committee bill, from the americans for

finance reform, consumers union, center for responsible lending, consumer federation of america, the public citizen, the national consumer law center, consumer watchdog, and aarp. of course, we're all familiar with the group representing older americans. in fact, i would ask unanimous consent, madam president, that a letter from the aarp opposing the shelby substitute on consumer protection be included in the record at this point. so major groups, ones that are consumer oriented as well as those that watch out for older americans, many of whom have to pay mortgages on fixed incomes i think are worthy of note. but again, i want to thank my colleagues for their comments and thoughts on this amendment. i will address more of it a little later, but let me yield the floor. mr. franken: madam president? the presiding officer: the senator from minnesota. mr. franken: madam president, i rise today to speak about the need to further address the problems in the credit rating agency industry.

senator dodd has presented us with a very good bill. it takes major strides in addressing many of the problems that brought our economy to the brink of collapse. it reans in too big to fail. -- it reins in too big to fail. it brings derivatives oust of the shadow. it creates a new consumer watchdog that will prioritize consumer president clinton over wall street profits. senator dodd's bill includes several provisions on credit rating agencies. it holds rating agencies accountable in court for being recognize unless their duties. it requires increased disclosure, creates new complaint systems and requires raters to use information beyond what is provided by issuers. these are a few of the many provisions that the dodd bill includes to begin to address issues with credit rating agencies, and they are all good. but one thing it doesn't do is

get at the underlying problem, the conflict of interest inherent in issuer -- the issuer pays model where the issuer pays the rating agency. to root out conflicts of interest completely, we must change the vested interest of each of the players. the central conflict of interest can be boiled down to this. the issuer has an interest in attaining a high rating so it can sell its product. the credit rating agency has an interest in giving out a high rating so it can sell its service. tom tolls of "the washington post" depicts the problem quite well in this satirical cartoon. here you see the rating agencies. he labels them that. that's how you know they are

them. giving three tens to a figure skater labeled wall street, and he is kind of fat there. you see he says i pay their salaries. that's why he is getting the three tens, or aaa. and yet he is a figure skater and he is dumping trash, really. there you see an apple core, there is a fish head, skeleton, a banana. you don't want those on the ice. you just don't want that. that's bad. and then a little figure here, a little garbage man here at the bottom, it says somebody else pays to clean the ice. that, of course, is us, the taxpayers. i think after seeing this cartoon, if anyone doesn't support my amendment, they are -- i don't know what could do that. anyway, this actually shows -- makes the point very well. the issuer is paying the rating

agency and wednesday the aaa. however, the credit rating agency should have an interest in providing accurate ratings, unlike the triple ten here, so that investors are provided with accurate information that they need to make investment decisions, but for the reasons i just described, there are very few incentives to provide accurate ratings. the market simply doesn't reward accurate ratings. the best way to fix this problem is to change the way the market works so it rewards accurate ratings, and once we start getting accurate ratings, investors can make better decisions about the products they are selecting for inclusion into pension funds. having safe products in pension funds protects the retirement security of hard-working americans. now, let me give you an example of the perverse incentives that have been driving the credit

rating agency thus far. my friend and colleague, senator levin, recently held a hearing in the permanent subcommittee on investigations. his investigators released many emails from the industry that reflect the conflicts of interest that drove the system. here's a good example. now, here's -- this is a rating agency employee writing to a -- his own rating agency people about the group that's -- a group of theirs. "we are meeting with your group this week" -- the group that's within the agency, within the rating agency." we're meeting with your group this week to discuss adjusting criteria for rating c.d.o.'s of real estate assets this week because of the ongoing threat of losing deals. lose the c.d.o. and lose the base business.

so here the credit rating agency is proposing to change its rating criteria to avoid losing business. this is exactly what was at the root of all these aaa rated subprime mortgage-backed securities that were leveraged and had the c.d.o.'s on them, the exotic instruments that were rated aaa and that created this entire mess. now, it's clear here that the incentives here are to keep customers coming back to make sure that accurate ratings aren't driving customers into the arms of other rating agencies. don't want to let accuracy get in the way of more business. we need to change the incentives, and i believe that my amendment, numbered 3808, will do that.

the amendment tasks a board, a self-regulatory organization with selecting a pool of qualified credit rating agencies. the board would then choose a system to assign one at a time one of these qualified credit rating agencies to each request for an initial, an initial credit rating. issuers could no longer shop around for the best rating. they could, however, get a second, third or fourth rating from any agency they choose, but the first assigned rating could provide a check against the next agency inflating its rating. the amendment would require the board to consider a rating agency's past performance and could adjust the number of rating assignments based upon demonstrated accuracy. if a small rating agency began

performing extremely well, the board could start giving it more assignments, breaking the oligarchy of the big three raters which served us very poorly. or maybe the big three would get their act together honoring this new system. the point is when the agencies are finally operating in a market in which accuracy is valued, they will compete on the basis of accuracy, and when accuracy is driving growth, not pre-existing relationships or sweetheart deals, and smaller agencies will have an opportunity to compete and grow, making the industry more robust. so properly addressing conflicts of interest in the credit rating agency industry necessitates realigning the interests of rating agencies with the interests of investors, of

investors. the way to do that is by promoting and rewarding accuracy. my amendment will create these incentives, increase accuracy, promote competition and stability and restore integrity to the credit rating industry system. i thank my colleague, senator schumer, senator nelson for helping lead this effort, and senators whitehouse, brown, murray, bingaman and murray for joining us. thank you, madam president, and i yield the floor. a senator: madam president? the presiding officer: the senator from alabama. mr. shelby: madam president, i rise today to discuss the amendment that i have offered on behalf of the republicans to greatly improve consumer financial protection. the amendment recognizes that our existing financial regulatory system fails to adequately provide consumer

protection. our system is broke and it needs fixing. we realize that. madam president, the recent financial crisis has revealed that our financial regulators were asleep at the switch and had neglected to uphold their basic responsibilities for consumer protection. far too often, our regulators were more concerned about pleasing the entities that they regulated than looking out for consumers. it's clear that we need to refocus the priorities of our financial regulators and to ensure that consumer protection gets the attention that it rightly deserves. make no mistake, republicans here want to strengthen consumer protection. we are all consumers in america. we need to make sure that consumers get clear and understandable disclosure so that they can make good decisions. we need to make sure that

regulators have sufficient authority to combat fraudulent practices. we also need to make sure that our consumer protection laws and regulations keep up with changes in our dynamic and our innovative marketplace. madam president, any changes to consumer protection, however, need to reflect the consumer -- that consumer protection does not stand in isolation. it's inherently linked with safety and soundness regulation in our financial institutions. this is most dramatically illustrated by the fact that an ill-conceived consumer protection law, such as the line for no down payments, could cause banks to fail, as we know. given that taxpayers resultly on the hook for bank failures, it would be irresponsible for all of us not to require regulators to consider the impact proposed

consumer protections could have on the deposit insurance fund that's so important to all of us. after all, madam president, one of the most important consumer protections is a healthy financial system. where financial institutions are able to keep long-term commitments to consumers, like annuities, insurance, and retirement funds. the amendments we're proposing -- the amendment that we're proposing today embodies this approach. it would put the federal deposit insurance corporation in charge of writing consumer protection regulation. that responsibility currently rests with the federal reserve. as a prudential regulator, the fdic has the experience necessary to ensure that the right balance is struck between consumer protection and safety and soundness of the institutions. to raise the status of consumer protection, a new division would

be established at the fdic. the division will be led by a presidentially appointed and senate confirmed director. the director, under our proposal, would serve a term of four years and would be required to testify before congress at least twice a year. this would help ensure that regulators are held accountable for their actions on consumer protection. nadin addition, madam president, this amendment that we're offering does not preempt the century and a half preemption with respect to national banks. i think we should be very cautious by allowing national banks to be regulated by 50 different states and opening up the door to needless regulation that only enriches lawyers and raises costs to consumers. the republican amendment that i'm discussing also grants the fdic primary supervision and

enforcement authority over large non-bank mortgage originators and other financial service providers that have violated -- yes, violated -- consumer protection statutes. this would give the fdic broad authority to clamp down on the worst offenders of our consumer protection laws without needlessly subjecting law-abiding businesses to expensive regulation. the republican approach here to consumer protection sharply contrasts with the approach of the dodd bill. under the dodd bill, the consumer financial protection bureau, madam president, would issue rules without considering the impact on the safety and soundness of financial institutions. need i remind my colleagues that this is the same regulatory model that produced the fiascoes at fannie mae and freddie mac?

in that case -- listen, h.u.d. wrote rules on housing rules and underwriting standards while the other regulator, ofeo, regulated them for safety and soundness, a bifurcated deal, as they're proposing now in the dodd bill. do we need a better example of the foolishness of divorcing consumer protection from safety and soundness? how did that regulatory model help consumers? it certainly left them with a huge tax bill to cover the government bailout that is continuing to this very day. an examination of the powers and size of the bureau established by the dodd bill shows further how the republican approach differs from the approach advocated by the obama administration and my democratic friends. they start -- they, the democrats -- start with the assumption that assumption that small businesses are, in

president obama's words -- quote -- "bilking people." and that heavy-handed regulations and an extensive bureaucracy are the only ways to ensure that small businesses do not take advantage of their consumers. madam president, i do not believe that the tens of thousands of small businesses in my state or in the presiding officer's state, businesses like florists, retailers, dentists, auto dealers, and so forth, who fall within the regulatory reach of the dodd proposal are bilking people. i also know that these entities had nothing to do with the financial crisis that we're grappling with. unfortunately, the dodd bill would create a massive new bureaucracy with unprecedented powers to regulate small businesses and consumers. the consumer financial protection bureau there could dictate exactly what forms

businesses must use, who they provide services to, and how they sell their products. control over american businesses would shift further from entrepreneurs to bureaucrats in washington, d.c. madam president, perhaps the most troubling aspect of the dodd approach is that it assumes that consumers need benevolent bureaucrats to make decisions for them. in order to make that happen, the dodd bill authorizes the new consumer agency to collect any information basically that it desires. shawl businesses acrossmall buse country fear the massive and potentially new bureaucracy created under the rubric of consumer protection. they have every right to be afraid. this massive new government bureaucracy has the power to place individuals under oath and demand information about their personal financial affairs.

the new bureaucracy, as proposed by the democrat -- the democrats is also required to report to the internal revenue service any information it gets that it believes may be evidence of tax evasion. why does their new bureaucracy need these incredible powers, unprecedented in america? because their bill envisions that the bureau analyzing and monitoring america's behavior -- americans' behavior and then issuing regulations to stop them from doing things the bureaucrats deem -- quote -- "irrational" or -- quote -- "inappropriate." just read the writings of the assistant secretary of treasury for financial institutions, one of the chief architects of this expansive new bureaucracy. he has written how -- quote -- "regulating appropriately is difficult and requires

substantial sophistication by regulators, including psychological insight. let me translate this academic jargon here. he's saying that all-knowing regulators -- the dodd proposal -- should be empowered to make decisions for consumers because benevolent regulators are the only ones who possess the right -- quote -- "psychological mind-set" to do things -- quote -- "appropriately." think about it a minute. regulators are wise and should be heeded. consumers are foolish and should do as they're told. that's what we're talking about here. madam president, the architects of this massive new bureaucracy have long argued for a consumer bureaucracy with the right culture. whether that culture focuses on consumer protection and a safe and sound banking system or it becomes a way for community organizers and groups like acorn

to grab federal resources is still left wide open. one of the strongest proponents for the new consumer bureaucracy has been the treasury assistant secretary for financial institutions, as i said. madam president, allow me to read into the record a couple of quotes from a paper entitled -- "behaviorally informed financial services regulation," coauthored by the assistant secretary barr in october of 2008. the secretary writes -- and i'll quote -- "because people are fallible and easily misled, transparency does not always pay off." he writes -- and i quote again -- "regulatory choice ought to be analyzed according to the market stance toward human fallibility." on regular labor, he further writes -- and i quote -- "product regulation would also reduce cognitive and emotional

pressures related to potentially bad decision making by reducing the number of choices." he's talking about choices in the marketplace. yes, madam president, the administration's chief advocate believes that benevolent regulators need to reduce choices for the consumer so that they, the consumer, can be protected from bad decision making and their own inherent fallibility. he also, madam president, opines on the topic of disclosures, where he states -- and i quote -- "disclosures are geared towards influencing the intention of the borrower to change his behavior. however, even if the disclosure succeeds in changing the borrower's intentions, we know that there is often a large gap between intention and action." madam president, i believe that regulators need to ensure that consumers have the information they need to make their own decisions based on their needs

and their circumstances. the proponents of behavioral economics believe, however, that regulators need to influence people's intentions and change their behavior so that they make decisions that the regulator deems appropriate for them. as i have said before, this is the nanny state at its worst. finally, madam president, he writes of a proposal of late fees charged by financial services providers, he writes -- and i quote -- "under his proposal, firms could deter consumers from paying late or going over the credit card limits with whatever fees they deem appropriate, but the bulk of such fees would be placed in a public trust to be used for financial education and assistance to troubled borrowe borrowers." the translation here, madam president, is that behavioral economists not only believe that they're in the best position to make choices and

decisions for us, but they're also best positioned to decide how private companies spend their money. needless to say, this is a disturbing perspective. it does not reveal just how much the obama administration wants to empower bureaucrats. we should remember that the failure of our existing regulators -- primarily the federal reserve -- to properly enforce consumer protections have caused this crisis. yet the dodd bill's here response is to create a bigger bureaucracy, to hire more bureaucrats at the fed. in contrast, the republican alternative, the amendment before us, would make the changes and improvements that we all can agree need to be done but would do so in a more focused and i believe a more prudent manner. the expansive reach of the dodd bill means that the new bureau is going to be expensive. the budget for the biew bureau s approximately $650 million in

new taxpayer costs, funded argentina style, by tapping the central bank's money printing powers. in comparison, the budget of the office of the comp treasur compe current circumstances our national bank regulator, is currently spending $750 million a year and that agency does both consumer protection and prudential supervision. under the republican plan, industry, not taxpayers, would pay the cost of consumer protection. yet despite giving the bureau a huge budget and vast power, the dodd bill fails to take any reasonable steps to hold the bureau accountable. the bureau receives all of its funding from the federal reserve, beyond both congressional and executive oversight. the bureau has complete discretion on how it spends the budget -- its budget under the dodd proposal, allowing it to device programs for back door funding of special interest groups like acorn and other

liberal activist groups. the more we learn about the dodd bill's approach to consumer protection, the more i believe the republican approach makes more sense and strikes the right balance. the republican amendment wisely, i believe, places consumer protection in a financial regulator, the fdic, but enhances the status of consumer protection by creating a new division of consumer protection. it holds regulators, madam president, accountable and ensures that repeat violators of consumer protection laws face stiffer penalties and regulation. the republican amendment avoids creating costly new bureaucracy and imposing unnecessary costs on small businesses that had nothing to do with the financial crisis. madam president, we all agree that consumer protection needs to be modernized and given more attention by our regulators. i believe the republican approach does this and it does

so without building the expensive and expansive bureaucracy contained in the dodd bill. most importantly, the republican approach ensures that consumers are protected but they, not bureaucrats, are ultimately the ones making the decisions for themselves. madam president, i have heard from productive american companies, from tractor-trailer manufacturers to beer brewers, from motorcycle manufacturers to public utilities that provide heating fuel to our homes, and they strongly oppose this section of this bill because it will increase their operational and risk management. i have heard small, responsible business owners who offer their customers the convenience of installment payments, express serious concerns about the potential for an out-of-control consumer bureaucracy that's envisioned in the dodd bill. although the bill's supporters have and will argue that the fears are unfounded because the

bill says that merchants not engaged significantly in offering consumer financial services are excluded from the new consumer regulatory bureaucracy. the bill, though, madam president, does not define what the word "significantly" means, leaving that to the discretion, again, of the benevolent bureaucrats. the supporters of this new massive government agency trust the bureaucrats. madam president, i trust the american small business owners and consumers to make their decision. i yield the floor and suggest the absence of a quorum -- oh, excuse me. a senator: madam president? the presiding officer: the senator from tennessee. mr. alexander: thank you, madam president. madam president, i congratulate the senator from alabama for his comments and for his proposal which he describes as a republican proposal. of course, what all of us hope is that it becomes a bipartisan proposal as our friends on the other side look carefully at it. that's what happened with the

big bank bailout provision that we worked on yesterday. senator dodd and senator shelby worked for a while. senators corker and warner had worked before that, and we came up with a conclusion that all but five senators agreed to. now we have moved to two of the other major deficiencies in the dodd bill that are all wrapped up in one proposal here, and it's really wrapped up with the central issue that's before the american people. president obama said in september of last year that the health care bill was a proxy for a larger issue about the role of government in americans' lives. the president was exactly right about that, and we have seen that issue over and over and over again. i don't think it will change between now and the november election. in fact, the president said at our health care summit that's why we have elections, and i think he's correct about that. we have seen a washington takeover of banks. we have seen a washington takeover of car companies. we have seen a washington takeover of many aspects of

health care. we have seen a gratuitous washington takeover of student loans. and now in this financial regulation bill, instead of dealing with the high jinks of big banks, we're going to take over main street lending and on top of it create a new czar or czarina to make decisions about millions of transacks across america that are on main street. so what senator shelby's proposal offers -- and we hope it receives the same kind of bipartisan consideration that the resolution authority or the big bank bailout discussion did yesterday that we had finally agreed on, is that we would like to change this bill in two ways. we'd like to say let's take main street lending out of it. the senator from connecticut, senator dodd, said it's not in there, but the language makes it look like it's in there. it makes it look like that this is the end of the 18-month payment for your daughter's -- for your daughter's dentist bill. it makes it look like that the

plumber, the dentist, the store owner up and down main street who gives you flexible credit -- in other words, who says you can pay me overtime, it looks like we're going to start regulating that transaction. and what's going to happen is that's going to make credit harder to get because the dentist is going to say, the plumber is going to say or the store owner is going to say i'm not going to fool with it. i don't want to be regulated by some washington bureau, so if you want to buy my goods, go to the bank and get some money or get another credit card. and you know what that's going to do? that's going to slow down the economy. that's going to make jobs harder to create because it's going to make credit harder to obtain and credit harder to offer. that's what it does. and that's not what we need at this time, madam president. i mean, we just had the reports of the growth, the economic growth of our country during the first quarter. it was 3.2%.

that's not very good. i can vividly remember flying on a helicopter with president bush when i was education secretary in 1992, and the economic growth of the -- of the third quarter of the year was better than that. it was 3.6%, and bill clinton beat george bush sr. on the "it's the economy, stupid" campaign. so 3.2% isn't going to cut it for our country. most economists say that if our economy continues to grow over the next year all the way through 2010 at the same rate that it grew in the first quarter, that the unemployment rate won't change. the unemployment rate will still be about 9% or 10% at the end of this year as it is today. now, what can we do to change that? well, we have to create an environment for job growth. we have done pretty good in creating job growth in washington. the one place the stimulus has

really worked is in washington, d.c. salaries are up, jobs are up. there are plenty of new jobs around here. but out across america, we're not creating enough new jobs, and too many of the things that we're doing here make it harder to create new jobs. the health care bill makes it harder to create new jobs because it imposes taxes on job creators. it imposes taxes on investors. tax increases make it harder to create new jobs. running up the debt. if the proposal is to double the debt in five years and triple it in ten years. that makes the economy less certain and make it harder to create new jobs. and the threat of creating a czar or czarina in washington, d.c., and a new bureau to supervise and make more difficult and expensive main street lending makes it harder to create new jobs, and we should take it out of the bill. if the senator from connecticut, who is one of our finest

senators, well intentioned, if he really wants it out of the bill, let's just take it out of the bill. let's don't leave in there the possibility that someone might come along and interpret significant financial activities to include the plumber and the dentist. this has attracted the attention of a lot of people from tennessee. community bankers, credit unions, the national federation of independent businesses. they are talking about office suppliers, jewelers, health professionals, furniture stores. they estimate that about 50% of small businesses let you pay overtime. in other words, they offer you credit. they make special arrangements. they say okay, we know you don't have all the cash right now and you might not want to run up your credit card or maybe your credit card is near the top, so we'll sell you whatever we have to sell you or we'll provide you

the service. you can pay us in six months. you can pay us in five months. well, if you do that under this bill and you're in a significant financial activity, then this czar or czarism na in -- or czarina in washington, d.c., is going to be regulating you, and you might be a very small business, you might not have a lot of extra money to fill out forms, but you're going to be filling out forms, suffering more regulations, you're going to be offering less credit, and up and down main street it will be harder to do. so if our real intention in this body on both sides of the aisle is to not interfere with main street lending, then let's just say that. that's what the republican amendment which we hope becomes a bipartisan amendment does. and then there is the second big idea that's in this republican amendment so far as i'm concerned. we don't need another czar. this bill is supposed to be about big banks, about financial

high jinks, about this recession that we're in and about -- about issues that will change the regulations in a sensible way that will avoid as many future recessions as possible, at the same time creating an environment in which we can grow the largest number of good new jobs. but suddenly, we have this new washington agency -- and remember, the issue in america is the role of the federal government in the lives of americans, so we have a new washington agency not only possibly regulating main street lending but creating an unaccountable person at the top to write the rules and regulations. when i say unaccountable, that means that she or he is just over here at the fed. once confirmed by the senate, this person has no boss. doesn't report to the president. doesn't have to come before congress for appropriations. just has a steady stream of

money and really unlimited authority. and there is nothing to keep this new czarina or czar from writing the kind of authorities and rules that got us into trouble in the first place with housing, that might encourage irresponsible homeownership. that's what we had before, so this might encourage irresponsible borrowing. so the second major idea of the republican amendment is let's make this person accountable. of course, the president can appoint, confirm by the senate, but this person would be in the federal deposit insurance corporation and would be there for -- would be therefore accountable to other people appointed by the president and would have to come before the congress for -- for -- for appropriations to give us a chance to inquire about things. so, mr. president, i have come to the floor today to say we have made an important step in the right direction when we worked on the first part of this

bill yesterday across party lines. that was one of the five issues that we need to deal with, the issue of what do we do about encouraging banks to get too big and fail and get the rest of us in trouble at the same time. so that issue, we think, is out of the way. but we have got four more big issues to deal with here, and two of them are in this republican amendment. one is let's not take over main street lending and make it harder to loan money, harder to get money and harder to create jobs. the number two is let's not create another czar in washington. the last thing we need is another washington takeover and another washington czar. we hope our amendment will attract significant bipartisan support and then we can move on to the other important questions in this legislation. i thank the president and i yield the floor.

the presiding officer: the senator from maryland. mr. cardin: madam president, first, let me thank senator dodd for bringing forward a strong bill to regulate wall street. the bill provides for strict new regulations to stop wall street's reckless gambling. and i think one needs to understand the current system and how we got to where we are today. we have eight federal regulatory entities that oversee the financial sector. now, their authority is different, their powers are different, their ability to respond to a particular problem is different, and the entity, the entity that's regulated today can shop for the regulator that they want by what they call themselves and the type of activities that they try to define themselves as, they can shop and look for the regulatory

entity that they believe they can circumvent the easiest. they can escape and did escape proper supervision. well, this legislation ends that practice by a clear regulatory framework in order to regulate all financial institutions. the regulatory entity that does the regulation is based upon size and jurisdiction, and we have a financial stability oversight board that provides uniformity. no more gaps in the regulatory system. and it provides the tools for the regulators for early intervention. that means we end once and for all too big to fail. by early intervention on takeovers, closing down financial institutions, requiring the sale of financial institutions, we can prevent the need for too big to fail. the risk will be on the investors, not on the taxpayers of this country.

the boxer amendment makes that clear. tools that are needed for orderly liquidation to minimize the impact on the financial sector in our economy is provided in this legislation. it recognizes the need for special attention for our community financial institutions. madam president, they were not the cause of the -- of the financial crisis that we went through. we know it came from wall street. our community banks were very much vulnerable as a result of the financial collapse. we need to streamline the regulatory process as it relates to our community banks. regulation is cost. we have to have regulation, we need regulation, they need regular labor, but we need to make sure -- regulation, but we need to make sure it's sensible. and this bill streamlines the regulatory structure as it relates to our local financial institutions. we need strong and adequate regulation, and it provides it. we need the right balance, and

this legislation provides that. i might say, madam president, there are amendments that we've already considered that i think were the right thing in order to make sure this balance is correct and i'm sure there will be other amendments that we will consider to make sure we get that balance right between adequate regulation and the cost of regulation to small community financial institutions. this legislation puts the consumer first, as it should, with a strong consumer bureau. now, some say, why do we need that? isn't the current adequate regulation? the answer is no. all you need to look to is what happened in the residential mortgage marketplace. all you need look at is the advertisements that were taking place just two years ago for no-docs or stated income loans or no down payment loans, loans that provided over 100% of the costs, and look at subprime lending in each of our communities.

where -- where home buyers who could have qualified for traditional home mortgages were steered into the subprime market because the -- the mortgage company or the -- the seller made more money by steering into subprime. well, those practices have to come to an end. those practices sparked, as we know, the housing, sparked the trigger for this recession. these practices helped create that bubble that burst and what damage it caused when it did burst. when we take a look at the cost of this recession, the pew financial reform project has estimated that just the slowdown in the economic growth will cost every family in america close to $6,000. well, that's -- that's money that will never be made up. we have to make sure it never happens again. the federal spending in order to prevent the economic collapse of wall street is estimated to cost $2,000 per household. if you look at just the decline in real estate value on the nine

months from july 2008 to march 2009, the wealth loss equaled about $30,000 per household in real estate and over $60,000 per household in the stock market. we lost millions of jobs. and i could go on and on and on. we have an obligation to make sure that our economy and our people are protected from this type of financial meltdown in the future. this legislation properly regulates the risky gambling by financial institutions by prohibitions and disclosures. it ends the derivative market that has no economic value to our economy. it requires disclosure on the derivative markets so that we can take just brandeis' advice and use sunlight as the best disinfectant. it provides for the volcker rule, codifying that by restricting certain types of

high-risk financial activities by bank holding companies. this legislation regulates credit rating agencies. we know that rating will greatly affect the viability of the security. the people of maryland and from every state in the nation, have lost their homes, jobs and savings. we have a responsibility to end this reckless practice on wall street that helped plant the seeds for this recession. and this legislation, mr. president, is a giant step forward. mr. president, i now would like to talk just very briefly about an amendment that i intend to offer, and i would ask that it be -- appear in a different -- separated from my initial comments. the presiding officer: without objection, so ordered. mr. cardin: i rise to urge the inclusion of amendment 3732 to s. 3217. this amendment is critical part of the increased transparency and good governance that we are striving to achieve in the financial industry. this is a bipartisan amendment

that would require all foreign and domestic companies registered with the u.s. securities and exchange commission, the s.e.c., to report in our annual report to the s.e.c. how much they pay each government for access to our oil, gas and minerals. most of the world's extracted mineral companies would be covered by this law, setting a new international standard for transparency, for openness. we've seen the devastating effects of the lack of transparency in this country, whpped what happened when wall street is left unchecked ask barrens cloaked in secrecy made off with millions when others lost their homes. this is why we are addressing openness and transparency in the underlying legislation today and we would be remiss to create the sweeping reform of our financial sector without addressing the needs for adding a new layer of transparency to a set of companies already under s.e.c.'s jurisdiction, the oil, gas and mining companies that make up

the extractive industries. this amendment would create an environment of transparency to reassure investors, help stabilize global energy markets and, thus, support goals of energy security. current federal accounting standard boards -- standards require reports of tax, royalty, and bonus payments to host governments, but the numbers need only be reported in the aggregate category, such as production costs, excluding taxes, and taxes other than income. these payments are reported on a country level, where a company's operations are very substantial. but otherwise, they are reported on such a broad basis that a company can simply report on which continent it was operati operating. sis disclosure is not useful in determining the extent of a company's operation in or ongoing financial arrangements within a country. in temples energy security, the oil, gas and mining revenues are critically important economic sector in about 60 developing

and transition countries which are tear docks cl paradox cli he than two-thirds of the world's poorest people.despite receiving billions of dollars per year from extractive revenues, these countries rank among the lowest in the world on poverty, economic growth, authoritarian governance, conflict, and political instability. unaccountable management of natural resource revenues by foreign government leads to corruption and mismanagement, which, in turn, creates unstable and high-cost operating environments for multinational companies and threatens the security of energy supplies of the united states and other industrial nations. so, mr. president, we are talking about in these countries where mineral wealth becomes a mineral curse. it becomes a source of revenue for corruption rather than a source of revenue for economic growth. so a country can grow. it runs counter to our foreign policy objectives of good governance and economic growth

for the developing world. transparency will help make sure that the mineral wealth goes to the people of that nation. the provision of this amendment would apply to all oil gas and mining companies required to file periodic reports with the s.e.c., namely 90% of the major internationally operating oil companies and 8 out of 10 largest mining companies in the world, only two of which are u.s.. so we're talking about foreign-owned companies, not u.s. companies, by and large. of the top 50 largest oil and gas companies by proven oil reserves, 20 are national oil companies that do not operate internationally. these companies are not registered with the s.e.c. or any other exchange and only operate within their own country, which means that these national oil companies do not compete with international operating companies. of the remaining 30 companies that do operate internationally, 27 would be covered by this legislation. 27 of the 30. these include canadian, european, russian, chinese, brazilian and other international companies.

we current have a voluntary international standard to promote transparency. a number of countries and companies have joined the extractive industries transparency initiative, eiti, an excellent initiative that has made tremendous strides in changing the cull tour of seek -- culture of secrecy that surrounds the extractive industry. but too much countries and companies remain outside this voluntary system. the notion of transparency has been endorsed by the g-8, by the i.m.f. and the world bank and a number of regional development banks. it is clear to the financial leaders of the world that transparency in natural resources is -- resources development is key to holding government leaders accountable for the needs of their citizens and not just building up their personal offshore bank accounts. it is now time to create an international standard for transparency. and it will only happen if the united states i is in the leadership.

the international community looks to us to be a leader on this issue. investors need to be able to assess risks in their investments. investors need to know where, in what amount, in what terms their money is being spent and -- and what type of high-risk operating requirements. these environments are often poor developing countries that may be politically unstable, have lots of corruption have, a history of civil unrest. investor has a right to know about the payments. secrecy of payments carries real bottom-line risks for investors. creating a reporting requirement with the s.e.c. will capture a larger portion of the international extractive industries, corporations than any other single mechanism, thereby setting a global standard for transparency and promoting a level playing field. investors should be able to know how much money is being invested upfront in oil, gas and mining projects. for example, oil companies often pay very large signature payments to secure the right for an oil field long before the

first drop of oil is produced. such payments are in addition to the capital investment required. in angola, for example, $500 billion is not an unusual signature bonus that has to be paid for a single field. and single field can cost more than $2 billion to develop. such cost takes years for the companies to recoup through their production sharing arrangement with host companies. for this reason, it is in the interest of the investors to know the amount and timing of payments in high-risk operating environments. when a company invests becomes targeted by a campaign of misinformation, only transparency of their financial information will help the investor. disclosure of payment is one way to address the risk, helping companies protect themselves from false or unfair accusations and blame shifting by host governments that can turn their image in the investor community and the general public. mr. president, i urge my colleagues to join me in supporting the creation of an

historic transparency standard that will pierce the veil of secrecy that fosters so much corruption and instability in resource-rich countries around the world. i thank the presiding officer, and i would yield the floor. mr. bond: mr. president? the presiding officer: the senator from missouri is recognized. mr. bond: mr. president, americans have sent congress a message -- reform wall street, hold bad actors accountable but don't hurt the folks on main street who had nothing to do with the financial crisis. that's what we're debating about here in the senate this week. senators on both sides of the aisle agree on one thing -- all of us want to hold wall street accountable for the havoc wreaked on main street. we all agree we need to enact reform to prevent another financial crisis, but we have some disagreements on what responsible reform looks like. while we all agree on the need to reform wall street to protect

main street, the current bill, even with amendments so far, doesn't, in my view, do the trick. we're making progress but there's still a lot of work to do, because in its current form, the bill is still a massive government overreach, punishing main street, hurting families, costing jobs by stifling small business and entrepreneursment today i'll highlight some of the concerns i've heard from main street in missouri and elsewhere and some of the amendments that have been filed to improve the bill. first, on the g.s.e.'s. none of us can deny that fannie mae and freddie mac were significant contributors to the financial crisis. just like any real reform to prevent a future financial crisis, we have to deal with wall street and we must also deal with fannie mae and freddie mac. unfortunately, this bill totally ignores, it turns a blind eye to these government-sponsored enterprise, g.s.e.'s, which

contributed to the financial meltdown by buying high-risk loans banks were directed to make to people who could not afford them. the irresponsible actions in the marketplace by fannie and freddie turned the american dream into the american nightmare for far too many families who face foreclosure, then a devastating entire neighborhoods with the foreclosed homes and communities where property values diminished. ultimately, it led to the national and international financial crisis. no one, especially those of us who are taxpayers, can forget what happened after freddie and fannie got done wreaking havoc on neighborhoods. they went belly up. a year and a half ago, the government had to take over the g.s.e.'s, leaving us as taxpayers to take over the bill. to make matters worse, i'm sure everybody read with shock just

yesterday the press reported that freddie lost $8 billion in the first quarter. that's a lot of work. then they had the nerve to request another $10.6 billion from american taxpayers and warned, and warned that this $10.6 billion is just a down payment on the money they will need in the future. is it time to call a halt? is it time to get a handle on it? well past. in case you need a reminder, this latest $8 billion freddie lost is on top of the the $126.9 billion that freddie and fannie had already lost through the end of 2009. "the wall street journal" today hit the nail on the head when they referred to fannie and freddie today as the toxic twins. these toxic twins are far and away the biggest losers in the entire financial crisis. bigger than a.i.g., citigroup and all the rest. so when we focus our friends at

fannie and freddie. you talk about doing some damage, here's where the damage is. here's where the burden comes. not just on us, but on the credit cards of our children and grandchildren, the young people here as pages. they have got to -- they are carrying around what they think in their wallet, they don't realize how heavy a debt burden we have already put in their wallet. sorry about that, folks. but you and your generation and generations to come are going to be paying for it. taxpayers and taxpayers in the future will be the biggest losers. it says according to congressional budget office optimistic estimates, these toxic twins will cost the taxpayers close to $380 billion. even for those of us in washington, $380 billion is a big number. after all this bane to families,

neighborhoods and taxpayers, you would think that oversight of fannie and freddie would be a top priority. which is why it's stunning to me that the obama administration has only recently nominated someone to fill the critically important position of inspector general of the federal housing finance agency to oversee the g.s.e.'s. how can we have proper and effective oversight of fannie and freddie when the office has been vacant at the highest level for so long? the bottom line is that responsible reform must address fannie mae and freddie mac. responsible form would put an end to taxpayer-funded bailout of fannie and freddie and refocus them on affordable housing. senators mccain, shelby and gregg have failed an amendment to protect taxpayers and put an end to the government bailout of fannie and freddie. in short, this amendment cuts up the federal credit card by putting an end to the limitless line of credit fannie and freddie currently enjoy,

compliments of us as taxpayers. this amendment puts an end to the conservatorship and requires each to operate eventually without government subsidies and on a level playing field with the private sector. next of great importance is seed capital. it's critical in reforming wall street we not punish main street and the very specific small business start-ups that are so critical to job creation. if there is one thing we're worrying about, it's where are the jobs. i'll tell you where the jobs are. they are the jobs that the entrepreneurs and the innovators and the inventors can start up. unfortunately, in the current form of this bill, there are provisions that will kill the business start-ups. while title 9 of the dodd bill has been little talked about -- far too little, if my opinion -- -- in my opinion, it could have devastating consequences. this bill could delay small business start-ups by

eliminating the availability of private investor seed capital. and that's essential where these start-ups are viable in growth. through new burdensome regulation by the s.e.c., innovators and entrepreneurs would be subject to registering with the s.e.c. for a four-month review, thus tying up vital venture capital needed for immediate use by new business. this could cripple new businesses. next, it would add a further requirement to raise the net worth to those who can invest invest $2.3 million, raising the annual household income to to $450,000. as the bill proposes. this would disqualify two-thirds of current accredited investors according to the age old capital association. small business and start-up companies are the backbone of our country. they are where we are looking to get the new jobs of the future,

and the critical role is played by angel investors in creating and developing new companies small or large. i'll tell you, i will confess, this is of particular concern to my state of missouri where i have been working for a long time to build an agricultural biotech corridor across the state. in missouri, we have the research institutions, the scientific leaders and advanced ag research and biotechnology. the research and biotech industry is our best hope for a stimulus to create high-paying, skilled jobs in rural as well as urban missouri and i would say across america. the stimulus these biotech and research companies are spurring in missouri is also happening today across the nation. according to the kaufman foundation, between 1980-2005, companies less than five years old accounted for all, all the net job growth in the u.s.

as a matter of fact, that same study showed that in 2008, angel investors provided roughly $19 billion to help start up more than 55,000 companies. why would you want to limit that? the bill, if enacted, would deny immediate access to the capital and would say to these innovators and entrepreneurs you are too small to succeed, too small to survive. not too big to fail. but there's good news here, and there is a bipartisan solution in the works. i'm very thankful and grateful to senator dodd who has agreed to work with me to fix the problem. we both want to protect these small business start-ups vital to job creation across the country. i think we're close to an agreement to fix this and hope to have a bipartisan amendment soon, and i would urge all my colleagues to take a look at it and to join us in supporting it. next and finally for today, to

go to one of the biggest problems in the bill, i believe will undoubtedly hurt ordinary americans who had no role in causing the financial crisis. that's the creation of the so-called consumer financial protection bureau, cfpb. those initials could in the future scare people more than all the combined deadly ten acronyms of i.r.s., e.p.a. and s.e.c. this new massive supergovernment bureaucracy would have unprecedented authority to impose expensive mandates on any entities that extend credit. we're not talking about goldman sachs or big wall street banks. instead, this new superbureaucracy could hit hard your community banker, farm lender, local dentist or auto dealer. the pain on main street won't just be borne by small business,

but the cost will be passed on to consumers. ordinary americans the bill seeks to protect, it might even cost them their jobs. the national federation of independent business, a strong voice, stated their concern clearly when they said -- "these small businesses had nothing to do with the wall street meltdown and should not be faced with owner us new and -- with onerous new and duplicative regulations because of problems they did not cause. further as the most recent small business trend surveys shows, small businesses continue to struggle with lost sales and such regulations could make these problems worse, stifling any potential small business recovery." close quote. and that, mr. president, is why i join with senators mcconnell, gregg, shelby and others on an amendment to fix the problem. instead of creating a brand-new superbureaucracy with unlimited authority and reach, our amendment would empower the fdic to look out for consumers. it makes sense. the fdic is the one that has a strong record of providing

consumer protections. it has a record of being able to deal with financial institutions. it is dealing with the financial institutions that get into problems. with the banks, anybody that is regulated by the fdic, they are in there looking over their shoulder. our amendment would create a division of consumer financial protection in the fdic so they could protect consumers without adding burdensome and duplicative regulations. they would avoid costs being passed on to the consumers, the very folks who are trying to protect, not saddle them with new costs. the amendment would ensure that consumer protection focuses on the real culprits currently operating under the radar. this shadow banking, as i call it, or as i would like to say the clicks, not the bricks. these are people who have preyed on vulnerable americans. before the financial crisis was brought on by bad loans, especially too good to be true home loans pushed on families

who could not afford the loans, my faction and -- my fax and inbox were cluttered, despite my best spam filters, with 1% or no down payment offers. these offers were not regulated effectively by state regulators, the s.e.c., the federal reserve or the o.c.c. they succeeded in escaping effective regulation entirely, although some have later fallen to regulation by u.s. attorneys who filed criminal fraud suits a little bit too late in the game. also important to this new division be tasked with financial literacy as i will continue to stress. we have to improve consumer education in any and all areas where loans are made. while foreclosure counseling is important, it's another bipartisan program with which i work -- which i worked with senator dodd in december, 2007, but $180 million in it.

we went out and reached out to financial counseling groups. they are doing a good job trying to help counsel families in danger of losing their homes on ways to solve the problem, but they came back with this unanimously, pleaded with us to say make available preloan counseling before somebody buys a home. make sure they understand the terms. make sure they take a look to see whether they can afford to service the loan. well, these are just some of the things we need to do. missourians in my state and people across america are angry. they are angry that bad actors caused the financial crisis and left many of them with a pink slip instead of a paycheck. they are angry at wall street bad actors that left them with a nightmare of foreclosure instead of the american dream of homeownership. they are angry the government has committed trillions of taxpayer dollars for rescuing the financial industry.

but so many of them are still struggling to pay the bills. is it any surprise that missourians and americans across the country are skeptical about financial reform? these folks were made more skeptical when they heard and saw on tv and read in the paper that it's the actors on wall street with whom the bill was supposed to deal and who caused the financial crisis that are now cheerleading this bill. missourians ask me how this bill can be real reform when the head of investment bank goldman sachs, who is supporting the bill, said, quote -- let me make sure you understand. this is from the head of the largest investment bank on wall street. "the biggest beneficiary of this reform is wall street itself." close quotes. that's a quote about the original bill. missourians have asked me not to pass a bill that will bail out out -- that will bail out wall street. we need to take care of main

street. there is no bailout for struggling families. we don't want any more wall street bailouts. pass a bill that reforms wall street that protects the main street. we have an opportunity, i believe, to pass real responsible and bipartisan reform. if senators from both parties will listen to the concerns raised by ordinary americans who didn't cause but are paying for the financial crisis. and i have heard similar concerns discussed by speakers on the other side of the aisle that say -- that seem to indicate that we are -- we share the same concerns, and i hope we can work together, mr. president, to get a good, strong reform bill that will deal with the problems that caused the last financial transaction, protect the consumers, assure the safety and soundness of all financial institutions and not subject them to special interests who may have pushed for the bad

loans that caused the last crisis. mr. president, i thank the chair and yield the floor, and i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: quorum call:

mrs. boxer: mr. president? the presiding officer: the senator from california is recognized. mrs. boxer: i ask that the quorum calling disptioned w. the presiding officer: without objection. mrs. boxer: what is the pending business, the order? the presiding officer: the amendment 3826. offered by senator shelby is the pending business. mrs. boxer: mr. president, i would like to take some time to speak out against the shelby amendment and urge that it be defeated and, if that's appropriate at this time, i would take such time as i might consume. the presiding officer: the senator is in order. mrs. boxer: mr. president, this is a pivotal point in the debate on wall street reform. we never want to see what happened to this country happen again where there was essentially a crash in the stock market, people had been talked

into very exotic and difficult-to-understand subprime mortgages, and we had such greed running rampant on wall street that instruments were created that were even very difficult for the secretary of the treasury to explain. derivatives so complex that they were in about the third order. and if we were to adopt the shelby amendment, we will weaken this bill. we will weaken this bill. as a matter of fact, we will weaken current law and not only will consumers be hurt but they'll actually lose ground. when the purpose of the dodd bill and our bill is to elevate consumers and give them

protection from these kinds of schemes that brought our economy to its knees and resulted in 700,000 jobs a month, mr. president, being lost and the wealth of the average american who had even a 401(k) was down 20%, 30%, 40%, maybe 50%, and as a result of that, the lack of consumer confidence that followed. and we know that our economy is based on consumer confidence. 70% of our economy is attached to consumer spending. and when people see the stock market going down, they see their wealth going down, they see their neighbors losing their home, they see their neighbors losing their job, they feel threatened, they pull back, and rightly soavment and it startedm

deregulation on steroids on wall street where the regulators didn't even use the powers they had to protect consumers. so this bill, an essential part of this bill is putting a cop on the beat for consumers. finally, whether you're a consumer in credit cards -- of credit cards or you're a consumer in terms of the housing market or you're a consumer in terms of the stock market or the commodities market, you're finally going to have a watchdog. we know national regulators didn't really care about consumers -- we know that the regulators didn't really care about consumers. we know that. we know, for example, that the fed had the authority to intervene in the housing market if they felt these subprime loans were wrong and stop them, and, mr. president, they didn't do it.

we know the s.e.c. was warned about madoff, right? they knew. they were told. there were whistle-blowers. a ponzi scheme. and many more ponzi schemes were going on. they didn't even follow the lead. so we need to have a strong, independent consumer agency that says to the regulators, you're not doing your job, and we're going to make sure you do it. and that's what's in the bill before us. but the shelby amendment takes us back. the new consumer financial protection bureau that this amendment would gut will do the following things: iring's it will enforce existing consumer protection laws, those same laws that went unenforced by current regulators. i'll give you an example of the sec seajtdz ponzi schemes, of the fed overlooking mortgage

crises and there are many others. it also would ensure clear disclosure to all consumers of all the terms and conditions of the financial products they buy. believe me, you would have to have a degree in economics and finance and everything else to understand some of the fine print in a credit card bill. people are stunned to know they're paying 20%, 30% interest rates on their credit cards because there's no clear way of knowing. in this bill, that's over. you have to know the terms and conditions of the financial products that you buy. this bill would bring new protections to home buyers from the kind of exotic mortgages that led to the current crisis. let me give you an example. people were offered mortgages, mr. president, at a tear a teas,

a very low rate, not really be told in clear terms that in a couple of years that teaser rate would go up and then go up and then go up. and i have to say, some in the mortgage business were paid more commissions to put unsuspecting consumers into these exotic mortgages, and so they pushed those mortgages. that's wrong. we need a consumer protection agency that knows it's wrong and puts a stop to it. so, we have a situation here that weakens the current law. and if you think that's right, if you think, for example, that consumers caused the wall street meltdown, i think you're living on another planet, but vote for

this amendment. we know who caused this crisis. we know the greed on wall street. we know even while these companies were getting bailed out, they were paying their people huge bonuses. the word "outrageous" really can be defined by what these people did. so if you want more of the same same -- i can't understand why you would -- but if you want more of the same, if you don't want to strengthen consumer protection, then vote for the shelby amendment. let's be clear. let's be clear, this amendment is a gutting amendment. let's be clear. this amendment is a gutting amendment. instead of creating an independent consumer watchdog,

the shelby amendment creates a weak sister, a weak division of the consumer protection in the fdic. this new idea of senator shelby's, this new division of consumer protection, it would no longer be independent. it would be under the fdic. we'd have no authority to adopt any rule without the approval of the same bank regulators who have routinely ignored or opposed the needs of consumers. let me repeat that. the weak consumer protection agency created in the shelby amendment would have no authority to adopt any rule without the approval of the same bank regulators who have routinely ignored or opposed the needs of consumers. and it even would give bank regulators a veto over consumer protection regulations.

and that is totally unacceptable. so if you are for wall street reform, you have to vote "no" on the shelby amendment. this is the moment of truth. either you're going to stand with the people of this country who were innocent victims of greed on wall street or you're not. you want to stand for the greed on wall street, if you want to stand for the weakening of the protections they already have which are if a too weak, vote for this amendment and let's go forward with the dodd bill, which has a strong independent consumer protection agency. so, i would add that the shelby amendment would burden the new consumer protection division that he has with incredible procedural hurdles, hurdles that have effectively prevented the

f.t.c., that has similar rules, from writing any new rules protecting consumers since 1984. now, 1984 was an interesting year for me. it was a long time ago; i was a lot younger. it was before my hair turned blond. in that year i was in the house of representatives, and i was pushing the federal trade commission, pushing them to help consumers. they had too many hurdles. they haven't done anything in all those years. and yet, this is the template that senator shelby is using for this watered-down consumer protection division. now, i see senator merkley on the floor, and i'm going to yield in a minute, because he is such a leader on all these issues and such a great populist leader in this senate. so i would ask that the rest of my statement be be included in

the record, but i would give -- the presiding officer: without objection, so ordered. mrs. boxer: -- i would give one more example that i think is very important. i told you that the template for senator shelby's new consumer protection agency is the f.t.c., and i told you that under those rules, the f.t.c. hasn't done anything for consumers since 19 # 4 -- since 1984. but let's say they were able to get new rules written. let's say they were able to do that. senator shelby insures that the rules they write could never be enforced. how does he do that? because he says that the only time the weakened consumer division could do any examinations of some financial companies would be after consumers have been harmed

repeatedly. this is after the fact authority. i've seen too many people crying because of what happened on wall street. i've seen too many people crying because they lost their job because of what happened on wall street. i've seen pictures in the paper of americans crying because of what bernie madoff did to them and their children. i want this stopped. i don't want it stopped after the fact. yes, thank goodness bernie madoff's in prison where he belongs. but it's very difficult to make the people whole who were harmed by that ponzi scheme. we don't want after the fact authority, mr. president. we want before the fact authority. we want this consumer protection agency to be on its toes, to intervene, to see if there's a scam going on, to see if there's a credit card scam that leads to 30%, 40%, 50% interest rates, to

see if there's a scam on mortgages where people unknowingly walk into a mortgage where the rate goes up to 12%. so, at the end of the day, we know consumers were hurt, hurt hard by ponzi schemes, by markets in the dark, confusing mortgage options, some bordering on fraud by credit card scams and worse. so let's take a stand in a bipartisan way and vote "no" on this amendment and support the consumer protection agency, the strong one that is in this bill. because i can tell you when you have that done, the american people can take a deep breath and know that they will be protected. i thank you very much. i yield the floor. a senator: mr. president? the presiding officer: the senator from oregon is recognized. mr. merkley: mr. president, i

applaud my colleague from california who has been an extraordinary champion of consumers throughout her career. she understands that the basis of a successful nation is successful families. that depends upon them having a strong financial foundation. we should not measure the success of our country by the million-dollar bonuses or the billion-dollar quarterly profits on wall street. we should measure it by the success of our families, and this bill -- the financial reform bill -- is essential to restoring those financial foundations. whereas this amendment before us does the oppose. the shelby amendment carves the heart out of this bill. this dog don't hunt. in fact, this dog doesn't bite. i don't even think this dog barks, and for that matter, i'm not sure it's a dog. that's how bad the shelby amendment is. now, the background is this:

predatory mortgages and the securitization of those mortgages on wall street built a house of cards economy that came falling down last year. the predatory mortgages were done at the retail level. the securitization and selling of those packages occurred on wall street. and they built investments that were taken in by every major financial house practically in the world, and those investments, those securities had a two-year fuse on them, essentially a two-year teaser rate on every underlying mortgage. at the end of the two years the mortgage rates doubled, the families can't make the payments and the securities go bad and we have one financial firm after another collapsing. we have lehman collapsing, we have bear stearns collapsing. we have major problems at bank of america needing a bailout. we have citibank collapsing.

all built on predatory practices, every single piece. that's why consumer protection is so important. that's why it's at the very heart of this bill. that's why we need a consumer financial regulation agency. now, i have friends back in oregon who write to me, citizens back in oregon, constituents who will say here's what went on, and how can that be fair? let me give you an example. a woman from salem wrote to me and she said, "i always pay my credit card on time. always have for years and years. but i got my credit card statement and it had a late fee, and so i called up the credit card company and said how is it possible? i always mail my payment on this day. it should have had plenty of time to get there. the credit card company said, yes, as a matter of fact, your payment did come on time. but, you know, madam, we are not required to post your payment on the day we receive it.

in fact, under the contract that we have, we can sit on your payment for ten days and then post it, and then your payment's late, we get to charge you this fee. and we're just following the rules. and she said, how can that be fair?" well, it's not fair. everyone knows it's not fair. let me give you another example. citizens who wrote saying, hey, i had a whole series of transactions with my bank, and then the bank changed the order of those transactions to put the biggest transaction first. it so happened that biggest transaction made me $10 over the funds i had in the bank. i had an overdraft. but by putting that transaction first, it meant that instead of one overdraft fee, i have ten overdraft fees. instead of owing $10 for one

overdraft, i owe $350 for an overdraft series. how can it be fair the order was changed in order to multiply the fees i owe tenfold? now, everyone knows that that's not fair. everyone knows it. and we simply need to have an agency that is able to say that's not okay. we don't want to have a process where something that is unfair goes on for ten years or 15 years or 20 years before there's legislation to address it. you can't address a consumer products choking hazard by doing it in legislation. you have to empower an agency to say no, that part's too small. you can't address lead paint by doing legislation every time something's painted. you have to have an agency to say we'll test that paint and we'll say lead paint is not

okay. it's the same in consumer financial products. we need the same power to fix traps and tricks in real time for fairness to america's families, so they can rebuild their financial foundations. because that's what a strong country is: families with strong financial foundations. not million-dollar bonuses, not billion-dollar quarterly profits based on stripping funds from working americans. and it all comes down to the heart of it: fairness in consumer financial documents. let's take a look at the amendment, number 3826, and why it carves the heart out of this important bill for america's families, america's main street families and businesses. because here is what it does. first, it said virtually no one is covered. now let's look at the list here. water covered -- what are covered are large nonbank

mortgage originators. large nonbank mortgage originators don't really exist anymore. so it's covering firms that don't really exist anymore. it's kind of like saying we're going to have the regulation of safety on cars, but it's only being for cars that are powered by gasoline and were built before 1850. no such cars really exist. all the other cars, the ones actual lip on the road, we're not -- the ones actually on the road, we're not going to cover them. let's see if we have a list here. we have. commercial banks, not covered. investment banks, not covered. credit card companies, not covered. car lenders, not covered. payday lenders, not covered. nonbanks that sell financial products of a whole sort, not covered. well, i think you get the picture that this amendment is meant to make sure nothing is

covered. and then just in case there's some little piece that does get covered, it says, you know what? this agency is not independent. it cannot write rules. it has to have everything it does approved by financial world, the financial world that brought us all these problems, that brought us the tricks and traps, that stripped wealth from working americans. they're going to decide what's covered. i would echo my constituent from salem and say where is the fairness in that? mr. durbin: would the senator yield for a question? mr. merkley: certainly. mr. durbin: as i understand the republican amendment amendment, it goes back to the old days where there was virtually no consumer financial protection. the bill that we have before us here that senator dodd and the banking committee brought has the strongest consumer financial protection law in the history of the united states. it has an agency with independent authority to protect americans, but more importantly,

to empower americans to make the right decisions when they're taking out a mortgage, a loan for the car, a home loan, a student loan, and what the republicans are suggesting in the shelby amendment is to go back to the old days where there was no protection, there was no authority, and i ask the senator, the argument that's made about the fact that, well, when it comes to mortgages, they weren't the problems. the problems were wall street. but at the heart of the issue on wall street was the mortgage being signed by the family in springfield, illinois rs and portland, oregon. i ask the senator, in your state, in your experience, as you look at this, if the republicans had their way of moving us back to the old days when it comes to this consumer empowerment, consumer protection don't, we run the risk of falling into other economic crisis, losing millions more of jobs across america? isn't that the risk we run if we go the route suggested by the republican amendment?

mr. merkley: my colleague is absolutely right, that because mortgage -- predatory mortgage practices were at the heart of this crisis that led to securities that blew up the economy, which led to the loss of millions of jobs around our narknation, an unemployment in y state that has been over 12%, we not only have the risk of going back there, we're perhaps more at risk, because we have fewer larger banks and many investment houses that were independent are now inside those banks in a position where if they blow up, they will blow up the banks as well. so unless we have this strong consumer financial protection agency, it's like taking this bill before us and sticking it in the shredder and with it shredding the hopes and aspirations of america's working families to build strong finances in the future. mr. durbin: if the senator would yield for a another question -- mr. merkley: yes. mr. durbin: isn't it true that last week on three different owe educations the republicans

filibustered this bill to stop us from even starting the debate on this bill? that unless and until they reach the point after the goldman sachs hearing when there was this embarrassing testimony from executives telling america what they were up to, it was only after that hearing when it all became very public that the republicans finally backed off their filibuster, backed off their delay of this legislation, and now let us come forward and debate and now one of the first amendments they offer is to weaken this bill so that the financial institutions and the banks are going to have more power over the economy, more power over consumers, than this bill provides? isn't that the history, the real history of how we got to this moment in this debate? mr. merkley: -- the senator is absolutely correct, that indeed my colleagues across the aisle, the republicans, voted three times to say we do not want to proceed to the bill where our ideas would bear public expriewt knee. instead, we want to talk behind

closed doors. you know what they were looking to do is not to strengthen this bill. and now we do see that now the amendment has come out and been placed before us publicly, it does as we fear. it's designed to take a knife and carve the heart out of this financial reform. mr. durbin: i would ask the senator from oregon, if he'd yield for one last question, now that we've been through this experience where we lost $17 trillion in value in this american economy, $17 trillion accounted for in the savings of accounts of ordinary americans in illinois and oregon, $17 trillion in businesses that failed ands, in jobs that were lost, isn't it critically important that this bill from the senate banking committee move forward and that each amendment take this strong bill and make it stronger instead of the republican amendments, which compleerl are designed to weaken this -- which clearly are designed to weaken this amendment and open us up to the vulnerable of more job loss and

more economic crisis? mr. merkley: my colleague is absolutely correct. the failure of financial rules that did such a devastating impact to our families -- as you put it, $17 trillion worth of damage t means families whose houses are under water if they're lucky, for many families it means loss of a job, loss of health care, loss to make those mortgage payments at all. and they have lost their dream at every single level. that's the damage that that $17 trillion did to our families and that's why the bill that we have before us right now, every amendment should seek to say, here's the bill and here's how we will make it stronger. and with that, mr. president, i yield the floor. mr. dodd: i just want to quakily -- i appreciate everyone wanting to make my bill stronger. every bill can use a little

improvement. i want to compliment my colleague and a member of the banking committee, senator merkley. he's been a very valued member of this committee. i mentioned earlier that we've had -- in the committee meeting, it is by seniority. and i've got this cluster of new members down at the end of this committee table, and the senator from illinois and i have been at that position on those tables back over the years, but between senator tester and senator merkley and senator bennet, they kind of occupy that last three seats on the banking committee. and i saw that with great respect to all the rest who are on the committee. but those three new members on the committee have added tremendous value to our debates and particularly the senator from oregon has been wonderful in his concern about mortgages, prepayment penalties, what's happened to the 7 million foreclosures in our country, the 8.5 million jobs that got lost in our nation, and why we need to address this issue, why it is so critically upon. i want to make one more point

about this raiment, the shelby amendment that may be lost on our colleagues here. in our bill there's no assessment on a nonbank or a bank. but there are assessments in this amendment. we just went through the tester-hutchison amendment to actually lower the assessments on community banks. what a great irony that the next amendment, those having supported the earlier amendment to reduce costs, this amendment sets assessments. community banks have assessments on the nonbanks out there in order to pay for their consumer bureau within the fdic. so i -- those who are concerned about the burdens on community banks -- and i think a legitimate concern, one that i think the hutchison-tester amendment did a great deal to alleviate -- they're going to turn right around on these institutions that are struggling to stay alive to serve their communities and add a financial burden to them. for all of those reasons the senator from oregon mentioned

plus that one, the shelby amendment deserves to be defeated. i yield the floor. mr. enzi: mr. president? the presiding officer: the senator from wyoming is recognized. mr. enzi: i thank the chair, and i want to point out that you've just seen an example of why there isn't bipartisanship in this chamber. you cannot denigrate the other party and denigrate every single thing that they put up as an amendment and suggest that there's going to be bipartisanship. the amendment that's before you is an attempt to correct some of the things that are in the bill. the filibuster was mentioned. well, the filibuster was -- bought enough thyme senator dodd and senator shelby were able to work out the agreement for the amendment that has passed, a major amendment, a major change, a wasn'tton change, an -- a wanton change, an expected change and a change that makes the bill far better.

if every amendment that the republicans bring up is going to get the kind of treatment that this amendment is getting and not looking for that piece in there that might make a difference, we're not going to have much success on this bill. i heard the other side mention goldman sachs. goldman sachs said they like this bill. one of the offenders and they like it. that really encourages me that it's a good bill. i appreciate the senator from oregon giving the ages of some -- giving the examples of some things that are terrible in our economy. some of the credit card examples that he gave shouldn't happen in america. i don't think this bill fixes that. if our amendment is too open-ended, the democrat amendment raises the possibility of controlling every single thing for middle america, every single thing. and i'm going to explain how that wonchts i don't think it was what was intended, and that's why we go through an

amendment process is to clierp problems liberi is to clear up s like that. i am going to talk about the consumer financial protection. when i talk about this protection, i'm talking about protecting consumers from bad actors. remain a talking about educating consumers. when i talk about consumer protection, i am not separating consumers' protection from the health of the economy. i rise today to talk about what was flawed in title 10 called the consumer protection title of the financial reform bill. and to raise awareness about an alternative to the current language in title 10. i believe an alternative to the section is desperately needed because the federal government should not be involved in our daily lives and everyday decisions. under the proposed consumer protection title, we would be opening the floodgates of government involvement. the federal government could be telling us how we could spend our money, how we could save the future by making decisions for us and could truly limit the

financial markets to the point of economic decline. the federal government should not operate with the belief that it's protecting us from ourselves. however, that's where title 10 language begins to work. from supporters of this bill, we've heard that noter in order for consumer protection to be truly effective, it needs its own independent agency or bureau now and that this consumer financial protection bureau should be free from outside influence, independence from outside influence is a fine goal. but our government was built on using a system of checks and balances, and this bureau would be totally unchecked. it would have unprecedented power and authority to write its own rules. no review. it would have an uncontested budget. no appropriation. and decisions made by the bureau would be made without regard to the impact those rules would

have on the health of our economy. where's the transparency in this power? where's the accountability of this proposal? and i haven't even touched on what the title could do to consumers' personal information or financial decisions. to achieve independence, the bureau would consolidate all financial protections and efforts from the various federal government agencies, all in the name of better protecting consumers. don't get me wrong. these are issues needing to be addressed for consumers protection. but right now each federal agency acts as a check on its neighbor when it comes to consumer protection. might fear is that once this bureau has consolidated power it will not stop at protecting consumers from fraud or deceptive practices. this agency would only be getting started. i'm deeply troubled about the creation of this bureau because it would place the bureau within the jurisdiction of the federal

reserve. too many of my constituents already believe the federal reserve gaining additional power san alarming thought. however, what's most alarming to me is in the fact the federal reserve would have little authority over this proposed bureau. most of all, they had aide provide the money. right now, as this bill is written, the federal reserve would be required -- required -- to give the bureau a designated 12% of their operating budget. the catch here is that congress would have no budgetary authority and would not approve this money. and it's adjusted for inflation. now, if you are gating a percentage of a budget -- if you're getting a percentage of a budget, how do you adjust a percent for inflation? but aside from that, it is adjusted for inflation. works up to be 12% of the operating budget of the federal reserve. now, in addition, they can even

invest any of the money they don't spend. you'll find it on page 1073. i know it is a huge book, so i didn't want you to have it look through the whole thing. on page 1074, it even says these aren't government funds. you know why? that way it doesn't cost under the scoring, which even though it will drive up the deficit and the debt, it doesn't count that way. it looks like a free program, but that's not true. so they get to keep the money and invest it, what they don't spend. i don't know another entity that gets that right. and it's not considered to be government funds. that provides a little latitude. the bureau not only has an uncontested budget, the bureau would be the single-most powerful government agency in the federal government. not only could the bureau write

their own rules for our states' businesses and local banks to follow, it woos oversee -- it would oversee consumer decisions and the bureau would be the enforcers of their own rules. no other agency has that kind of unchecked power. where is the accountability in this? unc unchecked power doesn't lend itself to accountability either. what's really important is for the public, for the average american, to know is that this bill could protect people. but it could also go potentially ten steps further and take some of their decision-making power and transfer it to the federal government. we don't do that in america. for example, as the bill stands, it's so overreaching and ambiguous in areas that it could impact everyday purchases for most americans. how would they do that? under the wraouls they write -- under the rules they write that no one takes a look at. here's how the bill would

regulate consumer products or services as well as service providers sweeping thousands of already regulated small businesses into the bureau's purview. then you add in section 1027 of the bill, and it could penalize anyone who buys or sells something on an installment plan, or it could affect any local small business that offers some kind of monthly payment on credit. that's why we're being flooded right now with people that want to be exempted from this bill. they're worried about not being able to provide their service anymore. you ever bought a car and paid for it over a few years with a financing plan from the dealer recently? many of us probably have. this bill's language is so ambiguous and unclear, that it looks like people who want to pay for a service in an installment plan or those who offer those plans will be penalized and regulated by the new consumer protection agency. i should say consumer protection

superagency. nobody has ever had this kind of power. small business owners, regular people off the streets and from our states have been streaming into the congressional offices looking for these exemptions i just talked about because of this title and this bill. as drafted, this title is so ambiguous, so far-reaching that consumers and good actors are being swept up with the bad. anyone who ever paid for dental care in installments could in the near future be facing the prospect of paying for dental work up front as dentists realize they can't afford to keep up with the new regulations. additional regulators or the cost of compliance with the bureau's demands. for auto dealers where financing is hardest to come by in small towns in rural america, this would in fact be a direct hit on their business. right now the financial burdens of the bureau would also be borne by auto dealers who direct

clients to available financing but don't originate car loans themselves. that's pretty far-reaching. additionally, though, if a consumer purchases something on an installment plan, whether the loan is for a bike, minivan, braces, engagement ring, livestock or a home, if there are more than four installments, the government, through the bureau, would have a say in approving that loan. the bureau also in the name of protecting us from ourselves would require banks -- would require banks to keep and maintain records of all bank account activity and financial activity of their clients for at least three years while also requiring this information be sent regularly to the bureau for safekeeping. i have serious concerns about our government collecting information on the daily activities of our citizens and equal concerns about the government approving or

disapproving the financial choices of its citizens. i've just outlined why the consumer financial protection bureau is bad for consumers, why it's bad for small businesses and our communities and why it's bad for individual consumer choices and freedoms. i point out all of these things to you today because there is an alternative to this bureau that is being proposed by my colleagues from kentucky, alabama, and tennessee. this alternative proposal addresses each of the concerns i've just raised about accountability, oversight, consumer protections, consumer education, and consumer rights. this new proposal keeps our current regulatory infrastructure intact and improves on it. this alternative would not scramble all of our current regulators in the name of a change. but instead has carefully and thoughtfully made our current system better, creating more effective checks and balances.

the consumer protection alternative title would create a consumer protection division to be housed within the fdic. the fdic already oversees consumer deposit protection, so it's a logical step to place consumer protection interests here. all the new consumer protection division is shielded from outside influence and has awe ton ni -- autonomy, the bureau is prevented from yielding absolute power. when rule changes or actions are proposed, the fdic board would be better able to use their regulatory experience to protect consumers while at the same time ensuring safety and soundness are not disregarded. this division would still have a presidentially appointed and senate-confirmed director who serves the four-year term in office instead of needlessly looping in all kinds of small businesses into the fold for additional regulation, the division's mission would be of a proactive consumer education,

ensuring consumers are able to receive timely and understandable information on consumer financial products. the division would partner with other agencies like the federal trade commission to develop guidelines for market oversight. through these types of partnerships, the division would pursue fraudsters and bad actors in the market. they would be developing best practices for overseeing mortgage originators and addressing risk-based supervision of our nondepository institutions. very importantlily, this new alternative leaves current prudent regulators in place for banks, savings associations, and credit unions. while the division would watch over the large institutions who have already violated consumer protection statutes, this alternative would provide an infrastructure with regular try experience that would also meet the demands of growing consumer financial protection concerns. this proposal creates a balance

between past regulating experience and the call by consumers to have more protection without losing the rights to personal financial decisions. mr. president, i'm a cosponsor of the title 10 alternative because i believe in its ability to address consumer protection without regulating consumers out of their rights as citizens. i'm a cosponsor because i believe this alternative regulates the bad actors withouts ting small business into -- without tossing small business into the mix and regulating them out of business. it doesn't form a new agency that has to go through a whole rulemaking process over a period of time before we even know what they're doing, putting the bureau under the federal reserve with all the concerns and pressures focused on the fed right now is a very bad idea. moving consumer protection to an unregulated, nontransparent, not accountable new agency that can

write its own rules without review and operate aougs unchecked -- using unchecked money is beyond my comprehension, and i think it's beyond the comprehension of the american people when they find out about it. i'm not sure they're aware of it or i think there would be a huge hew and cry across this country. people are more concerned over their freedoms right now than they ever have been, and this will take away freedoms. you have to have the freedom to make your choices and even to make bad choices. but in america, that's the way it works. and big brother isn't allowed to hang over your shoulder and decide for you whether you're making a good decision. i yield the floor. a senator: mr. president? the presiding officer: the senator from florida is recognized. mr. lemieux: thank you, mr. president. while i couldn't have said better what my friend and colleague said from wyoming,

just talked about in terms of this consumer protection bill. every member of this body is in favor of consumer protection. the goal is to get it right, not to do too much and not to do too little. i think it's important for us to remember what we're trying to address. we're trying to address the financial market meltdown that happened in 2008 and the ramifications that have been so devastating to this economy, very devastating in my home state of florida. but what we should do is address the problem. what we should do is try to make sure the problem doesn't happen again and not use this crisis as an opportunity to create a huge new all-powerful bureau of government that is going to regulate orthodontists and folks that have nothing to do with this financial crisis. let's think back about what happened. to me there,'s really three or four parts of this story where you can find the culpability,

places where we should be regulating, some of which is not done in this bill. one is we know mortgages were given to people who shouldn't have had mortgages. people who had no income and no jobs. they called them ninja ones. why were they written? many were written by mortgage lenders and banks. there were no underwriting standards and they could ship them off. they had no skin until in the gd no responsibility. and then on wall street, this huge market was created to suck in all of these mortgages to create these new investment vehicles that put all of these mortgages together, mortgages that didn't have the underwriting standards that you could make sure that they were sound. and in the need to create more and more investment instruments, they created what are called

synthetic investment entities. and those aren't even ones that held these actual mortgages. they were just merely a shadow that tracked them. so we compounded the problem into hundreds of trillions of dollars betting on mortgages that should never in many ways been written in the first place. and then what was the third part of the problem? well, these mortgages got bundled up into these mortgage-backed securities sold on wall street, and the world looked to the rating agencies to stamp their approval on them. and the morning stars and the moody's -- the moody's, the fitch's and the s-p -- s&p stamp their rating without evaluating them. that's one of the culprits that caused this financial crisis we had. but for those rating agencies putting the aaa grade on these

mortgage-backed security srefrplts, i don't believe we -- investments, i don't believe we would have had the crash that occurred. people would not have placed their confidence in them. why did h that happen? why did these rating agencies stamp them? why did so many people rely on them? what we've come to find out is that these rating agencies are written into law. they are written into the federal law as a way to determine the credit worthiness of investments. the fdic abdicates its authority and allows rating agencies to be the ones that say something is a good investment or not. that's in the law. now how do these rating agencies, how do they get paid? they get paid by the very banks that put products in front of them for them to rate. so here's this a real easy way to understand this. we all buy "consumer reports"

magazine. "consumer reports" magazine evaluates everything from toasters to toyotas, but they don't take own money from the people that they rate. they don't have advertisers. but for these rating agencies, they're paid by the people they rate, by the products that these banks bring in front of them. and our law says that they are the ones who are going to determine whether or not something is credit worthy. so, mr. president, i want to make sure that we have, as senator shelby put forward, a good consumer protection law in this country. but i also want to make sure that we are addressing the problems that caused this failure in the first place. and one of the ways to do that is to make sure that we have underwriting on these mortgages so that people have some skin in the game. that you're putting a down payment on your house. that you're showing that you can be credit worthy. that's the way it always was. it's only recently that that went away.

we need to go back to that, and that's why i join my colleagues: senator corker, senator isakson, senator gregg on their amendment to put the underwriting back in the mortgage business. but another thing we need to do is we need to take these credit agencies and we need to write them out of the law. they should no longer get their preferential khaoeplt. and they should no longer should the fdic abdicate responsibility to get credit worthiness. the market should take care of this. if people know they can't rely upon three or four or five rating agencies and they have to do their evaluation themselves, we may prevent this problem from happening in the future. and the next way this problem may manifest itself. mr. president, i've introduced an amendment, filed an amendment, amendment number 3774 which will do just this. it will take these credit rating agencies out of law. and in that way i believe that we can stop one of the reasons why we had this financial

collapse. it's not just me who believes in this. on the other side of this building, in the house of representatives, this same language was put forward in the package that was passed. so this should not be a republican issue. it should not be a democratic issue. because the democrats in the house supported something very similar to what i'm proposing. this just makes common sense. let's go after one of the problems that caused this financial mess. mr. president, i'd like to point to the august 21 edition of the "wall street journal." in their editorial, they say when the government ordains moody's and standard & poor's as official arbiters of risk, the damage can be catastrophic because so many people rely upon them. let's no longer abdicate the government's responsibility. let's no longer enshrine these rating agencies in federal law. let's get rid of one of the reasons why we had this financial meltdown to start with. let's not create a whole new

huge consumer agency that does way too much, gets involved in too many things that have nothing to do with this financial meltdown. let's go after the problem, solve that problem. mr. president, i believe we can do so by passing the amendment that i've introduced today. with that, mr. president, i yield the floor. a senator: mr. president? the presiding officer: the senator from south dakota -- the presiding officer: is recognized. mr. thune: i want to compliment my colleague from florida, he's addressed an issue which is an important part of this debate, and that is making sure that loans that get made in this country and both on the borrower's side and the lender's side are responsible loans. i think the amendment that he will offer is one that we ought to have a debate on and we ought to have a vote on. and i hope that this body will act in a way that leads to more responsible practices and a higher level of responsibility, both with borrowers and lenders in this

country, which really was at the heart of why we ended up where we did. now, it's interesting to me, mr. president, that we continue to watch the problems that we're experiencing in our economy probably by far the most important one is the high level of unemployment that has become sort of a chronic problem. and even though the economy appears to be recovering and growing again, we continue to see these very high rates of unemployment, certainly worth in some parts of the country than in others, but nonetheless something we cannot tolerate and we ought to be attacking every single day. everything we do here ought to be focused on what can we do to eliminate this high level of unemployment, to provide incentives for small businesses to create jobs, to grow their businesses and expand, get the economy going again. and obviously in my view, at least, the small businesses in this country really are the economic engine of our economy, they are our job creators and we ought to be focused on making it easier for them to create jobs

rather than harder. and that's why i think it's ironic that almost everything that the congress has been doing of late makes it even more difficult for small businesses to do that. we passed a big, massive expansion of the health care entitlement here in the congress awhile back and that's going to impose lots of new taxes, lots of new mandates on small businesses, going to raise their insurance premiums, which we're seeing now more and more, the c.m.s. actuary with their recent report suggests what we suggested all along and that is that fs going to driv -- that ts going to drive the cost of health care up in this country. it's not going to drive it down, it's going to drive it up. so what i think you're going to see with small businesses across country is not only a higher tax burden associated with faig forg for that but also the new mandates associated with it but you're also going to see them having to deal now with the higher insurance costs that will be associated and come with this massive health care expanse that was passed. not to mention the fact that in

my view, this is going to end up in tremendous amount of growth in the debt in the out-years when we realize that this thing is going to cost way more than was expeapped that manufacture the offsets -- anticipated and that many of the offsets or pay-fors probably are not going to come to fruition. but that being said, it seems to me at least that having all this uncertainty coming out of washington, whether it's the implementation of the new health care bill, whether it's questions about a climate change bill that could impose a crushing new energy tax on our economy in this country, questions about what's going to happen with tax rates with regard to dividends and capital gains and marginal income tax rates next year, what's going to happen with the death tax, all this uncertainty that is just hanging a cloud over this economy and making it very, very difficult for our small businesses to do what they do best and that is to -- to exercise that entrepreneurial spirit, to grow the economy, to create jobs. very difficult to do that when you pile more and more burdens

and more and more costs on top of the very small businesses that we're hoping will lead us out of this recession. and that's why i think that all of our efforts ought to have a -- a very close eye on what impact they're going to have on the small business sector of our economy. and this is no exception. the debate on financial services reform, mr. president, really is about some very critical issues, issues that need to be addressed, issues that we should be focused on, how to deal with the issue of systemic risk and make sure that systemically risky enterprises in this country, that that risk is constrained, that there is appropriate oversight, there's appropriate transparency. i think that there's a -- there's an important issue to be de maiziere baited here in terms de -- debated here in this country which is derivatives, which is a trillion-dollar economy that's been operating in the shadows, in the legislation before us. if it's amended in the right way, and i think it will be here on the floor, will bring that into the light there, will be

transparency, something that i think is desperately needed in that area, hopefully done in a way that doesn't impose new burdens on end users, those who are trying to legitimately hedge against higher commodity prices and currency rates and interest rates and those sorts of things. but there are things that need to be done in this legislation to deal with the issue of systemic risk, to ensure that we take all the steps that we possibly can to avoid and prevent the type of economic collapse and meltdown that we witnessed a couple of years ago. now, i think it's ironic that this legislation does not encompass something that was at the very heart of that economic meltdown and that is the issue of freddie mac and fannie mae. ironic to me at least that the focus of this legislation is to deal with the issues that led to the economic malaise that we found ourselves in and the collapse that we experienced here a couple of years ago that would attempt to accomplish the objective of preventing that in the future absent dealing with freddie mac and fannie mae, which were a huge contributing

factor to what we -- what we witnessed here a couple of years ago. so it does not include that. it does get at derivatives. it does address in some fashion the issue of too-big-to-fail and then it all addresses this issue that we are debating right now which is the issue of consumer protection. and i would argue that this is an important part of the debate. when it comes to the relg laition oregulationof financials even the most important part and that's protecting consumers. now, having said that, i think that the -- what the recent financial crisis highlighted was the fact that there were a number of bad actors out there in the marketplace who were out for a quick profit without concern for the consumer, and this consumer protection effort here is part of this legislation is designed i think to correct that or at least address and get at that problem. now, i strongly support some of the consumer protection ideas that have been put forward. there's a republican alternative amendment that's been offered to the base bill. but as is typically the case here in the congress, instead of

just dealing with the issue that needs to be fixed, trying to fix the issue that needs to be fix fixed, it seems like the pattern here is that we try to go beyond that and fix issues that don't need to be fixed. and, in fact, in -- in this particular case, with a whole new bureaucracy, creating a whole new consumer financial protection bureau, a man with lots of new federal government employees, with lots of new powers and -- and in my view, mr. president, extending a reach way beyond what should ever have been complicated -- or contemplated to deal with the important issue of protecting consumers in this country. now, are do i say that? i -- i had n in my office last week a bunch -- in my office last week a bunch of community bankers, i've met with credit iewrntionz i'v uniot with auto dealers, i've metes met with lots of small businesses, and i would say these resident the types of entities that led to all the problems we experienced.

these resident systemically risky entities or companies. threes hard-working in most cases small businesses. when i sat down with my community bankers, i'm not talking about big wall street banks. i'm talking about main street banks, local banks, banks that are about their customer because they care about their customer and they're -- they're their neighbors, they're the folks that they -- that they hang out with, their friends and their kids go to school together. these are people who are far removed from wall street. and they told me about how this bill does not level the playing field and how they're going to be subject to a whole new layer of regulation that they cannot afford. they told me stories about, you know, how they would make sure that their customer's always satisfied and how they cannot afford to make bad loans n. these smaller banks and -- bad loans. in these smaller banks and small communities where there's a tremendous amount of accountability, obviously these resident the types of banks that i think this legislation should be targeted or directed at. these are banks that provide capital to our farmers, our small business owners in my state of south dakota.

you know, these are the people that most of my constituents would rather bank with than these big, you know, large chain banks that we talk about when it comes to the issue of systemic risk. the democrats' bill in its current form places new burdens on these banks, mr. president, costly regulations on banks that are already heavily regulated and who have already proved to be sound financial entities. i also recently sat down with some car dealers from my state, and, again, small, main street businesses in south dakota who have personal relationships with their customers. they told me how they may have to cut some of the services that they provide to their customers because of the broad authority that is granted to this brand-new agency, this consumer financial protection bureau. these businesses take great pride -- when i say "these" the auto dealers -- in the services that they provide to their friends and neighbors who come into their businesses to buy a car and to have bureaucrats in washington, d.c., looking over

their shoulder does not seem like the right approach to me. now, i've heard the arguments that the small banks are somehow not going to be affected because of the $10 billion exemption, but i think it's important that we point out here and that we clear up some of the facts on this issue. that $10 billion exemption, mr. president, is from enforcement and examination authority by the new consumer financial protection bureau. the new bureaucracy still has the ability to oversee every product and loan and transaction that these small banks enter into with their customers. i've also heard the argument that section 1027 excludes many of the small businesses who are calling me and e-mailing me and coming to my office because they're concerned. however, it seems to me that once a small business decides to give their customers an option to pay for their goods and services over time that this new consumer financial protection bureau can come knocking on their door. now, what washington bureaucrats are going to tell them is what's in the best interests of their

customers in south dakota and so you can imagine, mr. president, the implications of this type of authority. and currently, the legislation provides very few checks on this new bureau's broad, new authorities. i want reforms to our current regulatory oversight structure and we need better protections for our consumers, but the bill that is before us, mr. president, creates a new bureaucracy that has a funding stream outside of congressional oversight with very few checks and balances and that is not reform. what i want to see is this -- would like to see is this bureau removed from the bill. there are other ways to provide better protection for consumers without burdening small businesses, which, as i said earlier, are the engine of our economy. now, just to -- to illustrate or to put a fine point on that, i have a letter here from the national federation of businesss this country, has a very large membership, including many businesses in my state, and they write to express their concerns with certain parts of the bill

that are too far-expreechg would impose major -- far-reaching and would impose major new costs on small businesses. and they go on to say that the establishment of the new consumer protection bureau will cover many small businesses strictly because they set up flexible payment arrangements with their customers. according to a study that they did a few years back on getting paid, approximately 50% of small businesses offer special terms or credit-type arrangements to allow customers to pay for goods or services. and then they go on to describe the nature of some of those arrangements. but i think it's fair to say, mr. president, that a lot of small businesses -- and car dealers are probably the most notable example of this, but as was said earlier, that could extend to turnt stores furnitur, jewelry stores, that could extend to orthodontists and dentists, people who allow their customers to spread out the payments over time, to pay on terms and have these flexible types of payment arrangements would be covered by this.

that makes no sense. at a time when we're trying to get our small intoises that they can -- small businesses so that they can help lead us out of this recession, start creating jobs, instead of dealing with the systemically risky entities that got us into this -- this mess in the first place, we're talking about piling a whole new burden and lots of new costs on top of our small businesses at a time when they can least afford it. and so i would hope, mr. president, that the amendment that's being offered, the alternative to the consumer protection financial bureau in this bill will be adopted, that my colleagues here in the senate will take steps to improve the way that this bill treats consumer protection and the way that it treaties small businesses under this bill. i, frankly, as i said earlier, would like to see this title removed entirely and us deal with this in a way that makes more sense, that doesn't create a whole new bureaucracy with all kinds of new government employees, with all kinds of new powers. there are certainly ways in

which we can address the issue of consumer protection absent having to go to these great lengths and to this great cost expense to the taxpayer and great new burdens imposed upon small businesses in this country. and so, mr. president, i am one who will be supporting not only the amendment that is before us but other amendments that address this title in the bill. i have one that i'm working on that would exempt many of the small businesses that would be covered by this bill. so far which i mentioned in my remarks -- some of which i mentioned in my remarks earlier, but i think this is an issue which is incredibly consequential in this legislation and so far removed, so far removed from the purpose of this bill in the first place. and as i said earlier, we ought to fix the things that need to be fixed but we shouldn't try and fix things that don't need to be fixed, particularly when it calls for creating a whole new government bureaucracy and -- and new government in washington, d.c., new government employees at greater additional cost, and, of course, as i said

earlier, at great additional expense to america's small businesses, which are the economic engine and the job creators in our economy. mr. president, i yield the floor. a senator: mr. president? the presiding officer: the senator from new jersey is recognized. mr. menendez: thank you, mr. president. mr. president, i -- i wanted to come to the floor to talk about the shelby amendment. i think we would have to be 100% clear about one thing, and that is is that we need to pass a consumer protection bill. not a wall street protection bill. a strong independent agency that can aggressively defend families in all sectors of the financial industry. that's -- that's consumer protection. a weak agency that can't defend

families against commercial banks, investment banks, credit card companies, car dealers, payday lenders and entities like a.i.g., that's wall street protection and that's what, in essence, this amendment does. the fact is is that the republicans' proposal on this amendment seems to symbolize america's worst fears about how the powerful operate. the powerful protecting the powerful. the problem is isn't that famils have too much protections on wall street. the problem is that they haven't been protected enough. the shelby substitute is just the status quo. it's a cynical attempt to pretend that they are doing consumer protection. in reality, it's meant to assume that there is no meaningful consumer protection at the end of the day. it willfully ignores the lessons that we should have learned,

that left to their own devices, there are lenders who can and will take advantage of consumers. that's what the marketplace as it is right now has taught us. we absolutely need a muscular, independent agency, however it's configured, wherever it's housed, one that will have full and comprehensive authority to develop and implement real honest pro consumer rules so they will no longer be fooled by 30 pages of fine print no one except the bank lawyers could possibly understand. one that has independent rule writing authority and authority over banks and nonbanks while maintaining strong state consumer protection laws. one that will stop the ongoing attempts by credit card companies to certificate couple vent the rules that this senate and this congress have already enacted. they're already working at it.

as hazard law -- as harvard law professor elizabeth warren has noted, thanks to product safety rules, you can buy a toaster that won't burn down your house, but you can buy a faulty mortgage that can take your house away. and the bank regulators have been of no great help because they're looking out for the banks, not for us, not for you, not for unsuspecting families who need the full force of regulations implemented by a muscular agency that's on your side. so in my view, a new independent agency would provide not only the comfort they need but the protection that they deserve. we can argue about details, but i doubt there is much disagreement after what we have been through that wall street needs a watchdog, one that has jurisdiction over all financial products, no matter who offers

them, not just the products offered by big banks. chairman dodd has worked very hard over many months to craft the details of an agency that strikes the balance, and i was really happy to see that finally our republican colleagues are saying we're on the wall street reform train, but now i begin to wonder when i see amendments like this that they jumped on the train to strike the emergency brake on consumer protection enforcement. the shelby amendment offers nothing in the way of consumer protection. there's no independence. the cfpd would simply be a division within the fdic with no autonomy of its own. it wouldn't even finalize a rule without fdic approval. it will not have any resources. that's how republicans want it. no resources, no supervisory authority, no enforcement power. guess who wins in that scenario?

nonmortgage companies will ever be subject to the supervision unless they have a pattern or practice of breaking the law within the past three years. so what does that mean? let's have a lot of people get hurt before we actually would say that we should now give them protection. it's not my sense of how the law should operate. the shelby amendment would establish the division of consumer protection of the fdic. it maintains, in essence, the status quo. consumer protection rule writing will still be under the same authority, the same regulators who routinely ignore or oppose the needs of consumers. no safeguards to prevent the fdic chair or board from overwriting decisions by the division director. the amendment would actually prohibit, prohibit the proposed consumer division from doing any rule writing under the federal trade commission act for payday lenders, debt collectors, foreclosure scam operators,

mortgage brokers, other nonbank consumer finance companies. they could only do examinations of nonbank consumer companies when they demonstrate a pattern or practice of violations of consumer law so only after the consumer has been harmed could they repeatedly, repeatedly after they have been harmed, repeatedly could the consumer division do any examination of business. this is just simply saying, you know, i'm going to tell you that i'm going to put a cop on the beat. he has got no uniform, he has got no equipment, and he can't stop the bad guys. what a falsehood. we need to defeat this amendment, and we need to have a bill that ultimately gives strong consumer protections for millions of families in this country who have already faced the consequences of the system that is going on unregulated in a way that it allows greed and excesses to take place and that puts protections, yes, for wall street but not for main street.

senator dodd has struck the right balance. we need to preserve it. and i look forward to supporting him and opposing this amendment. with that, mr. president, i yield the floor. the presiding officer: the senator from connecticut is recognized. mr. dodd: mr. president, let me briefly express my gratitude to my great pal and friend from new jersey, bob menendez. once again, we look around, there are a hundred of us here. i don't often acknowledge these things, but if i had to pick one of my colleagues to be in my corner as an advocate, i would pick bob menendez every time. when he is as focused on matters such as this one, there is no better advocate than him. he has been a great help the last number of years as we have worked on bills coming out of the committee. his understanding of this issue is exactly right. i say there are ideas people can offer for which they can make a case that they strengthen our

particular provisions here, but i say respectfully this is such a step backwards. it's even hard to imagine someone could conjure up an amendment that would step this further away from even the status quo. i thought i might get another strike and just leave the world as it is. senator thune made that somehow this isn't broke, leave it alone. yet there isn't a person i know in this country that doesn't recognize this problem all began because there were unscrupulous brokers. there were people willing to put ratings on bundled securities that were worthless. there were bankers willing to turn a blind eye and a deaf ear, pushing out mortgages they knew people couldn't possibly afford, luring them into it by promising they could beat all their obligations. and to suggest the system isn't broken, you would almost have to have been living on a different planet over the last few years not to recognize what happened because consumers were forgotten. safety and sound we were told was in great shape, institutions were making money. this was a very stable

situation. woe had a -- we had a hearing almost three years ago with our committee, june of 2007. david byrnebach. let me quote, if i can, his three years ago testimony." for the past five years, community groups, consumer protection groups, fair lending groups and all our members of the national community reinvestment coalition have been sounding an alarm about poor underwriting, underwriting that not only endangered communities, the tax bases, their municipal governments, their ability to have sound services and celebrate homeownership, but underwriting that was going to impact on the safety and soundness of our banking institutions themselves. those cries, he concluded or actions fell on deaf ears and here we are today. i remember my colleague from new jersey almost three years ago, i remember your words. i don't have them written down in front of me, but i remember them very clearly.

this is going to be a tsunami were your words that day. the first time i heard those words used to describe the looming foreclosure crisis. we were told then maybe a million, maybe two million foreclosures. now we know the number is in excess of seven million that have occurred, not to mention job loss and the like. so when i hear people say that -- that the underwriting standards, the consumer people were arguing for underwriting standards. it was the safety and soundness regulators that were refusing to acknowledge that we didn't have underwriting standards or refusing to acknowledge that we had to do something about it. so i just wanted to commend my colleague. mr. menendez: if i may, i ask my distinguished chairman to yield a moment, you're absolutely right. as a matter of fact, when i made that comment we were going to have a tsunami of foreclosures, the administration witnesses at the time, previous administration, of course, said that with all due respect that's an exaggeration. i wish they had been right and we had been wrong. but i think that the chairman

hits it right on the point. in the context of the rating agencies, they were playing coach and refer. well, when you're playing coach and refer, -- and referee, somehow the game doesn't work out quite that well. i appreciate what you have done in that respect here as well. i think the chairman makes the case very cloarl that the definition of insanity is doing the same thing time and time again and expecting a different result. if we want to see exactly what's happened to the american consumer in this country continue to face the same consequences they have passed over the last couple of years, then we adopt this amendment, but if we want to change that, then we would support your underlying provisions in your bill. thank you for your leadership. mr. dodd: the last point i want to make on the amendment. under this proposal, any person that is subject to one of the enumerated statutes could be assessed under this bill. section 1015-a.

now, as i read that section, 1015-a -- and this amendment, by the way, talk about a bureaucracy, a long amendment here. but in 1015-a, it says -- "the chairperson shall establish by rule an assessment schedule." we'll assess now these various institutions that are already burdened with assessments. "including the assessment base and rates applicable to covered persons subject to section 1023." this i know sounds like a lot of jibberish, mr. chairman, but what is 1023? what do they say? section 1023 talks about nondepository institutions subject to consumer laws. just consumer laws. now, one of the complaints about our underlying bill is -- which is totally false, is that florists and butchers and dentists and accountants and lawyers would be subject to the provisions of this act.

nothing could be further from the truth, and the language in our bill makes it explicitly clear that you must be significantly involved in financial services or products. that's the language of our bill. 1023, nondepository institutions subject to consumer laws, could be levied with assessments. that is your florist, your butcher, your dentist, your accountant, your lawyer. so those who argue against my bill and argue for this alternative, in fact explicitly in here, at least as i read this, could very well impose assessments on the very, very people they claim are affected by our legislation. and again, i invite my colleagues to read it. it's not a speech i'm reading. i'm reading from the proposed amendment. in that section 1023, assuming you can look it up here, it's a section of the bill, it speaks about nondepository institutions subject to consumer laws, and the definition accordingly the very people who are not financial institutions who could

be levied with those assessments. so for all of those reasons, i say respectfully i would urge my colleagues to reject this amendment. i don't claim perfection in our underlying consumer protection language. we think we have got a very strong bill, mr. president. i'm always anxious to hear if people think they can make it stronger or better in some way, fine. but to propose a whole new regulatory structure here with new people coming on at great cost with no power whatsoever to do anything about the very problem we're confronted with seem to be the height of what we're trying to avoid, creating a bureaucracy that doesn't do much. that seems to be what the american taxpayers want us to avoid. with that, mr. president, we're complete on our side with the debate against this amendment. unless there are some further comments, then i would ask for the yeas and nays on the amendment and call for a vote. the presiding officer: is there a sufficient second? now there is. there seems to be. there is a sufficient second.

mr. dodd: one second. the presiding officer: sure. a senator: mr. president? mr. dodd: before going to the vote, i ask unanimous consent that the senate now proceed to a

vote with respect to the shelby amendment, numbered 3826, with no amendment in order to the amendment prior to the vote. further, that the previous order with respect to the sanders amendment remaining in effect, provided that after the sanders amendment has been called up and reported by number, senator mccain be recognized to call up an amendment relating to g.s.e.'s, and that after the mccain amendment has been reported by number, the senate then resume consideration of the sanders amendment. the presiding officer: is there objection? without objection, so ordered. mr. dodd: mr. president, just before we get to this vote again, i make this appeal that we're going to have this vote, we'll go to the sanders amendment, then to the mccain amendment. and again, we're going to try to go back and forth and move along. the number of amendments now has increased to over 150 amendments. when i say to my colleagues -- there are actually more amendments on the democratic side than the republican side. not many more, but more.

i urge my colleagues to either either -- we'll share this with you. if you have very like-minded amendments, it might be in your interests to combine some of these ideas together in a single amendment that incorporates the same concepts, or if there is repetition of the same idea several times over, maybe rally around one amendment that actually make the point. i would like to either extract from the bill or add to the bill. again, we all realize, look, we're not going to be on this bill forever. i want to accommodate as many people as i can and have the kind of discussion we just had on this amendment, but to do that in the time frame we have is going to require cooperation and some indulgence on the part of people to -- to not be demanding. if you have an amendment up, let's try to get to it, have a good discussion, but not too long so we give other people a chance to be heard as well. i make that plea to everyone involved. with that, mr. president, i yield the floor and i still ask we move to the --

the presiding officer: the yeas and nays have been ordered. the question is on the shelby amendment. the clerk will call the roll. vote:

ieksz vote:

vote:

the presiding officer: are there any members wishing to change -- to vote or to change their vote? if not, we have 38 yeas and 61 nays. the amendment is not agreed to. without objection.

a senator: mr. president? the presiding officer: the senator from vermont. mr. dodd: mr. president, before -- the presiding officer: the senator from connecticut. mr. dodd: let me give our colleagues some idea of how we're going to try to proceed. mr. president, senator sanders has the next amendment. we entered into an unanimous consent agreement a minute ago. senator sanders' amendment. he has asked for 80 minutes to be equally divided on his amendment. we'll then turn to the mccain amendment -- or go to the mccain amendment u i'm hoping we get a time agreement on that amendment as well. about 140 minutes equally divided between us here. i want to accommodate everybody as much as i can. if some people take too much time, it will mean others never get a chance to offer their amendments. so i make a request of my good friend, senator shelby, to

inquire before we get to the mccain amendment what sort of a time agreement we could have on john's amendment. then my intention would be to go to a democratic amendment and possibly a republican amendment tonight. and there'll be votes tomorrow. i will let me colleagues know that we're going to have votes tomorrow. we've got, i gather, monday and friday next week that are nonvote days. so we'll have a limited week next week. and we've got 140 amendments with members who want to be heard. obviously we can't go on forever, too. reid will my friend yield? mr. dodd: i will be happy to. mr. reid: mr. president, for all the senators here, we may have 141 amendments, but it isn't the first time we've had 141 amendments on a bill. the number of amendments -- i've looked at the catalog of amendments, a number of them are on the same subject. what we're trying to do over here is find out different categories and not have everybody offer the same

amendment in seven different languages. so i think our goal tonight should be to try to get rid of, like, four amendments. if we could have -- get four amendments out of the way tonight, we could look -- and i appreciate my friend, because i've told him, that we're going to have votes in the amon -- ort least a vote. i could create a vote or twovment i hope there aren't amendment ofs that people want to debate. senator sanders has an amendme amendment. has he agreed to a time? mr. dodd: yes. mr. reid: senator mccain, has he agreed to a time? mr. dodd: let me say to my colleague, if everyone demands more time, everyone here suffers. there's not an unlimited debate on this bill. with 141 amendments, about equally divided with my colleagues, we have got to provide time for people. i want to do that. but i can't do it if someone us

insists upon unlimit thlimited r more time. we you a know these issues pretty well. this is not as if this is a new bill. i'm not asking for it right now. think about it. mr. mcconnell: if the senator from connecticut will yield for just a minute, just for an observation. mr. president, we may have 141 amendments, but they're not all equal. we're going to try to work our way through the major amendments here in a serious way. this is a very important piece of legislation. and i think the majority leader and i had a good conversation earlier today about how to go forward and we'll just keep working on it and try to work our way through it in a systematic way that maximizes opportunity for people to have votes on important p amendments. mr. dodd: i tell my good friend from kentucky, this has been 24 hours on one amendment. 24 hours. we've got to do better than that. i can't accommodate people if we're going 0 spend a day on one

amendment t just doesn't work. and so all amendments may not be equal, but all members r all members deserve to have an opportunity to be heard. and i -- and so i appreciate the majority leader's point of trying to consolidate, if several members have the same idea about something. maybe it can be brought together as one amendment, rather than five in some cases. i say that to both democrats and republicans, so we have a good discussion. that's my only request is that when you're bringing -- i can't spend 24 hours on one amendment and accommodate people. just isn't going to happen. that's my plea. mr. shelby: mr. president, i think we're making progress. we might not be making progress as quickly as some people would like. but this is a very important bill, and maybe we did spend a lot of time on this amendment. but it's very important. and we've debated it and i guess it's been disposed of, at least that part of it now. but there are a the although of other important amendments coming up. we can work together and we can work through some of them because a lot of them are

duplication, to some degree. some of them we can take. and senator dodd and i can help with our staffs on that. but this -- remember, this affects all of our economy, everything. mr. dodd: i'll take advantage of the motive moment, mr. president. i'll be here all weekend. not going to have votes on the weekend. but i'll be here all weekend. for members who have amendments and would like us to consider them, senator shelby's staff will be around, we'll try to work on your amendments to try to modified them. so i'll spend saturday and sunday here all day with people to go over their product so we can maybe expedite things next week as well. with that -- a senator: mr. president? mr. reid: madam president, if i could just talk to the two managers through the chair, i know how important everyone thinks their amendment s but you could have a half-hour on each

side, an hour per amendment. somebody can say quite a bit in five minutes. i just think we're going to have to have some guidelines as to what we're going to do. everybody thinks their amendment is the most important, and i'm sure in their own mind it probably s but we're going to have to set some standard here. i have been very accommodating in the last 24 hours, because i think so much of my comanager of the bill, senator shelby. we could have moved to table his amendment a long time ago. let's not -- let's understand, there are other ways we can move forward. we just can't -- somebody comes and say, i need three hours hon an amendment. there's not an amendment on this bill that's worth three hours, okay? so we've had a good conversation. i hope that we can -- the two managers can give us a guideline as to what they expect to do tonight and tomorrow. because members have other things to do than listen to the three of us.

mr. dodd: mr. president, and senator sanders? mr. sanders: mr. president? the presiding officer: the senator from vermont. mr. sanders: i call up amendment number 3738. the presiding officer: the clerk will report. the clerk: the senator from vermont, mr. sanders, for himself and oh, proposals an amendment numbered 3738 to amendment number 3739. mr. sanders: i ask that the amendment be considered as read. the presiding officer: without objection. mr. sanders: mr. president, this amendment -- mr. president, this amendment, which calls for transparency at the fed, is frankly one of the more unusual

amendments that i have ever participated in, not so much for its content but for the kind of coalition that has come together around it. how often do you have the afl-cio and freedomworks supporting the same effort? how often are the seiu -- which is the largest trade union in this country -- moveon.org, public citizen striving for the same goal as the national taxpayers union or the eagle forum or the conservative americans for tax reformer? so i think there is a coalition representing tens of millions proliferate grass-roots activists, some of them are progress, come from where i come from; some of them are conserve tivment but they are all united around the very basic principle.

we need transparency at the fed, and we need it now. and i want to use this opportunity and thank chairman dodd for allowing me to do this to talk about the amendment, what it does, and why so many diverse groups are coming together in support of it. because you do have to ask yourself, what brings together some of the most progressive groups in the country with some of the most conservative groups, some of the most progressive members of the senate with some of the most conservative? i also want to tell you, not only what this amendment does but to clarify, as best i can, what it does not because there has been some distortion in terms of -- about this amendment and those distortions are blatantly untrue. and i want to touch on that also. i have to tell you,

mr. president, that the origin for this amendment came on march 3, 2009. and that was the date that, as a member of the budget committee, i had the opportunity of asking chairman bernanke what i thought was a pretty simple question. chairman bernanke oivelg obviously is chairman of the federal. and what i asked him is, mr. chairman, my understanding is that the fed has lent out some $2 trillion to some of the largest financial institutions in this country. would you please tell me and the american people who received that money. and i thought that was a pretty simple and straightforward question. mr. bernanke said, no, despite the fact that this was $2 trillion in zero interest or near-zero interest loans. he apparently believes that the american people do not have a

right to know who received that money. on that very same day, i introduced legislation requiring the fed to put this information on its web site, just as congress required the treasury department to do with respect to the $700 billion tarp program. and here we're tatted. -- and here we're today. whatever one may think of the tarp program, you can get information as to who received that money, when it was paid back, the details. it's right there on the internet, and i believe that that same information should be made available in terms of the fed zero and near-zero interest loans. mr. president, what the fed apparently does not understand -- and this is the important point -- is that this money, these trillions of dollars, do not belong to the fed.

they belong to the american people. and it is incomprehensible to me -- and i think to the overwhelming majority of the people in our country -- that the fed believes that they can keep this information secret. this amendment not only requires that the fed tell us who has received the $2 trillion it lent out, but similar to the language incorporated in the house bill, it calls for an audit of the fed by the g.a.o. and that's it, mr. president. that's what we're attempting to do with this amendment. transparency and a straightforward audit. who got what when, on what basis, on what terms, who was at the meetings, who made the decisions, and taking a look at possible conflicts of interest. simple, factual questions that

people from the state of vermont ask me. i suspect people from minnesota ask you, and people all over this country, regardless of their political persuasion, are asking. mr. president, i understand that this amendment may not be supported by everyone. some may suggest inaccurately that this amendment -- and i quote from a statement -- "takes away the independence of the federal reserve and puts monetary policy into the hands of congress" -- end of quote. that's one of the charges that's one of the charges being made against this amendment. let me address those concerns by simply reading to the members of the senate exactly what is in the amendment so that we know what we're talking about, and i quote from page 4 of a 6-page amendment. not a long amendment. and this is what it says. can't be clearer than this: "nothing in this amendment shall be construed as interference in

or dictation of monetary policy to the federal reserve system by the congress or the government accountability office." end of quote. so if there are people who are saying, oh, we're going to get involved in monetary policy, oh, we're going to be politicizing the fed, oh, we're going to have before the election congress telling the fed to raise interest rates, to lower interest rates, that is absolutely inaccurate. that is not what we're doing. that is not in my view what we should be doing. we want an independent fed. we want them to develop monetary policy. that is not underline, what this amendment does. this amendment does not tell the fed when to cut short-term interest rates and when to raise them. it does not tell the fed what banks to lend money to and what banks not to lend 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. let us be clear about that. mr. president, what the opponents of this amendment are doing, i think, is equating independence with secrecy, and there is a difference. at a time when our entire financial system almost collapsed, we cannot let the fed operate in secrecy any longer. the american people have a right to know. i find it amusing for some people who oppose this amendment, as chairman dodd or the presiding officer knows, we have had heated debates on the floor of the senate over a $5 million amendment, over an $8 million provision. it goes on for hours. and yet, you've got trillions of dollars being lent out, and

there are some people who think american people don't have a right to know who got their money. i think, frankly, that is absurd. we hear over and over again on the floor of the senate the american people play by the rules. that is what the average american family does, they play by the rules. what are the rules governing the fed? who makes those rules, or are they just made up as they go along and they don't have to tell anybody about it? so i've got a problem with that, and that's what this amendment is about. now, mr. president, to my mind -- and these are just my issues. others may have different issues, and i'm sure they do. here are just a few of the questions that the american people are asking and why we need a g.a.o. audit of the fed. these are just a few. let me throw them out. mr. president, why was lloyd

blankfein, the c.e.o. of goldman sachs, invited to the new york federal reserve to meet with federal officials in september of 2008 to determine whether a.i.g. would be bailed out or allowed to go bankrupt? when the fed and treasury decideed to bail out a.i.g. to the tune of $182 billion, why did the fed refuse to tell the american people where that money was going? why did the fed argue that this information needed to be kept secret -- quote -- "as a matter of national security"? end quote. now here's the point, when a.i.g. finally released the names of the counterparties receiving this assistance, how did it happen that goldman sachs received $13 billion of this money?

a.i.g., $182, $13 billion going to goldman sachs. 100 cents on the dollar of a company that was going bankrupt and that was bailed out. how's that, 100 cents on the dollar. not bad. goldman sachs. another question the people might ask: did goldman sachs use this money to provide $16 billion in bonuses the next year? so here you have goldman sachs getting $13 billion out of the $182 billion that a.i.g. got. the next year they're announcing $16 billion in bonuses. did they use some of this money to provide those bonuses? a g.a.o. audit of the fed might help explain to the american people if there were any conflicts of interest surrounding this deal. i think the average american would say, yeah, there's a conflict of interest. you've got a guy from goldman sachs sitting in the room arguing for $182 billion.

he gets $13 billion. the next year the company gives $16 billion in bonuses. is there a conflict of interest? i think so. but that's what -- you know, my opinion isn't the important one here. that's what the g.a.o. will be doing if this amendment is passed. mr. president, just another question out there: in 2008, it seems to me -- i may be wrong but it seems to me there was a conflict of interest at the fed, be federal reserve of new york when steven friedman, the head of the new york fed who also served on the board of directors of goldman sachs -- let's back it up. head of the fed, serves on the board of goldman sachs, approved goldman's application to become a bank holding company, giving it access to cheap loans from the federal reserve. okay? head of the federal reserve, new

york federal reserve, on the board of goldman sachs, applying for goldman sachs to become a bank holding company to gain cheap loans from the fed. looks to me like there may be a conflict of interest, but what do i know? that's what we need a g.a.o. report to tell us. here is interestingly enough an article on may 9, 2009, in the "wall street journal." let me quote briefly from that article. quote -- "goldman sachs received speedy approval to become a bank holding company in september of 2008. during that time the new york fed's chairman, steven friedman, sat on goldman's board and had a large holding in goldman's stock, which because of goldman's new status as a bank holding company, was a violation of federal reserve policy.

the new york fed asked for a waiver, which after about two and a half months the fed granted. while it was weighing the request, mr. f r*eu edman -- mr. friedman bought more shares in december. they have since risen 1.7 more in value. mr. freedman says none of these events involves any conflicts. end of quote. that's the "wall street journal," may 9, 2009. that's what mr. friedman says. i kind of disagree with him, but i would like the g.a.o. to take a look at that. mr. president, without a comprehensive g.a.o. report, we have to take mr. friedman at his word, and i don't think we should. who got what? when did they get it? on what basis? on what terms? who was at those meetings? were there conflicts of

interest? these are the kinds of questions that a g.a.o. audit of the fed will answer. mr. president, as a result of the bailout of bear stearns and a.i.g., the fed -- and this is a beauty. this is really quite something. the fed now owns credit default swaps -- listen up on this one -- now owns credit default swaps betting that california, nevada, and florida will default on their debt. so the federal reserve stands to make money if california, nevad and florida go bankrupt. and i suspect that the senators from the great states of california, nevada and florida would be rather interested to know that if their states go bankrupt, the fed makes money. on the surface, this looks a little bit absurd to me. but again, i think this is an issue that the fed -- that the

g.a.o. might be taking a look at. mr. president, it has been reported that the federal reserve pressured bank of america into acquiring merrill lynch, making this financial institution even bigger and riskier, allegedly threatening to fire its c.e.o. if the bank of america backed out of its merger. when the merger went through, merrill lynch's employees received $3.7 billion in bonuses. was in a good deal for the american taxpayer? a g.a.o. audit can help us find out. mr. president, when the federal reserve provided $29 billion -- a $29 billion loan to j.p. morgan chase to acquire bear stearns, the c.e.o. of j.p. morgan chase -- his name is jamie diamond -- served on the board of directors at the new york federal reserve. let's repeat that. when the federal reserve

provided $29 billion to j.p. morgan chase, the c.e.o. of j.p. morgan chase served on the board of directors of the new york fed. did this represent a conflict of interest? i think the average american would say yes. maybe somebody has a different point of view. but i think a g.a.o. audit could help explain all of this to the american people. mr. president, currently -- and i think we have to appreciate this as well, to shed some light on these issues. currently some 35 members of the federal reserve boards of governors are executives at private financial institutions which have received nearly $120 billion in tarp funds. but, mr. president, we don't know how much these big banks received from the fed. we know what they got from the tarp, not from the fed. a g.a.o. audit could answer this

question. mr. president, all of us -- i believe all of us are deeply concerned that small and medium-size businesses around this country -- i know it's certainly the case in vermont. small and medium-size businesses are begging for affordable credit. they have the opportunity to expand. we're beginning to see some economic recovery. they want to expand. they want to create new jobs. they are finding it extremely difficult to acquire those desperately needed affordable loans. now, i find it as important issue to ask how much of the trillions of dollars in zero or near zero interest loans that financial institutions receive from the fed went out to those small businesses? or perhaps, as i personally believe is the case, were simply

invested in federal government bonds earning an interest rate of 3% or 4%. what a number of observers believe, and the g.a.o. can help us discover, did we provide -- did the fed provide zero interest loans to a large bank which then took that money, bought government bonds or 3%? and if that was the case, and i suspect it was, you're looking at a huge scam. huge scam as small and medium size businesses that need the money. that was the intention of these loans. but i don't know how much of this was invested in government bonds. you don't know, the american people don't know, and it is time that we found out. mr. president, this amendment that i am offering is virtually identical to legislation that i've offered on this subject

that has 33 skpoers. the -- cosponsors. the amendment, i think, has 20, 22 democrats and republicans. the original legislation had 33 cosponsors. just so that you can get a sense of the diversity of ideological opinion behind this amendment, let me tell you the names of the people on board the legislation. not the amendment. the legislation. that is senators barrasso, bennett of utah, burr, coburn, cochran, crapo, demint, feingold, graham, grassley, harkin, hatch, hutchison, inhofe, isakson, leahy, lincoln, mccain, murkowski, risch, sanders, thune, vitter, wicker and wyden. those are people who are on the original legislation. 33 cosponsors. and as you can see, they range from some of the most progressive members to some of the most conservative members. the amendment that is now on the floor has, i believe, 22 cosponsors, republicans and democrats alike. and i want to thank all of them

for their support. you know, the american people are asking: can people work together? can they come together on important issues? if there is an important issue that people with different ideological background have come together on, this is that one. and i want to thank my republican friends and my democratic friends who every other day are fighting like cats and mice, but on this issue have come together, and i appreciate that. but it's not only the members of the senate. mr. president, in terms of progressive grass roots organizations, this amendment enjoys the strong support of the afl-cio, the service employees international union -- the single largest union in the country -- united steelworkers of america, public citizen, the new american foundation, center for economic policy, the u.s. public interest research group, and americans for financial reform, which is a coalition of over 250 consumer employee, investors and civil rights.

huge amount of support from the progressive community. it also has a huge amount of support from the conservative community. let me read briefly a letter that i received from the legislative director of the afl-cio. this is what he says: "on behalf of the afl-cio, i am writing to urge you to support the sanders-feingold-demint-leahy- grassley-vitter amendment. working people want to know who benefited from the liquidity provided by taxpayers during the crisis, and this amendment will ensure that we receive this information." end of quote. i received another letter which came from the president of seiu, president of steelworkers, many other progressive groups and this is what they say: "since the start of the financial crisis, the federal reserve has dramatically changed its operating procedures. instead of simply setting interest rates to influence

macroeconomic conditions, it rapidly acquired a wide variety of private assets and extended massive secret bailouts to major financial institutions. there are still many questions about the fed's behavior in these new activities. the federal reserve's balance sheet expanded to more than $2 trillion along with implied and explicit back stops to wall street firms that could cost even more. who received the money? against what collateral? on what terms and conditions? the only way to find out is through a complete audit of the federal reserve. that's why we support the standards-feingold-demint-leah y-vitter-grassley-brownback amendment" to increase transparency." that's from the sciu and their unions. now, that is what some of the progressive groups, groups that i, frankly, work with quite on which, have to say about this amendment. but let me quote from some of

the conservative organizations who, frankly, i usually do not have very good voting records with. very often they oppose what i bring forth. here's the national taxpayers' union. i don't know how many folks they have but they are a big organization. this is what the national taxpayers' union says -- and i quote -- "the national taxpayers' union urges all senators to vote yes on s.; 3738 ts.; 3738to the financial reguly reform bill. this amendment would require the accountability office to conduct an audit of the federal reserve." and i like their next sentence. this is what the next sentence is. "transparency is not a democrat or a republican issue but, rather, an issue of right or wrong. if the senate insists on further expanding the fed's reach, americans deserve to know more about the workings of a government sanctioned entity whose decisions directly affect their economic livelihood. a yes vote on s. amendment 3738,

this amendment, will be significantly weighted as a pro-taxpayer vote in our annual rating of congress." that means i may have at least a 1% approval vote from the national taxpayers' -- from the national taxpayers' union. and i appreciate their support. that's from the national taxpayers' union. let me quote from another letter of support i received from a group of conservative organizations that includes the americans for tax reform, the campaign for liberty, the rutherford institute, the freedom works, and the center for fiscal accountability. again, some of the more conservative groups in this country, groups that usually do not support my initiatives. this is what they say -- quote -- "we urge you to vote for senators feingold, demint, sanders, transparency amendment. this amendment does not take away the "independence" of the fed, it simply conducts the g.a.o. to conduct an independent

audit of the fed and release the names of the recipients of more than $2 trillion of taxpayer-backed assistance during this latest economic crisis. any true financial reform effort will start with requiring accountability from our nation's central bank." and let me thank all of the conservative groups. in this case, the americans for tax reform, the campaign for liberty and the others, for their very strong grass-roots effort in supporting this amendment. it is an indication, again, that on certain issues, progressives and conservatives can come together. mr. president, let me mention this because i think it's possible that some of the members don't know this. madam president -- i am sorry. the presidency changed while i was speaking, i guess. this amendment is not a radical idea. as part of the budget resolution debate, in april of 2009, the senate voted over wepg whelmingly in support of this -- overwhelmingly in support of this concept by a vote of 59-39. i brought that up. it was a nonbinding vote, part

of the budget resolution, 59-39. so many senators have already gone on record in supporting that. and here is also an important piece of information. in the house of representatives, this concept passed that -- this concept passed the house financial services committee by a vote of 43-26 and was incorporated into the house version of the wall street reform bill that was approved by the house last december. so again, what we are talking about is something that was passed in the house and it is in the house bill. there's a variation. we are not the same, to be honest. but the same concept for a federal audit already exists in the wall street reform bill passed in the house. this concept has the support of the speaker of the house, nancy pelosi, who has said the congress should ask the fed to put this information -- quote -- "on the internet, like they've done with the recovery package

and the budget." that's exactly what this amendment would do. this concept has already -- now, here's another point. many people don't know this. a lot of this language is in the house bill. a lot of this language has already been supported in the senate last year as part of the budget resolution. but here's an important point that many people don't know. bloomberg news service did a very good job and they have aggressively demanded as a news organization that this information approximate about who the fed lent money to -- information about who the fed lent money to be made public. and as a result of their efforts, two federal courts -- not one, two federal courts -- have ordered the today release all the names and details of the recipients of more than $2 trillion in federal reserve loans since the financial crisis starrestarted as a result of a m of information act lawsuit. so bloomberg news filed suit to

federal court supported bloomberg. mr. president, the fed has argued -- had argued in court, in opposition to bloomberg, that it should not have to release this information, citing, according to reuters -- quote this is what the fed said -- quote -- "an exemption that it said lets federal agencies keep secret various trade secrets and commercial or financial information." end of quote from the fed. however, the u.s. court of appeals in new york disagreed. here is what a unanimous three-judge appeals court panel wrote in their opinion. unanimous three-court -- three-judge appeals court. quote -- "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 believes such an exemption would better serve the national interest, it should ask

congress to amend the statute." 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, mr. president, we now have 59 senators who, as part of the budget resolution, voted on this issue, 320 members of congress, the house, two u.s. courts that have all told the fed in no uncertain terms, give us transparency. that's what we've got. mr. president, as i wind down and conclude my remarks, let me just simply say that i thank very much all of the support, all the grass-roots support from progressive and conservative groups and from my fellow senators. the american people have a right

to know when trillions of their dollars are being spent and who got it. the american people have a right to know whether there are conflicts of interest. mr. president, i would ask my colleagues -- there's so many cosponsors, i won't even mention them all. but i just want to thank all of them. let me just conclude by saying that i am very proud to say that we have been working with senator dodd's office and some other offices and i'm going to ask that my amendment with modified with the changes are at the desk, and i'm proud to say that these modifications have been worked out by senator -- with senator dodd and would allow the g.a.o. to conduct a top-to-bottom audit of all of the federal reserve's emergency lending activities since december 1, 2007. in addition, the modifications require the fed to put on its

web site all of the recipients of over $2 trillion in emergency assistance since december 1, 2007. mr. president? the presiding officer: the amendment is so modified. mr. dodd: mr. president? mr. grasp: madam president? gra? the presiding officer: the senator from connecticut. mr. dodd: i'm going to speak long other this later but let me just thank our -- longer on this later but wil let me just thankr colleague from vermont. he brings great footion this -- passion to this issue. but when senator sanders gets involved in something, you better believe he does it with a great deal of conviction and passion and purpose. and i'm a cosponsor of this amendment he's just modified. i think it's right. he's absolutely correct on the transparency issues, there's no excuse, when as much of american taxpayer money has been exposed as it has been, the right to understand where that's going,

who's involved in it. it's done in a way, by the way, that does not -- because there was a concern about whether or not the independence of the fed in any way would be compromised and he has guaranteed with his language here that that is no longer an issue whatsoever. and i want to thank him for it. it's a great amendment. and i know senator grassley wants to be heard and so i'm going to yield the floor and later on i'll talk in greater detail. mr. sanders: i thank you very much. mr. grassley: madam president? the presiding officer: the senator from iowa. mr. grassley: you've heard me say many times on the -- to my colleagues that the public's business ought to be public. and i don't know why that doesn't apply to the federal reserve, at least on its regulatory and activities when it gives money out. there's all kinds of reasons why it shouldn't apply to monetary policy, but for everything else, the federal reserve is acting at the behest of congress, law going way back to 1913 giving

them certain powers. if congress exercised these same powers and under the constitution we have the authority to do that, it would be the public's business. in fact, even more than what this amendment does. so the public's business ought to be public. and with transparency -- and that's what this amendment is all about -- you get accountability. and it seems to me with what's happened over the last ten years, more transparency leading to accountability, if we'd had that transparency, we probably wouldn't have had the bubble in the first place that broke in 2008 that brought us to this recession that we're in. so i rise not hesitantly but forthrightly to support the pending amendment by the senator from vermont. i appreciate all of his hard work on making the federal reserve more accountable to the

people of this country. i'm a cosponsor of his stand-alone bill, so i'm glad to be a sponsor -- cosponsor of this amendment to bring sunshine to the fed. during the last 2 1/2 years, the fed has gone well beyond what was viewed as its historical authority. it has taken on more and more risk in complicated and unprecedented ways. it intervened in the market to prop up certain firms. it intervened in the market to protect these firms from faili failing. and using an unlimited source of taxpayers' dollars to, in effect, pick winners and losers. the risks that they've taken will ultimately be borne by the american taxpayers. so in the interest of accountability, the taxpayers

deserve to have answers on who got money and how it was spent. under law, the federal reserve has lending authority for unusual and exigent circumstances. under section 13-c of the federal reserve act, the reserve can -- quote -- "discount for any individual, partnership or corporation notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are endorsed or otherwise secured to the satisfaction of the federal reserve bank." essentially, this means that the fed can lan lend to any entity r person when it believes that there is an emergency. this is an extraordinary amount of power and discretion and it should be exercised in the light of day.

transparency, accountability, the public's business ought to be public. trillions of dollars were provided to financial institutions and corporations since the financial crisis beg began. the fed helped rescue fannie mae and freddie mac. the fed propped up bear stearns and a.i.g. when they were on the brink of failure. they intervened in business activities of lehman brothers, merrill lynch, and citigroup. bn doled out and to whom is still a mystery. this amendment would allow the independent arm of congress, the government accountability office, to review the decisions made by the federal reserve. and the general accounting office is -- and the government accountability office is nothing but a group of professional

people without a political motive and the right group to get the job done and doing it on an ongoing basis. an objective review of the fed's actions will serve our country well in the future. we can learn from the mistakes that may have been made. we can determine if the losses or profits from the fed's investments help serve the economy well. did the federal reserve act in an appropriate and ethical manner? was the relationship between regulators and the financial industry too cozy, hampering the ability to make objective decisions? proponents of the federal reserve shouldn't consider this as a threat to the independence of the fed, an independence that i support. they should embrace an independent evaluation as an opportunity to improve its operations, and most importantly strengthen public trust for

future generations who may be faced with similar financial crisis. as the senator from vermont has made very clear, the intent of his amendment is not to interfere in monetary policy. i share that same feeling that he has and i would not support an amendment that went into monetary policy. but the fed's extraordinary power outside of monetary policy should be subject to the light of day. transparency and accountability. the public's business ought to be public. we should allow the government accountability office to audit the fed since they moved far beyond their traditional and primary mission of conducting monetary policy. i yield the floor.

mr. sanders: madam president? the presiding officer: the senator from vermont. mr. sanders: i want to just thank the senator from iowa, not only for his support but his long fight for transparency. it's been a pleasure working with you, and i thank you very, very much. a senator: madam president? madam president, i want to thank my colleagues, senator sanders and senator demint for putting forward, bringing this amendment to the floor. i'm a cosponsor of this amendment along with several of my other colleagues. mr. brownback: i say as well to my colleague from vermont, my colleague from south carolina and others that are sponsors of this, this is an issue i hear a lot about. when i'm around -- traveling around my state, which is often that i'm traveling around and listening to people, this is something people are concerned about. they are concerned about the monetary policy, they are concerned about the money

system. they are -- they are concerned. and i would note to people and my colleagues in particular, the congress created the fed, the fed didn't create the congress. so the congress does have control over this issue, and i think we need to look at it and say let's look at what is appropriate and what's proper here, and this is clearly one piece of it. i think the fed has done a number of things quite well and quite right, yet i don't see any problem whatsoever with having a simple audit, that that's going to somehow reveal the genie in the bottle and let out all these secrets that are going to be harmful to the development of monetary policy. this seems to me to be a lot of -- a fair amount of overstatement on the other side of the terrible damage that this audit would do. that doesn't seem right to me. it doesn't seem right to my

constituents. my constituents look at this and say i don't want to harm the development of monetary policy. i want it to be wise and good and sound, but i don't see how it's harmed boy an -- by an audit of an entity that's created by the government, that's created by the congress, so why shouldn't we do something like this? that's why i think this is a prudent amendment. i think it's a good commonsense amendment, and i think it will be well received by the constituents of this great country that i think are pretty wise on these -- these other decisions that we go around. that if we'll listen to what people are saying, i think there is a lot of wisdom in that. they are saying we ought to know more about what's taking place in the fed. i know we would all like to move forward on financial regulatory reform legislation. i have some serious problems in this bill. i think the consumer financial product piece shouldn't penalize auto dealers and orthodontists

and others that didn't cause any of this problem. so i have an amendment, i have got other amendments that i'm a part of as well along with this one that i think we need to consider before we move on forward. even though i have some problem with the basis of the bill, i think it hits more main street than it does wall street. the difficulty is that we just have different ideas and beliefs about the best way to move forward, and that's -- that's normal. this amendment isn't just about the choices, though, we have on reforming the financial sector. i think it gets to the heart of a more fundamental issue. what the american people have a right to expect and know from their governmental institutions. the fact that this amendment is brought forward by gentlewoman vermont, mr. sanders, and the senator from the gentleman from south carolina, mr. demint, should be a sufficient warning and measure to make everyone sit up and take notice of what is it that's here that's so troubling? this amendment isn't about whether the legislation will put an end to taxpayer-backed

bailouts. it isn't about whether or not the legislation went into too big to fail. it isn't even about how to best protect the american people and taxpayer dollars. it's about something i believe even more fundamental, the accountability of governmental institutions to the people of the united states and to the congress. i think it is important, as i stated, to remember -- i want to state this again -- one single fundamental reality in this debate, that congress created the federal reserve, not the other way around. we created the federal reserve system to serve the interests of the citizens of this nation, not to serve the interest of large financial institutions. in establishing the federal reserve, congress recognized the importance of a central bank that could operate with independence to assure the orderly functioning of the banking system and to maintain price stability. that's the core function of the fed. more recently, the federal reserve mandate was expanded to charge them with maintaining price stability and maximum employment. that was an expansion piece that

was added. the government accountability office is also a creation of congress. g.a.o. is an independent and nonpartisan agency that works for congress. what is g.a.o.'s mission? g.a.o.'s mission is to support the congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the american people. now, in my view, the real issue here is whether or not you believe that the congress has the right to ask g.a.o., in many respects our auditor to review actions and activities of an institution that we, the congress, created. i certainly understand the importance of the federal reserve's independence in the execution of monetary policy. i understand and i support that. i understand the importance of not interfering with the operation of the fomc. that is not what this amendment is attempting to do. that is not my intention. i'm confident as well it's not the intention of the main sponsors of this amendment. but i do think it is relevant to

know whether the federal reserve is operating in a manner that is consistent with its statutory authority. i do think it is relevant to know whether the federal reserve is following its own established rules and procedures or if it is just making it up as it goes along. i do think it is relevant for congress to know who was involved in decisions to take extraordinary measures by exercising emergency powers, as well as who was and was not consulted before those actions were taken. those are prudent and proper things for us to know. i think it is equally important to know whether or not the policy statements and subsequent minutes of fomc meetings accurately reflect what went on in those meetings. recent news reports surrounding the release of transcripts from 2004 meetings of the fed contain some serious distressing information. those reports reveal that as far back as 2004, there were significant concerns raised by regional reserve bank presidents

about an emerging housing bubble that indeed did emerge and burst. did we see any indication of that in the meeting minutes or the policy statements? we did not. and what that tells me is that the minutes did not accurately accurately -- i will even say they didn't directly portray what went on in the meetings. i don't believe that's right. disturbingly, the transcripts reveal that the federal reserve bank president from atlanta warned that, quote -- "a number of folks are expressing growing concern about potential overbuilding and worrisome speculation in the real estate markets, especially in florida. entire condo projects and upscale residential lots are being presold before any construction with buyers freely admitting that they have no intention of occupying the units or building on the land but rather are counting on flipping the properties, selling them quickly at higher prices." end of quote.

that's a direct quote. disconcertingly, at the same meeting, the former chairman of the board of governors, gropes greenspan, made the following statement -- "we run the risk by laying out the pros and cons of a particular argument, of inducing people to join in on the debate. in this regard, it is possible to lose control of a process that only we fully understand." let me repeat that quote. this is from chairman, former chairman greenspan -- "we run the risks by laying out the pros and cons of a particular argument of inducing people to join in on debate that in this regard it is possible to lose control of the process that only we, the federal reserve board, friewl understand. "-- fully understand." i serve as the ranking member of the joint economic committee. senator demint is also a member of our committee. we believe in the free enterprise system. we recognize the support of the strong financial system. yet a fundamental requirement for the orderly operation of free markets is transparency and

accurate reporting information. i think the suggestion that only the federal reserve was capable of, quote, fully understanding is evidence enough that this amendment is necessary. congress needs to demand change and greater accountability so people can have more information. what if the people had known about this debate going on at the federal reserve as the housing bubble was developing? how would people have acted? my guess is they would have acted quite fluently in saying the federal reserve is concerned about this, this is legitimate information. maybe we should pull back on housing investments, maybe we should be watching this as well. i think people can get it. they need the information, though. this amendment doesn't address the issue of time delay in releasing transcripts. i do believe that the current five years which amounts to almost six in many cases is indefensible between the actual minutes and them being released.

five years. in between the actual minutes and their being released to the public. in my judgment, that time limit should be reduced to no more than two years. members of this body should have access to these and other transcripts before we were asked to reconfirm the current chairman of the federal reserve board of governors, and i would suggest it would have been helpful to have had access to this information before the housing market collapse and before it turned into a financial crisis. madam president, the american people are mad at washington, they are mad at the governmental institutions that they view as increasingly unresponsive and unaccountable. let's take this step in the direction of transparency, accountability and disclosure of information. the american people have a right to know whether their interest were protected or simply placed on the back shelf, they have a right to know the information. i urge my colleagues to support

this amendment and i urge the federal reserve to work with us to address real concerns about this amendment rather than trying to defeat it or amend it with the purpose of making it a symbolic and meaningless gesture. let's remind the federal reserve board of governors that they are not the only people capable of fully understanding issues on which i or all of our economic future depends. mr. president, i yield the floor. mr. sanders: mr. president? the presiding officer: the senator from vermont. mr. sanders: i just want to thank the senator from kansas for his remarks and for his strong support from day one for this concept of transparency of the fed. thank you very much. the presiding officer: the clerk will call the roll.

quorum call: mr. coburn: madam president? the presiding officer: the senator from oklahoma. mr. coburn: thank you. yeah, that's fine. thank you. thank you, madam president. i wanted to spend a few minutes on a couple of topics. the presiding officer: the senator will note that the senate is in a quorum call.á mr. coburn: i would noalt that the quorum call be dispensed with. the presiding officer: without objection. mr. coburn: as we watched the debate the last six days on the financial regulation reform bill, i thought it would be interesting just to raise a few questions. the congress, both the house and the senate, created what was

called the financial inquiry commission. as a matter of fact, they had a meeting today. and the purpose of that commission, who will turn in their report in december of this year, was to take a thorough and complete look at wha what happed to us in 2008, the causes, the regulatory failures, the poor incentives, and then make recommendations to the congress on what we should do. now, the question i have for my colleagues is, we have a bill on the floor that is given no creed tons the commission we -- that is given no credence to the

commission that we created. we're actually going to finish the bill next week without the benefit that have commission's inquiry. so a couple questions i'd ask is number one, why? why are we doing that? and, number two -- and, by the way, the people on that commission is learned people with great exposure and great experience in the areas of which we're discussing. and then the second question i'd ask is, why are we allowing the commission to continue spending money if we're not going to pay any attention to them? why don't we just end the commission? since we're obviously decided what they're going to have to give to us isn't of value, as we make the decision about what we need to change. but that's what we had the commission for. so i find it peculiar that in our rush to blame somebody, our rush to take the focus off of

where it really belongs -- and, by the way, that's right here in the u.s. congress, because 90% of what went wrong was our fault, our fault, that's where it lies -- in our rush to shield and reflect that away from us, we're going to pass a bill with all sorts of unintended consequences of which we fully don't understand right now, a bill that's going to treat the symptoms, not the underlying disease, of the financial problems that we had, and it rings well from a populist standpoint, but in the long run it does a disservice to our country, understand that doesn't mean that this bill -- this bill may not hit it 100% on what the commission recommends. but we have no idea what they're going to recommend. so i think it it's a great quesn

for the public to be asking us, why are we doing that? and why are we continuing a commission that we're obviously not paying any attention to? one was to create it so w we'd offload the commission. we obviously didn't care what they thought because we're not going to pay any attention to it. and, number two, we're going to continue to spend money on the commission that we're not is going to value. and if we were going to value it, we would at least have given a mandate to hurry up so we can make appropriate decisions and use their expertise, or we'd eliminate it. now to the bill that's in front of us. what really happens here -- this is my opinion of what happened. the u.s. congress created incentives to increase with ease the ability to own a home in this country. and then we created incentives

through fannie mae and freddie mac to do that even greater, and then we created the ability to package and offload what fannie mae and freddie mac had taken and securitize it, and we wonder why people would take advantage of that. there wasn't one oversight hearing on the office of thrift supervision, which absolutely failed in terms of loan originators. there was one hearing in four years on the s.e.c. that had nothing to do with their oversight of the packaging of these bills, before they became a problem. there was no oversight, significant oversight, on the explosive nature of derivatives trading in this country and around the world. and we're so quick to point the

fingers at the people who took advantage of the incentives that we set in motion. and so now what do we have? we have $6 trillion or $8 trillion worth of exposure for the u.s. taxpayer in terms of guaranteed mortgages by the federal government through fannie mae, freddie mac, and f.h.a., and we're hulling along so that none of -- and we're hustling along so that none of that ends up getting focused ounce. and we've got a bill on the floor that doesn't address the core problem of what went wrong. and here's the core problem of what went wrong: there were no mortgage origination standards that were enforced by the federal government as they took american taxpayers to guarantee what was going to be an asset. and what we find at the permanent subcommittee of investigations? that in the last year before this, one company alone that originated a vast majority of the loans in california -- long

beach mortgage -- 90% of the mortgages were based on fraudulent data. o.p.s. knew t didn't do anything about it. why did they not do it? because they got 16% of their revenue from washington mutual savings and loan, who owned long beach mortgage. so we set up all these systems, we incentivize the system, and now that it blew up in our face because we didn't look at it, we didn't oversight it, we didn't do our fiduciary responsibility, we want to be quick and get rid of that blame from us by pointing the finger somewhere else. we have minimal leverage rirlts requirements in this bill. if you're going to create an incentive for people to act bad, at least you ought to put a block somewhere else that will limit the exposure of financial institutions based on capital ratio. we haven't done that.

we haven't accomplished that in this bill. that's something that has to be there. to keep us -- we had companies going 40 and 50 times their net worth leverage out and yet we're not aaddressing that issue to a significant extent. one small portion of the bill. and then we're going to take a consumer protection, which we created the problems for, and created a massive government bureaucracy that's going to filter all the way down to every small business in this country and all that power in one individual that's not accountable to the president and say, you fix t and we're -- on limited funding stream that's going to be totally out of control, that's going to impede animpact the freedom of americas to make a living. in the name of consumer presentation protection.

if you thim a giving a speech to protect banks, you're wrong. i like them about as much as i like insurance companies. but we have to think about what we're doing. and we ought to be about fixing the real disease, and that real disease is us. us not doing oversight, us not being responsible for the legislation that we create, incentives, and then yawn as it goes by and goes awry and then point our finger somewhere else. there's no question we need to change the regulatory structure in this country. but there's something we need to change more than the regulatory structure, and that's the demand on the congress to start doing its job in terms of oversight. we're quick to whip a bill out when it's politically e expediet to do it and to create a whipping boy -- or, several

whipping boyce, and say we're drefg things but it's kind of like the pea under the three walnut shells. you never know where the pea is. and the reason you never know is because there's not really even a pea there. there was when it started. but it went way. and then it gets put back. and so we're playing the game. we're playing the american people that what we're doing is substantive and in fact it's going to enhance capital formation when what we're doing is it's going to decrease capital form maismghts we have one section in this bill that says, every small bank in oklahoma, if they write a mortgage forever and sell it, they have to keep 5% of it. if they're a small capitalized bank, they're never going to create another mortgage in oklahoma. so we're going to concentrate all the mortgages to the big banks in this country. that's why goldman sachs loves this bill.

that's why citibank loves this bill. because we're not making the big banks smaller. we're making the big banks bigger. and we're going to undercut the small- and medium-sized banks in this country because we're going to put a 5% retention on every mortgage that they write. when in fact all we would have to say is if you write a mortgage and you package it and sell it, there's recourse back to you, the originator of the loan, that that mortgage when it becomes nonpmpling comes back to you. -- nonperforming comes back to you. that's all we have to do. that doesn't tie up their capital. that doesn't limit there their incentive to create housing in our own regional markets, which is made available with capital in those regional markets. we're going to make the big boyce bigger. you know, all the regulation that's in this bill, none of the big banks will ever have a problem with it. they already have thousands and thousands of staff to handle government regulation.

they won't add a person. but every small community bank in this country, every small financial institution in this country is going to drown in the requirements of this bill. i know that the chairman of the banking committee has worked hard to try to bring a bill. i know there's been great deliberation with many from our side of the aisle on this bill. but i think we've thrown common sense out the window. the motives are good. the goal -- fix the problem -- is good. but if we treat the symptoms of this and convince the american people we've fixed it when in fact we haven't, when we really haven't eliminated too big to

fail because we're going to make the big banks bigger, what we're going to see is a further decline. in the name of fixing things, we're going to be taking massive amounts of freedom away from small businesses in this country. we're going to take discretion and capital risk, we're going to take discretion away from capital risk that has minimal risk to the country but has every by the of risk to the person lending the capital. we're even going to take away sugar dad did i investors who are the only hope for some ideas -- not venture capitalists -- we're going to take away the ability for someone to come if in and invest 40% in your company. we've actually created requirements for that.

as we look at what we're about to do, the american people ought to ask three questions. three very important questions. does it really fix the problem? that's one. number two, does it grow the government and require increased spending. two. and, number three, is there anything to make you think, since we were regulating all these industries already, that the congress might oversight the next set of regulations that we put out there to fix this problem? and i think the answer to that -- all three of those questions -- is "no." and i'm in the minority. i understand that.

and i said previously, i think that we ought to change the regulations in this country. but i think we also ought to eliminate too big to fail by making those that are too big become so small that they won't make a difference if they do fit. you -- if they do fail. we ought to create the market circumstances that would force that to happen. but this bill doesn't do that. this bill won't do that. so as we go through this rather large bill that i think has had three or four accepted amendments so far, that is 1,409 pages long, one of the other questions we ought to be asking is how many members have read the entire bill. how many members really understand what is in the bill? how many members can have the capability to anticipate the

unintended consequences of what's in the bill? and i think we'll find that that's zero. yet, we're in a hurry to do this for a political reason. so i'll go back to what i started on. we created the financial inquiry commission. what are we going to do with it? what are we going to do? what happens if they come out in december and says everything we did was wrong? why did we create it? i'd love to read back some of the speeches that were given on this floor about why we were creating it. because we had to know what went wrong. and now we have a commission that's been charged to tell us what's wrong, but we're going to ignore them. we're going to pass a bill before they even completed their

hearings. i think there's no wonder why the country has a low level of confidence in our deliberations, because they don't make sense to the average american. they understand the political spin. they understand pinning the tail on the donkey. they understand placing blame so you can deflect it from yourself. they get all that. they see it. they see right through it. but we're creatures of habit. there are good things in this bill. let me end on that. the elimination of the office of thrift supervision had to be. the reason they were ineffective is because they got their money from the very people they were supervising, and when their biggest customer was doing

something wrong, rather than lose revenue, they turned the eye the other wait a minute consequently, billions -- they turned the eye the other way. consequently billions and billions of dollars became junk. other good thing: changing the rating agencies. what they're accountable for. this bill goes in a direction different than what i would have gone. but the point is there needs to be a change. they need to not get paid by the very people that are asking them to rate something they're getting ready to sell, and they really ought to be paid by the person that's getting ready to buy what they're getting ready to sell. so the accountability will be there. but we haven't done that.

we recovered and are recovering from this financial fiasco because of the resilience of american people. the price is enormous with having 14 million people unemployed. that's a tremendous price to pay. the loss in terms of dignity, the loss in terms of ability to provide for your family, the loss of losing a skill set that you had and no longer can find a job to do it, tremendous price that has been paid. but the american people are resilient. what they don't want to tolerate, however, is a congress that fails to recognize and continues to repeat the mistakes of the past. and so we can say we've been working on this for six months. we have. there's been negotiations going on for a long time on this.

my question is: do we really have the answers? do we know what the answers are? and if the answer to that question is yes, then let's disband the financial inquiry commission right now. let's not waste those folks' time. let's don't spend another penny of federal taxpayers' money if we think we already have the answers. we're going to do just like we do on every other program. we're going to create another one, and we're going to keep spending on the first one. needless to say, i think this bill is fixable. i think we ought to address the real key issue: fannie mae and freddie mac. why are we not addressing them? because we don't want to put on the bucks, the cost to do it.

that's why. that's why we're not addressing it. we know the issues. we've taken an unlimited now amount of our kids' money and put at exposure, and we've given an absolute implicit, implied guarantee to both those organizations now. the president in late december took off the -- they're now buying back close to $400 billion worth of mortgages from the treasury, nonperforming mortgages, of which our kids are all going to pay that back. and it's 20 or 30 years before any of that property actually attains the level of which it was sold. so what's coming next? what's coming next is we're going to mandate principal reduction on mortgages across this country. now who's that impact?

what that says is everybody who paid their mortgage on time and kept up with their payments are making tremendous sacrifices other places, guess what? you're going to get to pay for the mortgage of everybody that didn't. for your taxes and your kids, through their taxes. you acted responsibly, but what's coming down the pike is we're going to lift the load for those that didn't. you met your obligations. you signed a contract on the bottom line, and those who are less fortunate than you, you now are going to get to pay for them too. that's what's coming. mark my word, and you'll hear it before november. that is what is coming, through the 40% reduction in the principal amount on many of these mortgages. so what's going on?

we're rushing a financial reform bill that doesn't attack the three major, major underlying diseases of the financial system, and then right after we pass that, we're going to force principal reductions on hundreds of thousands, if not millions, of mortgages of which you, the taxpayer, are going to pick up the bill. that's what's coming. we're going to hear that it's not. that's what's coming. so wha* watch what we do -- so watch what we do carefully. watch how we spend things. watch how we create demons when in fact we're the source of the problem. watch how we point our fingers at others who we incentivize to take advantage of systems we created and say, oh, no, we're not culpable at all.

it wasn't us. we did all the oversight hearings. we held the -- we changed it. when we saw the writing on the wall. we didn't do any of that. the congress created this mess, and we're going to continue to act in the same way that's going to create more. because we're going to create a whole new set of regulations, and then we're not going to have the oversight hearings. are you doing them? where's the metrics? how do we measure whether you're doing them? are you mr. bureaucrat doing what the congress directed? as a matter of fact, we don't even put the regulations in there. we let somebody else write the regulations. we're so knowledgeable that we're getting ready to fix this problem, besides the fact that the financial inquiry commission hasn't said anything to us yet about what the causes are and potential solutions. but we're not even going to write the regulations, just like we did on the health care bill. 1,690 times the department of

h.h.s. is going to write regulations on the health care in this country. the same thing is going to happen in this bill. like i say, i hope we can fix the bill, because i think we need to make major change. and there are some good things in this bill. we are in danger of losing what confidence is left of the american people in our actions. and we ought to be asking the right questions for the right reasons, that shouldn't have anything to do with politics, shouldn't have anything to do with partisanship, and ought to have everything to do with what is the best right solution for our country in the long run, not the short run. mr. president, i yield the floor. mr. dorgan: mr. president? the presiding officer: the senator from north dakota. mr. dorgan: mr. president, i've come to speak on behalf of

the sanders amendment, in support of it. i am intrigued by my colleague's presentation, so i will respond to just a bit of it. there are a couple of areas where we agree and some where i profoundly disagree. but let me start with the agreement. when my colleagues says if you are too big to fail, you're too big and you ought to get smaller, i fully agree with that, and i have an amendment that would say if you're too big to fail, judge by the counsel in this bill that you're too big to fail, at that point you begin to pare that -- you require the breaking up or the paring back of whatever's necessary of that institution to bring it below the level at which its failure would cause a moral jeopardy or an unacceptable risk to this country's entire economy. if we end this process and too big to fail still exists -- that is we have companies that are in fact too big to fail, then we will have failed, in my judgment. too big to fail means you are too big. we've broken up standard oil

into 23 pieces. it turns out that 23 pieces are more valuable than the whole. at&t was broken up. i'm not interested going to break up companies for the sake of it, but i am saying this: we know what's happened. this chart shows what has happened to the largest financial institutions in this country. it shows that with respect to assets and liabilities, the top six commercial financial institutions of this country have gotten bigger, bigger, bigger and much, much, much bigger. does that cause jeopardy to this country? well, if you've been awake the last few years to watch $700 billion be pledged to avoid a calamity, calamitous event to this economy, then you understand that this is too big. and something has to be done about it. create early warnings? no, i don't think so. stop signs? how about deciding that if you are too big, you're just too

big, and you have to pare back those portions of your institution that make you too big to fail and provide a moral hazard to this country and an unacceptable risk to the future of this economy. here's another chart that shows about the same thing. it shows the growth of these institutions going back to 1995. it is relentless, aggressive growth. and if we end this without having addressed it, we will not have been -- we won't be able to tell the american people we took care of too big to fail. now, the area -- and so i agree with the senator from oklahoma on that point. where we disagree is the notion that the problem here is us. well, i tell you what. the "us," quote unquote, bears plenty of responsibility. let me just talk about the "us."

it wasn't the us who decided in countrywide, which was the largest single mortgage company in this country, to decide to write liar's loans, to decide to say to people, hey, you want to get some money from us? we're a big old company. we're making a lot of fees. we're paying a lot of money to our executives. and we want you to come to us. in fact, i've got an ad that they ran, countrywide, the biggest mortgage company in the country. here's the ad they said to america: do you have less than perfect credit? do you have late mortgage payments? have you been denied by other lenders? hey, come to us. we've got money for you. are you a bad risk? are you a bad person? you can't pay your bills? come to us. now, it wasn't -- it wasn't the congress that did that, i would say to my friend. this is countrywide mortgage. and, by the way, the guy that ran this organization got off with $200 million. and so, he's now