vote:

the presiding officer: are there any senators in the chamber who wish to vote or to change a vote? if not, on this vote the yeas are 96, the nays are zero. the amendment as modified is agreed to. order in the senate. under the previous order, the question is on amendment numbered 3760. is there a sufficient second?

the presiding officer: there appears to be. the clerk will call the roll. vote:

vote:

the presiding officer: are there any senators in the chamber who wish to vote or change a vote? if not, on this vote, the yeas are 37, the nays 62, the amendment is not agreed to. mr. dodd: i move to reconsider the vote and lay it on the table. the presiding officer: without objection, so ordered. mr. dodd: mr. president, i have seven unanimous consent requests for committees to meet during today's session of the senate. they have the approval of the majority and minority leaders. and i ask conse that these requests be agreed to and that these requests be printed in the record. the presiding officer: without objection, so ordered. mr. dodd: and i'll note the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call:

quorum call:

mr. dodd: mr. president? the presiding officer: is not frr connecticut. mr. dodd: i ask unanimous consent that the call for the quorum be dispensed with. the presiding officer: without objection, so ordered. mr. dodd: let me just say that the next amendments up deal with the mccain amendment, and while we don't have an agreement yet, i'm hopeful one will be agreed to right after the -- we come back after the respective caucus lunches at 2:15.

and then i'll urging members -- again we're trying to line up these amendments so we can have an afternoon full of votes, some short debates on amendments and then votes. but i don't want to hear later, i didn't have enough time. you can't have it both ways. you can't tell me you needed more time and then not be here or get the time agreements to allow us to move forward. with that, mr. president, i yield the floor. the presiding officer: under the previous order, the senate stands in recess until the hour of 2:15 p.m.

>> speaking nancy pelosi on

a congressional delegation trip to the middle east and germany. until that happens, we'll have a discussion on national security issues from today's washington journal. >> host: our guest currently serves as senior advisor for international affairs united states institute of peace. formerly the national security advisor under the bush administration from 2001-2005. stephen hadley, welcome to "washington journal.". >> guest: thank you. >> host: give us context meeting with president karzai but what it means for the larger context what is going on in afghanistan. >> guest: well, obviously president karzai is the elected leader of the afghan people. he is going to be the partner for our country in dealing with the challenges in afghanistan. and i think what's important here is the president is going to treat karzai as that elected leader, give him the respect he deserves and also hopefully build a

personal relationship because these two leaders face great common challenges and, personal relations among leaders matters. hopefully this will be an opportunity for the two of them to have a candid understanding and discussion of the challenges they face, and build a, a stronger relationship between the two of them. >> host: from when you used word candid and stronger relationship you suggest the relationship is not strong in your opinion? >> guest: if you just read the papers over the last year or so it has been a bumpy relationship. there was some public expressions of doubt about karzai's leadership, of his commitment to fight corruption. and to make some of the hard decisions that need to be made. and i think it was unfortunate that that became such a public issue. you know, i think a good rule of thumb is when you're dealing with close allies, is to, praise in public and criticize in private and i think early on in the

administration it kind of got that a little bit reversed but i think they have taken some good steps. i think president obama is right to have him come for this visit. i think it is an important is visit and seems pretty clear the administration is going out of its way to put its best foot forward, to close the, or turn the page if you will on the past relationship and to try and get this relationship on a firm footing going forward and that's what they need to do. >> host: as far as that firm footing what is the national security implications not only in terms of afghanistan but in particular its neighbor pakistan? >> guest: there are tough issues that need to be worked through there. there is a coming operation that is going to be in kandahar that will be very important for the military dimension. president karzai has had some reservations about that. it's important there be a clear understanding of what's going to happen. president karzai talked about reconciliation and having meetings with a broad

spectrum including perhaps representatives from taliban. u.s. government has some reservations about that it is important for them to have candid exchange and have a common understanding how to approach the issue of reconciliation and reintegration of fighters. so there's, there are tough decisions both of these countries have to make and it is important that they be made together with good understanding of positions of each and much as possible with a coordinated approach. >> host: what did the events with faisal shahzad teach us about national security but not only what happened in the united states but what happened in pakistan with the waziristan section of that country? >> guest: we've been worried about the tribal areas of pakistan. it is a witch's brew of al qaeda, of pakistan taliban, and afghan taliban and other groups and it is a source of threat to obviously pack stand and

stability of pakistan across the border to afghanistan but also we've seen potentially to the united states as well and i think in a way the administration has been lucky because with this times square attempt and the christmas bombing attempt going into the airport in detroit, we've had two wake-up calls, two terrorist efforts that did not succeed, really because of failures on the part of the terrorists and i think it is been useful because i think it has helped the administration relook at our processes and procedures for countering these incidents, strengthening them and in the process nobody died. two wake-up calls, nobody died. that's a good thing for the country and it reminds the country and the administration that the terrorism is still a problem today and there are people out there who are trying to kill americans. >> host: are there weaknesses in the current processes as you describe

them? >> guest: well, you know, it is one of these things you can always get better. you're learning all the time. this is an enemy that does adapt and use new methods. you know, as people say, it is the truism, in terms of preventing terror you have to be right 100% of the tile. if you're a terrorist you only have to be right 1% of the time so what changes are needed? >> guest: i think they have already been making a series of changes. there was in response to the christmas bombing a an improvement in terms of watch lists which is very important. i think that has been improved again, shortening the time between watch list notifications come out from the government, when the airlines need to put it on their list and be using it as part of their screening processes. i think every time you have something like this, you learn something and can further improve the system and that's really what i hope the administration is doing. >> host: our guest with us until 10:00.

you can talk to him on three lines this morning. for democrats, 202-737-0002. republicans, 202-737-0001. for independents, 202-628-005. e-mail at journal@c-span.org. first call is, from, jupiter, florida and our republican line. you're on with stephen hadley. >> caller: yes, hi. i wanted to ask you about russia's recent offer to destroy the poppy fields that make the owpy yum. and i guess the u.s. declined, saying it would disrupt the local agricultural income and that we had to protect that i kind of curious when the taliban was ruling poppy growing was not allowed. it was against their religion. and it seems we're giving the impression that we're supporting the poppy fields

and, i think we all agree that this money is funding the terrorists. so if we're to take a strong position on the terrorists we should also take a strong position on getting rid of the poppy fields. could you comment on that please? >> guest: you're absolutely right. the link between poppies and the terrorism, poppy and illegal drugs as a source of funding for terrorists and for the taliban is exactly right and it is an enormous problem. the government halls been working on that problem but, the united states government in close coordination with the afghan government. obviously we've not made nearly the progress that's required and part of the problem is the issue of how you attack the problem. obviously there are a number of things. you want to interdict those people who are taking the narcotics and the poppy from the farmers, turning it into drugs and trading it on the

black market and making these profits. you want to interdict them. you want to provide alternative livelihoods to the afghan rm faers. there has also been a big issue about eradication. united states pushed particularly under the bush administration to use airplanes to spread the chemicals that would kill the poppy. that's very controversial in the afghan context. many americans believe that's the best way to approach getting rid of the poppy. the afghan government has been very reluctant to do it because of political reaction. that is one of the unresolved issues that at some point our our two governments have to talk about. you're exactly right. it is a huge problem. we've got to get it under control. frankly under two administrations so far efforts have not been up to the task. >> host: memphis, tennessee. go ahead. deloris on our democrats line. >> caller: good morning? >> host: you're on, go ahead.

>> caller: okay. i was calling him to ask him about our national security. how in the world can we stop someone who is willing to blow up their self and hurt others? you don't know when it is going to happen. people are out there ready to destroy us. and there's a reason. i would like to know why do everybody hate americans? you know why? america is stepping in everybody's business, trying to control other countries. people in their country don't like it. they call people insurgents. explain to some americans what insurgents r they are angry people like there like black people angry the way they was treated back in the '60s and back in the 1920s. we need to stop saying insurgents. those are iraqis, pakistans and afghan people. innocent people getting killed by our so-called drones. that is the reason these people are angry. >> host: leave it there. >> guest: well, it's, there

is obviously a lot of anger in these countries. i think though we have to recognize that the reason we're in afghanistan was because afghanistan under the taliban was a safe haven for al qaeda. and al qaeda in afghanistan mounted the attack on 9/11 that killed over 3,000 americans and other citizens in three locations around this country. so, and, president bush gave the taliban an opportunity to turn over the al qaeda, shut down the training camps and unfortunately the taliban did not take that opportunity and that's why we're in afghanistan. one of the, you're quite right, one of the things you need to do if you're going to do something like this is to as much as possible, be allied with the people of the country to deal with a common problem. you know the afghan were not happy living under the at that ban. it was a brutal form of existence. you know, women in particular were discriminated against, not allowed to go to school.

it was a brutal regime. one of the things we did go into afghanistan was to do it with various groups, tribal groups and others in the afghan, in the afghan context so that in fact it was the afghans with our help that were liberating themselves from a brutally repressive taliban regime. and we have tried since then to try and work with the afghan people to help them establish a stable political structure and a more viable economy so that the afghan people can have a more prosperous and hopeful future. you can't do this kind of thing as an adversary of the afghan people. it needs to be working with the afghan people to empower them to establish a better life. that's what the administration is trying to do. in afghanistan. that's what we tried to do under the bush administration as well. >> host: when you hear stories, people within afghanistan, reaching out to

the taliban for some type of compromise or at least stability, what do you think? >> guest: well i think you have to distinguish between the hardcore leadership of the taliban, that has been bent on reasserting power and probably can not be reconciled and those people who perhaps, for economic reasons or other reasons, are aligning with the taliban in terms of some of the criminal and terror activity in the local areas, that i think our commanders out there believe these lower level people can be brought out of the insurgency. this is, that is what classic counterinsurgency doctrine is. to try and win the support of the population, to isolate the insurgents and then, to basically split insurgency. to bring those who are willing to come out of the insurgency, accept the government, drop violence, give them an opportunity to return into the society. but in any insurgency, there is going to be a hardcore of

people, idealogically motivated or power motivated really are not going to be rec sighable and you will have to deal with them with force. >> host: turning to president karzai's meeting this week, will one of the discussions be about corruption within his own government? >> guest: that is issue of longstanding for the administration. it is part of this notion of helping the afghan people establish a government that is democratic, that serves their interests and can bring them a better life. that government of course has to have legitimacy and support within the afghan people and regrettably the reputation of corruption that has plagued afghan government now for a number of years has undermined the support with the people. that is why we make such a point about corruption. it is not a favor particularly for us. it is something that the afghan government needs to do to have standing, credibility and support from its own people. and that's why the it is so

important that the issue be addressed. >> host: stephen hadley our guest. fairmont, west virginia, john on independent line. go ahead. >> caller: i need to make a statement before i asked the question. i was extremely disappointed in president obama joking about the immigrants coming over recently at his dinner at the correspondents' dinner. i think that, our main weakness, as far as watching out for terrorists would be our own borders with mexico. and i think we don't really understand the severity of, i mean they might look like workers but if just 2% of them are coming over here for reasons besides working in the fields? i just want to know, if your guest would tell me if while we're trying to, like that lady said, get in everybody's else's business all over the world, should we not be trying to tend to

our own borders as number one priority? i'm waiting for his answer. >> guest: we certainly should. and we've obviously, if you can not defend your own borders you're going to have a problem keeping terrorists out. one of the tricks of course is to defend your borders in a way that keeps the terrorists out but allows normal people to come through with as minimum interruption as we can and also allows the commerce that goes back and forth, the goods that go back and forth. there's a huge amount of economic activity between mexico and the united states. it is important for the economic health of both the united states and mexico. so it's, the trick is to defend your borders, keep the terrorists out, cooperate with the mexican authorities in terms of bringing them to justice but allow normal interaction among people across that border and the flow of commerce across that border. mexico has a huge challenge

in those provinces that are in the northern part of the country up on the border. it is a combination of terrorists, narcotraffickers, who are really threatening the rule of law and the ability of the government of mexico to bring safety and security to their people. it is an extremely serious situation. mexico is one of our closest allies. it affects our border but it affects potentially the stability of mexico. so in addition to dealing with our side of the border, we need to also, and both bush and obama administrations have been very active in trying to help the mexican government deal with the challenge presented by criminal terrorists and narcotrafficking elements. it is a serious threat to the government of mexico. >> host: maryland, rebecca on our republican line.

>> caller: i don't think our national security allies know what they're doing when it comes to foreign of affairs. we asked bhutto to get rid of musharraf and she ends up dead. we have less stable pakistan. n a diverse nation like pakistan, afghanistan, we need a strong man to lead that country, not democracy for troubled nations and, i like to hear your comment. >> guest: well, we tried very much to get a reconciliation between mrs. bhutto and benazir bhutto and president musharraf. as you know, tragically benazir bhutto was killed by some of those elements in the northwest terrors, -- territories, particularly elements of the tula mehsud.

it was a great tragedy for the pakistani people. president musharraf unfortunately made some serious political mistakes and it was clear that he had lost the confidence of the pakistani people. and what we did was to support him in steps he took to transition from the military regime to a democratic structure. he courageously set elections. took off his uniform. lifted the state of emergency and presided over what was widely viewed as a free and fair election that resulted in the current democratic government. i think that was a tribute to president musharraf. i think it was a real accomplishment of president bush's foreign policy, and think the alternative was to see pakistani, pakistan descend into chaos. which would be bad for pakistani people and would be a problem for its

neighbor india and would put islamic extremist in control of nuclear weapons in pakistan's inventory. so this was a very difficult time for the people of pakistan and i think actually president musharraf equitted himself well. we're lucky the transition was to democratically elected government, not into the descent into chaos we feared might occur. >> host: there is a photo in "the new york times" this morning. result of one of three bombs that took place in basrah in iraq. accompanying story attacks extremist groups to launch catastrophic attacks throughout the country despite recent security terroris including two commanders of al qaeda in iraq and known as al qaeda in mesoptamia in rare. what does it say about its security or its stabilization. >> guest: it is obviously a

huge challenge for the country. these groups if you notice from the article, most of the attacks, some of them were in fallujah out in the west, in the sunni areas but most of the attacks were in shia areas. this was an effort, iraqi authorities believe and i think our authorities agree by the al qaeda in iraq to do what they did in 2005, which was to attack shia to provoke shia to retaliate so you get sectarian violence and turn the country into chaos. i've been reassured by some quotes from iraqis who basically said they are not going to respond to this violence in this way. but it is an indication that iraq still has not fully stablized. it is a position of transition from an election to a unified government. unity government. that's what they need, a unity government that involves shia, sunni and kurds. that electoral process and

that formation of that government some taking a very long time. and it under mines confidence, gives a sense of instability and really opens the door for these kinds of terrorist attacks as they try to destablize iraq during this very difficult transition period. so the solution i think is, for one, for the iraqies to accelerate this process. get a legitimate government that involves sunni, shia and kurds and that the people of iraq can rally around and focus very clearly on the remaining security challenge they face and at the same time, get the economy moving and do those other kinds of things that is going to be a long term peace and prosperity to the country. >> host: what is your sense of the current condition of the iraqi security force which u.s. forces trained and police forces as well? >> guest: i of course have not been over there and been

out of this for a year or some but the impression i have it is a much improved security force. remember, the united states in a drawdown of forces that really began in 2007 and 2008 has gone from over 170,000 now to something like i think around 100,000. and we'll go to 50,000 by the end of august of this year. the fact that we can do that and despite the events of yesterday have still a pretty stable security situation is a tribute to the iraqi security forces and their ability to maintain order. similarly the election they just had was fairly free of violence. again security responsibility almost entirely in the hands with our support of course, of the iraqi security forces. so i think that has been a real success. but as we found with terrorist incidents here at home, it is very difficult when people are coming to

try to kill your people and in case of iraq have an objective to destablize the political system. it is very difficult thing to have zero terrorists incidents but it is a troubling development. iraqi security forces are good but obviously more work that needs to be done to stablize the country. >> host: two to five to 2009 our guest served as national security advisor to president bush. serves currently at united states institute of peace as senior advisor international affairs. prospect, kentucky, you're next for stephen headly. cynthia, on our democrats line. >> caller: good morning. i think it is very, very scary serving on institute of peace since he instituted two wars. i have two questions. do you agree that we have had double the problems, double the terrorists because of your war in iraq? and i want to know, my second question is why did

you allow mr. cheney to manipulate the intelligence that took us into iraq and do you repent of the damage you have done? thank you. >> guest: i would say three things. the caller used the phrase, instituted two wars. of course one of those wars, afghanistan, we've already talked about earlier on this show. it was a response to the attack on our country in 9/11 that killed over 3,000 people and the unwillingness of the taliban to rein in al qaeda which was responsible for that attack. in terms of iraq it was a war of last resort after iraq defied the international community and failed to account for weapons of mass destruction, supported terror, invaded his neighbors and violated the sees fire arrangements that were concluded at end of the gulf war. pooerz pooerz

. .the end of the gulf war. obviously wars are terrible things and particularly terrible in the countries of which they occur. but in both instances there was no alternative. i think it was not manipulation of iraq or whether there were stocks of mass destruction. there turned out to be no stocks of biological and chemical weapons but >> it was the same intelligence that basically every the oftelligence service in thee world shared the judgment thatw. evddam hussein had weapons of t mass destruction.he president clinton instituted aie strikes intodam hussein had weapons of mass destruction.

president clinton constructed air strikes and it was on the basis of that intelligence the change of iraq, and bottom line not that intelligence was manipulated but it turned out to be wrong. and saddam hussein had been asked to account for the weapons of mass destruction that we knew he had at the end of the gulf war. and he failed to do so. and the war in iraq was not our decision but saddam hussein's decision to defile the international community and not do what everyone asked him to do. was to destroy the weapons of mass deinstructistruction or sh.

caller: the countries will never quit fighting, we are bankrupting our nation, and we trade with no one. and we need to align ourselves with candidates and denounce these clowns in congress or senate that won't do the will of the people. thank you. st: tha you, i think >> guest: i think if you look at of thst election, overwhelmingly they have turned out to vote, and overwhelmingly they have turned against violence. remember in anbar province which votethis the western part of iraq, it was actually the aga sunnies that turned against al-qaeda and freed the province from control of al-qaeda and the terrorists. and this was basically sunnies t

coming forward and wanting to fe be, to repudiate terror, to be part of a unified iraq and to be part of a democratic iraq andfod participate in the, in the elections. so there clearly is an element in iraq in terms of the al-qaeda in iraq which is a sunni-based terrorist group, but i think what's interesting abouu iraq is that overwhelmingly all iraqis, including the sunnies, have rejected them. and overwhelmingly they are trying to work together really for the first time in the history of iraq and for theng t first time, really, in the arabe world where you have sunni, shia and kurds working together to te try and build a common futurethb for their nation. world, i think that's a very hopeful he sign. one would hope -- >> we'll leave this recorded segment now to take you live to the capitol and a briefing with house speaker nancy pelosi and others on a congressional delegation trip just back from the middle east and germany.

[audio difficulty] >> 100-hour trip, 40 hours in the air, ten different time zones, so when i said good afternoon, i said it with a question mark at the end. it was quite a remarkable trip. organized by the subcommittee of the armed services, congresswoman susan davis. i joined a trip that included, both of whom are members joining congressman davis on the armed

services committee and congresswoman edwards of maryland. house woman edwards and congresswoman saunders grew up as air force brats, so their closeness to the military is personal as well as official. i'm going to yield, now, to congresswoman davis, and as i do, i want to thank her for arranging a very extraordinary trip. if there were four words to describe what this trip was about in terms of meeting women on mother's day, our women in the military, women in afghanistan both leaders and, leaders in kabul and on the country side it was about security, security, security, security. they talked about education, it was about having security to leave the home for their daughters to go to school. health care, to go a clinic, security to leave home. jobs, security, security. they saw it as the answer to every challenge they faced. more about this important

subject and the extraordinary leadership of congresswoman davis, by the way, it's a return visit because she brought a group concluding congresswoman edwards a year ago on mother's day as well, so it's great appreciation and just i'm in awe of the trip that she planned for us. we learned so much, and we are better equipped to make some decisions as we go forward because of her leadership. chairwoman susan davis of california. >> thank you. thank you very much, madam speaker, and i'm very happy to share some remarks regarding our second mother's day visit to afghanistan principally to the kandahar region and kabul province. you know, the trip really had special significance this year. for one thing, it was a return. we told the women when we met them last year that we wanted to return, we wanted to see them again. we wanted to see how things would be going for them and, in fact, we did that. we were able to take a measure

of any changes that they had experienced. it was also just on the eve we were able to meet with women and talk about the importance of the parliamentary elections which are coming soon. and finally, of course, we were really honored by the speaker's involvement in being part of this particular trip because she brought such seriousness, really, to our mission. and she certainly elevated that, and she inspired so many of the people that we met along the way. the first thing i want to talk about are our troops, and also i would add the civilians who are now working in theater, the mothers -- our troops and also the civilians. the fact that we're visiting on mother's day, i think, just heightens the reality that these are women who are there, they are there knowing that their

children are at home. no brunches for them, no hugs for their children. they are there because they think that their presence will help our own national security. so that is why they are there. they're in this remote area, and it's not easy. they shared with us pictures of their children, we even shared a few tears. this is not an easy assignment, but we want to to impress upon you and we certainly impressed upon president karzai how significant this is that these are women. the second thing, of course, that we wanted to do was meet with the after beganny women, some of whom -- afghani women, some of whom we had actually met with in the past. they are the key to security in their areas because we know how

critical governance is, and i can assure you that without their involvement, there is no governance that they can look to, that they can have confidence in, and they can be certain that the people who are there, that their local leaders are caring about them. and not just something that, perhaps, doesn't matter at all to the future of their country. so when you ask them what they care about, they care about security. that's number one. they care about education. and, in fact, they seem to suggest that, you know, their kids and especially their girls can't always even go to school because of those security issues. we had at our table, we had a group of women. now, last year when we met, it was a group of women that had been put together through the province reconstruction teams, and they hadn't had a lot of time to necessarily work together. but this, this is a great

improvement. this was a council of women, and it ranged from women who essentially had been begging on the streets to teachers, to a midwife, to women who really believe that their voices were becoming important. even in a small way in some cases. we were really inspired that they believed that they had a role to play in softing the -- solving the problems. but we also know that for many of these issues, i'm going to just highlight one which is health care, the midwife who was there spoke to us about the fact that women without security, they can't even see a doctor sometimes. if they're pregnant and they're about to deliver and they're coming from one of the villages, unless the security is there, they may not even make it because it's too far a distance, and they said that sometimes women arrive at the hospital.

they're not quite ready to deliver. they're sent home, and in going home without transportation, without anyone there to care for them and with worrying about who could hurt them along the way, they don't always make it home. and certainly the babies don't make it. so these are very important issues to these women. we also heard that there are some projects there, and we want those to be sustaining projects, and they indicated to us that they were seeing that. one of the women who was very, very poor shared with us that she finally had some work, and she can now care for her family, and it made her feel so good. this is a woman who covered her face almost the whole time that we were there with her. very moving, very significant meetings, and we felt very good about that. and i wanted to just mention one other group of women who we had a chance to meet with because they were very impressive. in addition to the women who were there in a number of

capacities, we've just trained a group of women called the female engagement team, and that team has been trained in special communications skills. we actually think as women they have special communication skills, but they've been trained to especially work with translators and with the community. and what they shared with us is, actually, they're having as much success working with men as they are with women. and the very fact that you see them, it changes, changes the environment in which they're working. so we know that they're critical, and we were there to were them a happy mother's day as well. my colleagues are going to speak to the peaceful sure georgia that is coming, also the parliamentary elections. i was particularly pleased that one of the women who we had met with last year and who was at this small shura that we met with on the trip had put her name forward on the nomination papers for the parliament.

we will certainly be looking to see how the results of those elections turn out for her and for many of the women and for everyone who is putting themself forward at this very critical time for the afghan community. thank you for your presence here. i especially want to thank the speaker for elevating this trip and inspiring all that she met along the way. congress month boar call the low is going to be next. >> thank you very much. good afternoon, members of the press. i represent the u.s. territory of guam unlike my colleagues here who represent big states and large constituencies. i want to thank the speaker. she certainly lent a great deal of prestige to this codell, and it was unique. we were all women which was unusual, and, of course, mrs. davis. most of us here serve on armed services, i do as well. i'm asked to speak about our women in service, united states

armed forces. we met with them on several occasions, qatar, in afghanistan as well as germany. on mother's day we were in afghanistan, and so we went around the room introducing ourselves, of course, and asking them to introduce themselves and to give us an idea about their family. well, what amazed me was that here are women serving in harm's way on an important day like mother's day, some of them had three children all in college. somehow i don't know how they can financially accomplish that. others, one had a set of twins, the other had -- >> [inaudible] >> that's right. they all had children. so we were curious. we said, well, who's taking care of these children? well, mr. mom. the husbands. and in some cases the husband was serving in the armed services as well. he was deployed to some other area. so i really marveled at the way,

and they are many of them enlisted personnel but as well as in officer ranks as well. so we do have a great group of women in our armed services serving, and what they're doing, what they're carrying on their shoulders -- families back home, responsibilities, we all know that. so i really applaud our women in service. i also just want to, in contrast, mention quickly about the women in afghanistan. we have so much, they have so little. and they pleaded with us as the speaker and ms. davis said about security. they can't do anything, they can't advance. life expectancy in afghanistan is 45 years old simply because they can't get medical attention and so forth. so they're depending on us to try to help them in the way of security. security was the keyword wherever we went. and it truly was a mind-boggling

to me and an eye opener that we saw such a contrast between what we have and what they have. and so i think our mission, i just want to say we went on mother's day, we went to look at the role of women in these foreign countries and as well as to check on our women that are serving in the u.s. armed services. thank you very much. >> and we'll now hear from congresswoman nick si song gas -- tsongas. >> i want to thank susan and our great speaker for organizing a wonderful trip. it was a real pleasure to travel with my distinguished colleagues, and as they say in washington, this is really how we get to know each other, and so we did. and we survived 40 hours on planes and whatever. but it was my third trip to afghanistan. it was an opportunity to hear directly from our soldiers on the ground, from those leading

the great effort in afghanistan as well as to meet with afghan women in particular. and we were fortunate to meet with so many, as we've heard, women who are currently serving and to come away with a sense of their extraordinary commitment to the war effort there. and you've heard what they've given up. madeleine talked about some of the women and their children. the story that stays with me is i met a young woman who had a six month old baby. she left, and she will not see that child for another year, and we all know what happens in a year of the lifetime of a young child. so it was a very poignant reminder, particularly so because we were traveling on mother's day, but also, i think, demonstrated their extraordinary commitment to securing the national interests of this country as they engage in this effort in afghanistan. and their ever-increasing participation in the military, we saw an enormous array of ways in which they are serving our country. the women's engagement team was

one way, there was a woman who led a convoy that took 55 hours across very dangerous terrain. these are the kinds of stories that you need to go to afghanistan to hear, but their extraordinary contributions are in stark contrast to what afghan women are able to do. we did meet with the afghan shura, and you see as we heard women who finally are able to make a subsis tense living from the kinds of ways we're making investments in afghanistan who are worried those projects will disappear up to women who are very sophisticated, have extraordinary talent. they're doctors, teachers and only want to have the opportunity to contribute to their society in a very long-term way. so the challenge i think we have going forward is to make sure that women are part of the peace process. it's very important that they be, that their participation be significant and robust and that as the parliamentary elections go forward that there is a process in place that women will

be able to participate and lend their full voice to the process. as we heard, the issues are education, health care, economic opportunity, but without security women cannot access those basic elements of life, and they seek to do so in behalf of their families and our children. so i look forward as we go ahead to president karzai maintaining his commitment to include women in the peace process in a significant way, to make sure they're participating in our government, in their government in a significant way, and to, and to the ways in which our administration and our president makes sure that that is the case going forward because without the participation of 50% of the afghan population, the long-term security that we seek to achieve really will not be attainable. so much is dependent upon their capacity to become engaged, change their lives and change the lives of their families as well. so it's one of those things in

which there's nothing like a visit to really bring home the extraordinary challenges, but the extraordinary opportunities and to engage with the leadership that has the capacity to make the difference for the afghan people and in particular afghan women. so i want to thank susan davis again for putting in place an extraordinary effort. it's one that i will always remember, and i look forward to going back again. >> we're now joined by congresswoman donna edwards, maryland. >> thank you to congresswoman davis for putting together this return trip for ms. davis and i to afghanistan at mother's day. and we really do value and appreciate the leadership of speaker pelosi in joining us because i do think that it elevated the concerns that were raised by women last year and continue to be raised in afghanistan. i'd first like to say that it was really a privilege to meet the servicemen and women, our servicemen and women who serve in afghanistan.

who put themselves in harm's way as my colleagues have described, who are mothers themselves. i think to the young woman who graduated from the high school i graduated from, and she's a sergeant in the army. she has a 1-year-old and a 4-year-old here at home out in prince georges county. and it's their service and sacrifice that are our guide posts and barometers for success, both our success and the success of afghan women in a security environment that enables afghan women to provide for their families, to achieve prospects for economic development and for participation in governance in their country. i join my colleagues in emphasizing the importance of the upcoming parliamentary elections in september, and we had an opportunity to speak with president karzai directly about this. he confirmed for us that there will be 417 women who have

qualified for the ballot in the upcoming elections out of some 2600 candidates. these women actually went through an even more rigorous are qualification process this time. i think having to gather a thousand signatures to qualify for the ballot. that means that in every province there are at least two women, and president karzai stressed this in our meetings with him, that there were at least two women who would qualify in every province, that there would be a back-up plan if for some reason a woman would not be able to serve. with this number of women it's, you know, entirely possible there could be even more women than the mandate in the constitution. this is really important. and what we've learned is that if we want to gauge the prospects for success in afghanistan, a key barometer has to be the status of women, their participation in governance, their participation in economic development activities, their ability to achieve an education.

and after years and years of taliban rule where women have been so suppressed, we must use women's success as a barometer for success, overall success in afghanistan. and that success isn't just about the success of afghan women, in my view. that success is also tied to what is in our national security interests. there are poor women and women who don't participate all around the world. the linkage and the difference for us is that it's tied to our national security interests, and the security of afghan women, the security that's tied to whether or not there is corruption in the government, security that's tied to whether women can get to, get an education. security that's tied to whether a woman is safe in her home. security that's tied to whether a woman is able to go to market and to work and contribute.

all of these elements are tied to our unique national security interests, and i think that it is that combination that is really important for us to understand how we measure women's success. i'll conclude by saying that i hope -- i've been, and it's no great secret, a skeptic as to whether we can achieve that kind of success in afghanistan, but what i know for certainty is that we will not be able to achieve any level of success if it is not measured using a barometer of women, success and participation. i believe, i hope that president karzai understands this, and i look forward as we go through this week in discussions with the highst levels of our government that we're able to tie women's success to the overall success and the long-term success of afghanistan. thank you very much. >> thank you very much, my colleagues.

i wish to associate myself with all of their remarks singing the praises of our men and women in the military. we started in qatar at the base which is a platform for going into afghanistan where we thanked the men and women in uniform, spent some special time with the mothers in the service and heard their stories. it equipped us for when we went to afghanistan later in the day and could say to president karzai our families, our women are leaving their babies and their children at home in order to fight for our national security. and we are present in afghanistan because it is in the interest of our national security, that's the way they see it, a safer world for their children. but you should know that we expect the policy here to match the sacrifice of our troops and recognize that women were making this extraordinary sacrifice. when we spoke to him, we talked

to him about what congresswoman edwards said, about the elections and the increased participation of women, but also about the jury georgia. jirga to get consensus for possible reconciliation with the taliban. we wanted to make sure that women were represented in sufficient numbers, and i think we made our point there. it was going to be a legitimate consensus, it had to have the full participation of women. we spoke to women leaders at the dinner he had for us and heard from them the challenges that are faced and the progress that they thought was being made and that more needed to be done. but what was very moving for us was to go -- congresswoman davis described it so well, but she did not describe we had to take a plane to kandahar where we met with our troops, we met with

our, a female engagement teams. imagine our women reaches out to the families, both men and women, but especially the women in afghanistan to establish communication, and it has reaped wonderful results, and we're proud of that. meet with the moms and the rest. but then take another long helicopter ride to the province of kalot. so this isn't just about going to see women in kabul. this is about -- i don't know how they found this province in the first place because it was so ri mote. but they were there last year, and they said they would return. imagine these women from the poorest of the poor now 'em employeed because of -- employed because of initiatives of usaid. grateful for that. but again, it all came back to national security and their security. security, security, security. and we believe that women as community builders, as moms and the rest are essential to that

security, and we are taking that message back again to president karzai. can you imagine being in a room with these women, again, who were beggars, as poor as they could be, and now saying, i can feed my children. but we need to have security. and, again, i won't repeat, but the congresswoman said the level of professionalism of some women and the poorest of the poor coming together and enabling us to be part of it. we met the governor of kalot, he welcomed us with some children when we arrived, but the meeting was women only. and the trust they placed on us, the gratitude they had to congresswoman davis and edwards for coming back this very far, distant place, at the end of the meeting these poor women gave me these bracelets. there are many more. they go all the way up to here. [laughter] i'm going to save them for my

granddaughters because it's very moving to have them make a sacrifice even of a gift to me and to all of us in appreciation of our visit. they placed our trust in us. we know that the future of afghanistan depends on them, and that is part of what we'll talk to president karzai about. when we met with president karzai, we emphasized the four points we always do. it's about security -- have we said that word enough? it's about governance, it's about the people feeling benefit, reaping the benefit of policies that we have helped to fund there. it's about corruption. a decision to end corruption, to have more accountability and more transparency in their government. but because a lot of our federal dollars are going there in the military and otherwise, we need accountability too. we're subjecting every dollar we spend here to very tough scrutiny.

we want it, we want that money to be well spent in afghanistan. and then with the question of the involvement of the other countries in the region that border afghanistan which have a stake in the stability of afghanistan. that would be china, russia, the stans including pakistan and iran. thank you. everyone has a stake in this. and all of these areas i really want to salute the president, because he went to afghanistan. he was very clear that the security of afghanistan related to the security of women there. secretary clinton has been absolutely superb, and i don't think we'd be where we are in any of these issues without her tremendous leadership, and i support the statement she has made about the importance of ending corruption in the afghanistan. we're at a critical moment because we'll soon have to take a vote on this, and we want to see how in the view of the

president after this meeting what the further development is of a plan for success. i think we all agree that the mission is a necessary one to protect our national security. the question is, what are the prospects for success? and what is the commitment -- excuse me -- of president karzai in terms of governance, of ending corruption, of promoting security and recognizing the important role that women play in that. we're not there to promote women's rights per se, we're there to say that women's rights are essential to security, and that's essential to our national security. so, again, we were -- really, it was an honor for me. last year i was in iraq on mother's day in baghdad on mother's day to thank our troops there. i went, our moms. i met one grandmother on this trip too. after we left afghanistan, we went to see our wounded warriors

in germany. what can you say to these young people who have risked their lives? and we saw some in very, very, very critical condition. but their patriotism, their courage, the sacrifices they and their families made for our country heightens the need for us to have a plan that will work in afghanistan, and that is our message to president karzai. thank you. with that, we're pleased to take any questions on this subject. >> the white house is concerned -- [inaudible] also talked about liking the -- [inaudible] did you talk to him about those comments that caused some consternation in the white house, and also do you believe president karzai is -- [inaudible] >> i invite my colleagues for any comments they may have. i believe that those comments by

president karzai were probably for domestic consumption, and they're really behind us. we're talking about how we go forward in a way with a plan. the president has confidence in general mcchrystal and ambassador eikenberry. we were briefed at some length by the two of them there. they believe that the prospect for success is good but must be worked for. and i'd just as soon without further comment put what president karzai said behind him. however, i did tell him that his leadership is required to convince people that he has made the right decisions in terms of security, corruption and governance if we are to support a plan in afghanistan and that the president has given him plenty of opportunity. this trip will tell us what the message will be, and i think

that, i think we, again, ice skating scores, just take that one off, and we'll take one off here, and let's just go where we have scores in the common. [laughter] >> do you believe -- [inaudible] stabilize this region and build this -- >> i believe that president obama will make, has been making that judgment. and i think that the message has been clear to president karzai. our young people are risking their lives, our moms are leaving their children, our budget is making a serious commitment. first, of course, our treasure, our men and women in uniform, are our first and foremost responsibility. if we had all the money in the world, we wouldn't want to squander any of it. we don't, and so we'll be scrutinizing the expenditures going into afghanistan.

but, again, the sacrifice in every way that the american people are making for our own national security. let's remember, we're only there in our own national security. it requires a plan with a reliable partner. i think he understands that, and, you know, i trust the president's judgment as to that. does anyone want to say anything in that regard? >> does your visit lead you to encourage your members to vote for the supplemental that's coming up? i mean, do you have more confidence in the u.s. mission so that, i mean, you still have a lot of skeptical members of your caucus with the funding bill coming up. how does your visit factor into that? >> well, first of all, let me say on war votes i never encourage -- you know, we present the facts, and members make their own decision. it's a different kind of a vote. it is -- and then at the end of this week we'll have a better idea of what we can present to

members, so we'll talk again about this after the end of the president, president karzai's visit. >> [inaudible] iraq conflict you have sort of a, for lack of a better term, a group in your caucus here. dovetailing off that question, does that make it harder to sell? you said you'll know more later this week, you'll present some of your cases. it's about security, but some of them just don't think the united states should be committed to afghanistan, think that we should move on past it. >> i think we'll know about the vote when we see what the proposal is that the president will make following this week. congresswoman edwards, did you want to speak to that? >> thank you. >> representative -- >> i am a member, i am a member of the progressive caucus, and as i described, i have been one who's very skeptical that the vision that's laid out. so i plan to use this visit and other information, and as this

week of meetings develops to make an independent decision about whether or what kind of ongoing support for this effort. and i appreciate the speaker's leadership here because a vote on war and peace, those are different kinds of votes, and those are votes of conscious and clarity, and i spend, though, to use what i've learned during this visit to make that decision and to share that with my colleagues so that we can make independent decisions. and i look forward to the remainder of the week of president karzai's visit and to hearing from the administration about the direction forward. >> is madam speaker, i wanted to ask you about -- >> [inaudible] >> again, we'll see what he says on his visit here. i think he understands full well how important it is to us.

first of all, one of the women, well, in the course of our visit somewhere along the way the women said to us, and i'm not identifying with any particular meeting, that they saw security being served by ending corruption. so the people there understand whether it's the governance issue and how government works for people, whether it's security and the way that corruption could stand in the way that they see a connection of corruption to impeding governance, impeding security. and, again, president karzai shouldn't be doing it just for us. he's got to be doing it for the people of afghanistan and, again, in furtherance of them understanding the benefit they have from his government.

so i'll be interested to see what statements he makes. it's a big challenge throughout the world, and we're not talking about paying a dollar to cross the road. we're talking about systemic corruption within the system that prevents the flourishing of a nation. and we expect a strong commitment in that regard, and some of it will be public, some of it may be private, but i'll depend on evaluation of the president of the united states. we will have president karzai here tomorrow to speak to the democratic and republican leadership of the house. i know he'll be over on the senate side as well. and i'm sure he'll hear the same message there. but i told him we will welcome you with candor and friendship, candor and friendship in my view go together, respecting the office he holds and with dignity. but that we do have questions that will require some answers. it's a, it was a pretty exciting trip for us, especially we were

leafing -- leaving for germany as the president was leaving for the united states. our planes were side by side when we strove to get out first because we still had another destination before coming to the united states. and i think that, i think, hopefully, our trip made an impact in terms of raising the level of the importance of women and security. again, this isn't about just we want more rights for women. this is about you're not going to have security unless women are in the communities building this security for you. and that means our women fighters, that mean our female engagement teams, that means the women of afghanistan, that means our civilian women who are working over there, and that increased communication has been a very positive force woman to woman. and that's what our trip was about. so we thank you -- >> if i could just jump in on the supplemental. i think a question back there on the supplement, is that what you

were questioning? yes. well, i do feel that, you know, this time around that it'll be, there'll be a lot of scrutiny coming up. they will be asking a lot of questions, and we're going to have to have answers, and i agree with the speaker that, you know, after this meeting with our president, i think some of these things will be ironed out. but i do know that we probably will have a little more difficulty among members, questions because we did find those that went to afghanistan a year ago, we found that the plight of the women were not much improved. so i think there will be questions, more questions than usual. >> if i just may say, we find ourselves in the situation we're in because in the fall of 2001 the united states went into afghanistan with overwhelming support of the congress, routed but did not defeat the taliban. they headed for the hills, and

when we went to iraq, they came back. and they started their campaign to overtake villages and towns and provinces and the rest. so now we're in this situation where since 2001 until president obama became president there was no plan in afghanistan. so this is a heavy lift because there was so much time when there was no plan. last year when we made the vote, the president was only in office for, what, ten weeks? a few months, and we had to do the supplemental in order to pay the bill from the previous administration. the president has been at work with the generals, with the state department and the rest, general eikenberry having worn both hats as the general in charge there and now as the ambassador, general mcchrystal who has the president's confidence to put together a plan on how we go forward. essential to that plan is the reliability of the partner that we have, and that would, that's

the message that we brought to president karzai and with the idea that though it's in our national interest and that's why we're there, we don't -- >> [inaudible] >> and internationally as well. in any event, recognize why we are where we are, and as we make these judgments how long there's been a period of real neglect as far as a plan in afghanistan. thank you all very much. >> the senate is still in recess for weekly party lunches, but when members return at 2:15 eastern, work continues on the financial regulations bill.

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replace justice stevens' wisdom or experience, i have selected a nominee who i believe embodies that same intelligence, independence, integrity and passion for the law. and who can ultimately provide that same kind of leadership on the court. our solicitor general and my friend, elena kagan. >> with the supreme court justice nominee in the news, learn more about the nation's highest court from those who have served on the bench in the c-span's latest book, "the supreme court." providing unique insight about the supreme court available now in hard cover and also as an e-book. >> and with the senate coming back at 2:15 until then a discussion on the president obama's selection of solicitor general elena kagan to serve on ok. supreme court from today's "washington journal."

>> host: thomas mark sherman ofn the associated press, because she wasn't a judge, is more going to be expected from elena kagan as far as case law and he: thinking than maybe previousl te confirmation hearings we've she seen? >> guest: i don't know if more gut: be expected. nominees say as little as they bve to to win confirmation. elena kagan herself lamentedlite this in a law review article she wrote about 15 years ago, but as she said last year, she's sort of seen the error of her ways. >> host: it expect that will shs come back as well. >> guest: a few times, yes. >> host: if the that is true, how will those definitions wreak down as far as republicans -- break down as far as publicans o and democrats are concerned? thr >> guest: republicans already are suggesting epshe has a thinn record and that means perhaps ad

she'll be a rubber stamp, i've heard many people say, for thei administration. and then there are questions about her political inclinations, her ideological leanings which republicans are already suggesting she'll be a left of center justice which i t suppose shouldn't be much of a l surprise. ats, on the other hand, will paint her as a moderate well w giuethinss the s mainstream open to both sides. president obama talked about her willingness to listen to both sides when he nominated her yesterday. side >> host: as far as her current job as solicitor general, if shs became a justice, wouldn't being the solicitor general require her to recuse herself on cases coming up before the court, andi how many of thoseng the cases py cauld be affected by that? >> guest: well, thesere's -- you're right. i mean, she would have to stepu? aside from a number of cases. maybe on the order of a dozen, herhaps more that the court actually agrees to hear and countless more where the court orkes action, disposes of the m

case without hearing.actual so there'll be aly few. this, there's a case involving the government's lawsuit against the tobacco industry where, which is currently pending at the court. if the court agrees to hear thae case which would probably happeu endire the decision to hear the case would happen before her confirmation, she would probably have to step aside from that,o e amost certainly. >> host: but that's not problem overall then. >> guest: well, i think it's probably considered a short-term problem but nothing more than na that. >> host: talk a little bit,, then, about the preparation that's going to go leading up to the confirmation hearing. who's the handlers assigned tono her, and what's their job until confirmation? be >> guest: well, it's essentially the same team. the white house counsel itself has changed since last year, buu that office and that team along with the justice department's office of legal policy will beut heavily involved in getting her, ready for the confirmationice dd hearings. picy,rse; she was through a

confirmation hearing just a year ago.etting r it will be the same in many respects, but not certainly in the intensity. so there'll be a lot of time over the next few weeks preparing her for the questionsl that are certain to come on a range of hot button issues and at her articles thater she's published and speechesat e that she's made to pick out, you know, what might be problematic publand might raise some questions at her hearings. >> host: such as? >> guest: well, what we've already talked about, her view>> of the kind of scrutiny that wil nominees should get, certainly. she'll get asked about her view of executi kve power.tiny she suggested in the past that she's, that she endorses a fairly robust view of theer. president's authority. that'll raise some questions on both sides -- >> host: because? >> guest: well, republican senator sessions said yesterdaye that the american people think cat washington's exercising wan too much power, and that the --

president has, you know, seized too much power and wants more and wants a friendly supreme court justice to ratify that ower,a. some democrats, some critics of the past administration'sy suprm policies on, in the war on terror some of which have been the paued in this administration, detention policies and defense of there poliantless wiretapping policy and trying to prevent its exploration this lawsuits byppin using tghe state secrets act,in those are the kinds of questions she'll get, and i'm sure she'll say as much as she thinks she qn has to but no more than that. am host: numbers on the screend ef you want to certa call in, ao >>urnal@cspan.org and c-span wj off twitter.is the callers this morning mentioned a coup of specifics, so if you wouldn't mind fillingl in the lanks, the rotc decisions caat she made. how much is that going to play y ento the confirmation hearings?

>> guest: well, not exactly rotc, but it was campus, military recruiters on campus. callard for a long time maintained as part of its antidiscrimination policy the policy of preventing recruiters from companies and government agencies that themselves practiced discrimination. and the military's at first barring of gay and lesbiany soldiers and the institution of the don't ask, don't tell policy was taken by harvard and lots of --s r law schools as discrimination. so they didn't allow recruitersk on campus, although at harvard they didn't allow recruiters to. use the campus placement office, but they did allow them to usett campus space and work through the veterans' association of the ut thed law students. when elena kagan became dean, te there was an -- by that time recruiters were already allowed back on campus.ecame

when a court, an intervening court decision was, went against a federal law that told federasities they could not bar recruiters from campus if they received federal funds and continued to receive those un funds, when that happened, then the law school dean kagan told whe military recruiters that they could noen longer use the office of campus career placement. told milita then the supreme court tthey c intervened, reversed that court ruling, and the recruiters camec back one campus. -- so cathat's the sort of long story, and that's, i'm sure,he t going to get explored in great detail. >> host: another caller brought up an as is sociation withe th n sachs. >> guest: well, she was on some sort of an advisory board that did not advise goldman sachs, ot best i can tell, about anything having to do with, you know, investment decisions.sachs. but just about policies, you having know, global affairs. it was some sort of global this, advisory board. and she received, i think, a

ere,000 payment in 2008 for that work. >> host: you had said that when her hearings for solicitor $1neral came up, she received wide support even amongst some s republicans. will that support be seen this i time around? >> guest: well, she did gete seven republican votes in theroe her confirmation. now, i believe all seven areoin most of those seven have already said, well, that was then, thise is now. that was an appointment for al f defined term, and this, of course, is for lifetime tenure. defid thenclear how many of for lirepublicans will, will vote for her this time. on the other hand, she did also receive support from some sort i of conservative legal scholars, and i think we'll see some of that again. >> host: what's her mind set as far as, a lot has been said as far as how much information she reveals on how she thinks about things. as what's her reputation on that? >> guest: well, it's said she's very discreet personally, thata? she does not reveal a lot of herself. she's more analytical, but thats

she is m not embrace ideological positions with great gusto. that >> host: has she talked aboutmbe that at all or at least explained why she's so, she>> plays cards that close to the s chest? >> guest: well, no. although, you know, she's beenwy in a number of roles where i guess she's seen her job asingso requiring that she play her hand that way. she she worked in the clinton whiteb house as a domestic policy that r. as the dean of the harvard law school, her role, she saw her role as reaching out to bothhou. sides, as not being a lightningr rod, but as being more of ato bh person who could bring people together. and as the solicitor general, she's there to defend the administration as well as actspp ofle congress. >> host: because of her reputation of bringing people together, does that necessarily mean she'll be able to do so ife she becomes a justice?ecause of >> guest: well, i think there'sg probably a long-term goal that she could do that. she be i don't think anyone expects ite in the short term, her arrival l

on the court is going to makebud any substantial difference in any of the really controversial, he courtous issues t beals with.or there to >> host: our first caller isanyg coom maryland. chuck on ourntro republican lin. chuck, go ahead. >> caller: good morning, how are you this morning? part of my concern and the question i have is that i'm really appalled with all of the justices and all of the judges concern very well qualified toy be on the supreme court and havl justices a experience in interpreting tndhe law and theqo constitution that this lady would be picked who's basicallyd been an administrator, she seems to be very much an i'd log as far as -- idealogue in the liberal agenda, and i'm juster surprised there hasn't been mor. made of this more so than taking the reciruiters off campuses and stuff like that and that she's basically more of a politician or a defense attorney ord thing. prosecutor than she is a judge to interpret the law, not change

the law. and i'd like you to respond aspt to why there's not more emphasis on her lack of experience just like with president obama. thank you. >> guest: well, there has been some made about her lack ofence experience. on the other hand, the administration and lots of guople were saying, gee, isn't it about time we get someone on the court who hasn't been astrat judge and particularly a federai appeals court judge? the rest of the court, the other eight justices with whom she j would serve if she's confirmed,. all served as federal appeals court judges, and, of course,ule elena kagan has not been a judge in fedeast. now, for trahe past nearly 40 years everybody on the supreme court for the past nearly 40 years everybody confirmed for the supreme court has previouslt served as a judge. but before that time it wasn't uncommon to find justices with a variety of experiences that did. mot include being a judge.ncom earl warren, of course, was a governor, hugh go black -- hugo

black was a senator, william douglas was an sec commissioner. so it hasn't been uncommon, although it has been recently.s. >> host: senator mitch mcconnell commenting on theommo. experience question, here's what he had to say. >> ms. kagan is currently a -- member of president obama's administration at his pleasure. by contrast, today she was a nominated for a lifetime appointment to the nation's high e court. -- highest court. the sition itsf scrutiny is, wasrly, much higher now. now we must determine whether posion oho is a member of the president's administration will be an independent and impartialy jurist on the nation's highest court. the american people also want a nominee with the requisite legae experience.ghest cot. they instinctively know that a o lifetime position on the supreme court does not lend itself to on-the-job training. that itsfurse, one does not need to have prior experience as a judge before being appointed to the

country's highest court. but it strikes me that if a nominee does not have judicialoh experience, they should have substantial litigation experience. expernce,has neither. she has neither of these. >> what do you think about his statements? >> she does not have courtroom experience. there is nothing significant. there were a couple of cases and she was the junior associates. but until her sixth argument in front of the supreme court, she rarely did step aside the court room. this is something that obviously is going to be debated du >> or at least the ability to be independent when you are a member of the administration. >> guest: again, other questions that you'll have to face. there of course have been justices in the past from the

administration, william rehnquist, marshall, the solicitor general, when he was nominated, justice scalia just as john roberts and samuel alito served time. >> host: you're on with mark sherman. blake, go ahead. >> caller: yes, i just want to point out it's really being slabbed in the back of the progressive of the democrat party. it appears the democratic party will not be supporting this administration in the next election. i just want to point that out. also, it appears that the

nomination will move the court to the left -- to the right, i'm sorry. and also point out that -- when the previous republican nominations they were made, they were made basically on candidates. there was no issues about it. now we have a nomination that we think have succumb to the system and trying to a resolver. no, we don't need that. we need somebody that's going to move the court a little bit more orientated. i also want to come in about reporting done by the, you know, correspondent from the newspaper. they are not doing a very good job about the judicial system. and it doesn't have information and everybody is is just playing a stenographic function. >> host: caller, back to the

point about your the nomination moving the court to the right. what makes you think that? >> caller: because she's affiliated with goldman sachs and, you know, that's something to think about. not only that, it's that she has succumb to everything. you don't need a calm person. you need somebody to actually stand up for the democratic principal. i don't think he's going to be succumbing individual. >> host: mr. sherman? >> guest: i think the first thing is there's a generally accepted invitation that the vote on most cases probably will end up looking a lot like john paul stephens on the cases. in terms of the actual voting record, i don't think people are anticipating a great deal of difference. certainly, no one thinks he's going to come on to the court and play any kind of a role the way justice stephens did in the

later years immediately. from that point of view, the court may get more conservative in the sense that it will be lacking the sort of glue that helped formed coalitions and put together some majorities in closed cases. on the other hand, it's no -- there's no doubt that there have been liberal interest groups out there that were really hoping that president obama would not be a real clear liberal voice and somebody who as people have said, the liberal scalia. is that haven't been his focus and way of operating in most of his judicial nominations. >> host: could that be the case if he has to make another appointment to the court in the next few years? >> guest: well, it could be. on the other hand, if the republicans made gains in the election in the november, he may find that he has less rather

than more room to operate if there's another opening on the court next year or the year after. >> host: detroit, michigan, good morning. go ahead. >> caller: hi. washington journal? >> host: yes, you are on. >> caller: okay. yeah, i'm from pittsburgh. i'd like to speak to the guest. >> host: you're on. go ahead. >> caller: you can't hear me? >> host: no, you're on the air. go ahead. we'll leave it there. tony, republican line, palm beach, florida. >> caller: good morning. how are you? i think there's a horrible potential nomination to the supreme court. you are saying this woman is a moderate. she's not a moderate. he's comes from one -- she comes from one the most liberal institutions of higher learning, harvard university. i wouldn't send my son or daughter there, if they got a

free scholarship. it's socialist college. she's pro homosexual, he's a raging lib rat and she's anti-christian. >> host: do you have a question for my guest? > caller: yeah, is she married? straight? gay? have children? >> guest: she's not married. i'll leave it at that. >> caller: good morning. she's well loved at harvard law school, i think it was a safe pick by obama. i don't think he wanted the fight like someone like dyne wood. my only question is it's odd that he's kind of following in bush's foot steps when he chose

harriet meyers, i think people should judge her in her total academic and everything else. these hot button issues that they talk about with the military recruiting and other things. i really don't think they have any value in the total picture of all of this. i just want to know what your guest thinks. > guest: well, people have tried to draw some parallels to the harriet meyers nomination. she was the white house council will president bush nominated her. i think that her record pryor to serving in the administration was completely different from meyers and atlanta kagan was the clerk on the supreme court that served the marshal, she was the dean at harvard law and solicitor general. she's had a lot of top legal

jobs. but she's had a reign range of top-flight jobs. >> host: pittsburgh, pennsylvania. go ahead. on the democrats line. >> caller: hi, mr. sherman, do you think the time will come when -- i don't know how ms. kagan would vote if we could knock down the corporations or the right wing of the supreme court seems to think is a good thing for us? >> guest: well, as the solicitor general last september ms. kagan did in fact argue in support of the federal campaign finance law that the supreme court struck down. that said, she's said very little and written very little about her issues and interest to business.

we don't very much about her on that. >> host: part of the announcement, the president said yesterday the reason he choice was an understanding of laws but as it affects the lives of ordinary people. how does he define that oar -- or see that? >> guest: he pointed to her in the citizens of the supreme court as one of those. but the truth is that she's not the -- you know, she's not a person, you know, who -- i mean she grew up in manhattan. she went to top schools her whole career. she's taught at top schls. she does not have some of the personal story say that sonya sotomayor had when she was nominated. >> host: florida, john, republican line. >> caller: yes, good morning. i think she's a female obama. she has no experience like he

had. she hates the constitution too like he does. how can you interpret the constitution when you don't like it? >> host: what leads you to believe she hates the constitution? >> caller: she said its flawed and everything exactly like obama said. they don't like it because it doesn't redistribute the wealth and, you know, that's what carried us for 300 years. of that took us from being dirt poor farmers into the most powerful nation in the world. they just think it gets in our way and they can't do what they want. she has no experience. obama has no experience. she knows nothing about her or him, i think they are both in the same idea. >> host: mr. sherman, evidence 6 his statements? >> guest: well, some critics have pointed to the speak that marshal gave when he referred to the government and constitution as defective when written.

obviously, it was referring to slavery and it took amendments and civil war to correct. some people have seized on that and the use of the word defective. on the other hand, when the caller said she's like obama, there's probably a certain amounts to truth in that the president say see in her what he sees in himself, which is this person who is able to reach out and bring people together. now, obviously, that's his view of himself and critics have their own views. there is some of that win think, at play here. >> host: is she forced to step down from her current position? >> guest: no, she won't, i believe, step down until she's confirmed. she'll continue to play some time. although the bulk of her time will be getting ready for her hearing. she will not take part in any new matters before the solicitor office. >> host: mark sherman reports from the associated press and issues of the supreme court.

we go next to engl ewood, ohio. dennis on the republican line. >> caller: why would the president nominate an unmarried women with no children, no family background, how is she going to be fair to somebody coming before her court with an argument on a family issue when she's definitely from the left side, left-wing agenda, pro abortion, anti-family and so forth? >> guest: she has a family. two brothers and a niece. her parents have both passed away. and -- >> host: baltimore, maryland. go ahead. >> caller: hello, hello, everyone, mr. sherman. you know, some of these callers, i have a comment. some of these callers who call in, i don't know if they realize how they sound so

discriminatory, whether the women is lesbian or not, she has a family -- just because she's not a mother, doesn't mean she's anti-family. no one knows if she's anti-christians. because some of the fake christians don't know anything about god. i hope she is like obama. he's doing a fabulous job. for the far right wing tea parties and all of that, you're going to have a real surprise when you realize you guys are not taking over anything. >> host: let me switch position. a couple of papers today and yesterday talked about the religious make up the court? how does that change? why is it a fascinating question to some people? >> guest: it's fascinating that since the nation's founding that the court has been made up of white protestant males. for the first time if she's confirmed, no protestants, six

catholics and three jewish members. there there's any significance is debatable. a lot of people think not. it is a remarkable shift in the court and a very short time. >> host: have the justices in the past talked about this issue or given some insights to their thinking on it? >> guest: i think the justice could agree that it makes no difference. i have heard several say there was a catholic seat or jewish seat on the court. now there are justices who happen to be catholic or happen to be jewish. they are not chosen because of their religious make up. >> host: if she's nominated by november, or before the session starts in october, actually, what case is in a general sense will be facing the court this next term? do we know yet? >> guest: there are a few cases the court has taken for the next term. there's an interesting case

about the folks who protest at a soldier's funeral. anti-gay protestors at funerals. the court has taken on that case. that's probably the most interesting high profile case. >> host: stafford, new jersey. >> caller: good morning, mr. sherman. mr. sherman, president obama likes to use the expression whole host of, for example, whole host of reasons why he might have choicen ms. kagan could you please comment a little bit about the political reasons, for example, you just mentioned that ms. kagan was not chosen or that the choices are not made based on religion. but politically, isn't it an extremely important part of this

selection, the election of 2012 and that mr. obama or president obama is looking forward to, for example, the support of the hollywood people such as mr. spielberg and mr. gethan and some of those and he's trying to please that part of the democratic party? thank you very much. >> guest: there's always the question of what role supreme court choices play in presidential elections. there's not a lot of evidence that they play a great role. and i don't know that this would be any different. >> host: have the justices themselves said anything about this nomination? >> guest: no. ii haven't heard one. >> host: maryland, good morning. richard on our independent line. >> caller: yes, i was wondering if you could call in. >> host: you're on. go ahead. >> caller: oh, thank you.

yes, good morning. >> host: sir, you're on the air already. just ignoring what you are hearing on your television. >> host: -- >> we'll leave the portion of the washington journal to go back to the senate. live coverage on c-span2. and i want to assure him we'll try to get a time agreement completed as soon as possible, and i ask my colleagues on this side of the aisle who want to speak on this amendment to call the cloakroom so we can get that done. and, mr. president, i ask unanimous consent that senators burr, hutchison, roberts be added as cosponsors of this amendment. the presiding officer: without objection. mr. mccain: and i apologize to my colleagues for giving them false information a couple of days ago. it isn't $125.9 billion that we're now pouring into fannie

and freddie. it's up to $145 billion that's now being poured in. $145 billion. i would remind my colleagues again that last -- last christmas eve at 7:00 p.m. was when the treasury department decided to lift the cap which had been at $400 billion. it is now up to $145 billion. so here we are addressing "financial regulatory reform" and not looking at $5 trillion of toxic assets. that's already spent $145 billion off budget, off budget. incredible. now, my distinguished friend from connecticut pointed out yesterday, he says i want a little revisionist history. he says the house financial committee passed bipartisan legislation. it stalled in the committee over here despite the support for it. the republican control committee

then passed a bill and never filed it, never brought it up for vote here on the floor of the united states senate in 2005. that's my friend senator dodd's statement yesterday. the fact is, a little revisionist history, on april 1, 2004, the senate banking committee passed the bill, the federal enterprise housing regulatory reform act. all 12 republicans voted for it. all democrats including the distinguished chairman voted against it, according to the record. so neither bill was taken on the floor because as we know we don't move forward with legislation if it's blocked by the other side. then senator dodd went on to say i became chairman of the banking committee in 2007. we arrived in 2008. we had a significant number of hearings. the summer of 2008, the banking committee passed a comprehensive bill, et cetera, et cetera. the housing and economic recovery act was finally enacted on july 30, 2008. just 39 days later, fannie mae

and freddie mac were place norwood conservatorship. i would remind senator dodd that back in 2006, there was a group of us in response to an inspector general's report that said we need to fix it and fix it now. that was blocked by the other side. so -- so senator dodd said if you think that the market took a plunge last thursday, adopt the mccain amendment, it's a reckless amendment. what's reckless is the status quo. what's reckless is to totally ignore $5 trillion in toxic assets. already $145 billion of the taxpayers' money being spent. it's reckless for us to go to the american people and say we're fixing the problem that caused the financial meltdown, but yet we're ignoring fannie and freddie. we're ignoring the trillions of dollars of toxic assets. and don't worry, we'll address

it later on. that's what the distinguished chairman is going to say, we'll address this later on. later on? later on, when we have this already done, and it's not on budget. remarkable. and what the amendment says is a conservativeship -- conservatorship has to end in 24 months. we'll give them two years, we'll give them two years to figure all this out. so it's reckless, it's reckless in my view to say that we're not addressing these trillions of dollars in toxic assets. the hemorrhaging of $145 billion already of taxpayers' dollars, which there is no expert that believes we will ever, we will ever see return on. and finally, i would just like to quote "the wall street journal" editorial of this morning that says $145 billion and counting, fannie and freddie lose it all for you.

$145 billion and counting, fannie and freddie lose it all for you. talk about the -- the editorial says these efforts to support the obama antiforeclosure problem resulted in a doubling of loan modifications compared to the previous -- let me start from the beginning. "fannie mae yesterday announced its 11th consecutive quarterly loss." 11th consecutive quarterly loss. $11.5 billion and asked for another $8.4 billion in taxpayers' assistance." they lost that. they are asking for another $8.4 billion. that puts us well over $150 billion. fannie mae is the cal ripken of bad real estate deals, reliably pouring taxpayer money into the housing market. granted, fannie faces tough competition from its toxic twin, freddie, which last week announced its own request of another $10.6 billion from taxpayers. once the checks from the

treasury is clear, fannie and freddie will have combined to consume $145 billion in taxpayer cash, and the end is nowhere in sight. both companies warned of further losses triggering more government assistance, which is now unlimited after a 2009 treasury decision. the losses are unlimited because the companies are now run by the government not to make money but by deliberately downsizing housing. in yesterday's press release, c.e.o. mike williams didn't even pretend that he's running a profit-making business. quote -- "in the first quarter, we continue to serve as a leading source of liquidity to the mortgage market, and we made solid progress in our ongoing effort to keep people in their homes. these efforts to support the obama antiforeclosure program resulted in a doubling of loan modifications compared to the previous quarter, ramping up

modifications make perfect sense in the up upside-down world of fannie mae. the company also announced that most of the loans it modified in the first three quarters of 2009 had gone delinquent again within six months." does anyone get that? most of the loans that were modified at the cost of 100 and some billion dollars of taxpayers' money have gone under again, have gone delinquent again within six months. talk about the -- "the wall street journal" goes on. talk about an exciting business opportunity. in case anyone still hasn't gotten the joke, the company also clarified yesterday that its directors, quote -- "are not obligated to consider the interests of the company unless the government tells them to do so. the real joke is that the obama administration and senator chris dodd have collaborated on a

financial regulatory reform bill that includes no reform of fan or fred. senators should rectify this embarrassment as early as today by voting for john mccain's amendment to end this most costly of all bailouts." so i guess my question to the distinguished chairman, even if he doesn't accept any of the statements that i made, is it true that there is trillions of dollars in toxic assets, and if so, what are we going to do about it and when? if not on this bill, where? so this -- you know, it's -- the cynicism out there amongst the american people is at the highest level that i have ever seen it, in the many years that i have been privileged to serve. and to go to the american people and say we're going to take measures which will prevent another worldwide fiscal meltdown and we're not going to address trillions of dollars in

toxic assets, we have already poured $145 billion into, they lifted the cap on christmas eve at7:00 p.m. so they think it will be in excess of $400 billion over time, and nothing, nothing in this piece of legislation, nothing in it has anything to do with fannie mae or freddie mac. so don't be surprised at the cynicism of the american people. mr. president, i want to tell the manager as he -- because he was not here, i'm trying to get a list of speakers, get a time agreement and give him a time agreement at least on this side as soon as possible. mr. president, i yield the floor. mr. dodd: let me just say to my friend from arizona, senator, what i'm going to do is call up an amendment that will be a side by side arrangement. i won't ask for any time on this. i appreciate you getting back to me so you can set a time certain so you can vote on both

amendments. i'll call up amendment numbered 3938. the presiding officer: is there objection? without objection. mr. dodd: i thank my colleague. i see senator chambliss here and senator isakson. i will wait and respond in a minute. i will yield the floor. the presiding officer: the senator from connecticut. the clerk: the senator from connecticut, mr. dodd, proposes amendment numbered 3938 to amendment numbered 3839 -- mr. dd: i ask unanimous consent that the amendment be considered as read. the presiding officer: without objection. mr. dodd: i would urge -- and i realize people want to be heard on this. again, i urge my colleagues if we can, and every amendment has great value. there are about 60 amendments. at some point, we're going to end up having to draw a line someplace, so i would hope the people would use as little time as necessary, all the time they think they need. if we can get to a point here, we can have a vote up and down on these two amendments, and i appreciate it very much. the presiding officer: the

senator from georgia. mr. chambliss: mr. president, first of all, i thank the chairman for allowing us to debate this amendment this afternoon. this is one of the most critical amendments that i think that certainly we have talked about today and moving forward, unless we address the issue of the g.o.c.'s as i'm going to talk about in a minute, i'm not sure we have accomplished anything in this bill. for all the potential unintended consequences in this financial regulatory restructuring package, at least one will be entirely intentional, and that is the failure to address freddie mac and fannie mae. despite the general theme of the increased overreaching regulatory power of this legislation, a glaring example of something that was actually left out is a substantive attempt to address one of the most significant causes of the financial crisis, and that is reform of the

government-sponsored enterprises or g.s.e.'s such as freddie mac and fannie mae. it hoob highlight interested this floor that recent market volatility and a faulty trading construct and our financial markets are illustrations that the bill before us is needed now more than ever. specifically, the sudden significant drop throughout certain exchanges last week has been pointed to as evidence of the necessity for greater regulation of our markets. however, when news broke last week that freddie mac had lost $8 billion in the first quarter and would yet again be looking to the taxpayers for an additional $10.6 billion bailout. another bailout after both fannie and freddie had already received a total of $126 billion in taxpayer dollars, i fail to hear cause for reform on the -- calls for reform on the other side. just today, it was announced that fannie mae will ask for

another $8.4 billion after posting a loss of $11.5 billion for its first quarter. shouldn't these entities' repeated failures serve as an example evidence that the future of these bailout behe had moths moths -- behemoths must be addressed and now is the time to address them. apparently, this administration feels differently and has for some time. in fact, while it was busy cutting back room deals over the health care bill and making noise that a government takeover of health care would reduce the deficit, in the quiet of the night on christmas eve, another deal was made, only this one didn't make it out of the back room. at the 11th hour, after the senate had finished its vote that holiday eve, the administration pledged to the mortgage giants unlimited financial assistance by lifting its current $400 billion cap on emergency aid without even seeking congressional approval.

how can we have a serious conversation about overhauling our financial regulatory structure, yet ignore two entities that have exposed the taxpayers to more than than $5 trillion as of today? as "the wall street journal" put it recently, and i quote -- "reforming the financial system without fixing fannie and freddie is like declaring a war on terror and ignoring al qaeda." close quote. many have suggested that now is not the time to restructure these giants. that they will have to be addressed later, indicating that due to the comprehensive nature of their needed reforms, any attempt to address the proobs of freddie and fannie here would more than double the size of the current financial regulatory reform bill. where were these legislative size standards when this body was debating health care? that bill was more than 2,000 pages long. apparently while we can address

too-big-to-fail, these government sink holes have become too big to legislate. the fact that this is the number of pages in a bill is not the reason freddie and fannie are ignored here, and it's not for a lack of understanding of the problem. there has been no shortage of hearings on g.s.e.'s in both the house and the senate in recent months and years. the housing policies of this and previous administrations have chained the taxpayers to a self-perpetuating financial illness. policy, such as the community reinvestment act, or c.r.a., which forces banks to make loans to otherwise unqualified borrowers, set the stage for fannie and freddie to buy up these bad loans on the secondary mortgage market. such backward policies exacerbated the causes of the financial crisis. why would a bank not make these loans knowing they could turn around and sell them to the government?

especially when regulators were encouraging such practices? as a result, fannie mae and freddie mac and the federal housing administration, or more specifically, the taxpayer, now own or guarantee about half, one-half of all outstanding residential mortgages. it's time we address this enormous problem. the mccain amendment does tha that. i urge my colleagues to support the mccain amendment. mr. president, i would yldhe floor. a senator: mr. president? the presiding officer: the senator from georgia mr. isakson: mr. president, deference to the chairman, i will be brief, but i come because i feel compelled today because the two amendments this body will be dealing with. one is the mccain amendment and another amendment later in the day dealing with underwriting, but i'll save the remarks on that until those amendments are pending. i agree with senator chambliss and i commend senator mccain,

and i come from a lifetime in the real estate business, so what i talk about, i do understand its cause and effect on the marketplace. you cannot have responsible reform of financial services and leave out freddie and fannie. one of the reasons that, along with senator conrad, i created the financial markets crisis commission, which is now meeting, by the way, and will report back at the end of december, was i knew there were pervasive and redundant failures in the system that brought about what became a cataclysmic collapse. i understand the chairman's been under great pressure to bring this legislation forward and i have great respect for the chairman, appreciate his work. i wish we had waited until the financial markets crisis commission reported, but we haven't, so let me just for a second address fredy and fannie and the mccain amendment. freddie and fannie filled the void the save and loans created when he failed -- savings and loan created when they failed in the late 1980's. there are a lot of people who

will hear this speech who will remember those days. with exception of the f.h.a. and v.a., they basically made all home loans. therthere were a few players but too many. those entities, by the way, those savings and loans, had 100% risk retention of every loan they made because their depositors put money in there for the sole purpose of getting a preferred rate of interest for&for mortgage loans -- and for mortgage loans to be made to generate income. but they went under. they went under because of a lot of factors. one because of the federal government changing the rules under which they operated in midstream, which caused them to collapse. freddie and fannie immediately filled that void and they did a great job for a long period of time by creating a secondary market for capital to be formed, put into mortgages, the mortgage be securitized and the securities traded. and it worked for a long time. it worked, quite frankly, until a couple of things happened. one, until the government all of a sudden told fannie it started

to own a certain percentage of what it called affordable loans, which later became known as subprime loans. in fact, fannie mae became the purchaser of record for the first subprime securities that were created to meet the congressional mandate to end up having these affordable loans, which made a market for those securities which subsequently were sold around the world. so i want to commend the senator from arizona. what he brings before us is important. i don't know how you leave fredy and fannie out and talk about -- freddie and fannie out and talk about real financial services reform in the united states of america f. anything, they need to be -- in america. if anything, they need to be a critical part of it. now, i recognize this legislation portend there's will be a two-year winddown unless they improve, then there will be a liquidation at some point in time. but, mr. president, let me tell you what's going to happen if nothing happens. at some point in time, freddie and fannie will have to be liquidated and a new entity will have to be created that will fill the void that that liquidation takes place. we're going to have the mortgage money to this country one way or

another because america wouldn't be america without it. but we can't tend to have a black hole and an empty that can be used for political purposes or was used for political purposes, to create a market that ultimately helped break down the financial market. i commend the senator from arizona. i associate myself with the remarks of the other senator from georgia. i thank the distinguished banking committee chairman for his time. and i yield back my time. mr. gregg: mr. president? the presiding officer: the senator from new hampshire. mr. gregg: i wish to rise to also -- first i want to associate myself with the words from the senator from georgia. he is absolutely correct in his history of how freddie and fannie got started and what their purpose was and the fact that they are a great idea that went wrong, unfortunately, or went awry would be a better term, not wrong. they remain -- the concept remains a good idea. and i want to rise to support senator mccain's proposal, because what he is suggesting is

a way out of a very deep and dark hole of debt for our nation and our american taxpayers which is being generated by the legacy and the present activities of freddie and fannie. part of this amendment which i played a role in primarily is the issue of bringing on budget and, therefore, into the light of the day just how much the american taxpayers owe as a result of the situation that's occurred in those two businesses. it is estimated that the american taxpayer will end up picking up somewhere around $400 billion to $500 billion in costs as a result of the activities of freddie and fannie. as far as the american taxpayer knows, this will be something that comes out of the -- of the sky. i mean, nobody is aware of it. nobody's thinking about it. nobody's talking about it.

but these are actual debts that are going to get put on our books and which will affect our credit worthiness as a nation and which all americans will have to pay back. and why is this going to happen? it's going to happen because during the hallogen days of taking on debt or taking on obligations in the area of mortgages which weren't properly underwritten -- and there will be a later amendment by senator corker which i'll support in the area of underwriting -- but which weren't properly underwritten and which were securitized and basically insured, for all intents and purposes, by freddie and fannie, you ended up with a situation where they own a lot of paper which doesn't have the value, doesn't have the value it's supposed to have and which isn't being paid back at the rate which it's supposed to be paid back at. and unfortunately the -- there was a tacit understanding that grew up in the markets that the american taxpayer was going to stand behind that paper.

now, it was never explicit but it became tacit and people expected that and then when the actual event occurred, as these defaults started to accelerate, it became real and the american taxpayer is now having to stand behind all this debt. it's certainly going to come to a shock to most americans that they own -- that they owe approximately half a trillion dollars here. half a trillion dollars because of very bad decisions that were made by a group of people who were underwriting and basically security tieing these loans. -- securitizing these loans. why did that happen? well, there will be a lot of recrimination on this but the basic reason was the united states congress. the congress decided that americans should own houses, whether they could afford the house or whether the house sustained the value of the loan, americans should be able to go out and buy houses.

and so a lot of houses were sold which did not have the underlying value necessary to support the loan which was made on them and which the person who bought the house and took out the mortgage didn't have the income over the extended period of time of that loan to pay it back. everybody knew it at the time that the house was bought. everybody knew it at the time the mortgage was made. but they figured, well, appreciation will always occur in real estate prices so that won't bother us with the value of the house. and, well, maybe this person who got the loan for the house, maybe their income will increase or when the reset day occurs on that mortgage, they'll be able to take care of it some way. and so nobody faced up to the problem. at the time, and literally millions, millions of homes were purchased under that basic scenario. and that's what caused the implosion basically of our financial markets back in late 2008 and freddie and fannie are a large part of that implosion. but a lot of the initiative for

that came from the congress, basically asserting that people should be able to get those types of loans and pushing freddie and fannie from using what had been very traditional spurned writing standards in the 1990's into much more aggressive standards as they moved into the period of 2000, 2001, and the early 2000 period, and as a result had you this proliferation of loans that didn't have the underlying value and did not have the capacity to be repaid and they were all securitized by fannie and freddie. so now the american taxpayer ends up with this huge bill. and i think we have an obligation as a congress to at least be honest with the american taxpayer and tell them this is how big the bill is, and it's huge. it's huge. so this bill is now hidden in a drawer under the federal accounting system, where we don't even acknowledge that it exists under the federal budget. even though we know we owe it, even though we know that it's going to be put on the books of the federal government, even though we know that the american taxpayer is going to have to end up picking this up in the long

run, we don't even acknowledge it. it's stuck in some drawer somewhere here in washington. well, that shouldn't happen any longer. we just had an amendment on here about transparency with the federal reserve. everybody voted for it. everybody voted for the transparency bill on federal reserve. this is the transparency bill on freddie and fannie. this bill will tell the american taxpayer just how much they really do owe. it will bring on budget the issue of the debts of these two corporations, which are now the obligations of the federal government and, therefore, the american taxpayer. absolutely has to be done. and i thank the senator from arizona for including in his amendment this language which brings this on budget the way it should be and opens the light of day so that the american taxpayer can understand just how much risk has been piled on their backs, how much debt has been piled on their backs as a result of the irresponsible activity which in large part was initiated by this congress over the years, forcing out loans

which -- and pushing a public policy that these loans should be made. and secondly, i congratulate the senator from arizona for bringing forward an idea, proposal for how we unwind this situation and how we get out of this situation, by putting us on a path, a path towards basically decoupling freddie and fannie from the american taxpayer, making it -- having those two organizations no longer be dependent on the american taxpayer and have the american taxpayer no longer have to pick up the debts of mistakes made by those two corporations, wheen those mistakes -- even when those mistakes were caused to some significant degree by the congress taking actions which were inappropriate or which were bad policy. not necessarily inappropriate but definitely bad policy. so i congratulate the senator from arizona. i think this is a good amendment. and as has been said, how can you take up financial reform if you don't take up the single

biggest entity, the single biggest two entities, when combined, the single biggest entity that affects the financial markets relative to real estate lend not guilty this country? which i -- real estate lending n this country? what is caused the downturn and crisis at the end of 2008. you can't do it. you can't claim you've done financial reform if you don't take on and address this issue. i understand that the administration says, well, we'll do it next year. well, we don't have time. i mean, it needs to be done now. i mean, we need to address this now. it's a critical issue. and it's at the essence of how -- whether we can get our house right and our -- and our ducks in the correct order relative to financial reform. because if you don't straighten out freddie and fannie and its relationship to the federal government and specifically its relationship to the american taxpayer, you really haven't done anything to solve the long-term problems of how we get our fiscal house in order, because that issue of how you make real estate loans in this country is at the essence of how

you correct the financial structure of this country. and so this amendment coupled with the amendment that's coming from senator corker on the issue of underwriting are the two key amendments to this bill which address the two elements of this bill which are -- are not addressed but which have to be addressed if we're going to have effective, comprehensive and lasting and meaningful reform. mr. president, i yield the floor. mr. mccain: mr. president, i'd like to say to the distinguished manager that i have the following speakers: senator coburn for 10 minutes, senator demint for 10 minutes, senator thune for 10 minutes, senator shelby -- i have not been able to nail down how much time he's going to take; and i would like to sum up for five minutes. sno more -- there will be no more speakers on my side on that. mr. dodd: okay, mr. president, i can't do the math that fast. i don't know what that amounted

to. but if you'd add 15 minutes on that for myself and i'll ask -- why don't i ask for 20 and then i'll yield back. i'll take maybe 10. i don't have any requests from speakers at this time. i want to leave a little space if others want to be heard. we'll lock down a time on the two amendments. i don't need any additional time for our side-by-side. i'll speak about that during our 10-15 minutes. so as soon as we get a number on that, we'd let our colleagues noavment i thank my colleague from arizona. the presiding officer: the senator from oklahoma. mr. coburn: thank you. i wanted to spend a minutes kind inform general talking. i want to give an example because this is a very big bill with a lot of hard work by the banking committee and their staffs. but i want you to compare this bill to your loved one who gets pneumonia. they go to during the and they've got a cough and a fever

and chills and they just feel terrible, and think about it. if you would take your loved one to the doctor and the answer they would have is, oh, i think i can take care of that. i can give you something for the cough that will suppress the cough, and i'll give you something to take care of the fever, and i'll give you a little something to take care of the pain in your chest. you go on home, and you come back if you don't get better. and of course two days later your loved one ends up in the hospital with raging now bilateral pneumonia and accept sis, bacteria in the blood. and this bill is kind of like that. it's kind of like a doctor treating symptoms instead of the real disease. because the real disease was congress. the real disease was poor underwriting standards --

actually, no underwriting standards. the poor disease -- the real disease was fannie mae and freddie mac, and the real disease was the rating agencies that haven't been controlled effectively by this proposed legislation. and this legislation does nothing for the real disease. it treats a lot of symptoms. it grows government gigantically. it's going to create more bureaucrats and more rules than you can shake a stick at it but it doesn't fix the underlying problem. and when people dispute that ask the following questions: if you're at home working and paying your mortgage, guess what? the reason that they're not fixing fannie mae and freddie mac is tow that you can continue to pay yours and pay more taxes so freddie mac can solve those mortgage problems through your tax dollars and other people will not be responsible for theirs. that's what's going on here. that's why you're going to see $5 billion in more -- additional

losses with fannie mae and freddie mac because we're going to let it keep going until we've satisfied all this, not doing the hard work, not recognizing that we're actually going to need $500 billion or $600 billion more in taxes or we're going to borrow that to take care of this problem. and so everybody that's out there today nays working hard, paying year mortgage and keeping up is going to goat pay extra because we're not going to fix fannie mae and freddie mac in this bill. that's why this amendment is so important. we decided in this country a long time ago that we were going to set forth a policy to help people own homes, except we overdid it. and then yeted incentives that would take out the worst-naturing people -- and if you don't believe that, just look at long beach mortgage where 90% of the mortgages they wrote prior to them holding were totally fraudulent. where was the oversight? there wasn't nivment the office of thrift supervision, but we didn't oversight the office of

thrift supervision. so we created a symptom and a set of incentives and now we want to leave them right there. because this bill, this underlying bill, doesn't address the three main diseases that caused the problems that we have. congress general uflexes and reflects any criticism from us to the greedy banks or the greedy loan originators, but they never say anything about us not doing oversight. they never say anything about us not reforming fannie mae or freddie when we knew what was coming. so we have a bill that doesn't fix it. a lot of hard work, a lot of good intention, but it doesn't fix the core problems so they won't occur in the future. as the senator from new hampshire said, if you combine strong underwriting standards and transparency associated with

limiting the loss that the american taxpayer will take on fannie mae and freddie mac, you're going to do something. but the way the bill is now, we will have created this great big theatrics, everybody will shake hands and holler and dance around when the bill passes, except the dirty little story will be that we didn't fix the real disease. so when that loved one in i.c.u. with double pneumonia and sepsis size, we go after the person that could have fixed it and we say, you're liable. well, we're liable. we ought to be fixing this. and the very fact is that we're not. the mccain amendment is a commonsense amendment of i understand the reservations. they don't want another $400 billion of recognized debt. they don't want to count for the losses that are continuing to flow, $20 billion so in the first quarter of this year, out

of those two institutions. and i think the senator from new hampshire way underestimated the cost to the american taxpayer and what it's going to ultimately be by not fixing it. so my appeal to the chairman of the committee is to seriously look and give us good answers of why we're he not fixing fannie mae and freddie mac. what are the real reasons we're he not fixing that? war the repeal reasons we're not creating strong underwriting standards so that the problem doesn't occur in the future? what's the real reason? what's the real reason that we don't hold accountability the rating agencies and take away the conflict of interest thoroughly -- not partially but thoroughly -- from the rating agencies? you know, if the rating agencies had been doing their job, they're supposed to be a check. if they had been doing their jobs, you wouldn't have had all of these securities sold that in fact were worthless or were nonperformers. they didn't do their job. we didn't do our job.

fannie mae and freddie mac didn't do their job. yet we're not going to address the core issues that created the setup and framework that we're now experiencing as an economy. to me, i think that creates a tremendous amount of liability on our part. and we ought to have to be in explanation of every ounce of our being on why we don't fix the real disease that caused this problem. mr. president, i yield the floor. mr. dodd: mr. president? the presiding officer: the senator from connecticut. mr. dodd: let me speak for five minutes and i ask the chair to inform me when i've consumed five minutes, if i could. first of all, let me just notify my colleagues -- we don't have a time agreement yet but i hope we will shortly on the mccannel amendment and the amendment that i'll offer as a side-by-side on this issue. first of all, you should know --

and i'll ask to submit to for the record. the national homebuilders, the national realtors of america oppose this amendment, the national association of federal credit unions oppose the mccain amendment. let me just explain very briefly why. and i say this with all due respect. but this amendment, the mccain amendment what it does, it just says in 24 months you get rid of fannie and freddie. i don't dhal reform. it is getting -- i don't call that reform. it is getting rid of something. what are the implications of just getting rid of fannie and freddie? the fact is that fannie mae and freddie mac account for 96.5% of all funding for all mortgages tared. the amendment would undermine the supply without establishing any alternative. there's no alternative. it just says 24 months, you get rid of fannie and freddie. well, that's a wonderful conclusion except for the fact that what you get for that --

this is not -- i don't make these numbers up -- you get higher interest rates on mortgages, declining values in properties, the possibility of eliminating the 30-year fixed-rate mortgage which only exists because frankly we've had fannie mae and freddie mac mortgage program. now, look, this program needs to be fimed. there's no question about t you need an alternative housing financing system. that is without question. but this amendment doesn't offer any. it just says, get rid of the one we've got. as the letter from the national homebuilders -- rather, the national association of realtors says -- and i quote the letter from it. "it places fannie mae and freddie mac in on a fast-track to dissolution." "realtors believe that reform of these institutions may have played a pivot ole role in the housing market is necessary. however, now is not the time for

drastic action, especially concerning the current role in stabilizing the housing market. the mccain amendment does not offer a replacement to fill the enormous gap that the shuttered g.s.e.'s will leave." it goes on an additional paragraph. but that's what we're being asked to do here. in the letter from the national association of homebuilders, let me quote from their letter, mr. president. "fannie mae and freddie mac have been critical components of the u.s. housing financing system, however, we remain concerned about how to from the creents structure to a few of arrangement without undermining ongoing financial rescue efforts and disrupting the operation of the overall housing financing system. any changes," the letter goes on, "should be undertaken with extreme care and with sufficient time to ensure that the u.s. home buyers and renters are not placed in harm's way and that the mortgage funding and delivery system operate officiately and effectively as

the new system is put in place." mr. president, we have got to do this carefully. it was the housing problems that got us into this mess. its it was not fannie and freddie. it was this notion after dreeghted environment that occurred. all the problems emerged in the unregulated sector, unregulated brokers, unregulated mortgage companies that were luring people in to mortgage they cannot afford with no documentation, no background checks whatsoever. that is the genesis of this whole issue. read this new book, "the big short," if you want to have a good read about the genesis of this problem. that best-selling -- and i shouldn't be in the position of selling books, but that will lay out what happened here. now, fannie and freddie contributed to the problem further out. but the problem began in a totally unregulated environment, an unregulated environment that

was promoted by the chairman of the federal reserve and his advocates and supporters all through this institution. that's the origin of the mess that got us into this. now, today there's no backup. if 96.5% of mortgages are backed by these two institutions right now, what replaces it? and there isn't any in this amendment. so you are least in a freefall. who gets hurt? average americans. that's who gets hurt. now clearly we have not to step up and our amendment that we'll offer as a substitute demands within six months a plan laid out -- and there are a lot of different ideas, mr. president, how to do t we've had a lot of hearings and a lot of discussion on what ought to replace the present housing finance system. but i don't know of anyone yet that's come to one single conclusion on what the best alternative is. some have advocated a public utility concept. i think that has very attractive feesms to it, one that i would be inclined to be supportive of. but there are other ideas on how to do this. but to just eliminate it altogether without an

alternative at a time when we're just beginning to get back on our feet, housing values are beginning to creep up, housing sales are beginning to move forward, and again we understand that if you leave this sector of our economy in the kind of disruption that i think it's created by this amendment, then we could fall right back into a recession again. we've lost 8.5 million jobs, 7 million homes in this country have been lost. 4 million homes today are under water in the united states and 250,000 of them have been seized in the first three months of this year. you want to contribute to that? is that what our goal is here? in this bill, to decide on a whim in offering an amendment just to strike these two entities that exist with all their problems? the presiding officer: the senator has reach five minutes. mr. dodd: i think it would be a drastic mistake to make, mr. president, in having an amendment like this be adopted. that's the reason i feel strongly about t and that does not in any way take a back seat to the notion that we've got 0 come up with an alternative

housing financing system in our country. that is absolutely certain. this amendment does not do that. it just gets rid of the present one without relation it with anything. that is not the way to engage in the kind of reform that is needed in our nation. mr mr. president, i think my five minutes is up. i'll reclaim the balance of tie time. mr. mccain: before i yield to senator thune, in response to senator dodd's statement, i am incredulous that he would somehow believe that fannie and freddie were not among the prime reasons for this financial meltdown.s peter wallison wrote extensively and says the financial kraoeufgs dates back to 1993 when fannie mae and freddie mac, with the encouragement, by the way, of members of congress, including the passage of the community reinvestment act, which basically forced people to give

home loan mortgages to people that could never pay them back, he goes on to say when fannie mae and freddie mac began stoking up on subprime mortgage assets and other risky loans while reporting them as prime, the agency's conflict of interest between presenting to low-income borrowers and minimizing risk-taking activities may be to blame for their behavior. however, it is certain that the government's failure to properly regulate the enterprises has created one of the worst policy disasters in history. on christmas eve, when most american minds were on other things, the treasury department announced that it was removing the $400 billion cap from what the administration believes will be necessary to keep fannie mae and freddie mac solvent. the action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored

enterprises, g.s.e.'s will rank for u.s. taxpayers as one of the worst policy disasters in our history. and that is the view of most economists. how in the world, someone as knowledgeable as the distinguished chairman of the committee doesn't recognize that this is one of the prime reasons for the failure? this is one of the prime reasons why 48% of the homes in arizona are under water or people are throwing keys in the middle of their living room floor because they can't afford to make the payments. the enablers were fannie mae and freddie mac. the enablers of all this. and time after time this congress -- this congress -- put pressure on them to increase their home loan mortgages to people that could never afford to pay it, pay their mortgages. we know that's the cause of it. and how the senator from connecticut can somehow allege

that fannie and freddie were not, as mr. wellerson says, that the action confirms the decade-long congressional failure to more closely regulate these two government-sponsored enterprises will rank for u.s. taxpayers as one of the worst policy disasters in our history. this morning mr. wallerson is quoted as saying right now we have a consensus that something needs to be done. the sensible thing to do is to put congress in a position where they have to act within a certain period of time. that's what this amendment does. they have to act in a certain period of time. and the senator wants to know who then should be making home loans. community banks. community banks should be making home loans to people. and they should be able to extend lines of credit to small businesses. but the main thing is that they should be given -- not give back

to a government-sponsored enterprise to keep it in business where the hundreds of billions of dollars of taxpayers' dollars being spent is unlimited. i yield -- senator thune, i believe, has ten minutes. mr. thune: thank you, madam president. i want to thank my colleague from arizona for yielding. the presiding officer: the senator from south dakota. mr. thune: i want to thank my colleague from arizona for yielding time. i say this fannie mae and freddie mac is a pox on all of us. but shame on us if we don't try to do something here in this legislation to address this issue. and what the mccain-shelby-gregg amendment does, madam president, is a responsible thing. it does allow for a wind-down of this conservativeship, but it goes squarely at what i think, as the senator from arizona has pointed out, most economists argue was a huge contributor to the meltdown that we experienced a couple years ago.

this runaway lending and irresponsible lending practices that were involved with the plate that we -- the plight we see with fannie mae and freddie mac where they have up until, i think, this last quarter, or take the last quarter combined, it's about $145 billion now that the taxpayers are on the hook. as the senator from arizona pointed out, last christmas eve the administration lifted the cap. there was a $400 billion cap on the amount of taxpayer assistance that could be provided to these two institutions. but now that cap has been lifted. i mean, imagine the scale and dimension of what we're talking about here when we've already got $145 billion of taxpayer exposure. we assume it could be as much as $400 billion. but just in case the administration lifts the cap because it could go well beyond that, which suggests if history is any indication, that it will go well beyond that. and what this does, it says we need to exercise some

responsibility with regard to the regulation of all of the financial institutions in this country. and what the senator from connecticut, his bill does with financial services regulation reform bill, is attempts to get at what contributed in many respects to the meltdown that we experienced a couple years ago. but it ignores perhaps, as has been pointed out by the senator from arizona, one of the biggest contributors to that problem, and that is these two toxic institutions -- freddie mac and fannie mae. the administration has said they need to come up with a plan. the side-by-side is going to be offered by a democrats, is going to be a study. we're going to study this for like six months. i think that their argument is it would be dangerous to rush the process. i think the contrary is true. i think it is dangerous, madam president, to ignore this problem for any longer. we cannot afford to wait so that more taxpayer money can be lost, can be wasted on trying to keep these two entities afloat.

now, as i said before, last week we were informed that freddie mac needs an additional $10.6 billion in taxpayer funds due to an $8 billion loss in the first quarter of 2010. in september of 2008, that brings the taxpayer invoice for freddie mac to $61.3 billion. fannie mae reported a first quarter loss of more than $13 billion, needing $8.4 billion from the government, putting their bill to the american taxpayer at $83.6 billion. the tkpwrapbld total -- the grand total of taxpayer loss from these two entities since their takeover in 2008 is $145 billion. now, madam president, the losses racked up by freddie mac and fannie mae exceed -- exceed the government's losses on a.i.g., general motors and chrysler. yet, the current legislation here in the senate is completely

silent on these two entities. madam president, that is outrageous. we cannot continue to funnel unlimited amounts of taxpayer money into freddie and fannie and have no plan to end this siphon. at a time we're faced with crushing debt and out-of-control deficits we're willing to turn a blind eye to a $145 billion problem which is going to only magnify over time to the point that last christmas eve the administration lifted the cap of $400 billion, which is what initially was put in place that would limit the amount of taxpayer exposure. what we're now saying is that may not be enough. yet, we do nothing, nothing in this legislation to remedy this problem. obviously the administration knew there was more bad news ahead when they decide to lift the cap on government assistance on christmas eve of last year. the obama administration decided the taxpayers could afford unlimited funding for freddie and fannie rather than keep a

$400 billion on assistance in place. and it's frightening that they believe that that $400 billion is not going to be enough. unlimited funding may not be enough. i mean, who knows where this thing ends. that's why i think it's important right now that we deal with this issue and the mccain-shelby-gregg amendment does it in a responsible way by winding down and providing a time line. it sets a 30-month date out there by which this conservatorship has to be wound down. if you look at what the current exposure is in terms of freddie and fannie. they guarantee over 30 million home loans worth about $5.5 trillion. the c.b.o. estimates that freddie and fannie could cost the taxpayers as much as $380 billion through 2020. my assumption is because we, the administration, lifted the cap on the $400 billion of exposure, the assumption is it's going to go much higher than that. i think we have to ask ourselves this fundamental question: is this the direction that we want to continue heading, or is it

time to change course? the time to change course is now while we are debating a bill that is designed to address the very problems that created the financial -- the problems that we encountered a couple years ago. and freddie and fannie, madam president, as the senator from arizona has said, were at the very heart, the very core of that issue. according to a recent "washington post" article, with the government's conservativeship of freddie and fannie, the government backed nearly 97% of home loans in the first quarter of 2010. 97% of loans are backed by the united states government. is this where we want to end up? is this where we want to head? is this the best course for our housing market? is this the role the federal government should be taking when it comes to housing in this country? i firmly believe, madam president, that it is time that we change course. i think there is great value. we all agree there's great value in homeownership in this country and helping families achieve the american dream of owning their own home.

but we have got to bring personal responsibility back in to the conversation. we need to go back to a time when families saved up money to make a down payment on a house. they went to their bank, they provided the necessary documentation to prove that they could pay back their loan, and they bought a house that was within their budget. buying and owning a home should be a goal that people work to achieve, not a government mandate funded by the taxpayers. and that essentially is what we have created. so, madam president, i believe it's about time to take responsibility for our actions. my constituents in my state who bought houses they could afford and pay their bills on time want to see congress start taking some responsibility. and i believe that the mccain-shelby-gregg amendment does just that and shows our commitment to getting our fiscal house here in order in washington, d.c. it is a sound plan for winding down the government back stop to freddie mac and fannie mae, mandates the conservatorship

ends in 30 months or less. freddie mac and fannie mae will have to reduce their portfolios by 10% each year and if they are not viable enough after 30 months they will be lick dated. if they are viable they will only enjoy g.s.e. sta*ut tuesday for three years. the amendment repeals the affordable housing goals that persuaded the two entities to enter the subprime loan business in the first place, which i believe was the slippery slope, madam president, that got us into all the problems and all the troubles we're facing today. it creates new underwriting requirements on loans purchased by freddie and fannie. they will have to reduce mortgage assets and increase their capital reserves. it repeals the temporary increase in conforming loan limit, returning it back to $417,000. 2002 would have to pay state and local taxes, register with the s.e.c. and pay a fee to the government to repay their debts to the taxpayer. these are all responsible reforms, madam president. and contrary to the assertions that have been made by the other side, this amendment is the

correct way to proceed in dealing with these two giant institutions that have lost their way and are costing the taxpayers literally billions and billions and billions of dollars every quarter that passes that we don't take steps to fix this problem. the amendment would reinstate the $400 billion cap that the administration lifted in december so the taxpayers know for certain that they are not going to be on the hook for unlimited financial support. the amendment establishes a new inspector, a special inspector general at the g.a.o. to investigate and report to congress on these two entities. freddie and fannie would be included in the federal budget until their conservatorship is ended which is the fiscally responsible thing to do when we all know they do in fact have an impact on our budget and on our debt. i have said, as i said, madam president, i've heard the arguments on the other side of the aisle, and i think they are ignoring the clear will of the american people. the american people get this. they know that why we are where we are. they are sick and tired of subsidizing the mistakes of freddie mac and fannie mae, and we need to put an end to the

taxpayer bailout. and i think it's important the credibility of our economy -- the credibility, our credibility with the american taxpayers. but it's important the credibility of the markets and to our economy that they understand we're serious about sofrlg this problem. that's -- solving this problem. that's why the mccain-shelby-gregg amendment is the correct way to proceed. we're going to have a vote on that very soon here, and i hope we won't leave this subject, that we won't dispose of this financial services regulation reform bill without addressing this very important topic. it is, to suggest for a minute, as the other side has, that somehow we can do a study, we can put this off for six months and who knows, by the time they complete the study they'll have to think about the results of that study and formulate a plan and that will take another six months or a year, and every single month, efrgz quarter --

every quarter that goes by we continue to h.j. more dollars at the -- continue to hemorrhage at the expense of the american dollars. they have had enough, and i hope my colleagues can support it. madam president, i yield the balance of my time. madam president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

a senator: madam president? the presiding officer: the senator from alabama. mr. shelby: i ask unanimous consent that the quorum call be dispensed with. the presiding officer: without objection. mr. shelby: madam president, as part of the debate on the mccain-shelby-gregg amendment, i'd like to take this opportunity this afternoon to discuss the history of fannie mae and freddie mac from my perspective. by doing this, i want to emphasize past republican attempts at regulating and reforming these institutions, while also discussing their role in the financial crisis. madam president, the government-sponsored enterprises that we call fannie mae and freddie mac were key players in the collapse of the u.s. housing market. their multitrillion dollar portfolios gave them the purchasing power to drive markets. in addition, false presumptions about their housing finance

expertise and their connections to the government gave them further power to influence the housing market. and let us not forget the g.s.e.'s nationwide lobbying and public affair apparatus that was designed to keep reformers at day and their supporters flush with cash. when the g.s.e.'s began to buy subprime securities, other firms, including most of the wall street banks, took this as a signal that subprime mortgage securities were safe and worthwhile investments. in effect, fannie mae and freddie mac placed the good housekeeping seal of approval on these risky instruments. and as a result, the rest of the market especially gauged in this this -- engaged in this practice and the race to the bottom began. ultimately, the g.s.e.'s collapse lit a wildfire that burned throughout the financial

markets. due to their miscalculations, fannie mae and freddie mac have been placed in conservatorship and have already cost the taxpayers well over $100 billion. just last week, madam president, we learned that the g.s.e.'s will need another $20 billion, $20 billion in taxpayer assistance for their losses during the previous quarter. madam president, this did not have to happen. for years, the warning signs were flashing and republicans made multiple attempts to adopt the necessary reforms. unfortunately, those efforts were opposed by democrats in the senate banking committee and ultimately caused the many efforts put forth -- caused the many efforts put forth by republicans to stall right here in the senate. in 2003, as chairman of the banking committee at that time, i held multiple hearings on proposals for improving the

regulation of the g.s.e.'s, and i would like to read a portion of my opening statement from one of those hearings here now, and i quote from that time." the enterprises are large institutions. collectively fannie mae and freddie mac carry $1.6 trillion in assets on their balance sheets and have outstanding debt of almost $1.5 trillion. the federal home loan bank system is not far behind with combined assets of over over $780 billion and outstanding advances to member institutions of $495 billion. due to the importance of the housing g.s.e.'s mission and the size of their assets, i believe that the enterprises require a strong, credible regulator, and i further read from the statement then. i remain ternd at that time that

the current regulatory structure for the housing g.s.e.'s is neither strong or credible." madam president, at this same hearing, it became apparent that the two parties had very different perspectives regarding the need for reform. one of my democrat colleagues noted, and it's in the record, there is an old expression, and i quote -- "if it ain't broke, don't fix it." i think some of us here in the senate believe that when we try to fix things that aren't really broken, we can end up doing more harm than good. end of statement. notwithstanding the mindset on the other side of the aisle, my republican colleagues and i persevered and we remained engaged in the effort to reform the g.s.e.'s by holding numerous hearings and closely tracking the g.s.e.'s activities at that time. we decided that those who believe things aren't really broken were wrong. in the face of strong democratic opposition and a relentless lobbying campaign by the g.s.e.'s and their supporters,

we proceeded with a markup of the federal housing enterprise regulatory reform act of 2004. madam president, today i would like again to reread portions of my brief opening statement from that markup which lays out the issues and the responses that we have crafted to address the problems of the g.s.e.'s then. i quote -- "this afternoon, the committee will consider senate bill 1508, a bill to address regulation of the housing g.s.e.'s. today we're faced with the most important decisions considered by this committee in years -- determining the strength, the independence and the credibility of regulation of our nation's government-sponsored housing enterprises. the strength, independence and credibility of this regulatory system have tremendous implications for the future health and vitality of our housing markets, our capital markets and the economy as a

whole." and i continue to quote the statement -- "fannie mae and freddie mac currently have at that time $1.7 million of debt outstanding. to provide some perspective, our nation's treasury debt in the hands of the public at that time stood at over -- just over $4 trillion. the federal home loan bank system has also grown significantly since the 1990's and has a vastly expanded membership base. its current regulator, quoting my statement then, is not up to the task of providing adequate oversight of the significant role." madam president, my statement continues -- "fannie mae is the second largest at that time financial institution in the united states. freddie mac is fourth. their debt is held by foreign central banks, insurance companies, money center banks and community banks. because of the interest rate risk that these g.s.e.'s must

manage, they have an extensive network of derivative contracts. should one of these institutions encounter significant financial difficulty, it could make the s&l crisis pale by comparison," i said then. i was here, speaking when i was an early member of the banking committee, as was senator dodd, during the bailout of the s&l's, and it was no pretty matter. it ended up costing the taxpayer at least $130 billion. this experience, i continue, has only reaffirmed my resolve to ensure such a debacle never revisits the taxpayers, and quite simply, the real truth is we cannot afford a crisis of the magnitude a failing g.s.e. would pose. i approached this markup today, at that time with a firm appreciation and gravity of relevance of what we do here. and i state again as i said

before, i support the housing mission of the g.s.e.'s as i said then. homeownership is a primary source of wealth for many americans. it fosters strong communities and promotes stability for children and families. further i said then and i believe there is a consensus in this committee on this one point at least, they are not well regulated and therefore pose significant risk to the taxpayer and the markets that they serve. to be clear, they are not well regulated because the regulatory structures and authorities that congress created are insufficient and weak by design, and that is what the draft before us is all about. reaffirming the important mission of the g.s.e.'s, creating a regulator that has all the tools and independence that other first-class regulators require and protecting the taxpayer. these are the guiding principles that animate the draft that have put for the banging committee

today, i said. madam president, unfortunately for the taxpayers of this country, politics got in the way of advancing credible public policy then. apparently, the democrats felt that it was better to block necessary change, adhere to the status quo and ignore the risk to the financial system, all while leaving the taxpayer fully exposed. we, the same republicans who have been characterized by democrats as being pro-wall street and antiregulation throughout this process were trying to create a stronger regulator, raise capital standards, reduce risk taking and put in place a resolution regime that would limit taxpayer exposure in the event of a firm failure. that was a number of years back, madam president. i would like to revisit the words then of one of my democratic colleagues who made the following statement that's in the record as we debated the merits of the republican g.s.e.

reform bill at that time. and i quote, "lord only knows where the economy would be today if it were not for the stability of the housing market in the midst of so much turbulence and the ability of americans to draw down some of their home equity to engage in consumer purchases." end quote. then as we stood on the precipice of a housing and financial meltdown, my democratic colleagues were opposing more regulation and promoting more consumer spending. as if that wasn't bad enough, we were encouraging homeowners to raid the home's equity to finance their purchases, and look where it brought us. another democrat took issue with the fact that we attempted to give the regulator the power to place a g.s.e. into receivership, and i quote -- "receivership first, it does not have to be in the bill, but second to allow a regulator who may not like this institution to then sort of dole out little

pieces of it one way or another and weaken the fundamental structure of fannie and freddie easily leads to its demise." i'm not sure whether my colleague then understood the basic concept behind establishing an orderly resolution process, but i hope the lesson has now been learned. ironically, democratic opposition to strong reform actually produced the exact outcome that my colleague feared, and when reform stalled in the face of democratic objections, investors once again viewed fannie mae and freddie mac as -- quote -- too big to fail. they were confident that congress and the u.s. government would never allow them to go under. madam president, this, of course, gave the g.s.e.'s a significant financing cost advantage which led to their explosive growth and excessive risk taking. finally and most telling, one of my democratic colleagues is concerned about how wall street

might interpret the regulatory changes that republicans were advocating and stating. it is a fact that just mere speculation about the prospects of some provisions in the then-proposed bill is sending shockwaves through wall street. really? madam president, when wall street became concerned that our legislation at that time would provide a stronger regulator, require higher capital standards, mandate less risk taking and establish a well-designed resolution regime, the democrats came to wall street's rescue, not the republicans. when the choice was really between main street and wall street, the democrats made it absolutely clear whose side they were on. they close wall street. wall street ultimately paved the road that led to this collapse. at this time i ask unanimous consent to enter into the record a copy of the recorded vote of the proceedings that day in the senate banking committee. that result was a party-line

vote with all 12 republicans voting for g.s.e. reform and all democrats opposing it. the presiding officer: without objection. mr. shelby: that wasn't the end of the story, though. more than one year later, we tried again to pass these important issues in reform. the banking committee healed more hearings leading to a markup of s. 190, the federal housing enterprise regulatory reform act of 2005. i will not read my entire statement from this markup, but i will read a part of it that describes the commonsense steps that we were attempting to take with our newest effort to pass then g.s.e. reform, and i quote from that markup -- "my legislation creates a new regulator with combined oversight for both the safety and soundness and the housing mission of fannie mae, freddie mac and the federal home loan bank system. the new regulator will have general regulatory authority over all housing g.s.e.,

including enhanced authority over capital requirements and enforcement and prompt corrective action authorities that are comparable to those of the regulatory agency. among other enhanced regulatory authorities in that proposed piece of legislation then, the bill we will consider then includes a clear direction on portfolio reviews for compliance with safety and soundness, mission and systemic risk.r th m president, the enterprises would be permitted to hold those assets which promote the enterprise's mission in the housing market. that bill then also would transfer the product review function from h.u.d. to the new regulator and create a two-tier approval process through which enterprises must receive approval prior to offering any new product. you that bill would also establish

new criteria for a product that means that they'll stay focused on their application of facilitating a secondary mortgage market. and i quote further, "the new regulator will also have the power to conduct an orderly resolution of a failing or insolvent g.s.e. through a receivership process. this clear and definitive process for deal with a troubled enterprise is a critical tool for the credibility and strength of a new regulator," i said. madam president, unfortunately, the democrats did not share my view of increasing regulations on the g.s.e.'s and their comments during the second attempt to pass meaningful reforms are telling. one of my democratic colleagues stated then, "when the sink is leaking, you do not tear down the house, especially if the house has served you well." another recalled a critique he read of the bill before the markup which claimed, "it's like trying to cure the common cold with chemotherapy."

in fact, at one hearing, one of my democratic colleagues expressed an interest in hearing how the g.s.e. roles might be increased when he explained -- and i quote -- "i'm not only interested in hearing about the role g.s.e.'s currently play in the mortgage market, i'm also interested in how their commitment to homeownership and affordable housing can be expand the." madam president, in the end, the result of our 2005 markup was the same as our 2004 markup: a strict party-line vote with all 11 republicans supporting the reforms and all 9 democrats opposing them. unfortunately, madam president, the democrats once again sided with wall street and the special interests by rejecting g.s.e. reform and any attempt to move the legislation beyond the banking committee. i ask unanimous consent to enter into the record a copy of that recorded vote in the banking committee. the presiding officer: without

objection. mr. shelby: i would like to point out another bit of irony now, madam president. many of my colleagues who recently complained about the process regarding consideration of this bill were some of the same people who took every measure to block all consideration of g.s.e. reform. actions have consequences and in this particular instance, they were almost immediate. as soon as it was apparent that g.s.e. reform was dead, fannie mae and freddie mac took steps to dramatically increase their risk. the government accountability office, g.a.o., detailed this in a september 2009 report. the g.a.o. discovered that in 2004 and 2005, the enterprises -- and i quote from g.a.o. -- "embarked on aggressive strategies to purchase mortgages and mortgage assets with questionable underwriting standards. for example, they purchased a large volume of what are known as alternate a mortgages which typically did not have

documentations of borrowers' incomes and had higher loan-to-value ratio or debt-to-income ratios. furthermore, purchases of private label m.b.s.'s increased rapidly as a percentage of retained mortgage portfolios from 2003-2006. and i quote further from the tboa gog.a.o. report -- "by thef 2007, the g.s.e.'s" the enterprises -- "collectively held more than $313 billion in private label mortgage-backed securities, of which $94 billion was held by fannie mae and $218 billion held by freddie m mac. rye" recently, daniel mudd's, fannie mae's former chief operating officer and chief executive officer testified -- and i quote -- "while the market was change, fannie mae struggled to meet aggressively increasing h.u.d. goals. the goals were extremely challenging, increasing

significantly every year and permitted no leeway to account for the challenging lending environment. certain mortgages that may not have met our traditional standards could not be ignored." while mr. mudd may be correct that these mortgages aided their ability to meet their h.u.d. goals, it also should be noted that the g.a.o. in this same report did not see these purchases as a benefit to their mission, stating -- and i quote g.a.o. again -- "the rapid increase in the enterprise's mortgage portfolios and the associated interest rate risk did not result in a corresponding benefit to the achievement of the housing missions." ultimately, madam president, this increased risk played a significant role in the demise of fannie mae and freddie mac. i would like to read one final section of that 2009 g.a.o. report here this afternoon -- and i quote from g.a.o. -- "according to the federal

housing finance administration, while these questionable mortgage assets accounted for less than 20% of the enterprise's total assets, they represented a disproportionate share of credit-related losses in 2007 and 2008." for example -- and i quote further -- "by the end of 2008, fannie mae held approximately $295 billion in alternate a loans which accounted for about 10% of the total single family mortgage book of business. similarly, alternate a mortgage accounted for nearly half of fannie mae's $27 billion in credit losses of its single family guaranties book of business in the year 2008." and i quote again from g.a.o. -- "at a time -- at a june 2009 congressional hearing, former ofeo director james lockhradt said that 60% of the aaa rated

private label m.b.s." -- mortgage backed securities -- "purchased by the enterprises" -- fannie mae and freddie mac -- "had since been downgraded to below investment grade." think about it. he also stated that investor concerns about the extend of the enterprise's holdings of such assets and the potential associated losses compromised their capacity to raise needed capital and issue debt at acceptable rates. madam president, we all know what happened once they were unable to raise capital, but let us also remember the consequences that followed our failure to properly regulate fannie mae and freddie mac. charles dueg of the "new york times," part of a group of journalists that produced the book, "the reckoning," a series that explored the roots of the financial crisis wrote in 2008 -- and i'll quote -- "the ripple effect of fannie's plunge into riskier lending was profound. fannie's stamp of approval made

shunned borrowers and complex loans more acceptable to other lenders, particularly small and less sophisticated banks. james lockhardt supported this conclusion in his testimony before the financial crisis inquiry commission on april the 9th of this year when he observed that the g.s.e.'s -- and i quote -- "indirectly encouraged lower standards by purchasing private label securities. they also encouraged lower standards by not aggressively pursuing the obligations to repurchase mortgages if they did not comply with the enterprises' underwriting requirements." madam president, during the debate on this bill before us, we've heard numerous times that we need to have a tighter grip on wall street to prevent those large wall street firms from harming small businesses on main street. if only my democratic colleagues had been less concerned with wall street's reaction in 2004 and 2005, perhaps we could have protected not only those less

sophisticated, smaller banks on main street but also the millions of consumers caught up in the resulting inflated housing market and the millions of taxpayers who had to foot the bill for the resulting debacle. instead, madam president, the stalling of this legislation by democrats at that time ended any attempts of meaningful g.s.e. reform until mid-2008, when freddie mac and fannie mae were already in serious trouble. madam president, the simple truth is that we didn't act when we could have affected real change. republicans were ready to enact real reform, and unfortunately for the taxpayer, democrats were not. let us not make the same mistake again here today. the mccain-shelby-gregg g.s.e. amendment takes several important steps to reform the g.s.e. it provides transparency to the conservatorships of the g.s.e.'s by establishing much-need investigative oversight. it also requires fannie mae and

freddie mac to be included in the federal budget as long as they are in conservatorship or receivership status. and it reestablishes taxpayer protections that were abolished by the obama administration last christmas eve and it requires that congress be involved in any decision to spend additional resources to stabilize the housing markets. finally, it established a definite end to the ongoing conservatorships of fannie mae and freddie mac and paves a responsible path forward by refocusing their efforts, installing proper safeguards and untangling the u.s. taxpayer from this mess. i urge my democratic colleagues to ignore wall street and the special interest lobby against this amendment, join the republicans and do something good for the american taxpayer. support the mccain-shelby-gregg amendment. i yield the floor. i suggest the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call: the presiding officer: the senator from connecticut. mr. dodd: madam president, i'd ask consent that the call of the quorum be dispensed with. the presiding officer: without objection. mr. dodd: madam president, i ask unanimous consent that the only debate remaining on the pending dodd and mccain amendments be 20 minutes with 10 minutes accorded to each amendment, that upon the use or yielding back of

time, the senate proceed to vote in relation to the dodd amendment number 3938, to be followed by a vote in relation to the mccain amendment number 3839, with no amendment in order to either amendment prior to the vote. further, that upon disposition of the amendments described above and as if in executive session, the senate proceed to executive session and proceed to vote on confirmation of the following nominations in the order listed: executive calendar number 704 and 729. that upon confirmation, the motions to reconsider be considered made and laid upon the table, any statements relating to the nominees appear at the appropriate place in the record, the president be immediately notified of the senate's action, and the senate then resume legislative session. that after the first vote in this sequence, the remaining votes be limited to 10 minutes each. the presiding officer: is there an objection? without objection, so ordered. mr. dodd: well, mr. president -- madam president, let me -- and

i'll proceed with my time, and i know my colleague from arizona will come over to be heard. let me emphasize again to my colleagues, the mccain amendment is opposed by the national association of realto realtors, the home builders, the credit unions for the simple reason the amendment doesn't do anything except end fannie and freddie. that's hardly reform. it replaces it with nothing, and so we end up in a free fall in this country when it comes to providing affordable mortgages for middle-income families. grandgranted, fannie and freddid to be reformed, and the amendment we'll be voting on first off that i'll be proposing requires that the administration by january submit a specific plan that would call for the -- on how to reform fannie and freddie, what to replace it with in the housing financing system. not to have a housing financing system, just to leave us without one altogether, as you would achieve with the mccain amendment by just eliminating fannie and freddie with no replacement within two years, is

hardly what we need to do at this very hour. we've been through an awful lot. this problem began in the housing market in an unregulated sector of our economy. for years, the previous administration and others advocated a totally unregulated market, and because of those attitudes, we ended up where we did, with brokers and mortgage companies that were providing mortgages to people without any documentation, any underwriting standards whatsoever and we ended up, of course, as we have with 7 million homes have been lord, 400 million are underwater today, 450,000 were just seized in the last number of months since the outset of this year. so the mccain amendment would leave news a very, very infrastructureville situation and that's the point that the hom homebuilders, reals and credit unions are making to us. our amendment lays out a time frame in which the administration would have to submit a specific set of plans so that we could then in the next congress move forward. as my colleague from new

hampshire has pointed out, the issue of replacing and coming up with an alternative housing financing system is very, very complex. there are a lot of different ideas out there about what -- which of the plans ought to replace working today. and obviously that's something that the congress will have to consider. now again i mentioned earlier fannie mae, freddie mac and the f.h.a. account for 95.6% of the mortgages we have taismed the mccain amendment would undermine the supply without establishing a reasonable alternative. it is irresponsible public policy at a very uncertain time. as senator gregg said earlier, in the debate on the wall street reform bill, the g.s.e. issue is "too complex to do in this bill. ." end of quote. mr. president, the mccain amendment would require the federal housing finance agency to end the conservatorship of fannie and freddie or disband

them and put them into receivership within two years. that's all. the amendment proposes no alternative to fannie mae or freddie mac. it would totally privatize the mortgage market other than f.h.a. we've had some experience with how the housing market behaves when it is completely privatized. it is called subprime and exotic mortgage market. it was this unrecreated market fanned by wall street that pushed out those irresponsible mortgages that they knew people could not afford which led to our current problems. with this still fragile housing market in dangerous times, the mccain amendment would push us back into this downward spiral. the amendment would dot following, mr. president mr. pr: it results in an increase in mortgage rates for home buyers and homeowners. try to explain that as you go back to our states, if this amendment would adopted. it reduces the availability of mortgage credit in communities across our country, including communities with relatively

low-cost housing. this would result in reductions in existing housing values at a time when the housing market is just starting to recover some value. further, this amendment would reduce the availability of mortgage credit to first-time home buyers, to low- and moderate-income families seeking to buy or refinance a home by eliminating housing goals. it goes on by delaying or to put homeownership out of reach for many families. it raises the minimum down payment requirements to 10%. now, a minimum 10% for families starting out with the bettering underwriting standards, that kind of a criteria excludes a lot of young families starting out who wish to buy their first home. it reduces the availability of mortgage credit for affordable rengts housing by eliminating the housing goals. and it undermines the efforts to get loan modifications and affordable refinances to homeowners trying to save their homes. and lastly, it results in the potential elimination of the

30-year fixed-rate pre-payable mortgage. this last point is something that i don't think most americans are aware of. we're the only country in the world that provides a 30-year fixed-rate mortgage for families. that is the source of wealth creation for most americans. it's not buying stocks on wall street or getting involved in fancy credit default swaps and over-the-counter derivatives, all of this casino gambling that goes on. average americans accumulate wealth when they can afford to buy home and holding on to that peeves property, watching equity increase. that equity provides a source of income in retirement years, helps provide for college education for their kids. equity in a neighborhood provides stability for that neighborhood, strengthens communities. you eliminate the 30-year fixed-rate mortgage, you have just dealt a huge blow to working families in this country. and i don't think we want to look at europe when it comes to home mortgages. that's what you'll end up if the mccain amendment is adopted.

for all of those reasons, i said, the homebuilders, realtors and credit unions oppose this amendment. reform of the g.s.e., everyone agrees we need to meet that reform. however, the homebuilders say in their letter to senator mccain, "we remain concerned about how to get from the current structure to future arrangements without disrupting the operation of the overall housing financing -- finance system. any changes should be undertaken with caimplet" and i agree, mr. president. we should keep in mind that congress create add strong, new regulatory regime with fannie mae and freddie mac in 2008. they continue to provide crucial assistance to the housing market. longer-term reform of fannie and freddie would consider a thoughtful reconsideration of exactly what kind of structure we want to put in place to finance housing in this country. this will require hearings with many stakeholders and others involved in the serious discussions to determine what this system ought to be, to wipe

out the present system -- mr. president, i got to tell you a quick story. it may seem unrelated to the subject at hand. many years ago when i was at the old age of 22, i was a peace corps volunteer in the dominican republic. i wnts to one of the villages near the border of heavment i asked the people of that small village what they thought their needs were? they said, what do you think we need to do, this old american? i looked over at the school. i said, i think you need a new school. they said, that's a pretty good idea. i said, let's tear down the old school. it was my first project. for the next two years they had no school in town. it took that long. we didn't know where to build the school. didn't know where the property was, didn't have the materials. we gathered in people's homes to become the school. in effect, that's what the mccain amendment is doing. i made a mistake at age 22. before deciding to build what you're going to have, don't tear down what you have before

knowing what you're going to replace it w they went through a rough two years because this young american didn't understand that while the old school wasn't great and it was in desperate need of reform and repair, tearing it down and leaving them with no school left that little community without the ability to have a decent place to house and teach their kids. that analogy applies here, because what the mccain amendment does is tear down without building anything in its place. and again i'll take a back seat to no one. democrats should have done a better job -- republicans -- i listened to my colleague from alabama talk about the history of fannie and freddie. and believe me, i have an alternative history, but we can go back and forth on that endlessly. that's suffice it to say this: we all should have done a better job at this. and finger-pointing doesn't get us anywhere. we're not in the business of trying to rewrite history. we're etrying to determine best how to see that the coming generation would not have to go through what this generation has. what we're offering sheer specific idea on how to get us

to that new plan of housing finance. you don't get there by just eliminating what we've got today putting everything else at risk as a result of what's included in this amendment. under our amendment, the treasury is specifically told not may but shall do the following things: come up and tell us how we're going to wind down and liquidate fannie and freddie, the privatization of the two g.s.e. the breakup of the g.s.e. into small companies and other options that may be available. this is a tough study. it isn't one just to kind of paint this over. it demands "shall report back" as to how we can do this within a very time certain. it is not perfect. i wish i had some magical reform to offer everyone today. but, mr. president, we have looked that the for weeks and months and there is a significant debate over what that housing financing system ought tofnlt i can't tell with any certainty what is the best idea. i know this much: to tear down what we have and replace it with nothing would be

the height of irresponsibility, would put our country in an economic tailspin, in my view, at the very time we're beginning to come out of our financial difficulties. 290,000 jobs created in the last month alone. 121,000 more than we amendmented. housing starts are picking up. values are picking up again. why at this very hour would we step back. for all of those reasons, i respectfully say i hope the mccain amendment will be rejected by our colleagues on the onandour substitute amendmee adopted. i yield the floor. the presiding officer: the senator arizona. mr. mccain: mr. president, i have been around this body for a long time. and i've seen the side-by-sides and this is one of the classic that we have seen time after time. if you don't like a tough amendment, then have one that requires a study. let's study the problem. and the purpose of this

amendment, as stated, and i quote from the amendment, "to require the secretary of the treasury to conduct a study on ending the conservatorship of fannie mae and freddie mac and reforming the housing finance system." reforming the housing finance system. i thought that's what -- i thought reforming the housing finance system was part of the deal here. i had no idea that we were not going to reform the housing finance system when we advertised this legislation to the american people as to assure them that there would never be another financial meltdown, which was caused by the housing finance system. so what does the side-by-side amendment do? it will require the secretary of treasury to conduct a study. do you mean to tell me that the secretary of treasury, after the greatest financial meltdown in history since the great

depression, has to conduct a study? has to conduct a study to figure out why we have just spent $145, lifted the $400 billion cap at 7:00 p.m. on christmas eve? the system cries out for reform now. as is stated by literally every expert in america, it was the housing meltdown abetted by the enablers fannie and freddie that caused the financial meltdown. so we're doing nothing b about t except ask the secretary of treasury to conduct a study? remarkable. remarkable. again, i want to quote from "the wall street journal" again and -- that says it well enough. it says, "more importantly, congress must ensure that the

action confirm confirms the decg -- to regulate these two government-sponsored enterprises will rake the u.s. taxpayers as one of the worst policy disasters in our history." one of the policy disasters in our history, and we're doing nothing about it except conduct a study. that ought to do t that ought tube to do it. i am not calling for the abolition of fannie and freddie. i am calling for them to stop being in the government trough. i am saying that fannie and freddie ought to be doing their job in competition with everybody else who finances home loan mortgages in america and the history of these organizations is replete with enabling by the congress of the united states, including by the way incredible compensation for the so-called people who were supervising these organizations, as they went into the tank.

one of them -- $93 million for a year or two of supervising, going further and further into this kind of toxic assets. mr. president, all i can say is, if we pass this legislation without this amendment, do not look the american people in the eye and say that we have reformed the financial system in america. do not look the american people in the eye and say, we will never again have a financial collapse in this country. do not say that we're going to turn off the spigot of federal tax dollars. all right $145 billion. why did the treasury lift the kwan of $400 billion that we were going to spend to help with these toxic assets of fannie and freddie if he didn't think that it was going to be more than $400 billion? and so what are we doing in response?

sitting by and watching hundreds of billions of dollars of the taxpayers' money be used to bail out these two government-sponsored enterprises to the great cost of the american taxpayer. gerntion i say to my colleagues -- again, i say to my colleagues, don't wonder why the american people are fed up. zoo wonder why the american people -- don't wonder why the american people are in virtual peaceful revolt. when we continue to pour good money after bad, hundreds of billions of dollars, without reforming the institutions that caused it, then we are not fulfilling our responsibilities to the american taxpayer. i'm ask my colleagues, don't vote for another study. you know, if you're going to -- if you're going to vote against my amendment, fine. but let's not -- let's not continuing the charade and vote for another study. mr. president, i yield to the senator from alabama what time is remaining. the presiding officer: the senator from alabama. mr. shelby: how much time is

-r78ing? the presiding officer:our minutes and 30 seconds. mr. shelby: thank you. mr. president, earlier today here in the senate, i spoke about the past actions -- or, rather, inactions of this body that led to us -- us to the current situation sw fannie mae and freddie mac. i know will take just a few moments to discuss the current status of these institutions. as senator mccain has mentioned, i will also explain the specifics of the mccain-shelby-gregg amendment and why i believe we must adopt it. since september of 2008, we had to spend more than $150 billion to bail out g.s.e.'s. by some estimates, this amount exceeds the total cost, mr. president, of the savings and loan bailouts that occurred in the late 1980's and early 1990's. let me repeat that, mr. president. bailing out the g.s.e.'s has now cost as much or more than the entire savings and loan crisis and it is continuing. having spent such considerable amounts of taxpayer dollars, one

would think that the g.s.e.'s would be topic number one as we consider financial reform. unfortunately, that's not the case. as recently reported by tkpwre chen morgue -- gretchen morganson, "freddie's report says it continues to rise throughout ten. even more troubling, while the g.s.e.'s have considerable legacy problems associated with the older loans in their portfolio they are being used by the obama administration to take on additional risks." on christmas day of last year the obama administration announced it would prop them up with unlimited taxpayer funding, and that's exactly what they're doing today. the administration took this step so it would have the flexibility to continue its efforts to support housing market. some now are questioning those efforts. in "the new york times" piece that i mentioned, mrs. morganson

quotes dean baker, codirector for the center for economic and policy research who noted -- and i quote -- "i do not understand why people are not talking about it" -- referring to freddie's losses. "it seems to me the most fundamental question is: have they on an ongoing basis been paying too much for loans ever since they went into a conservatorship?" mr. president, this begs the question whether the g.s.e. should widow them at this point. what is to be gained? mr. morganson posits a compelling theory. freddie may be racking up losses by overpaying mortgages derived from his suspicious that the government may be encouraging it. i hope not. mr. president, in the past those huge piles of money consistently that have been spent found their way in the pockets of democratic

operatives like frank raines, jim johnson, tim howard and prepld's chief of staff -- president obama's chief staff rahm emanuel. now similar piles are floating around not necessarily to democrats. the only constant in either scenario has been that the taxpayer has been stuck with footing the bill. mr. president, i believe this afternoon this must end. it's finally time to protect the taxpayer. the mccain-shelby-gregg amendment will do just that. mr. dodd: mr. president? proeul all time has expired, -- the presiding officer: the senator from connecticut. mr. dodd: all time has expired, i believe, i hope? the presiding officer: the senator from connecticut has one minute remaining. mr. dodd: i think it's safe to say we can yield back our time. mr. president, i'd ask for the yeas and nays on the dodd

amendment. the presiding officer: is there a sufficient second? there appears to be. the clerk will call the roll. vote:

vote:

the presiding officer: are there any senators in the chamber wishing to vote or change their vote? if not, the yeas are 63, the nays are 36, the amendment is agreed to. without objection. the question now occurs on 3839. order in the senate. is there a sufficient second?

there appears to be. the clerk will call the roll. quorum call:

vote:

vote:

the presiding officer: are there any senators in the chamber wishing to vote or to change their vote? if not, the ayes are 43, the nays are 56. the amendment is not agreed to. mr. reid: mr. president? the presiding officer: mr. leader. mr. reid: mr. president, i have spoken to the distinguished republican leader. the presiding officer: mr. leader. mr. reid: and it's my understanding we're going to do these two judges by voice. following that, it's my understanding that the two managers have worked out an

arrangement to have a couple more amendments voted on within the next half-hour or 45 minutes. the presiding officer: okay. under the previous order, the senate will proceed to executive session to consider the following nominatns which the clerk will report. the clerk: nomination, timothy s. black of ohio to be united states district judge for the southern district of ohio. mr. mcconnell: mr. president? the presiding officer: the senator from kentucky. mr. mcconnell: i just wanted to address the majority leader. the presiding officer: could we have order in the senate, please? mr. mcconnell: mr. president, i would say to my friend from nevada, it's -- we're having voice votes on two judges? and then -- mr. reid: yes. mr. mcconnelet