the sec, one-person directer? >> i'm not -- >> consumer -- >> those particular agencies, quite frankly, have more than one person that have been ineffective. >> so you would advocate that we should have a one-person directer? >> i'm advocating having person to carry out the responsibility of protecting the american people. >> if we look outside of banking, we can look to the federal trade commission and the u.s. consumer protection safety commission, both consumer protection agencies that use commissions as well, are they also ineffective? >> let me just say if you wanted to address those agencies, we'd be happy to come back and testify -- >> but they're ineffective? you think that we should have, we should restructure the agency for these agencies to have one directer? >> we believe it would be a major improvement over the system we have right now. >> ms. smith, was your credit union one of the contributing factors to the financial crisis? >> no, we were not. >> and you've heard a lot about

predatory lending today. were you engaged in that? >> no, i do not. >> i was going to ask ms. andersen the same question, i assume her answer would be the same. >> is it fair to say that the regulations on your credit union have increased dramatically? is. >> yes, they have. >> and with the new regulations that are going to come from the cfpb, they'll also continue to increase with regulation, right? >> yes, they will. >> and you are not opposed to smart regulation in banking, are you. >> >> no, i am not -- >> but -- >> i just feel that the unregulated should be regulated. >> but overburdensome regulation increases costs, doesn't snit. >> correct. >> and it makes it more difficult for a small bank or credit union to compete against the big banks, doesn't it? >> yes, it does. >> you don't have the economies of scale. >> right. >> and in the end it drives up costs for your consumers, right? and you didn't have anything to do with the financial crisis or anything to do with predatory

lending? >> no, sir. >> but your consumers are faying the price for -- paying the price for it. >> yes, they are. >> in regard to what we're talking about with predatory lending, mr. shelton, i agree with you. it's atrocious what happened in the marketplace, and you and i are on the same page with that, and it has to be addressed. you'll find no argument from me with regard to that. i want to talk about how the cfpb has been set up, however. you know, i look at, you know, the review process. and to have a situation where, basically, the only way fsoc can review a rule from cfpb is if we have a systemic risk in the marketplace, in the financial system. i mean, the burden is incredibly high, isn't it? would you agree with that? ..

>> ms. born or the director of the cfpb is one of the 10. do you think the director of the bureau should be one of the 10 of the votes on fsoc? >> i see no problem with it. continuity is important for any deliberations. >> you think he'll be an impartial? do you think the director will be an partial on the board? >> i think he will be informed. >> you can be informed without

having a vote. you can still present your case but not be a voting member, right? >> even this body doesn't do an assessment of how government agencies performs is responsive building without renewed at head before it. you want that involvement in making your deliberation. >> you can do that without giving the director of go. this is my concern. >> this is one out of how many? >> ten. and we need two-thirds majority to pass it. with that two-thirds majority one of the voting members is the director of the bureau. this is a super majority. doesn't it make sense to say -- we want consumer protection. we also have a concern for safety and soundness. >> yes, we do. >> why don't we go to fsoc, take the bureau director out of play, of fsoc, and have a 5-4 majority to overrule the ruling from the

cfpb? >> that's been their overview. that's been the responsibility of. >> the gentleman's time has expired. >> you would agree with that? >> mr. canseco, five minutes. >> thank you, madam chair. i'm sorry that ms. andersen from bennington bank is not here to answer some questions that i have, but i think i can start out by saying that i feel there's a strong impact that the cfpb regular torrent authority could have on banks ability to assess and to adjust credit risk on an ongoing basis, because badly implemented and consumer financial protection board the late and could hinder a banks ability to maintain prudent credit underwriting standards. but with that said, ms. smith, in your industry do you feel that is true, with regards to

maintaining your credit risk and the balance of your credit? >> yes, i do. >> mr. sharp, in my district in san antonio, texas, we have an enormous amount of upstart companies with the biotech or check or other technology firms. and a lot of them as startup companies find that their sources of credit are sometimes a little bit diminished. so they go to their own personal credit to obtain the primary financing. i noticed that the chamber of commerce has estimated that 47% of small business owners use personal and not business lines of credit in order to grow their businesses and create jobs. because the cfpb a essentially extracts consumer protection guidelines from other agencies and makes consumer protection its primary objective, do you

feel there is a risk of small businesses and small business owners who are looking to create jobs and to build their businesses will be viewed as overextended consumers and be denied that credit? >> yes, sir. we do have that concern. i believe that figure is even small business administration figure as well. knotted into the chamber number. i believe this is a number that comes from the government. but that is a very big concern of ours. it's not just individual access to credit that could be harmed through this process. a very delicate balance. but as you point out so many small businesses, particularly and the infancy rely on consumer products to get their businesses off the ground. if individual credit is harmed or constrained or limited there is an effect on the small business world and that's a concern for us. >> do you feel there's a strong distinction to be made between consumer protection and safety and soundness? >> you can have one without the other, for sure.

>> ms. smith? >> i do concur. >> thank you. i yield back. >> the gentleman yield back. i would like to thank the panel for their testimony and their response to the question. i appreciate your participation so i will dismiss the first panel. would ask the second panel to assemble, and we're going to run over and make our vote. he may come back him if he comes back in time, assume that you're so we can go ahead and the testimony forward. thank you all very much. [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> ranking member maloney, and members of the subcommittee, my name is noah wilcox, and i'm a fourth generation banker. i'm president and ceo of grand rapids state bank and a member of the executive committee of the independent bankers of america. grand rapids state bank is a state chartered bank with $236 million in assets located in grand rapids minnesota. i'm pleased rep as a community bankers and icba's nearly 5000 hours of the support hearing today. community bankers are deeply rooted in the communities they serve. because we cannot compete with megabanks on margins or economies of scale we focus instead on the individualized needs of our customers. we practice relationship banking, not one off transactional banking. our customers our friends and neighbors, and any given loans or other service is part of a long-term relationship. our reputations in the committees are paramount and our

a condition of our success. community bankers have an overriding and sent to treat each customer well and earn their trust. the dodd-frank act exams committee banks with less than 10 million in assets from primary examination by the cfpb. because will be subject to cfpb rules and to examination on the sampling basis we have a keen interest in improving structure and procedures of the bureau and the quality of the rules that the issue. we support chairman bachus is recently introduced bill h.r. 1121 which would restructure the cfpb so that it is governed by a five member commission rather than a single director. commission governments would allow for a variety of views and expertise on issues before the bureau and those built in a system of checks and balances that a single director form of governance simply cannot match. the commission model which has worked well for the fdic, fec and ftc would help ensure that the actions of the cfpb are

measured, nonpartisan, and resolved in alice high quality rules and effective consumer protection. consistent with our support for commission structure, icba supports efforts to strengthen prudential records were review of cfpb rules which is extremely limited under the dodd-frank act. icba supports congressman duffy's bill, h.r. 1315, which would change the voting requirement for an fsoc be dealt from a two-thirds vote to a simple majority. excluding the cfpb director. the proposal would also change the standard to allow for a veto of a rule that is inconsistent with a safe and sound operations of the united states financial institutions, the current rule puts standard, puts at risk the safety of status of the banking system or stability of the financial system as a whole. is it impossible to meet and would let stand rules that are extremely harmful to banks and

to consumers. while this change would improve cfpb rulemaking, icba is proposal in which that would further broaden the standard to allow fsoc debut a rule that could add -- could adversely impact the industry in a disproportionate way. we blew the stand would have prudential regulars a more meaningful role and cfpb roll right. the cfpb far-reaching impact over the financial sector consumers and the economy be matched by the highest standard of accountability. ultimately, accountability for the action of the cfpb resides with its director, appointed by the president and confirmed by the senate. this basic mechanism of good governance would be undermined if the cfpb were the opportunity for its director is confirmed by the senate. for this reason we support capitals structure that would postpone transfer to the cpb until its directors confirm. the final discussion which i will comment would prevent the cfpb from participating in the examination of large banks on a

sampling basis before the chance or a function to the cfpb. we appreciate your caution about cfpb's exams. though this legislation would not affect community banks such as mine, we agree that sampling exams are not an innocuous exercise and a requested relief from sampling exams of banks with less than 10 billion in assets after the transfer of the functions. the so-called right or provision allows the cfpb their discussion to have input into every aspect of a small bank exam in limiting this authority would allow cfpb to focus its resources on the examination of entities that pose a greater risk to consumers. thank you again for the opportunity to testify today. icba is fully committed to developing effective and practical consumer protection for our customers, for customers of our competitors, and for the safety and soundness of the financial system. thank you. >> thank you mr. wilcox. our next witness, mr. rod staatz, president and chief

financial officer on behalf of the credit union national association is recognized with the purpose of making a five minute opening statement. [inaudible] >> to testify today. i am rod staatz, president and ceo of secu of maryland and the board of directors. credit unions are the best way for consumers to conduct their financial services. however, credit unions are facing tremendous regulatory burdens that will only get worse as dodd-frank is implement. relating credit unions radio toward burdens so they're able to serve their members with a safe and sound matter is our objective. see you in a has consistently stated that consumers of financial products exposure those provided by unregulated entities need greater protection. we believe that a consumer protection agency could be an effective way to achieve that protection, provided the agency does not impose unnecessary regulatory burdens on credit unions and take an active role

in improving disclosures for customers. in order for such an agency to work, consumer protection legislation must be consolidated and streamline. it should not add to the burdens of credit unions that have been regulated for decades and performed very well. the subcommittee has given consideration to several of our concerns regarding dodd-frank, specifically debit interchange regulations. we appreciate the opportunity to testify today regarding the structure of the consumer of financial protection bureau. we've had a number of conversations with the staff at treasury which is working to establish the bureau. we are encouraged by the staffs outraged, and especially by the establishment of the office of community banks and credit unions. still credit unions remained concerned that regulatory change could work to the detriment of our members. we have been asked to present our views on h.r. 1121, this legislation would replace the director with a five-person

commission. if congress decides to pursue this legislation we would encourage the size to include appropriate industry and regulator representation, including a seat specifically for person with experience related to credit unions. this would enhance the quality of regulations promulgated by the bureau by ensuring that both the consumer and industry perspectives are represented. cuna supports the intent of h.r. 1315 to achieve rules that balance consumer protection with safety and soundness. more specifically we support the provision that would reduce from two-thirds to the majority, the threshold for the fsoc to take action to set aside a bureau rule. h.r. 1315 also makes changes to the conditions under which the council can stay or set aside your racket -- recommendation. what is missing is the ability of the financial regulators to review your regulation in the context of overall regulatory

burden. we could support legislation to allow a rule to be set aside if the council determines it would unreasonably burden -- be unreasonably burdensome and that that burden to financial institutions outweighs the benefit to consumers. we haven't asked within our views onto discussions related to the bureau's authorities prior to the opponent of the director. we believe that much more important the details of how and when the bureau ramps up its how it will function once fully operational. we believe the bureau should conduct its consumer protection mission in a manner that minimizes regulatory burden on financial institutions. credit unions have not been the subject of widespread consumer complaints, and credit unions have regulators at the state and federal level that are in a position to enforce consumer protection laws. we ask that congress permit and encourage the viewer to assign the examination of larger institutions which have not had

a history of consumer abuses to their prudential regulars. we would like to recommend improvements to other areas of title 10. we ask congress to index the examination threshold for inflation without indexing these threshold significant erosion of the exceptions will occur in a relatively short period of time. we ask farmers to require the viewer to report to congress annually on steps they have taken to reduce regulatory burden, and told the hearing to review the report and consider whether further action is needed. we also ask, urge the subcommittee to work with appear to establish a meaningful exemption process for credit unions under section 1022. let me be clear, we are not advocating for the elimination of consumer protection regulations. rather we seek a regulatory approach for which consumer protection is maximized and regulatory burden is minimized. our behalf of america's credit unions and 93 million members, thank you very much for the

opportunity to testify, and i'm pleased to answer any questions. >> thank you, mr. stats to the next richard mr. richard hunt, present a consumer bankers association is recognized for the purposes of making a five minute opening statement. >> good afternoon. my name is richard hunt and i'm serving as president of the consumer bankers association. cds national trade association for retail banking in fulfilling the financial needs of american consumers and small businesses. retail banking is where the cfpb will now focus its broad authorities. we've had a long history of supporting improved consumer protection. it is no secret we opposed the creation of a cfpb. we believe the benefits are outweighed by the problems that arise and severing the agency from prudential banking regulators. nevertheless cba is focused on helping our numbers prepare for this new agency which will be their primary regulator, and we met on numerous occasions with

those standing up with a bureau. we also acknowledge the bureau will provide the benefits such as providing the first real opportunity to level the playing field and have comprehensive the federal oversight of tens of thousands of under regulated nondepository financial providers. we also support the disclosures. if there's a think your comments, it is uncertainty. uncertainty creates risk, let's innovation and does not promote competition which, in the end, hurts consumers and small businesses alike. this current transition period, the absence of a confirmed director and the power of this new bureau has created a kind of great uncertainty for retail banking. those of you is required to coordinate with other agencies to promote consistent regulatory treatment, this concept is ill-defined. if another agency objects a rule for any reason, the bureau is charged only with noting the

objection and its final issue is. in short, there's nothing in dodd-frank requiring the director of the bureau to defer to the views of the prudential regulator, and there's virtually nothing to stop the rule from being enacted that might cause serious harms to bank or even a small business or consumers. de minimis concerned that a single powerful director mike adapt rules with harmful unintended consequences, we would support a commission led model. a commission provides an opportunity for alternative perspectives to be discussed and has been effective in a number of federal agencies include the federal reserve, the ftc, the fdic, and the sec. i will point out, madam chairman, even the consumer product safety commission which was a model for the cfpb is headed by a commission. some have said the bureau is checked by the deal authority of the financial stability oversight council, fsoc. factually correct but not realistic. there are two main concerns. first the super majority to

overturn a rule, and second, the threshold for making such a decision. currently seven out of the 10 fsoc rivers must vote for a stay or to veto. since one of the 10 members of the actual director of the cfpb which would not vote against itself, seven of the remaining nine would have to vote for a stay to set aside a rule. that is nearly impossible. also, would it be prudent for the cftc who has no expertise in consumer retail banking regulation having to the side rules regarding the policy and the products. with all due respect, that would be like my asking someone, telling some a how to comb their hair. both out of their league. as for the threshold, the so-called veto issue is more of a catastrophic insurance policy to protect only against a rule that would threaten the safety and soundness of the u.s. banking industry or the stability of the financial system as a whole. while it is good to have a backstop against draconian rule, it is not addressed routine

safety and soundness risk for financial institutions. it would only come into play in the most extreme situations. this threshold should be brought to include substantial impact on individual financial institutions. we also believe the authority to supervise large financial institutions and issue regulations, should not be transferred to the bureau until the director has been confirmed by the senate. in closing, yes, we support a commission led cfpb, but in the absence of any structural changes in because the cfpb will not have any authority to regulate nondepository institutions until the director has been placed, which, of course, leaves us with the current unlevel and unfair playing field, we would urge the appointment and confirmation of a director who possesses a strong comprehensive understanding of the banking industry, and the management skills needed to lead a $500 million plus agency. cba will continue to work with them as of congress and appear

on these issues, and i look for to answer any questions you may have. thank you for the opportunity to. >> thank you. our final witness is professor adam levin, georgetown university law center. you're being recognized for five minutes. >> adam chairman, ranking member maloney and members of the subcommittee, my name is adam levin, professor of law at georgetown university. i'm here today as an expert on consumer finance and as a scholar who has worked, deeply concerned with the financial security of american families. the bill is being considered at this hearing would appear to be legislative tweets to the structure of the consumer financial protection bureau. but let us not mistake what this hearing is really about. the issue presented by this hearing is whether congress cares more about increasing the profits of banks or protecting the financial security of american families. which is more important? banks or families? that is the question. the new cfpb is not yet had a chance to get up and running to get already we're seeing attempt attempt to strangle the new agency in its cradle.

joined as to what this is about, look at who is your at this witness table. there are three bankers in the. at the previous panel, there were three bankers and mr. shelton from the naacp. ask yourself who here likes the cfpb and who does not. the banks are opposed to the cpb and want to see it is if not eliminate. but it is families, main street and the really going to like the cfpb and want someone looking out for the making sure that banks don't run wild like they did in the run up to the financial crisis. because the other bank regulars, the prudential bank regulars failed us and we were stuck with the bill. again, this is -- does the subcommittee more about the banks are about american families? i'm aware that members of the committee are concerned that the cpb will exercise its authority capriciously. this concern is ms. place kick despite what you hear from the banks and the chamber, the cpb as more accountable than any other agency in the federal government, period.

no other federal agency has as many limitations on its power as the cfpb. the cpb is subject to administrative procedures act. cfpb actions are subject to judicial review. the cpb is only three federal agencies that are subject to all i our small business flex builder review which recover some of the concerns of small financial institution. there are numerous statutory our initial making power. the cfpb is prohibited from imposing usury caps or frago toward non-bank financial, nonfinancial business. the cfpb is the only federal bank regulars subject to a budgetary cap. every other federal bank regular is not going through appropriations. and doesn't have a cap at the cfpb has a cat. the banks may think this gap is too high because it will enable the cpb to be too effective but i've never heard them complain about the lack of budgetary controls on the fed.

on the occ, or the fdic to get a daily seem concerned about budgetary interference when it is prioritizing american families, not banks. the cpb is only federal bank regulator whose actions are subject to a veto by the financial stability oversight council, i veto that is frankly dubious constitute down. i have not had any calls to subject the fed or the occ of a similar veto. perhaps most crucially the cpb is subject to oversight by congress. as this actions of our racial, that's no small matter. no matter how the banks expanded there's no escaping the fact that no other federal regulator is subject to congress i -- during to the bills and representative boxes bill would replace the single director with a five-person commission. look carefully for bachus bill proposes paying five people to do one person's job. and then giving each of those five of staff and paying for office space for all of them. this is classic big government ways. what is more by having five

people done one person's job, accountability which seems to be the overriding concern about the cfpb will be diminished and leadership will become less effective. there's no reason to adopt a five-person commission or if a single director is good enough for the occ, it's good enough for the cfpb. represented duffy's bill would lower the threshold for the financials of oversight council the veto will making. it's fragrant astonishing that anyone would propose to strengthen the sake do. the bank regulars given to veto are the very ones who fail to ensure both bank safety and soundness and consumer protection. in the private sector and regulars will be out of a job. they would not be rewarded with a veto. the duffy bill would require a veto to cfpb wrote that you were inconsistent with bank safety and soundness. it is a technical term. let me explain it to the committee. it means profitability. at go is nothing more than profitability. a bank can only be safe and sound if it is profitable. but consumer protection is that

sometimes at loggerheads with the bank profits. banks don't do it out of spite. what this means is that any cpb rulemaking that affects a banks profitability would be inconsistent with safety and sounds and thus subject of you. under the duffy build a credit card after 2009 and title 14 of dodd-frank which reforms the mortgage lending industry could not be of limited because they both affect the bank profitability and would be inconsistent with safety and soundness. in conclusion, the bill before this committee today seeks improve the cfpb by destroying it. by rendering it ineffective and incapable of performing the mission which congress passed it with. and the financial products help consumers rather than into financial distress. >> thank you. i want to thank all the what is and i like to begin questioning. i would like to pivot off of professor levitin's initial -- a

kind of shocks me a little bit -- to say that the choices here are between banks and families. we heard ms. andersen in the first panel, state it publicly that her customers, you know, service to her customers is the lifeblood of our institution and she provides as you give us i think some very good examples of targeted help. she talked about the burmese refugees and other folks that they been able to talk in their own community. so i would dispute that the choice is between banks or family. so i would like to give mr. wilcox a chance to weigh in on that statement. >> thank you, chairman capito, i appreciate that opportunity i would like to start by suggesting that there's a difference between banks and community banks. my bank is a $236 million

community bank, and as i noted in my opening testimony, our success is dependent on the people that we take care of your you will not find community banks around this country that have taken advantage of the people that they see at the grocery store, go to church together, and otherwise see around town. that is simply not the case. our success is dependent upon the success of the people that we serve and the vibrancy of the community that we operate in. and so, that stewardship of the community is paramount to the success of community bankers from coast-to-coast. >> thank you. i'd like to ask mr. hunt to respond. i'll say this about you, professor, you change my whole line of questioning when you made your statement. i'd like to ask on this question that profitability equal safety and soundness, what is safety and soundness mean to you?

>> to make sure the bank is healthy to provide the needed financial services to the consumers. they are not exclusive. you must have safety and soundness and you must have consumer protection. we have never advocated less consumer protection whatsoever i from louisiana and we have a saying, if mom is not happy, nobody is happy. >> i like it. >> thank you. if the customer is not happy the bank will not survive, very. if we did not protect consumers from getting loans, they will go to another bank. they are 7100 banks in the united states. it is pure competition of the. we know they can virtually go across the street. so it's imperative we have an agency that is what about safety and soundness, and consumer protection. >> mr. stats, you have a comment on that in terms of the credit union in terms of the profitability equals safety and soundness, our banks, credit unions, or families? because a credit unions are from his we know that our members. it would like to make a

statement. >> absolutely. we exist for those members. they own us. we have to perform for them each and every day. at the end of the data has to be a little profit to mature we are safe and we are sound, but we exist for them. and just like our banker friends here, you have to perform for them. we are in the community, and we are directly responsible to them. >> thank you. i'd like to also respond, one of the bills is expanding, and i'm on this bill, expanding from one to five in a commission. and i think we've got plenty of desperate that shows that works for other government agencies, and there are some instances where there's a singular director at the top, at the helm. but to say that creating a commission contributes to bloated ways when this bill creates a thousand people in a new consumer financial protection agency, and as we're finding and i would like to dig deeper on this, the way to

fester warren has laid it out for us is that she's got all these different agencies and said okay, all the consumer protection will now be under this same organization within the fed, but what we're finding is yes, there's another thousand people there, some of them are coming from these agencies. but the agencies are still keeping their own consumer, parts of their consumer protection and consumer investigative parts within the agency duplicative government, and then fdic is going to create their own oversight to make sure that mr. wilcox is bank is whatever rules and regulations, the cfpb put forward, that they can answer for that. so i'm not sure that the lines that were drawn supposedly in this bill are going to exist if the behavior of the regulators that are in place now, i mean the consumer, consumer protection is in place in different agencies now i'm are still existing their, a new

agency here, and another new oversight within the fdic, are they someone watching over this. without i will let ms. maloney beginner questions. >> i want to thank all of the panelists for being here. professor levitin, some of my colleagues have indicated their concern. if you are the testimonies earlier, that the cfpb will be an agency with unprecedented authority and reach. and in your statement you said that it has more limitations on its power than any other federal agency. so, can you expand on these limitations? i listen to my colleagues all day long about how it has unprecedented reach. yet you say there are more limitations. would you clarify for us, please? >> with pleasure. we can compare the cp both to

federal agencies in general and to other bank regulars in particular. we tend, structure bank regulars than other agency. one thing we do with other bank regulators if we take the budget and we take them out of the appropriations process. the reason we're concerned is we don't want political influence over safety and soundness issues. the thinking with the cfpb's budget, we don't want political influence over consumer protection. it's too important to make it exposed to the political process within election cycles. the cfpb, unlike any of the other federal bank regulators, has a cap on its budget. the occ come is the us is he wants to increase its budget it just increases the charges on expert the occ doesn't come to congress for a budget. similarly the federal reserve if it wants to increase its budget, just warms up the printing press. the cfpb though is capped at a percentage of the federal

reserve's operating budget and has no ability what the operating budget is. it sinks and swings within. i think that's a very good structure. because it keeps the it says we're going to make sure the consumer protection is at least going to be ex percent uzbek regulation. now compare with other federal register agencies, cfpb is the only agency around whether xavier over its authority. congress tried to structures a similar thing with a public company accounting oversight board getting the f. -- sec a veto. the supreme court said the people was unconstitutional. that was with a specific on the field but on some other aspects but it certainly raises questions about the constitutionality of the data. there's no other agency that is subject to review. no one can veto the occ's

action. by statute the treasury secretary is forbidden from telling the occ to take action or not to take action. if they want to find a rogue regular the occ is not going to be the cfpb. so, on top of this we have our whole range of regular safeguards on administrative agency. a lot of complaints i'm hearing from the committee our complaints about the administrative state in general, not about the cpb. there are reasons to be uncomfortable about delegation of authority to an elected officials we do this all the time. we have things like the administered officials act, so apple has a chance to be heard about the rulemaking. we have a judicial review making to mature agencies do not exceed the scope of the statutory authority. we have these features and they apply to the cpb just like they apply to any other agency. so when you take a look at the picture that the cpb really is subject to more restrictions than any other better -- any other federal register agencies. >> as you know, there are four

bills under consideration today and other debate. what you believe the aggregate effect of these proposals would be on the cfpb? >> if these bills were passed it would delay the implementation of the cfpb and render the cpb less effective and less accountable. >> and mr. hunt, i was voting, i didn't hear his testimony but i read it, and he and his testimony wrote that the veto system is designed under current law, a veto would be nearly impossible hurdle to meet. do you agree? >> professor levitin can? >> i do. the current fsoc veto standards is a high threshold without doubt, but it's worth considering what the alternative is that's being proposed is. and also, the for the alternate been suggested i think, i can member which of the committee

bank lobbies is proposing a further extension of is being proposed. the current threshold is undoubtedly high special to me and i think that's the right threshold, that we want to make sure there's, that we are not seeing regulations that cost systemic risk. but a threshold that says safety, fix safety and soundness is such a low threshold that pretty much every cfpb rulemaking will be subject to challenge. let me give you an example. in august 2008 a couple of the currency john dugan wrote a letter to the federal reserve objecting to certain proposed federal reserve regulations that would have restricted credit card rate jacking, a topic that i know was a particular concern to you. among the complaints that -- >> you can kind of -- >> among -- >> excuse me, i request a few extra seconds of you can complete. >> sherbet. >> one of the concerns was that will be inconsistent with safety and soundness. well, a couple months later

congress went ahead and pass the credit card act of 2009, which took the federal reserve regulations and raise them a notch. so basically the bank regulars are likely to call anything inconsistent with safety and soundness to the extent that it negatively impacts the probability of banks by raising compliance cost commits a. i think that the current threshold is probably the right place and we certainly should not think about extending it to where committee banks are arguing because given the economies of scale in the banking industry, every regulation has a disproportionate impact on small banks. that's the nature of the business. to be big, being big disadvantages. >> thank you. >> thank you. >> mr. renacci. >> thank you, madam chairman. professor levitin, you actually did change my direction of questioning, also. you talk about bank profitability and you said, i think one of the comments was that's what this was all about.

bank profitability versus safety and soundness. you believe a bank losing money is better off going forward and providing safety and soundness to its customers? >> i apologize if you misunderstood my comments. what i said is bank safety and soundness means profitability. therefore, a bank that is not profitable is not safe and sound. but a bank that is less profitable but still profitable is safe and sound. if the bank is only earning a billion dollars a year, not a billion and a half it is still profitable and it is still safe and sound. i think it's important to make that distinction, that less profitable as opposed to unprofitable or exact level -- i don't think should be a concern at all of the government as long as banks are profitable. but the exact level should not be a concern for any of us. that's the marketplace. >> you do agree though that some of the dodd-frank provisions will take away some of the profitability of the bank?

>> without a doubt, to the extent that predatory lending packages have been very profitable for banks, and dodd-frank is going to curtail those quite rightly. and to that extent yes, it affects the safety and soundness if you say it is affecting profitability are but a bank is not able to land on a fair and non-deceptive basis shouldn't be in base -- shouldn't be and disappear out of any of the banks here at this table are doing that and i want to emphasize that. that the issue really here is not about community banks and credit unions. there's some bad actors but generally they are the salt of the uzbek the problem is the large banks and we don't have any other large banks on the panel today. it was knit sometimes to see small banks telling -- towing the line for the large banks. >> mr. wilcox, would you agree that some of these regulations will reduce or profitability and also reduce your ability to create jobs?

>> i would say without any question it will. it has already. we are still feeling the fallout of the gramm-leach-bliley act. this dodd-frank thing is just getting started, and we are seeing the first bits of that come out. and certainly to the extent that there's an exemption in the radio toward process, some of those things filter down and become introverted and are used in the radio toward process. certainly will challenge earnings and very well could create an issue with how to continue to grow jobs and operate safe and sound and profitable manner? >> mr. staton when she agrees some of this profitability at your losing will be also a reduction of the potential of jobs? >> without question. >> mr. hutt? >> absolutely they will. the cost of compliance will go a. it will be a tremendous burden. we are already heavily regulated

to begin with. if you don't micah burgess go back to the veto question, the only way i veto can be sustained is if it threatens the safety and soundness of the banking system or the entire united states economy. who's going to determine that threshold? what will determine the safety and status of a bank or the entire financial economy going forward? i mentioned earlier in my testimony about the cftc but also the sec, cftc and the federal housing agency has a seat at the table to determine retail banking. they have nothing to do whatsoever. that's what i would like to see five out of nine, not seven out of 10 when it comes to veto. >> mr. levitin, you spoke that you felt pretty strongly about a single director. doesn't make sense then to consolidate all the federal consumer financial protection powers? out of your on the designated, if there is no director? >> actually subtitle f. of title

11 of the dodd-frank act, consumer financial protection bureau act does say that if there is no director who is appointed by the president on the designated, powers go to the treasury secretary as director. so we would have the treasury secretary who's been confirmed by the senate exercise the powers at least under subtitle f. >> chairman, i yield back. >> thank you. i would have to say that if it doesn't act happened and responsibilities go to the secretary of the trinity, i would question, is that not postponing, dealing, throwing the whole thing into a more chaotic position which is why i believe, part of my discussion draft, this is something that concerns because of the length of time it takes to confirm anybody into one of these positions. mr. manzullo? >> thank you, madam chair.

professor, since you made the statement that none of the people at the table, credit unions and the community bankers, are responsible for this meltdown, the crisis we have in banking, i would take event that you would agree that they should be exempt from consumer finance protection bureau of? >> no. quite to the contrary. first i was make a specific statement about the members at this table. there are bad eggs in committee banking -- >> no, i -- >> we should also note there been a lot of community banks, credit unions that fail. that's not -- >> i understand it i want to reclaim my time. because it wasn't until october 1, 2010, that the federal reserve published its final rule that said, are you ready for this, guys?

if you make a mortgage application, you must have written proof of your income. now, i mean, to me that's so amazing, so elementary. mr. staatz, mr. hunt, mr. wilcox, you always, always had this provision, isn't that correct? would have you made alone on anything. >> correct, absolutely. >> absolutely. and so here we have the fed which has jurisdiction over most of the banks by the time they figure out what they do, that has the authority all along that could have stopped this stupid blunder in realty. they have the authority to do that all along and they didn't do it. why should we trust yet another organization with a thousand new employees, untested, untried in theory? >> here is why.

the cfpb has a single mission, and it will be judged on whether it succeeds in protecting consumers. the fed has multiple missions and the conflict. >> but the cfpb would never be judged by the people elected in this country, and those are members of congress. and i find your statement to the absolutely astounding, especially in light of the fact that you are special counsel on the t.a.r.p. where you said you find it offensive that this agency would be subjected to the appropriation process. and, therefore, politicize, i mean, for goodness sakes, article one of the constitution gives the power to the united states congress. we are directly elected by people who want to see us, see oversight on behalf of these agencies. and yet, you make the statement that thank goodness we have the consumer financial protection

bureau that's immune from this process. i'm just shocked at that, but i want to go on. >> unfortnuately, there is a vigorous lobbying process which is present in this room spirit oh, come on. these are little guys. okay? >> there are big eyes also. >> i've been through a thousand real estate transactions and i've practiced law just before respa came in and i which are sometimes the 75-100 bucks to close a real estate transaction and i could close it in 20 minutes. along came respa and there's seven full-time employees at add that continue to work on respa and screw it up. and now you go the engine of disclosures like this. one agency on top of the other, and all one had to do to stop the meltdown was say, you can't give alone unless you have written proof of your earnings. government doesn't work in these situations. respa hasn't helped one

individual. it hasn't said anything because ultimately, all people want to know is how much does it cost me a month. and you're going to have more regulations, more rules, and you don't look to the practitioners. they would've been through this thing from little bit houses all the way through shopping centers. people of oregon towns with credit unions and community bankers like these little guys here. and there's something wrong in the fact that they belong to an association that they have a lobby? they are not entitled to be represented in washington? >> no one is making that argument. >> that's what you were saying. >> no, i beg your pardon. that's not the own but i'm making. be argued by making is the democratic process is sometimes influenced by campaign contributions and that we may want to be concerned about ensuring that consumer protection is insulated from financial -- >> so there isn't anything in this town that is insulated from anything. the people that try to insulate

themselves are the ones that isolate themselves and go beyond the reach of what americans want to do. this whole argument, if i can finish -- >> you can finish. >> because i've been waiting a long time. this whole argument that somehow the consumer finance protection bureau is above and beyond, has this great halo that's better than all these organizations, these people here seated to your right, on a daily basis do several things. the first thing they do is they always check to make sure that the people with who they have a financial transaction can afford it. they don't need government to do that. they look down at income tax returns and look at what the earnings are and they give them advice on what to do. and somewhere out there, you've got some people that really took advantage of the system that allowed people to buy homes when they could make the first down payment. people that were allowed, they

call them cheaper loans. when that practice went on, the fed winked at it and couldn't stop. where existing government agency that was insulated from politics and that's the fed had the authority to stop all of this, and they didn't do anything. and you expect us to believe the consumer financial protection bureau is going to do anything better than what the fed could have done. that's not going to happen spent i think in light of that giving the fed part of a partial veto authority excessively no sense. but i think it's important to note, the fed, one of the reasons the fed failed to act was it had conflicting missions. it was told to safety and soundness and -- >> there was no conflicting mission of the mission was to keep the government from collapsing. and they failed just as the seat fpb will also fail. -- the cfpb will also fail. >> the gentleman's time has expired. any questions? [inaudible]

>> yes, ma'am. mr. hunt, in your testimony you noted that the requirements of the bureau to promote consistent predatory treatment is ill-defined. could you explain why you feel this is ill-defined? >> i think i was referring to the revision where they create the new eight and that is abusive. we don't know if that's a checking account at a bank or if that means interchange fee. we think it is totally inconsistent and yes, i would bet you a lot of it is fear. that is why we have all of the little mouse traps, and everything else. because we have fear of litigation and fear being fined by the regulars. we do everything we can to promote products that are beneficial to the consumer, to the customer. but at the same time with one eye looking at our regular and at civil lawsuits going forward. we have to make sure that there

provision issues correctly since this is a new addition to the entire dodd-frank bill and in addition to deception. >> are you concerned that your small bank and other financial institutions will eventually find themselves caught in a trap with one federal agency trying to restrict the profits on certain products, and another agency telling them to increase their capital base? >> absolutely. we have found some coming up there real soon which will take effect in a couple of years. quite frankly we're concerned about everything these days. for instance, look at overdrive. you have the fdic come out with their guideline. you had other guidelines. was to prohibit the cfpb from coming out with their new guidelines as well quite its import we have the ability to continue to give consistent product to our customers without fear of retribution from the regulators. >> thank you, and mr. staatz come in your testimony you advocate for replacing the cfpb

director with a commission larger than what has been proposed. you envision this commission to have seats on the board that are designated for industry, representatives including its seat specifically for an individual with experience related to credit unions. would you mind elaborating on your suggestion and underlying concerns? >> well, first of all, as i said in a testimony in the oral medicaid today as well as one of our biggest concerns is unduly burdensome regulation. you know, earlier today i've heard all about all the horrors that went on the past few years. we are not part of that. we are involved in it, had to have cleaned up but we are not part of the. and i would think any of the structures that were talked about today, under any of the structures we could move very quickly to ban those sorts of products. okay? those that were truly abusive, but i guess our problem is that

when does it move from abusive and do some bureaucrats idea of what may or may not be right for the consumer? and so, i would like somebody, we would like somebody with industry experience to kind of buffer, you know, when it starts to cross the line from abusive to just somebody's idea of a better way of doing business, we think that's why somebody from the industry should be part of oversight spirit and what criteria from the industry would you suggest that that person or those individuals have? should they be bank presidents? should they be small bank presidents? should they beat credit union presidents? should they be payday lenders president's? >> the latter, absolutely not. payday lenders. and i would suggest that obviously from our viewpoint we believe that credit unions should be represented. why? because of who we are and who we represent. as a matter of fact, maybe the cfpb could learn a few things by

spending more time in credit unions and figure out how we serve lenders and maybe that could be the model. but again that sort of expertise might help all of us. >> a.q. circuit i yield back. >> the gentleman has gilded back. then that concludes the testimony from this bill. i thank you for your testimony and for your response to our questions. the chair notes that some members may have additional questions for this panel which they may wish to submit in writing. without objection the hearing record will remain open for 30 days for members to submit written questions to those witnesses and to place their responses in the record. with that the hearing is adjourned. [inaudible conversations] [inaudible conversations]

>> [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> the senate is about to gavel in. senators will begin today with

general speeches. the small business research bill has been set aside for the time being but it could be brought back today the measure continue startup funds for tech and research companies. also negotiations continue on federal spending for the remainder of the budget year. the house will consider a short-term funding bill today and that will keep the government operating for another week. while negotiations continue. the house will also vote on a bill to block epa regulation of greenhouse gases, similar provisions failed yesterday in the u.s. senate. you can see live house coverage on c-span, and now life senate coverage here on c-span2. the guest chaplain: will you pray with me. gracious god, from whom all

blessings do flow, we give thanks for the opportunity of this new day and the power and possibility within it to do what is noble, trustworthy, and true. we pause to center ourselves upon the importance of this present moment and our calling. may your spirit of wisdom and discernment descend upon this body as they seek to govern with justice and care. grant them wisdom and courage as they meet the challenges of our time, knowing they are stewards of a democracy and servants of a people. may their decisions answer your eternal call; to guard the dignity of each person, to ensure freedom for all people, and to strive, tirelessly, for the common good. for it is in our living beyond ourselves that we find the greatest meaning and deepest expression of our faith. truly, may your grace be upon this senate; our senators, their

staffs, those who work tirelessly in support of this chamber, as well as their families. and may your grace be upon our nation - diverse, gifted, and united in our affirmation of life and liberty, happiness and peace. for this we pray. amen. the presiding officer: please join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., aprill 7, 2011. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorabletom udall, a senator from the

state of new mexico, to perform the duties of the chair. signed: daniel k. inouye, president pro tempore. mr. reid: mr. president? the presiding officer: the majority leader or his designee. mr. reid: -- the majority leader is recognized. mr. reid: following morning business, senator hoeven will be recognized at noon for up to 30 minutes to deliver his maiden speech to the stphafplt we'll continue to -- to the senate. we'll continue to work to complete action on the small business bill. we're hopeful to be able to vote on a budget by the end of this week. senators will be notified when votes are scheduled. mr. president, for members of my caucus, the 12:30 luncheon that we have every thursday has been postponed until 3:00 today. mr. president, approximately 11 hours ago i was at the white house with speaker boehner, and we made a joint statement to the press in the nighttime there at

the white house. at that time i was cautiously optimistic that we could complete the work on the people's business to fund the government to the end of this fiscal year, october 1. now, mr. president, we're 38 hours away from this deadline of the government shutting down. so, it's clear from the math that we're less than two days, in less than two days a decision must be made as to whether the government closes or stays open, whether we put the american people first and reach an agreement or have, as i will explain in a few minutes, issues having nothing to do with government funding to cause the government to shut down. we met last night, the speaker and i, with the president for quite a long time, an hour and a half or two hours. the meeting was initially one with the president, the vice president, speaker boehner and

myself were present to try to work through these issues. we then went into a meeting with our staffs to try to work through these issues. the numbers, mr. president, are basically there. that's where we are. my staff, the president's staff, the speaker's staff worked through the night to try to come up with an appropriate way to end this impasse. i repeat, mr. president, the numbers are basically there. but i am not as nearly as optimistic -- and that's an understatement -- as i was 11 hours ago. the numbers are extremely close. our differences are no longer over how much savings we get under government spending. the only thing -- the only thing holding up an agreement is ideology. i'm sorry to say, mr. president,

that my friend, the speaker, and the republican leadership have drawn a line in the sand not dealing with the deficit that we know we have to deal with, that we've made significant cuts, not with the numbers that would fund the government to the end of this fiscal year. that's not the issue. the issue is ideology. not numbers. now, there are a number of issues, but the two main issues that are holding this matter are up the choice of women, reproductive rights, and clean air. these matters have no place on a budget bill, mr. president. this is a bill to keep the government running with dollars. they want to roll back the clean air act. the bottom line is this: if we are going to sit down at the

negotiating table as we have and fund the government, it should be based on government funding. i know there are some rambunctious new members of the house of representatives over there, and there are probably some of there who have been there for a long time, who are more senior who are republicans, and this is their time to shine. but do that in a legislative manner. don't do it on a spending bill. they could send the stuff, we'll get to it when we can to show we can get to things, we've done it on this clean air bill, very difficult issues; dealing with 1099, government issues relating to the health care bill. tough, we did it. we had a bunch of votes yesterday on e.p.a. funding. we can legislate, and we can do that on issues that are difficult. we showed that this week in the senate. but no one can realistically think that we can walk out of a room and suddenly agree on a matter that's been around for

40 -- i'm sorry. we can't walk out of a room and focus on an issue that's been around for four decades, issue relating to choice. this is a legislative matter. we can't solve in one night a disagreement this country has been fighting for for four decades. there are very, very did he have sides have been take -- very, very definite sides have been taken. i served in the house of representatives with henry hyde, where this all got started. henry hyde was the man that started, more than anyone else, public debate on women's choice. he was dug in as to what he thought was right. others disagreed with him. but, the hyde amendment prevailed, and we've been basically working off that for 40 -- i'm sorry, i keep saying

40. four decades, mr. president, we've been focused on that issue. we can't solve in one night an issue that we've had for four decades. it's not realistic. it's not fair to the american people. we haven't solved the issue in 40 years, we're not going to solve it in the next 38 hours. so, now is the time to be realistic. we should not be distracted by ideology. we've been distracted by ideology. this is a bill that funds the government. it isn't a bill that should deal with changing the environmental protection agency rules and regulations. that should be done legislatively. we can't now on a bill focusing

on the spending in this country suddenly decide there's going to be a big breakthrough on one side or the other on abortion. it can't happen. it won't happen. now, speaking of distractions, the house is now going to pass a short-term stopgap. it's a nonstarter over here, mr. president. doing that is a sure way to close the government. there are no more short-term extensions unless it's a clean continuing resolution to allow us a few more days to work on matters rhee lated to funding -- matters related to funding the government. the president has told the speaker that. i have told the speaker that. republicans in the senate have told the speaker that we can't pass another short-term c.r. it's not only bad policy, it's a

fantasy. as i said last night, this is a nonstarter in the senate. the president told the speaker that last night. he called and talked to him 20 minutes ago, 30 minutes ago, told him the same thing. i talked to the president 9:45; he told me the same thing. we have moved so far, mr. president, and we have given everything that we can give. the president is absolutely right, we can't keep funding this government one paycheck to the next, one stopgap measure after another. the united states of america, this great country of ours, shouldn't have to live paycheck to paycheck. i repeat, mr. president, this debate that's going on today deals with money. it doesn't deal with ideological issues that both sides have drawn a line in the sand.

if the house of representatives wants to send us matters regarding wall street reform, we can debate them here. if they want to send us measures dealing with health care, we can debate them here. if they want to send us issues dealing with e.p.a., we can debate them here like we did yesterday. if they want to send something here on title 10, which is reproductive health for women, we can debate that issue. but it's not on a stopgap funding measure. so if this government shuts down -- and it looks like it's headed in that direction -- it's going to be based on my friends in the house of representatives, the leadership over there, focusing on ideological matters that have nothing to do with funding this government. that's a sad day, i think. as my friend, the republican leader proves predecessor said, the great henry clay,

legislation -- all legislation, he said, is based on mutual consent. the great compromiseer, henry clay, who served in this body and served three separate times as speaker of the house of representatives, that's what he said. isn't this the time, isn't this the time to do that? remember the word that is so important in what henry clay said is "mutual concession." and we have done far more than anyone ever thought we would do. we've done it because we believe that this government should not shut down. mr. mcconnell: mr. president? the presiding officer: the republican leader is recognized. mr. mcconnell: my good friend mentioned henry clay. he would have approved very much of the bill that the house will be sending over later today, and the abortion provision that my good friend, the majority leader, refers to is one the democratic leaders have previously supported. it's a measure that's been previously in appropriations bills and a measure that's

previously been signed by the president. so obviously that's not what this measure is about. as the majority leader indicated, the talks are continuing, but two positions that have emerged are very clear. throughout this debate, republicans have consistently said that we prefer a bipartisan agreement that keeps the government running and provides critical funding and certainty for our troops. this is exactly what we've been working toward all along. and that is exactly what the bill the house republicans are expected to pass today will do. importantly, this bill will also include a modest reduction in washington spending, a reduction well within the range that even democratic leaders have described as reasonable. in fact, the bill the house republicans will send over to the senate today is nothing more than a smaller version of the larger bill the democrats say they want. so let's be specific, very

specific. the obama administration and secretary of defense said they need an annual defense bill. the house bill we'll get today does that. it passes the defense appropriations bill. the senate democrats have said they want the government to keep running. the house bill will get -- the house bill we'll get today does precisely that. democratic leaders have identified a number of cuts they believe are reasonable. the spending cuts that the house bill will get today go no farther than that. democrat leaders have said they wanted no controversial policy riders. that's what we just heard our majority leader talking about. but the policy provisions in the bill we'll get today are provisions that members of the democratic leadership have already voted for and that the president himself has previously signed into law. it will be pretty hard to argue that that's controversial. so here's the bottom line.

the bill does everything democrats have previously said they want. it cuts washington spending by an amount that democratic leaders believe is reasonable. the policy prescriptions it contains have been previously agreed to by democratic leaders and signed by this president, and most importantly, this is the only proposal out there that keeps the government open, the only one that's coming over from the house. in other words, if a shutdown does occur, our democratic friends have no one to blame but themselves because they have done nothing whatsoever to prevent it, since they have produced no alternative to the bill that the house is sending over today, no alternative to the one the house is sending over today, this is the only proposal currently on the table that will keep the government open. so there are two options at this point. democrats can either take up and pass this reasonable bill that falls well within the bounds of what their own leadership has

defined as acceptable or shut down the government. that's it. that's the choice. so rather than talking about a shutdown, i hope our democratic friends join us in actually preventing one. there is only one way to do that : by quickly passing the house bill and sending it to the president for his signature before tomorrow night. and, mr. president, on another matter, the president will meet today at the white house with colombian president juan manuel santos. we understand they will announce an agreement to advance a long-awaited and overdue free trade agreement with this important trading partner and arguably our best ally in south america. republicans have been urging the president to act on this and on other critical trade deals for over two years. the u.s. chamber of commerce estimates that trade deals with colombia, panama and south korea could provide up to 380,000 u.s.

jobs, and we know that this deal alone would create tens of thousands of new jobs here in this country. at a time when millions of americans are out of work and businesses are looking for opportunities to hire, there was no excuse to slow walk these deals. so we hope today's meeting marks a real step forward in concluding this trade agreement with colombia. we expect this announcement means the president will be submitting all three trade agreements, all three -- korea, colombia, and panama -- in the very near future, and we look forward to working with them to clear them through the congress. mr. president, i yield the floor. the presiding officer: under the previous order, the leadership time is reserved. under the previous order, the senate will be in a period of morning business with senators permitted to speak therein for up to ten minutes each. with the first hour equally divided and controlled between the two leaders or their

designees, with republicans controlling the first 30 minutes and the majority controlling the second. mr. roberts: mr. president? the presiding officer: the senator from kansas is recognized. mr. roberts: mr. president, it was my understanding i was granted 20 minutes under the leader's time. if that is the case, i would like assurance -- the presiding officer: is there objection? without objection, so ordered. mr. roberts: i appreciate that, mr. president. and i appreciate the leadership as best they can going into great detail on the mutual effort to avoid a government shutdown. i know all members are vitally interested in this, as is the american public. i do happen to agree, probably no surprise, with the republican leader and his description of

the situation, especially in regards to our national security, which i think is exceedingly important. i have asked for this time now to discuss a related subject. some may think it is not related, but i do think it is. it is related to a government or an economic shutdown, if you will, on many businesses all throughout the country already occurring, something that we hear about from time to time from various industries or businesses or owpgz, almost everybody up and down main street, and i would describe it as a shutdown by regulation or almost stragulation by regulation, and that is what i would like to talk about just a moment. and so i come to the floor to highlight another area where regulation is having a negative effect on business in my state

and all across the country. now, to date, i have spoken about the impact on regulations, on health care and on agriculture and on energy, and today i'm here to talk about the regulation of our financial sector. i want to emphasize i'm talking about the impact of regulation on our community banks. those banks in each of our towns that are often home owned and operated. our community banks share the common concern that i have heard from businesses in all industries all across my state. the volume and pace of regulations that are coming out of washington are basically unimaginable, and they add to the costs and they are diverting resources that would otherwise be used to grow their businesses or serve their customers or help the economy in its recovery. as i have noted in previous remarks, i was very encouraged

that president obama signed an executive order, and i credit him for that. he directed the administration to review, to modify, to streamline, expand or repeal those significant regulatory actions that he called unnecessary, overly burdensome or would have had significant economic impact on americans. he even in an offhand remark said some of these regulations are actually stupid, and i agree with the president and i gave him credit for that. and i was originally encouraged by the president's commitment to a new regulatory strategy which seems to be across the board in almost everything we do, but after reviewing the executive order, i was left with some concerns. and here's why. the executive order states in

applying these principles, each agency is directed to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. now, nobody could possibly disagree with that. it's a good statement. where appropriate and permitted by law, however, each agency may consider and discuss qualitatively, qualitatively -- i'm not sure if i understand that in very clear language, but at least i have been trying to figure that out along with a lot of the people who were on the receiving end of regulations, and then this is the part where i defy anybody to comprehend, when considering these regulations, we must consider values that are difficult or impossible to quantify, including equity, human dignity,

fairness and distributive impacts. now, as "the wall street journal" captured in their response to the president's editorial, -- quote -- "these amorphous concepts are not measurable at all. how on earth do you make such a determination? this language is, in fact, if anybody can understand it, a very large loophole. coupled with an exception for the independent agencies such as the fdic and the e.p.a. and the sub agencies and others -- and other regulatory agencies. it has the potential to result in no changes at all. so here you have an executive order, but you also have an executive order that has a lot of loopholes in it. that is why i have introduced legislation to put teeth into this executive order. my bill is called the regulatory

responsibility for our economy act, and it strengthens and codifies the president's order. like the executive order, my legislation ensures that the regulators review, modify, streamline, expand or repeal regulatory actions that are duplicative, unnecessary, overly burdensome or would have significant economic impacts on americans. but it requires that federal regulations put forth do consider the economic burden on the american businesses, ensure stakeholder input during the regulatory process and promote innovation. now, to date, 47 members of this body have signed on as cosponsors. i personally invite the distinguished acting presiding officer to also sign on as a cosponsor if he so chooses. that is a testament to the concerns that my colleagues are

hearing from their constituents about how the unrelenting tide of regulations now coming from washington are harming their businesses and our economy. it could be described, actually, as another government shutdown, as i have indicated, by stragulation. so today i want to call attention to the impact of the regulations on the financial services sector, in particular the impact on our community banks. i might add in discussing this before on agriculture, energy and health care, we talked to the stakeholders involved in kansas, the people who are actually involved. it is their suggestions that i am repeating and that i have tried to encompass in my legislation. the financial services sector of our economy is already the focus of substantial regulation. i think everybody understands that.

we all support commonsense financial regulations. however, it is important that financial regulations do not become undue burdens, especially on our banks that are the backbone of main street and finance the economic growth in our communities. now, while i appreciate that many of the agencies with responsibility for regulating the industry are independent of the executive branch, i am hopeful that these agencies are receptive to the president's effort. while the economic crisis focused attention on the financial services industry, leading to the passage of the dodd-frank bill, our nation's community banks who are already shouldering an undue regulatory burden will now bear a greater burden when the hundreds of regulations from this law are implemented. i should probably say thousands. our nation's community banks,

our small businesses on average a community bank has 37 employees and approximately approximately $154 million in loans and other assets. the meeting of banks in kansas have an average of less than 14 employees. however, they currently comply with 1,700, 1,700 pages of consumer regulations alone. that's incredible. they must also comply with hundreds of additional pages of regulations regarding lending practices and other banking operations. now, according to a summary of the dodd-frank act, this legislation mandates that 11 different agencies now create at least 243 more regulations.

issue 67, one-time reports or studies, and 22 new periodic reports. many of these new rules are required to be issued in the next year or two, and financial regulatory agencies have the discretion to issue additional rules on top of those, and those required under dodd-frank. this is incredible if not unbelievable. regulators have also -- have already, have already issued more than 1,400 pages of regulatory proposals. up to 5,000 pages of regulations are expected. many will be proposed by a new bureaucracy that is created in the dodd-frank act, the bureau of consumer financial protection. remember that name, the acronym

is cfpb. cfpb will southlessly suffocate a lot of businesses. it will have broad authority to monitor, regulate and direct the activity of banks. these actions will create additional and significant compliance costs that will impact the ability of every bank to serve its community. these actions have real cost to banks. according to recent testimony before the house oversight and investigation subcommittee, the c.b.o. director, the congressional budget office director, douglas elmendorf, said the dodd-frank act is expected to impose nearly $27 billion in new private-sector fees, assessments and premiums. this amount includes more than $14 billion in new fees on banks. and guess where that money is going to end up in regards to

consumer costs? now, our community bankers and their customers are worried about the impact of these new requirements. that's got to be the understatement of my remarks. they are frustrated, they are angry, they are upset. not every regulation will apply to the community banks. they tell me the rapid pace of the new regulations are placing a strain on any bank's requirement capabilities and are adding significantly to their operating costs. many banks tell me they are reevaluating whether they can afford to offer some products and services such as mortgage lending. yeah, you got that right. if you live in a small community and you go to your local bank and you'd like to get a loan in regards to finance and mortgaging, sorry, they're out of the business. it is important to understand that banks do not oppose

commonsense regulations. that's not what i'm saying. they are necessary to ensure that banks are doing their jobs and the consumers receive the proper information and disclosures that are beneficial to them. the problem is that unlike bigger financial institutions, our community banks do not have a large staff of attorneys general or compliance -- large staff of attorneys or compliance officers to help them navigate beef after waive of -- navigate wave after wave of these new regulations. one out of every four dollars of operating expenses is taoufd pay for the cost -- is used to pay for the cost of complying with the regulations. with dodd-frank we can expect that cost to go higher. one community banker tells me they have five compliance officers out of a staff of less than 100 employees. in speaking with compliance

officers, they tell me that regulations that are being put forth to implement a range of new requirements are being written too quickly without specifics and guidance for banks to implement as intended. they point to regulations that are duplicative or contradictory but which they must comply with, even if the banker or the consumer does not view the regulation as having any value or benefit to the consumer. i might add even if they can understand it. such compliance efforts cost time and money, and it is vital that federal regulators consider the total impact of all regulations, not merely each regulation in each isolation, in each isolation, and work to reduce unnecessary regulatory burdens on an already heavy regulated industry. now, with these concerns in mind, i would like to call attention to several regulations

and highlight the impact of an overly burdensome regulatory environment. i encourage regulators to join the president's effort to pursue solutions to regulations that make it difficult for our community banks to serve their customers, support businesses in their communities and help grow our economy. the dodd-frank act requires the federal reserve to issue a rule for debit interchange fees. basically interchange fees or swipe fees are fees a merchant bank pays to a customer's bank when a customer uses their debit card. in december i joined a bipartisan group of senators in writing to federal reserve board chairman ben bernanke expressing our concerns with the interchange provision and to encourage the federal reserve to ensure that our consumer interests are protected in rate

standards that are set. our letter outlines -- quote -- "concerns with the consequences of replacing a market-based system for debit card acceptance with a government-controlled system as well as concerns that the provision will make small bank and credit union debit cards more expensive for merchants to accept than those cards issued by larger banks. is it would likely put them at a disadvantage compared to the large banks that issue those other cards. in addition, the rule does not consider all of the costs incurred by a bank in actually providing the service, such as all the costs for fraud control, prevention, network processing fees, card production and insurance costs, fixed costs including capital investments. these are all significant costs for many banks and one of the factors they will have to look at when considering whether they even continue to offer any debit

card service. now, during debate on the debate interchange amendment -- on the debit interchange amendment, supporters maintained the reduction in interchange fees would be passed on to the consumer. yet, there's nothing -- nothing -- in the dodd-frank act that requires retailers to pass on any savings from debit interchange fees to their customers. on the contrary, the debit interchange rule will likely result in higher bank fees, a loss of reward programs or banks may ultimately, as i have said, decide not to offer debit cards to their customers. some are already doing that. some steps are already being considered. higher fees are limited choices. as a result of such government price controls, it does not benefit any consumer. that's why legislation i am supporting calls for the federal reserve and other federal financial regulators, slow down.

fully study this issue. carefully evaluate the 11,000 comments that were received on this proposed rule. i am particularly concerned about the estimated cost of the debit interchange rule for our community banks, which is not insignificant. supporters of the interchange rule say that our community banks will not be impacted. well, i beg to differ. consider what i'm hearing from the community banks in my state of kansas, one community banker in a town of just 1,000, whose bank began offer debit cards a few years ago tells me the cost of the interchange proposal will cost his bank $19,000 a year. two other banks that serve multiple rural communities will see increased costs per year of more than $46,000. and $100,000 respectively.

other banks, including banks in my state, estimate the cost to be in the millions. ultimately loss of income for pwafrbgz will mean -- banks will mean less capital available to lend for borrowers. i want to mention concerns of mortgage disclosure requirements. taken together, existing regulations and anticipated regulations as a result of dodde result of making it more costly to borrowers, already pushing some lenders to simply stop offering mortgages. one example is the "safe" act. it creates a nationwide mortgaging licensing system and registry for more -- for mortgage loan originators. this registry is intended for

use by regulators to identify mortgage brokers or lenders who seek to work in the state after being banned from working in a different state. that sounds all right. however, each mortgage loan originator will be required -- banned or not -- will be required to register with the national registry, obtain a unique identification number and submit fingerprints for the f.b.i. to conduct a criminal background check. so if you're in the business of trying to be a mortgage loan originator, you're going to get fingerprinted. you're going to be on file with the f.b.i. our community bankers tell me their costs to meet the new requirements is roughly $1,000 to $2,000 per loan officer. i know that might not seem like a lot of money to washington regulators, but it is a tidy sum in rural america.

the cost of compliance will take time and money away from the business of lending and may ultimately be passed on to the consumer in the form of higher prices for a mortgage loan. that's what will happen. finally i want to mention the recent guidance on the overdraft payment programs put forth by the fdic. now at some point most of us have had experience with overdraft programs, perhaps when we forgot to balance our checkbook. in the guidance, the fdic stated -- quote -- "the guidance focuses on ought may ted -- on automated overdraft programs and encourages banks to offer less costly alternatives. if, for example, a borrower overdrafts his or her account on more than six occasions where a fee is charged in a rolling 12-month period, additionally to avoid reputational and other risks, the fdic expects

institutions to institute appropriate daily limits on customer costs and ensure that transactions are not processed in a manner designed to maximize the cost to consumers. so while banks offer overdraft protection programs now and take other steps to aid customers in avoiding overdrafts, many are concerned that this guidance put forth by the fdic is overly prescriptive" -- nice word for it --" imposes new regulations and goes further on amendments on overdrafts put forth by the federal reserve. further, banks note that the guidance seems to contradict the intent of the president's executive order that requires agencies to propose or adopt regulations only upon a reason determined -- a reasoned determination that its benefits justify its costs, recognizing that some benefits and costs are

difficult to quantify. banks are concerned that the fdic guidance is based on outdated information and that the impact of the federal reserve's rules on overdraft programs should be reviewed before moving forward with additional guidance in this area. so while the fdic is not subject to the executive order, i certainly hope that they would adopt the spirit of the order. in addition, when a consumer -- pardon me. when a customer has a pattern of excessive use of automated overdraft programs, the fdic states that banks should contact their customers about a more appropriate and lower-cost alternative that better suits their needs. you know, i can remember a bank scandal back in the house of representatives. if only that bank would have had this protection from fdic, none of that scandal would have ever happened. this is ridiculous.

the fdic recently provided additional clarification on this guidance that provides some flexibility about how banks reach out to customers and permits them to contact customers by mail as well as in person and by telephone. however, the requirement that banks contact customers who incur six overdrafts in a rolling 12-month period remains a broad overreach of the fdic's authority, putting the burden on banks rather than the customer who ultimately bears the responsibility for ensuring that they have sufficient funds in their account to cover their transactions. in fact, one study shows that 77% of customers paid no overdraft fees in the previous 12 months. that same study also showed that for those 21% of customers who paid an overdraft fee, 69% say they were glad that the payment was covered.

another survey found that 94% of those surveyed said they would want a transaction to be covered by their bank even if it resulted in an overdraft fee. this guidance seems to be a clear example of where an agency is overreaching with little evidence of the need for or effectiveness of such additional guidance. mr. president, in closing, i thank again the president. i'm talking about president obama; for taking a step in the right direction to review federal regulations that place undue burdens on our nation's economic growth and recovery. i hope that financial regulators will join in this effort to examine rules and regulations that pose significant barriers to our small-community banks and their ability to serve our customers and contribute to the growth of their communities. thank you, mr. president. i yield the floor and note the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call: quorum call:

a senator: mr. president? the presiding officer: the senator from tennessee is recognized. mr. alexander: i ask consent to vitiate the quorum call. the presiding officer: without objection, so ordered. mr. alexander: i ask consent to speak for up to 15 minutes. the presiding officer: the minority time is only one minute and 30 seconds at this point, and then the majority time is for 30 minutes. mr. alexander: oh, i see.

the presiding officer: the senator from tennessee may proceed. mr. alexander: i thank the chair, and if another senator comes and wishes to speak, i will -- i will be succinct. senator begich, i see, is coming, so i will try to do mine in less period of time. i thank the chair for its -- for its courtesy. two subjects, mr. president. first, there is a good deal of discussion in washington today about making sure that we continue to operate the government over the weekend and on into next week while we get about the important business of reducing our debt.

our national debt is an urgent problem. members on both sides of the aisle understand this and have said this. we have 64 senators who have written the president to say, mr. president, we're ready to go to work on reducing the debt on the whole budget. we have a proposal from congressman ryan. we have a proposal from the erskine bowles commission. we're ready to go to work, and the house of representatives has made a proposal to, for the time being, continue the government while we work on that that is eminently reasonable, and i would like to ask unanimous consent to include a "wall street journal" op-ed from april april 4 by gary becker, george shultz and john b. taylor that points out that the numbers in the house of representatives' proposal would have the federal government spend for the rest of the year basically what we spent

in 2008 plus an allowance for inflation. and there's no reason, the authors say, why the government agencies from treasury and commerce to the executive office of the president can't get by with the same amount of funding that they spent in 2008 plus increases for inflation, so this would be a reasonable first step as we get to the larger issue of how we reduce the debt over a longer period of time. i ask consent to include that in the record. the presiding officer: without objection. mr. alexander: mr. president, last month marked the one-year anniversary of president obama's signing into law -- signing the health care bill into law. i believe it was a historic mistake. and we talk about the health care law in a variety of ways. one thing that we have said is that at a time when our country needs to try to make it easier and cheaper to create private sector jobs, the health care law makes it harder and more expensive to create private

sector jobs. and someone might say well, how could that happen? and so this morning, i'd like to just mention a few examples of how it actually is happening, how the health care law actually is causing -- making it harder and more expensive to create private sector jobs. last september, i met with about 35 chief executive officers of chain restaurant companies. according to the bureau of labor statistics, the retail and hospitality industries in america are the largest employers in the united states, second only to the u.s. government. food services and drink places provide roughly 10 million jobs. most of these are first-time job seekers and low-income employees, young people and poor people, so we're talking about companies that provide a huge number of jobs to low-income americans. one of the chief executive

officers that i met with said his company had been operating their stores with 90 employees on the average, and as a result of the health care law, their goal was to operate with 70 employees. mr. president, that's fewer jobs, and there are many other examples of that around the room. many of the members are on the national -- in the national council of chain restaurants. they have significant concerns about the law, and they provided me with specific examples. one restaurant chain based in tennessee with worries about the law is a company called ruby tuesday. ruby tuesday has 24,000 full-time employees, 16,000 part-time employees. according to ruby tuesday, the employer mandate will cost them roughly $47 million, yet their annual net income last year was just over $45 million. in other words, the cost of the health care law to them equals the entire profits of this multibillion-dollar company.

ruby tuesday says as a result it will have to reduce its work force by 18% in order to hold its profits even, and the company will increase the hours for their full-time employees and reduce their overall work force in order to reduce the number of people for which coverage would be required. now, the problem we're talking about, mr. president, is that the new law requires employers who don't provide -- quote -- "acceptable coverage to pay a fair share, -- quote -- ," penalty of $4,000 per full-time employee." a full-time employee is defined as someone who works 30 hours a week instead of 40 hours a week. so you can see that a company like ruby tuesday with that many employees would have a big cost, cost, $47 million, which equaled its entire profits for the year. another restaurant chain, white castle, is also concerned. it said that according to their internal estimates, thelike

law's provision imposing penalties for employer-sponsored health plans whose cost to the employee exceeds 9.5% of that employee's household income would be particularly punishing. in its present form, the provision alone would lead to an increased cost of over 55% of what white castle currentary earns in -- currently earns in net income. this devastating impact would cut job creation by at least half. it would be predominantly felt in the low-income areas where jobs are most needed. a representative of the national retail federation testified in february about another large quick change restaurant about potential job loss. this company preferred to remain anonymous. it estimates that the incremental cost to comply with the new law is $10,000 to $15,000 annually per affected restaurant which across the entire system could be $50 million to $75 million a year.

and in that company, this would wipe out one-third of that system's profits for the years, which means eliminating 10% of its stores, which means hundreds of restaurants and the potential elimination of 12,500 jobs. there was another example of a large franchise system with multiple casual dining restaurant concepts and projects. they estimated the average cost per restaurant in their system of the new health care law would be $237,000, which equates to a systemwide cost providing health insurance benefits to full-time employees of almost $806,000 a -- $806 million a year. if all this changed franchisee owners elected to pay the employers' penalty instead of providing insurance, the cost would be reduced, but to just over still $84,000 a restaurant or savings of $286 million systemwide.

so to cope with the increased costs of the health care law, mr. president, the employers of -- who are restaurant owners owners -- and these are the largest employers in america, employ the most people in america except for the u.s. government, are seeing their costs go up, and as a result of that, there are fewer jobs for americans. republicans believe it would be better to reduce health care costs step by step so more people can afford to buy insurance, instead of expanding a system that costs too much and will continue to advocate that position. but the important thing to remember about the law, we have heard it said, well, it hurts medicare, it adds regulations, raises taxes, individual premiums are going up, but also it makes it harder and more difficult and more expensive to create private sector jobs at a time when our country should be dedicated to making it easier and cheaper to create private

sector jobs. i thank the president and i yield the floor. mr. begich: mr. president? the presiding officer: the senator from alaska is recognized. mr. begich: mr. president, i rise today to speak about the wyden-coats-begich bipartisan tax fairness and simplification act. mr. president, it's that time of the year again, tax time. across our nation, small businesses and families are struggling to unravel the annual nightmare of paperwork required to file their taxes. across our nation, small businesses and families are struggling. mr. president, my wife and i are small business owners, so especially -- i especially understand how burdensome and expensive the tax code is in filling out the process -- and filling out the process can be for folks this time of year. this process is costly and

burdensome. the i.r.s. estimates that americans spend $6.1 billion hours -- 6.1 billion hours each year filling out tax reforms and roughly $163 billion each year on tax compliance. small businesses are the engine and the backbone of our still-recovering economy. so we should allow them to spend more time doing what they do best, creating jobs, growing the economy, not filling out burdensome paperwork. this is why i have joined my colleagues from both sides of the aisle, senators wyden and senator coats, to introduce the bipartisan tax fairness and simplification act. tax reform has been a long priority of mine. i'm happy to be moving forward on this important piece of legislation today. in a nutshell, our legislation simplifies the tax code and alleviates many of the burdensome paperwork and costly

requirements that are bogging down american families and businesses. our legislation would allow most taxpayers to file their taxes using a straightforward and shortened one-page 1040 i.r.s. form. when you look at this example, here it is exactly what it would look like. also, individuals and families would be able to request that the i.r.s. prepare a tax return for them to review, modify and sign. the wyden-coats-begich reduces the number of tax brackets for individuals from six to three -- 15%, 25%, 35%. it eliminates the alternative minimum tax which forces millions of taxpayers to calculate their taxes twice and pay the higher amount. in order to make capital investments more competitive for small business owners, the

wyden-coats-begich bill will allow 95% of small businesses, those with gross receipts of up to $1 million, to expense all equipment and inventory costs in a single year. these changes may be -- may seem simple and common sense, but they make a world of difference to our middle-class families and small businesses. let's talk specifically about the small businesses for a second. the people who are keeping our economy going, like my friend john brower from anchorage. he owns and operates a printing company in anchorage. john works tirelessly, 365 days a year and is proud of the business he built. with new technologies developing in the printing business, it's always bringing on needs for new equipment. this legislation will be able to have him -- allow him to expense

all that equipment cost that would make a world of difference for john, and save him thousands and thousands of dollars in taxes. i'm here to speak for the john browers and the other small businesses all across alaska and across this country. my view is very simple. let's quit giving tax breaks to multimillion-dollar corporations. let's close the corporate loopholes and help out the small businesses like john browers. mr. president, right now we are facing a $14.3 trillion deficit. we are hours away from a potential government shutdown rather than continuing on a path toward long-term economic recovery. our new bill actually promotes economic growth because it allows businesses to spend more time growing and less time worrying about the overly burdensome tax system which we all know only enables tax

avoidance. as all of us around here know, tax avoidance means outsourcing jobs overseas. instead of our legislation, it incentives and enables companies to invest right here in america rather than incentivizing them to invest overseas. the legislation also promotes responsible retirement savings in investment by expanding tax-free saving opportunities, the american dream account, whether it is for a new home, education for your children or health care, this account provides a unique opportunity to invest in the american dream. families and individuals alike can make contributions to an account that functions much like the retirement savings account, an r.s.a., to work toward purchasing their american dream. mr. president, right now the

u.s. corporate income tax rate is the second-highest in the world. that puts american corporations at a competitive disadvantage globally. to resolve that, the wyden-coats-begich legislation cuts the top corporate rate from 35% to 24%. that means american corporations will pay more competitive rate than corporations based in trading partner countries such as canada, germany, and france. to make the tax code fair, reduce opportunities for individuals in businesss to avoid paying their fair share of taxes, wyden-coats-begich bill ends a number of specialized tax breaks that favor one business sector or some special interest that has been fortunate to be down here lobbying in the years past for their special deal and makes sure everyone is treated fairly but ensures that we are competitive in the global economy that we now compete in.

our legislation protects and extends important tax deductions for families. the wyden-coats-begich bill retains many of the most commonly claimed individual tax credits and deductions, including deductions for mortgage interest and charitable contributions, credits for children and earned-income, and preferences for the armed forces, veterans, and elderly and the disabled will be retained, as will those that have americans pay for health care and higher education and save for retirement. the wyden-coats-begich bill also permanently extends the enhancement of the child tax credit and the earned-income tax credit and the dependent care credit. the legislation eliminates the current law phaseout of itemized deductions and personal exemptions, allowing all taxpayers to benefit fully from their deductions and exemptions.

finally, our legislation requires banks to identify all individuals who benefit from foreign accounts by name and nationality and to withhold 30% of all passive income such as interest and capital gains sent to any individual who disguises his or her identity. mr. president, tax reform is a bipartisan issue. hands down, republicans, democrats, our president, the o.m.b. director and many others all across this country have called for it. so let's do it. let's stop punching holes in an outdated system and make real tax reform happen. tax reform is about creating jobs, growing the economy and supporting our families and businesses for the future. mr. president, i yield the

floor. the presiding officer: the assistant majority leader is recognized. mr. durbin: mr. president, let me commend my colleague from alaska. i don't know the particulars of your bill, but as i listened to your description of it, it is long overdue. simplifying this tax code so the average american feels that it's fair and understandable is essential for the integrity of our tax system. i have always said that there's one law we could pass which would result in tax simplification overnight, and that would be a requirement that every member of the senate and house prepare and file their own personal income tax returns. it is a humbling experience. a few years ago in springfield, illinois, when my accountant passed away, i decided as a lawyer and a senator i'll do it myself. i spent the whole sunday afternoon and then monday went begging for help. and i thought to myself, mine isn't that complicated. it should be a system that is much simpler and more direct and

fair. and i thank you for stepping in to meet that challenge. the bowls-simpson commission talked about tax reform as one of the central elements to dealing with our deficit and expanding our economy. and i think i might add to that, fairness in the way our taxes are treated. thank you for your leadership on that. i thank my colleague for it. well, mr. president, we're now in the countdown phase as to whether or not this government of the united states of america, the most prosperous nation in the world, is going to shut down, turn out the lights, close its doors and walk away. and that could happen tomorrow night at midnight. if it does, it is an unmitigated disaster. there is no winner, no political party can claim that they've come out ahead in this exercise. it makes us all look bad, deservedly so. this morning i called into a local radio station in down state illinois, and the host

said you ought to hear the phone calls, senator. i said i can get what they're saying. what's wrong with those people in washington that they can't sit down and reach an agreement? they're supposed to be our leaders. they're supposed to work out our problems. they're not supposed to throw up their hands and throw a tantrum. that's frankly what will happen if we close down this government. now, i think there are ways for us to reach an agreement. there are certain things that we all agree on. let me tell you what they are. our deficit and debt are serious national problems. they threaten our future and they leave a legacy to our children and grandchildren which we cannot defend. in order to reduce our deficit and our debt, we need to change in washington. we need to cut spending. we need to be honest about it. and we need to tell the american people we represent what it means. some of it will require sacrifice. but online both sides of the aisle, there is no argument for

what i just said. we need to cut spending, and we need to reorder the priorities of government. but there's something more we need to do, and i credit two minnesota legislators who wrote a letter to "the new york times" a few weeks ago that i thought in a few words put it together. this democrat and republican wrote in and said "we're facing a fiscal crisis in our state. and what we've discovered is we can't tax our way out of it. we can't cut our way out of it. we need to think our way out of it. we need to find ways to deliver essential services to the american people in a more cost-efficient way. we need to stop the duplication, waste and inefficiency that are clearly part of our government today." so where are we? we are involved in negotiations primarily between the majority leader, harry reid of nevada, and speaker john boehner of ohio. they are trying to work out an agreement so that we can move forward and finish this year's funding. it's six months and a few days, but it's critically important we

get it done. and they're close. in fact, i would say -- and i just asked senator reid if this was a fair representation -- that the dollar amount of this negotiation is all but completed. the dollar amount is all but completed, meaning that both sides have agreed how much we will cut spending for the remainder of this year. taopbd give credit where -- and to give credit where it's due, to speaker boehner and the house republicans, there are significant cuts. in their initiative in this area they could point to as part of the agreement. on the other side of the ledger, i think at the end of the day we'll be able to say as democrats, yes, we support spending cuts, but we drew the line where we thought it was important for the future of this country. we made sure that the cuts weren't too deep in job training programs for the unemployed and new workers in america. we made certain that the cuts weren't too deep when it came to education, particularly for children from low- and middle-income families. we made certain that the cuts

weren't too deep when it came to medical research and the basic competitive research necessary for the american economy and businesses to expand. and a host of other things. but those three major areas of jobs, job creation, education, and research, we fought for, and at the end of the day i think we can point with pride to the fact that most of those are going to be largely protected. so we can both walk out of the room with some satisfaction. and after all of this time, we have reached the point where the dollar amounts are in basic agreement. i'm not going to say in total agreement, but basic agreement. so why am i not standing here saying with certainty the government will not shut down? because, unfortunately, now the house republicans have decided that this is no longer a battle over the budget deficit. it's a battle over issues, issues that don't relate directly to the spending of our government or the size of our deficit. one of the things they're insisting on are a group of

riders that, part of h.r. 1, their budget bill, which restrict the authority of the environmental protection agency in washington to deal with environmental issues. now, i totally disagree with the house republican position on this, and they are insisting on it. i would commend to them to pick up that always scintillating volume, the "congressional record," from yesterday and read what happened on the senate floor. yesterday on the senate floor the democratic majority agreed with the republican minority, and we called four amendments on e.p.a. in fact, we said to the republican leader, senator mcconnell, write your own amendment, we'll call it to the floor, we'll vote on it. it was a swaoefpg amendment which -- sweeping amendment which took authority away from the e.p.a. when it came to greenhouse gas emissions. i think that's the wrong position but senator mcconnell had his right to offer it. it got 50 votes in favor, 50 votes against. it failed.

but we had the debate. we're not ducking this issue, i say to speaker boehner. we have faced it. we have voted on it. this chamber has spoken on that issue, and three other debates and votes yesterday on e.p.a. none of those proposals got more than a dozen votes. but we've had the debate. we're not running away from it. so to insist now that as part of any budget agreement we accept the house position on the e.p.a. is to ignore the obvious. the senate has spoken. the senate has debated and voted, and it's clear where we stand. now the second issue that speaker boehner insists has to be part of this package is one that troubles me, because it goes to the heart of some basic health programs for people across america. it's the title 10 family planning program. speaker boehner's approach would eliminate the entire title 10 family planning program. how big an expense is this in $327 million.

since 1970, the title 10 funding has provided men and women in every state with basic primary and secondary health care, including annual exams, cancer screening, family planning and testing and treating for sexually transmitted infection. in 2009, title 10-funded providers performed 2.2 million pap tests, 2.3 million breast exams and over 6 million tests for infections, including h.i.v. title 10 services prevent nearly one million unintended, unplanned pregnancies each year, almost half of which would otherwise end up in an abortion. family planning programs like title 10 not only give men and women command over their lives, they save us money. every public dollar invested in family planning saves us almost

$4, $3.74, to be exact, in medicaid-related expenses. if we ended title 10 as speaker boehner and the house republicans insist, it would result in more unintended pregnancies and, sadly, more abortions. and it would result in more than five million women losing access to basic primary and preventive health care. mr. president, we're prepared to debate this. if the house republican position is that we need to close these clinics across america, we need to eliminate access to basic primary health care, to literally millions of women and men across america, i'm ready for the debate. but to hold up this budget negotiation, insisting that unless the house republican position on title 10 eliminating it is accepted, then we can't reach an agreement? we have to shut down the government? does speaker boehner really propose that we shut down the

government of the united states of america unless we're willing to cut title 10 family planning programs and health clinics, close the doors on health clinics across america? is that what the last election was about? i don't think so. i think the american people said in the last election get serious about the deficit and start working together and stop your squabbling. those were the two basic messages i took out of it. well, we're getting serious about the deficit because we're nearly in full agreement on the dollar cuts necessary for the remainder of this year. i don't remember the last election being a referendum on whether poor people and children in america would have access to health care at title x clinics. h.r. 1 included an amendment from a congressman from indiana that barred planned parenthood from receiving any federal funding, including medicaid reimbursements, c.d.c. grants

and teen pregnancy prevention program funding. planned plairnt hood health centers provide comprehensive care to millions of low-income and uninsured individuals each year. 48%, 1.4 million, of their patients are on medicaid and would lose access to their primary care. this provision is presented as a means to prevent planned parenthood from using federal funds for abortion. however, federal law already prohibits the use of federal dollars for abortion. that is not the issue. except under the hyde amendment which goes back decades now, except in cases of rape, incest or if the life of the woman is threatened by a pregnancy. abortion counseling represents 3% of planned parenthood services, and yet this amendment, this rider from congressman pence would ignore that. 90% of the care provided at

planned parenthood is cervical and family planning, sex education and the treatment of infection. if this amendment were enacted, most of the 800 health centers of the u.s. and 23 centers in illinois, including in my hometown of springfield, would be forced to close. this prohibition on planned parenthood funding is a rider on the house budget bill that is now the stumbling block for an agreement, on deficit reduction for the remainder of the year and keeping the government open. it is ridiculous that planned parenthood which receives title ten funding should be such a target and should be an obstacle to an agreement. we understand the conscience clause, restrictions that are in the law when it comes to the issue of abortion. that's not what this is about. this is about family planning. and those of us who personally

oppose abortion believe that women should be given the information and opportunity to take care of themselves and make their own family decisions. that's what planned parenthood is about, and this amendment would close down those clinics across america. that, i believe, is a move in the wrong direction. we could work together and we should to deal with this budget deficit. paul ryan is a congressman from janesville, wisconsin. i know him, i like him. we worked together for almost a year on the deficit commission. he's a bright, hard-working young man and chairman of the house budget committee. he has proposed a plan for the budget for the remainder of the next five to ten years. it's not a plan that i agree with but i respect the fact that he put the time in to prepare it. the reason i don't agree with it is that unlike the bowles-simpson commission, the budget plan that ryan has proposed does not deal in a

comprehensive and fair fashion with the challenge of the deficit. here's what i think and the commission believed. if you're serious about the deficit, you need to put everything on the table, everything. what congressman ryan has done on the republican side is to say we are not going to put on the table any savings from the pentagon over the next ten years. mr. president, that's hard to imagine. $500 billion a year-plus we spend at the pentagon, no savings, while we're cutting programs in every direction. we can't find a way to protect our men and women in uniform, keep america safe and secure and eliminate the obvious waste of money that goes on with much of the contracting in the pentagon? of course we can. i'm sorry that congressman ryan doesn't see that. i do. i believe it should be part of the conversation. and secondly, there is no suggestion of any revenue at all as part of the solution. in fact, congressman ryan goes in the opposite direction and continues the bush tax cuts for

the wealthiest americans. if you're worried about explaining to your children and grandchildren how we can leave them this bet, how could you explain congressman ryan's position that would have us borrow over $1 trillion over the next ten years to give tax cuts to the wealthiest people in america? how can you explain to your children we're going to go to china to borrow money to give tax cuts to wealthy people in america as we cut our deficit? that's his approach, and i don't think it is complete and balanced. there's a better way. we need to look back to the bowles-simpson commission, this deficit commission, and we need to move forward after we finish this debate on the budget for the rest of the year in a comprehensive and bipartisan fashion. for months, literally for months, i have been engaged in a bipartisan effort with some colleagues from the senate. we're trying to come up with something. i don't think everyone will applaud it. i know some of my colleagues will hate it, but it's going to be an honest approach to dealing with the deficit for the next

ten years. it's going to have the simpson bowles-simpson goals of of $4 trillion in deficit reduction and including all of the major elements of our government in this conversation. i think that's the only way to honestly approach this, and we can reach that debate once we get this immediate problem resolved. so the point i would like to close with, mr. president, is this. we are at a moment here where we can resolve this issue, keep our government open and move into the larger debate about our deficit in the years to come. it's morally an historic imperative debate. but in order to get beyond it, i hope that speaker john boehner, whom i respect as well, will accept the obvious. his riders on the environmental protection agency have been debated and voted on in principle already in the senate yesterday. it's happened. we're not avoiding it.

secondly, their rider relating to zeroing out funding for planned parenthood under title ten funding is one that we will take up at some point -- we're not running away from it -- but it's one that shouldn't stop the function of this government. it would be impossible to defend. closing down our government and all of the hardship that would follow over that one rider or two riders that they insist on, let's move toward reducing the deficit, but let's also reduce the political rancor here. let's put some of these issues which have been around for decades off to another day. let's make sure we consider -- and we will -- but let's move forward now to keep this government open. let the american people at the end of this week look at us and say in the end, they got it right. we didn't like the way they preached their point, but they didn't do the irresponsible thing and walk away from their responsibilities. they accepted their duties, they kept the government functioning, and now they are going to roll

up their sleeves and deal honestly with this deficit. mr. president, i yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: the senior senator from vermont is recognized. mr. leahy: i ask unanimous consent that the call of the quorum be dispensed with. the presiding officer: without objection, so ordered. mr. leahy: mr. president, i'd like to take a moment just to describe to the american people and actually members of both bodies of congress what's going to happen to our troops and

their families if a collapse of budget negotiation forces the government to shut down. you know, we look at charts and graphs and numbers and all, but let's talk about the reality. well, i'm sure many understand that most government services will halt, it's also important to understand some government operations will not shut down. in particular, our men and women on active duty and in the national guard and reserves will continue to serve, but they will do so without pay. at a time when we ask them to fight two wars, to help stay the slaughter in libya, to keep peace around the world. another burden is going to be added to their shoulders. they are going to be asked to do it without a paycheck. now, some of those in the armed forces, many of them, do not have savings to fall back on on hard times. many a family member is overseas fighting for america, and their

families living back here paycheck to paycheck, paying for their groceries, to pay the car payments, a bill for a sick child or rent or a mortgage. while the other member of the family, the one who earns a paycheck, is over facing the possibility of dying on the field of battle, now we tell them, oh, get right out there and fight, we're proud you're fighting, sorry we can't pay you, sorry we can't pay you because members of congress and the white house can't come together on a deal, we can't pay you. gee whiz, your family may not be able to buy groceries, your child may not get medical care, but boy are we proud of you, and if you get killed, we'll give you a medal. come on. many americans, some of those that live in our -- serve in our military do live paycheck to

paycheck. they use the money to put food on the table and keep a roof over their family's heads. certainly, mortgage lenders are not known for accepting excuses when the monthly payments come due. but excuses are all that some members of congress can offer for why they will not come to the table and make sure our men and women in uniform get the pay they've earned. this is not bumper sticker sloganeering government. this is what really happens. it's so easy it's so easy for people stand up and sanctimoniously say oh, we're doing this for the good of our country. you're doing it and you're harming the family of our men and women in harm's way. especially that hard times are now on prospect for our troops is completal voidable. the possibility of a government shutdown is very real because a relative few are willing to play politics and brinksmanship at a time when the public wants basic, unadorned statesmanship.

they want republicans and democrats to act as though they also have a stake in the course of our government. the american people want congress to do its job. that's certainly not too much to ask. those who are insisting on their way or no way should pause to reflect on what their intransigence means to our troops and their families, in fact, every american. the decision to put politics ahead of the american people is reckless and imposes real hardship on real people. it is crueler still knowing some of our troops are already facing fears of death or injury, sleepless nights on forward operating bases must now add paying the electric bill and feeding their families to their list of daily worries. i've been with some of those troops in iraq and afghanistan. they have enough on their mind.

they have enough that they face every single hour of every single day and especially every single night to not have the added worry will our families be able to pay their bills. and i worry, as cochair of the national guard caucus, i worry especially for the vermont national guard troops who are currently forward deployed to locations around the world. many of them come from small towns and cities of vermont. they face these very fears. and shutting down the governme government, an ideologically motivated faction in country is willing to breach our fundamental pact with these men and women. we have always said protect our nations overseas and we'll protect your loved ones at home. who can justify violating that

fact with the men and women in uniform? some in congress are already seeking cover, claiming they've put forward plans to fund the pentagon and our troops. but, of course, even these transparent political ploys, we're not paying many of our intelligence personnel, our brave and dedicated forward at the floyd consular staff and officers -- forward deployed consular staff and others, many of whom work side-by-side with our troops. not to mention the vast number of individuals working in communities across the nation to support our overseas operations. every one of these dedicated public servants, every one of our troops deserves to be paid for a day's work. our troops and their families and those supporting our troops and their families have enough to worry about without needlessly being pushed to the brink of a costly government

shutdown. mr. president, i hope -- i hope that as we sit here in our plush offices with a staff and everything we ever want, being well paid as members of congre congress, let's let the reality sink in. the distinguished presiding officer has spoken about this many times. the reality is, men and women, families throughout our country are being severely hurt and let's not forget that. and in this area, i note that some in the other body reacted to the ire of a minority of local antigovernment extremists who make no desire -- no secret their desire to shut down government, even while they complain the government doesn't do enough for them, are proposing reckless cuts in programs, job creation and

national security. many of the other party are masters at blaming others for our budget deficit, a debt that they created during the last administration. self-proclaimed fiscal conservatives who in a fee short year racked up a trillion-dollar deficit by refusing to pay for two wars, just borrowing the money for two wars, something never been done before in this country. their idea was to cut taxes for the millionaires, cut taxes for those companies that ship our jobs overseas, cut corporate taxes, and borrow the money to pay for two wars. they burned through the clinton-era surpluses and then started a massive borrowing binge. and they want to lecture us on fiscal conservatism? the catastrophic earthquake and tsunami and another earthquake in the last hour in japan and

tsunami, the nuclear crisis in japan as well as the popular uprisings and violence in north africa and the middle east demonstrate once again the essential role that our embassies and consulates and our foreign assistance program play in protecting the safety and security of american citizens and our allies. i hear so many words drastic cuts to our international operations and programs. they're less than 1% of our federal budget. whether a natural or manmade disaster occurs overseas, americans are affected, or when americans are arrested and locked in a foreign jail, the same critics of these programs, the same people who want to cut all the budget for our overseas budgets say where's our state department, where's our u.s. a.i.d., why aren't they immediately taking care of

things? oh, sorry, we forget to we cut out your budget, you can't be there, but you should be there anyway. in egypt alone, 75,000 americans were living and snugd that country when it erupted. so i will put my whole statement in the record but i would neat since the earthquake and tsunami, u.s. consular offices iofficersin japan and washingtod ceaselessly to assist americans in scrap pan. we do it throughout -- assist americans in japan. we do it throughout the world. you know, we can't have it both ways. we can't on the one hand support drastic budget cuts and at the same time expect the agencies losing personnel and resources be able to respond to help americans in need. so let me ask consent, mr. president, my full statement be made part of the record. as though read on both issues. the presiding officerthe presidt objection, so ordered.

mr. leahy: mr. president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

quorum call: mr. hoeven: mr. president?