The Wall Street Transparency & Accountability Act of 2010

[Guest Two Cents]

The Obama administration is stating that the Mortgage industry is still to fragile to frak with. I say remove this festering wound, so the government can move forward.

[Guest Heather Booth]

The defeat of this amendment was a win for the biggest banks. Its passage would have addressed a fundamental problem that led to this crisis, and we applaud Senators Brown, Kaufman and their co-sponsors and all those who stood with them. This amendment would have greatly strengthened the bill, but the underlying bill remains strong. What the vote did show was the big banks will stop at nothing to defeat or weaken this legislation The big banks will use all their might and power to undermine real consumer protection and gut states rights protect their residents from abusive and illegal lending. They will seek loopholes in reining in the casino economy. They will try to continue gambling with our money, and oppose separating risky speculation from commercial banking. They will oppose real protections for investors and accountability for corporate governance. They do not want accountability. As we did this week, next week when debate and votes continue on this bill, we will fight day and night to pass strong financial reform legislation

[Guest Always Red]

Alabama Sen. Richard Shelby says the Senate bill does not impose controls on giant government-sponsored mortgage finance companies Fannie Mae and Freddie Mac. He says they created a demand for risky loans and inflated the housing bubble.

 

[Guest PEW]

The Federal Reserve Bank of New York has come under pressure from Fed officials in Washington to improve the performance of its supervisors overseeing the nation's biggest banks, new documents show.

 

In the past year, the New York Fed hasn't been rigorous enough in making sure big banks were living up to commitments to improve credit and risk-management systems and make other improvements, according to a review of the New York Fed's supervision office by the Federal Reserve Board in Washington. The review was performed late last year.

 

'Our review found some examples where supervisory products are not fully completed, and supervisory processes were not fully performed,' the review said, adding it also found 'that supervisory ratings were not always updated on an ongoing basis to reflect the evolving risk profile and financial condition of the organization.'"

 

Click to go to the Wall Street Journal website and view the entire article.

 

http://online.wsj.com/article/SB10001424052748704370704575228010828622910.html

[Guest American for Progress]

The nation's five largest banks are fighting a provision in the Wall Street reform bill that would stop banks from trading derivatives, fielding "more than 130 registered lobbyists" and spending $6.1 million on lobbying in first quarter of this year alone.

[Guest LAW]

Mrs. HUTCHISON. Thank you, Madam President.

 

I rise to join my colleague, Senator Tester, and an increasing number of cosponsors, in support of our amendment which will ensure that banks of all sizes pay their fair share in deposit insurance for the risk they pose to the banking system.

 

Our amendment is intended to level the playing field for our safe community banks that for far too long have paid assessments into the FDIC insurance fund above and beyond the risk they pose.

 

The FDIC levies deposit insurance premiums on a bank's total domestic deposits, but domestic deposits are not the best means to analyze the safety of banks. Financial assets other than deposits create risk in the system. Nondeposit assets are held disproportionately by larger noncommunity banks and can be more complex and more risky.

 

Community banks with less than $10 billion in assets rely heavily on customer deposits for funding. This penalizes safe institutions by forcing them to pay deposit insurance premiums above and beyond the risk they pose to the banking system.

 

Despite making up just 20 percent of the Nation's assets, these community banks contribute 30 percent of the premiums to the deposit insurance fund. At the same time, large banks hold 80 percent of the banking industry's assets. Yet they just pay 70 percent of the premiums.

 

We must fix this inequality. That is what the Tester-Hutchison measure does. It will do so by requiring the FDIC to change the assessment base to a more accurate measure: a bank's total assets, less tangible capital.

 

This change will broaden the assessment base and will better measure the risk a bank poses.

 

A bank's assets include its loans outstanding and securities held. One need only look back to the last 2 years to know those are the assets that are more likely to show a bank's exposure to risk than just plain deposits. It wasn't a bank's deposits that contributed to the financial meltdown. The meltdown was caused by bad mortgages which were packaged into risky mortgage-backed securities which were used to create derivatives. These risky financial instruments and the large institutions that created and held them are what led to our financial crisis.

 

So our amendment is particularly timely because the FDIC has now said banks are going to have to prepay into the insurance fund for 3 years, and all that will be due this year, so a 3-year assessment will be due at the end of this year. It is so important to have a fair assessment ratio, and that is what the Tester-Hutchison amendment will do. It will have a ratio for what a bank owes into the deposit fund that is based on its risk, based on assets minus capital.

 

I am very pleased to be the sponsor of this amendment. I worked on this amendment in committee. I did the research on it to try to make sure we were doing the right thing. I am pleased Senator Tester joined me in this effort, and we have a very bipartisan group of supporters of this amendment. It is my hope that we pass by an overwhelming vote this amendment which will put into the law that the FDIC deposit insurance will be based on a standard that levels the playing field for community banks so big banks don't have an advantage over community banks. It is our community banks that are giving the loans to businesses throughout our country. They are the ones that were there in the crisis as best they could to try to put liquidity into the market. They didn't cause the crisis and they certainly shouldn't pay the price for it.

 

I urge all my colleagues to support the Tester-Hutchison amendment.

[Guest LAW]

Mr. DODD. Madam President, let me commend our two colleagues, Senator Tester and Senator Hutchison, for this proposal. As I said several times yesterday, I think this is a very sound contribution to this bill for the very reasons outlined this morning by Senator Hutchison and Senator Tester earlier--reducing the cost to our community banks at a time when obviously they are all feeling tremendous pressures under this economy. So I am a strong and ardent supporter of their proposal, and I am confident it will be overwhelmingly supported by our colleagues.

 

Let me quickly add we are going to be moving on after that vote to the Shelby, et al., amendment regarding consumer protection and complete replacement for the title. My colleague from Texas has written to me along with Jay Rockefeller regarding the Federal Trade Commission's interests, and we have worked that out, I believe, to the satisfaction of my colleagues on the Commerce Committee. But I draw to the attention of Members the amendment we will be voting on does great damage to the FDIC's rulings and abilities in this legislation. I urge people to take a good look at what we are going to be asked to support, as it deprives the FDIC of some of the very authority and rulemaking that I think we want to preserve in our legislation. So I will address the Shelby amendment after the Hutchison-Tester amendment is disposed of.

 

But let me say in response to the minority leader, one of the strongest features of what has happened to our country over the last several years is we have had seven different Federal agencies that have divisions on consumer protection. They have been around for a long time. The reality is, most of them were asleep at the switch and were treated as second-class operations within their prudential regulator to such a degree that even though we mandated legislatively to protect home mortgages and people, they never even promulgated a single regulation in this area. Small businesses watched credit card rates go through the ceiling. Many people who rely on that ability are watching their rates jump from 5 percent to 22 percent, which is not uncommon.

 

So the idea that this has been a division between bureaucracy in Washington and what happens on Main Street is a complete aberration. We have seen 7 million people lose their homes, many of them because they were lured into deals they never could afford at the fully indexed price. We saw the outrage expressed by consumers and we saw consumer credit cards again where rates exploded, making it difficult. There are all sorts of features.

 

This bill covers only financial products and financial services. That dentists and butchers and retailers on the street are going to be affected by this is a complete myth, totally so, and the provisions of the bill couldn't be more clear about it. There are no new regulations. We are taking existing consumer laws, things such as truth in lending, fair credit. Some legislation goes back 50 years to protect consumers and others from the kind of activities people have to worry about every day, in terms of making sure they are not going to be abused by people who would take advantage of them. The question is whether anybody is going to enforce any of this. So by setting up this agency in the Federal Reserve, we are giving them independent rulemaking authority, appointed by the President, confirmed by the Senate as an operation, and then working in consultation with prudential regulators so we don't end up with a conflict between the safety and soundness requirements of our financial institutions and the consumer protection issues.

 

In the absence of this, what we are confronted with every year is having to draft legislation to deal with one consumer problem after another, and we all know how long that can take, if it ever gets done at all. In the meantime, we see what happens to average citizens who have paid dearly.

 

As to the whole shadow economy, community banks are right to be annoyed. Here they are located on one street corner, and they have a payday lender on the other corner completely unregulated. Here they are as a community bank having to go through a regulatory process to make sure things are working right and yet the shadow economy operating maybe 100 yards away and no protections. Under this proposed amendment, we require assessments of community banks to pay for the regulation of the nonbanks. Here they go again. Another cost. Our bill does none of that. The cost of the consumer protection agency comes out of Fed money; no assessment, no appropriations to support it. This one requires an assessment. Here we are going to adopt an amendment, the Hutchison-Tester amendment, which reduces the cost to 98 percent of consumer banks, and the next amendment adds an assessment onto them. We have to be a little bit consistent about this.

 

So that is what the Shelby amendment does. There is an assessment in his bill on community banks, on the nonbank community. So while nonbanks will pay some, the other ones do. We don't do that in our bill. I think there are so many assessments out there already. That shouldn't be the case. We consolidate so you get clarity, not seven agencies telling you what consumer regulation you ought to follow or not. They deserve clarity in thought so there is a consistent line of what is occurring out there and that consultation and cooperation with prudential regulation so we don't have the conflicts.

 

We spent a lot of time going through this. This amendment, the provision of the bill, is one that was worked on, by the way, on a bipartisan basis as we were drafting it so we could have this feature of the bill.

 

Again, I am willing to listen to ideas on how we can strengthen this and make it more clear against some of the accusations that we are reaching into Main Street on this legislation. Nothing could be further from the truth. We are not reaching into it at all. Obviously, any proposal deserves to be looked at again and other ideas that can tweak it and make it look better. But the idea that we are going to level assessments--the FTC gets damaged, in my view, as it is presently written. I think people need to read carefully what they are going to be asked to vote on in the Shelby amendment and then walk away from it. It is worse than the status quo in many ways. It takes a huge step back. If there is anything we have learned in the last 2 years, it is those small businesses, those people out there who rely on the flow of credit, the access to capital, to see to it there is going to be someone watching out on a consistent basis to what happens to them, we believe we have a very strong provision in our legislation.

 

Senator Tester is here to close on the amendment. I apologize for drifting off into this other area. I see my colleague and friend from Massachusetts. But I know Senator Tester wishes to be heard on the Hutchison amendment. So I apologize to my colleagues.

[Guest LAW]

Mr. BROWN of Massachusetts. Thank you, Madam President. Thank you to my colleague from Montana. I have enjoyed working with him very much over the last couple days and the Senator from Texas as well. I know we have been working very hard on this amendment. I wished to commend the Senator who just finished speaking as well--I have privately and publicly--for taking this effort and trying to work through it in a bipartisan manner because, as I have said many times, this is an issue that affects the American people in very serious ways. I don't want to rush in. I want to do it right so we don't have to come back next year or next month and try to fix problems we may have inadvertently created. So I appreciate the Senator from Connecticut allowing me to come and speak to him privately in his office and his staff and work through this and I am hoping we can continue with that bipartisan effort.

 

As a reflection of that, I have signed on to many amendments, some by my Democratic colleagues and some by my Republican colleagues, and I am thankful the majority leader has said publicly that we are going to get a full and fair discourse on these issues. The one I am referring to today is the Tester-Hutchison amendment, of which I am also a cosponsor, amendment No. 3749.

 

For more than 75 years, the presence of FDIC deposit insurance has meant that Americans who deposit savings in insured banks sleep soundly at night. That is kind of the basic small community bank. You know when you are giving your money to a bank it is not going to be treated as a casino; it is going to be protected. But as our banking sector has consolidated and large national banks have emerged, our smaller community banks have been getting squeezed. These small banks pay approximately 30 percent of the total of the FDIC assessments but hold only 20 percent of the Nation's banking assets.

 

I feel it is time for the larger institutions to pay their fair share. This amendment will improve competition in the marketplace and help small businesses.Everyone knows small businesses across the country are having a hard time getting loans. Lowering the assessments on these community banks, I believe and others who are sponsoring this amendment believe, will help increase loans to small businesses. On a relative basis, our small community banks are far more active in the market compared to larger banks. As someone who was, in a prior life before I got here, involved in representing some of those banks, I can tell my colleagues they are the ones that are continuing to keep the economic engine going in these small towns.

 

I am pleased the amendment we will vote on today also makes sure the institutional custodial banks and bankers' banks are protected from unfair assessment levels that are not in line with the true role in the financial system. This matters a great deal to my State of Massachusetts--the global hub of institutional asset management--and will allow us to restore fairness to the FDIC assessment system without imposing large, unjustified assessment increases on custodial banks.

 

So I urge my colleagues to support the amendment. Thank you, Madam President, and the Senators from Montana and Texas.

[Guest LAW]

Mr. TESTER. Madam President, first of all, I wish to thank the Senator from Massachusetts for his comments. I very much appreciate his cosponsorship and support of this amendment. I also wish to thank Senator Hutchison for her hard work on this amendment. I very much appreciate her ability to get things done in a fair way, and I thank her very much for that.

 

Senator Hutchison and I have come to the floor several times to talk about this bipartisan, commonsense amendment to hold banks accountable for their behavior and to preserve the integrity of the FDIC deposit insurance fund. It has been said before that this would direct the FDIC to base assessments on assets rather than deposits, forcing big banks to pay their fair share into the fund. This amendment will ensure that the community banks that make rural America run will pay only their fair share into the fund--no more and no less--fixing the lopsided system we have now. It would also protect the integrity of the deposit insurance fund, which is critically important, ensuring that it has the resources to be self-sufficient and prepared to address any future crises.

 

Let me say, Senator Hutchison and I think this amendment makes a great deal of common sense, as do the other 13 cosponsors of this legislation. I am pleased we are joined by so many of our colleagues on this important amendment and that it is one of the first amendments up for consideration. It is a question of equity. It is a question of making sure the FDIC insurance fund is solvent for years and decades to come.

 

I wish to thank all the people who have cosponsored it, and once again let me thank Senator Hutchison as well as the chairman of the Banking Committee, Senator Dodd, for working with us on this amendment.

[Guest LAW]

Mr. JOHANNS. Madam President, I rise today to discuss the consumer protection piece of the financial reform bill we have been debating.

 

Let me start by expressing my appreciation for the good work of Chairman Dodd and the good work of Ranking Member Shelby and others who are making their way through a thoughtful process to try to get an overall bill that will work.

 

This piece of the bill, though, in my judgment, needs a tremendous amount of effort, attention, and work yet. The consumer protection piece has generated a lot of debate. We have all asked the question in Banking Committee hearings and on the floor: What is the best way to protect consumers? Let me underscore that. This has not been a debate about whether we do or not. No one is talking about ignoring this piece of the legislation. No one is advocating that we do nothing on consumer protections. What we are trying to focus on is the best way of doing it. We need to keep that perspective in mind as this debate unfolds and motives and words get distorted and stretched.

 

The bill before us establishes a consumer protection regime that is going to be housed at the Federal Reserve. But let me emphasize, that does not mean it is under its supervision. It functions like a stand-alone agency.

 

This new ``bureau'' will have what I would describe as unprecedented powers. It will reach into nearly every area of our economy with power over nearly everything. Anything that resembles the term ``financial in nature'' will come within the purview of this bureau.

 

I must admit, as this debate was going on, I found it surprising, if not shocking, that folks such as car dealers, accountants, and lawyers were showing up at my office to talk about the impact on them. It is no wonder that so many business groups have come out in opposition to this current piece of this legislation. I am not talking about banks. I am talking about business groups.

 

The Chamber of Commerce sent a letter outlining concerns on April 28 on behalf of--and I am using their language--``hundreds of thousands of nonfinancial services businesses.'' These hundreds of thousands of businesses--many of them small businesses--had absolutely nothing to do with the last crisis. Yet with this new bureau, I believe they will be punished or, at a minimum, tied up in redtape.

 

There are many pieces of this on which I could spend a lot of time talking on the floor, but what I have tried to do today is to encapsulate my thoughts into five areas, five concerns, if you will.

 

The first area is the unlimited rulemaking authority provided for in this legislation. Because the term ``abusive'' was added to the unfair and deceptive acts or standards, there is virtually no limit to the kinds of rules this new bureau can write.

 

We also know that the term ``abusive'' is entirely subjective. So how do you determine abusive? Will you make each customer take a financial literacy test? Is abusive different for Mike Johanns than it is the next customer? Because ``abusive'' can be defined so differently from one customer to the next, we can see the unlimited problem that is created.

 

The second area, no veto power. I consistently said that it is a mistake to separate consumer protection from the issues of safety and soundness of the institution. If a proposed rule will have a negative effect on the safety and soundness of financial institutions, then we need some kind of checks and balances. Checks and balances are good. In this bill under debate, this new agency only has to list the regulator's concerns, not take them into any kind of meaningful consideration.

 

The third area, privacy rights. While there are a lot of privacy concerns here, two major ones come to mind.

 

Let me go to the language of the bill itself. Section 1022 mandates the bureau to:

 

 

..... gather information ..... regarding the organization, business conduct, markets, and activities of persons operating in consumer financial services markets.

 

 

A person is defined in the bill as an ``individual.'' So do you follow me? What this means is the bureau can look into the business conduct of the average person out there.

Section 1071 requires any deposit-taking financial institution to geocode customer addresses and maintain records of deposits for at least 3 years.

 

As Jim Harper from the Cato Institute described it:

 

 

Think of the government having its own Google map of where you and your neighbors do your banking.

 

 

Is that what Americans want out of this bill?

 

The fourth item is the preemption standard. The current bill really changes current Federal law under the guise of giving States more power over their consumer protection laws. This worries me. This will wreak havoc for financial companies operating in more than one State. What we would be saying is they will have to comply with a patchwork of 51 State laws, and State AGs will have the power to enforce State and Federal laws against national banks. If this were the way since the beginning of time, one might say: Well, they have adapted to it. But to put them in this kind of regimen is literally to say to them: You are going to have to chew up mountains of capital to try to comply with all these various rules and regulations and laws of the various States.

 

The fifth item I wanted to mention is the expansive reach. This bill includes what I regard as an overly broad definition of ``consumer financial product or service'' and ``service provider.'' Specifically, section 1027 will subject numerous merchants to the regulation of this new bureau just because the business provides the ability to their customers to repay in four installments.

 

Imagine that you order a camcorder for the holidays off a home shopping network. This company provides you with the flexibility of making four installment payments. This new company could be swept under this new bureau. How long do you think companies will continue to provide that kind of flexible option to consumers if they are going to be buried in regulation? That is why the dentists, the lawyers, the advertising agencies, the accountants, and even florists are concerned with this bill and are showing up in our offices saying: What are you doing? I don't know about anyone else, but I can make the case without any hesitation that my local florist doesn't come to mind when I think about the players who brought our economy to the edge.

In response to this expansive and unfettered bureau, I am proud to announce my support for an alternative. This alternative, led by Senator Shelby, is well thought out, is a reasonable approach and I believe a compromise to a very difficult issue in this legislation. It would establish a consumer protection division within the FDIC, which I believe is a natural fit since this agency is already tasked with protecting consumer deposit accounts. This new division would have authority to make rules relative to consumer protection. All rules, regulations, and orders would receive the approval of the board of the FDIC--an important check and balance. This is a very important distinction in terms of what we are debating today. Board approval will ensure that actions taken by the division appropriately consider safety and soundness of the financial institution, while ensuring that consumer safeguards are in place. While it allows primary supervision and enforcement to exist with the existing regulators, it does not bring in nonbank mortgage originators for supervision.

 

I will end on a final thought. Many have claimed that these mortgage insurers acted unfairly and that they preyed upon unsophisticated borrowers during the last crisis. This ensures the mortgage broker operating out of his garage or whatever is going to be regulated.

 

Finally, this new agency will be able to go after the bad actors, and that is what we should be doing. Anyone who shows a pattern of material violations will be brought under this new FDIC division.

 

Let me wrap up where I began. I applaud all my colleagues who have spent so much time and energy focusing on the consumer piece of this regulatory reform. Chairman Dodd led us through hearing after hearing trying to figure out the best way to protect consumers. Senator Shelby, our ranking member, worked on those issues in concert. We can get this right, but in my judgment, where we are today, the proposed legislation on the floor does not get it right. Let's focus on getting it right, getting the bad actors.

 

I believe the approach that is being championed by Ranking Member Shelby is a reasoned one that elevates consumer protection while keeping safety and soundness as a paramount consideration. I ask my colleagues to support the alternative.

[Guest LAW]

Mr. DODD. Madam President, first of all, if I may, let me acknowledge the contribution of the Presiding Officer, my colleague from New York. Everyone brings value to this Chamber from time to time based on what they have done in their earlier lives. I thank her immensely for bringing her background and experience to this critical debate we are having. She spent a lot of years working in this area of the law, knows it well, and I have come to appreciate her counsel and advice and thoughts on all of this, and I want to acknowledge that, if I may.

 

Madam President, as I said at the outset, there are four major pieces of this bill of ours, and I will add a fifth, obviously, dealing with the derivative section that was worked on by the Presiding Officer as a member of the Agriculture Committee, Blanche Lincoln being the chairman of the Agriculture Committee. Title VII of this bill deals with that section. The Banking Committee side deals with the four other major parts of this bill, and they are, No. 1, end too big to fail; No. 2, set up an early warning system--and I am being simplistic in describing these--deal with the derivatives and the so-called exotic instruments; and have a strong consumer protection feature to this bill. Those are the four points.

 

We have resolved, I believe to virtually all of our satisfaction, the too-big-to-fail argument. We did that yesterday. And again, I thank my colleagues, particularly Senator Shelby and others, for helping us work through that to come to a conclusion that ends the debate as to whether the bill before us ends too big to fail. I think that in itself would be justification for supporting the legislation--knowing that if we adopt this legislation, as I am hopeful we will, and Lord forbid we are confronted with another major economic crisis, we will not be faced with the choices we were in the fall of 2008 where the American taxpayer wrote out a check for $700 billion to bail out major financial institutions that were on the verge of collapse. We were told that if they did so, the financial system of our country, and possibly globally, would melt down, to use their words. What we wanted to avoid was ever being put in that position again, where you had the implicit guarantee that the Federal Government would write that kind of check. We have done that now in this bill, so let's check that box. Too big to fail is over with, and this bill takes care of that. We need to pass the bill, and we need the President to sign it so that it becomes law. But as of right now, we are far closer to resolving that issue than ever before.

 

The derivative section of the bill and so forth--I know people are working on this and working with Senator Lincoln and others on that section of the bill. I respect immensely their efforts to make sure we can arrive at a compromise. We think we have good provisions in the bill, but I think all of us recognize other ideas and thoughts are always welcome. So that is being worked on.

 

The sort of radar, the look-ahead approach to our legislation, I don't think there is any debate about, so that box has sort of been checked. Maybe someone has some amendments on what they would like to do to strengthen it but not the idea that we have an early warning system so that we pick up these problems far earlier than we did or were willing to acknowledge as they were developing within the residential mortgage market as early as 2005 and 2006, beginning to explode in 2007, and then, of course, watching the events of 2008, culminating in the fall with the decisions we had to make in order to stabilize the financial system in our country. Had we had that early warning system--more than just one set of eyes at the Federal Reserve, which did, to put it mildly, a very inadequate job of picking up what was occurring in the real estate bubble--we would never have found ourselves in the situation we did in our country in the fall of 2008.

 

We believe the early warning system will be a major step in limiting the kinds of problems we have seen in the last couple of years. It does not stop the next economic problem. There will be another economic crisis. Future generations will deal with that. There is nothing in this bill that prohibits us or guarantees us that we have once and for all avoided economic crises. First of all, we are no longer in total control of that within our own country. How many more headlines do we have to read about Greece and what is occurring there--the riots in the streets today because of the economic decisions they are making to stabilize their country. These are already having an effect globally. So while we can do a lot to minimize what happens here, we recognize today that we live in a far more interconnected world that poses its own set of risks.

 

Nonetheless, I think the fact that we have established, on a bipartisan basis--and again, our colleagues Mark Warner and Bob Corker, along with other Members, did a great job, in my view, in crafting that part of our bill. So I think we have done a good job there, and I see very little dissent about it.

 

The fourth piece, the consumer protection, is the one in which we are now engaged. This is a debate that I believe is worth having over the next hour or two and then vote. Let me say to my friend from Alabama, the author of the amendment, and his cosponsors that we have to come and debate this stuff. I am here and will be glad to engage in the debate, but I have one other colleague here right now involved in this question. This is a major part of the bill.

 

People have told me over and over again that this is a big issue for them. I am willing to accept their determination. I think it is a big issue too. But we have about 100 amendments people want to offer, and we have about 39 legislative days between now and the end of this Congress, with an awful lot to do.

 

Now, I can't get there for you. I can't get your amendments up if others insist upon elongated times on the consideration of their amendments. We have all been debating consumer protection for years now, particularly over the last 18 months. There is no reason to have a protracted debate on this question. My Republican friends have offered a substitute to my bill on this issue, and I welcome that substitute. We need to now debate it and then vote on it and move on to the next issue.

 

Madam President, I am delighted to see my good friend, who just arrived to engage in this discussion. So let me address this issue of consumer protections in terms of both what we have in the bill, reading the language of it, and what the alternative would do.

 

Let me first of all say that I listened to my friend from Nebraska, Senator Johanns, a wonderful member of our committee and a person I have come to respect very much. He has been very productive and very helpful in the Banking Committee.

 

But the idea, to use his language, that we are covering florists and accountants and lawyers and dentists--nothing could be further from the truth. I guess the old adage is, if you say something often enough and repeat it often enough and if it goes unchallenged, it becomes a fact. It is not a fact. In fact, it is anything but a fact. I know they wish to use that argument to try to pass their amendment or to defeat the sections of the bill I have included, but I cannot say it any more clearly to my colleagues. I believe it is section 1027 of the bill. You have all got copies of the bill on your desk. Read section 1027 when you come to the floor. It is not complicated legislative language. It says specifically the only reason you would be covered by the consumer protection language in this bill is if you are significantly involved in financial services or financial products.

 

I realize the word ``significantly'' is what people want to work on, and I am willing to listen to some ideas as to how we can define that word ``significantly.'' That is not a bad point. I understand that. But don't tell me it covers a florist under any definition of the words ``significantly involved in financial services and products.'' It excludes retailers and merchants across the country. Again, I am willing to debate all sorts of language here but don't make me debate completely false allegations about what is in the bill.

 

At any rate, we have been working on our bill for a long time. My compliments and thanks to my colleague from Alabama for the efforts yesterday and so forth. But this is a very important part of the bill. We have worked to create an early warning system, as I mentioned, and of course too big to fail, but consumer protection is critical because it goes to the very heart of what we are trying to do. In fact, it was consumers, small businesses, families, individuals, farms that were adversely affected. Wall Street did fine, as we have seen. Some people lost some jobs along the way. A couple of these large institutions did collapse. But we have heard about the bonuses that went to top executives. The buildings are still there. They have been making record profits over the last couple of years. But what happened to those millions of people who had a home that now is gone? What happened to those 8.5 million jobs? Gone. What happened to those retirees in our country who watched 20 percent of their retirement evaporate? What happened to those people who still have a house but the value of that home has declined by 30 percent in the last year and a half? I don't know what you call them; I call them consumers, the average person in our country who did not do anything except try to hold body and soul together, got lured into a bad deal by people who were unregulated and were willing to convince them they could buy a home they never could afford, knowing that the fully indexed adjustable rate mortgage was going to wipe them out.

 

I talked about Dolores King, who was the first witness I brought to our committee 3 years ago, in January or February of 2007. She was a retiree in Chicago who worked as a librarian for 30 or 40 years. Her husband had died. She had about a $30,000 or $40,000 credit card debt and some unscrupulous broker came in and convinced her she needed to rewrite her mortgage and an adjustable rate mortgage would work for her. She lost everything. She lost her home--70 percent of her fixed retirement income went to pay that mortgage.

 

So when people tell me you cannot get consumer protection, when that automobile company a few weeks ago had to recall its cars because the accelerator got stuck, they got recalled. Did Dolores King get her mortgage recalled because it was faulty, when she lost her home? That is what consumer protection does. If you are in the business of financial services and products, having someone watch out for the average citizen ought not be such a radical idea when we talk about financial reform.

 

We have this in a way, on a bipartisan basis, I might add, that sets up an independent consumer protection agency housed at the Federal Reserve. Its director is appointed by the President and confirmed by the Senate. It has the authority to write rules on consumer protection in the financial services area where financial products are involved.

 

Then of course it has examination and enforcement authority--only for those institutions that have assets more than $10 billion--for enforcement; otherwise, it is done at the local level. The rules are the same. We don't write any more rules. The rules are there. They have been around in some cases for 50 years--truth in lending, fair credit, RESPA--all of these laws in place. All we are saying, can someone enforce them and examine institutions and determine whether they are living up to them?

 

Right now there are seven agencies that have a consumer protection division. For a huge part of our economy, no one is watching them. One of the very legitimate complaints our community banks make: We get regulated but that guy down the street, that payday lender, no one is watching out what he is doing every day, and we are disadvantaged. Our bill stops that. If you are a payday lender, you are under the same rules that banks would be under--at least have someone watching out there. That is a major step forward. We recognize a major part of our economy's collapse or near collapse was in the shadow area of our economy. Our legislation fills those gaps.

 

We understand, or should understand, how important having an independent agency with rulemaking authority is. Again, the issue is--wait a minute, you have to be careful, Senator, because you have safety and soundness and the prudential regulators have to be considered in all this. That is a legitimate point. I don't disagree with that, although I think sometimes the accusation that there is this great conflict is exaggerated. Our bill says the prudential regulators have to examine and look at the rules coming out. If they vote, two-thirds of them, and say that rule creates a conflict or some problem, it does not go into effect. There is not another agency in government that can have its own regulations or rules vetoed by another group of regulators. That was a suggestion, again, by Republican colleagues to include in our bill, to provide the kind of safeguards against potential conflicts of interest between safety and soundness and consumer protection.

 

Again, that today with seven agencies tasked with consumer protection, not one of which did the job to anyone's satisfaction in the lead-up to this crisis, ought to be justification alone for what we are trying to do. Our legislation will have an independent director appointed by the President and confirmed by this body, as I said. They will have a dedicated independent budget paid for by the Federal Reserve Board.

 

The proposal we are being asked to vote on adds additional assessments to banks and to nonbanks. We just got through adopting the Tester-Hutchison amendment regarding assessments, to reduce the assessments on community banks. If you adopt the Shelby amendment, you are going to add assessments on again. Here we vote on one hand to take them away, and now with an amendment--this asks to put them back on and is asking our community banks for additional assessments to cover the activities of nonbanks. I thought I heard my colleagues say around here we ought to be more sensitive to what is happening at the community bank level. Yet this amendment my colleagues are going to be asked to vote for does the opposite. So be very careful when you get up and vote for this amendment to explain why, later, if in fact it gets adopted, this bill does, why we are adding assessments to those banks.

 

Our bill will have an office of financial literacy to ensure consumers are able to understand the products and services being offered, which was a major problem in the last crisis, and a national toll-free consumer complaint hotline so Americans have somewhere to go when they need to report a problem.

 

Our bill will make us empowered to write consumer protection rules governing any institution, bank, or payday lender that offers consumer financial services or products, and only those businesses that do that. In short, we are ending the alphabet soup of distracted and ineffective regulators and replacing it with one single, empowered, focused cop on the consumer protection beat.

 

Again, a complaint, I think legitimately, is when you have seven agencies with consumer protection jurisdiction--I think the lack of clarity is important. My colleagues should understand that. My colleague from Alabama has come out with a Republican substitute for the consumer protection bureau. I am surprised. I know my friends were not going to agree with the consumer protection provisions as strongly as some of the ones in my bill, and in some of my more pessimistic moments I thought they might want to maintain the status quo, but this is worse than the status quo. This is a major step back. This substitute actually goes backward, making it easier for unscrupulous lenders to rip off the American public, businesses, and families. It is a stimulus package for scam artists, that is what it is, this amendment; nothing short of that. For the life of me, I cannot understand, after months of hearings, months of analysis, months of discussion regarding the fact this financial crisis started with a failure of consumer protection, anyone would think that the right solution is less consumer protection. Yet that is exactly what this amendment does.

 

It is as though we are in a deep hole and we spent a full year debating how to get out and our Republican friends' solution is: Keep digging.

 

I am going to walk through the provisions of their substitute but, in short, here is why it is simply unacceptable.

 

First, when it comes to writing new consumer protection rules, the Wall Street substitute--and that is what it is--relies on the same regulators who screwed up the country in the first place. Why would you ask them to do it again?

 

Second, when it comes to enforcing rules, their plan actually makes things worse, reducing regulators' ability to stop rip-offs and leaving American families even more vulnerable.

 

Third, the Republicans' substitute wants to raise taxes on community banks and credit unions to pay for the regulation that will not even happen.

 

Fourth, they want to make it easier to sell Americans mortgages they cannot afford which, if you have been paying any attention at all to what has been going on in the last 18 months, is the very reason we got into this mess in the first place, making it easier to sell Americans mortgages they cannot afford.

 

Fifth, to top it all off, this substitute eliminates the provision of any consumer protection proposal that targets discrimination in lending. How on Earth could anyone be against ending discrimination in lending? Yet that is also a part of this substitute.

 

If you look at how we got into the crisis and you conclude that the answer is to weaken consumer protection, you are doing it all wrong. Let me go into a bit more detail, and then I see my colleagues want to be heard as well.

 

The first important change in the Republican substitute is, instead of having an independent agency write consumer protection rules, it puts the task in the hands of the same distracted and ineffective regulators who failed so badly in the first place.

 

What would that mean for the consumers? Here is a preview. One of those regulators has already demonstrated itself to be anticonsumer, opposing proposed rules to keep credit card companies from retroactively raising interest rates on outstanding balances.

 

I can speak firsthand. I am the guy who wrote the credit card bill. The agency that fought me on it now is going to be tasked with the job of protecting people from it. For the life of me, of all the agencies you could have picked to run this in your bill, you picked the one agency that has fought us on credit card reform. It is stunning to me that someone would actually write a substitute tasking this agency, knowing this was the agency that did so much damage, was opposed to the idea that we put limits on interest rates to be charged on outstanding balances. That is not putting consumer protection at the heart of our financial system, that is putting consumer protection in the backseat, where it has been for far too long.

 

That is not the worst of it. The Republican substitute limits enforcement powers to ``large nonbank mortgage originators.'' Large nonbank mortgage originators--other finance companies will avoid enforcement unless they demonstrate a ``pattern or practice'' of consumer abuses. In other words, their version of the consumer protection agency will not be allowed to prevent abuses committed by commercial--or banks, or payday lenders, check cashers, credit card companies, debt collectors, car dealers who are involved in the finance business, and a wide range of the worst actors in the subprime mortgage industry, until it is already too late for potentially thousands of consumers to be protected. It is as though they want to create a police department that is allowed to enforce laws against littering. Maybe they will cut down on littering, but to leave the same regulators to deal with the rest of the financial sector, they are essentially turning a blind eye to every other kind of crime out there. In fact, it is like legalizing those crimes by eliminating the Federal Trade Commission authority to police unfair and deceptive financial practices in these other sectors. The substitute is worse than the status quo, and the status quo is very bad indeed.

 

Meanwhile, the substitute raises taxes on potentially any nonbank financial services company. It allows the Federal Deposit Insurance Corporation to raise assessments on banks, including community banks and credit unions. In fact, their plan would ask credit unions to pay for the regulation of their nonbank competitors--the same competitors who will be getting a free ride, exempted from any Federal oversight whatsoever.

 

Our plan is to have the Federal Reserve pay for enforcement. Their plan is to have community banks pay for enforcement, and then do not have the enforcement, of course. That is a tax increase they don't need and one that our depository institutions, so critical to rebuilding our economy, cannot afford.

 

The amendment also prohibits the establishment of strong mortgage underwriting standards. We all know how important it is to establish better underwriting standards. If we had rules in place 2 years ago that required banks and mortgage lenders to make loans only to people who could show that they have the ability to repay them, we would not be in this mess--if that had been the case.

 

The amendment before us would prohibit the new division we have proposed to create from issuing commonsense rules like these. If you had to pick one thing in this bill to undermine and ensure that we have another financial crisis, in my view, this would be it.

 

The substitute also eliminates as an objective of the new consumer division the goal of eliminating discrimination. I believe this goal is essential to restoring America's faith in our markets.

 

In short, I find it impossible to work with this proposal. There are ideas I am willing to listen to, that we might define ``significantly'' and things like that. That is fine. I understand that. But this approach does more damage than you can imagine.

 

Again, to go back to what I said at the outset, we have spent a lot of time talking about what happened to the big firms on Wall Street and what happened to large institutions and large manufacturers. The root cause of the problem we are in began because there was a total disregard for small businesses and families and individuals out there; that they could take advantage of them, as they did, because they could sell off--they could get paid immediately, they securitized these crummy mortgages out there, leaving that home owner in a situation they could never afford to sustain, and the house of cards came tumbling down. And it all began--it all began--with that problem.

 

I say, respectfully, this proposal goes right at the heart of the very issue we must address in this bill, in addition to all of the other aspects we are talking about. There is no more very important vote we will cast, in my view, in this debate than this one. If we walk away from providing the safeguards for the average American--I do not care what their politics are, what their ideology is, anything else, they deserve to know in this debate, at long last, they are being considered, that watching out for them is part of this.

 

The outrageous case that this somehow reaches into retailers and merchants is highly offensive to me. It is the last thing I would ever suggest to my colleagues, that we somehow get into the business as Federal regulators of poring over florists and dentists and butchers and accountants and lawyers. Nothing could be further from the truth.

 

This goes after those businesses involved in financial services and products. It does so in a way that provides clarity, provides an opportunity for those institutions to be regulated, to know what rules they have to follow, and who is in charge of insisting that they meet those obligations.

 

So with that, I urge my colleagues to vote against this amendment. My hope is we will vote fairly soon. Again, we have hundreds of amendments that people want to be heard on, and we do not have all of the time in the world to deal with it. So we have to move on on these issues.

 

I think people understand the debate. They can read the amendment. I urge you to read 1027 in our bill, the section dealing with consumer protection, dealing with who is covered. Then we will have a vote.

[Guest LAW]

Mr. DORGAN. Madam President, I will join my colleague from Connecticut in opposing the amendment on the floor if it weakens the underlying bill, but I do not come to speak about that proposal at the moment. I wanted to speak about an amendment I have discussed previously on the issue of too big to fail.

 

There is much yet to do on this subject of too big to fail. I recall, in a room just steps from here, on a Friday, I believe it was, the Treasury Secretary leaning over the lectern in a very stern way saying to the caucus that I was involved in, if within 3 days a three-page bill granting $700 billion to the Secretary of the Treasury, with which to provide funds to stabilize some of the biggest financial institutions in the country, if that did not come about, our economy could very well collapse completely.

 

I remember that moment and remember thinking that it was pretty bizarre that our country got to that point: that all of a sudden 1 day, after being told month after month that the economy was strong, the economy was in good shape, that there were some ripples and hiccups here and there, but things were on course and we had confidence in the strength of the economy, that we were now being told the economy may well collapse in days unless the Congress comes up with $700 billion.

Why was that the case? Because institutions that were so large in this country, at the top of the financial industry, were so important to the economy that their failure could very well result in failure of the entire American economy. That is what is called too big to fail.

 

Let me show a chart that shows the six largest financial institutions in the country and what has happened to them since 1995. This is their growth as a percentage of GDP. It shows that they are getting larger and larger and larger and much larger. Even during this period of near collapse, the same institutions that were judged too large to fail and judged to represent a grave risk to the entire economy have gotten larger than just too big to fail.

 

We had a vote yesterday, but that cannot be the end of this discussion about how to address too big to fail. The vote yesterday was rather Byzantine, as far as I was concerned. I was not someone who was a big fan of the $50 billion to be pre-funded for resolution of too-big-to-fail companies. But having said that, to decide that the $50 billion, which would come from the very institutions that are too big to fail, should be abolished, and that the funds instead would come from the FDIC, which are initially funds from the American taxpayer, made no sense to me. Then suggesting that it will be all right because the FDIC will be repaid with the sale of assets--oh, really? Well, firms that are too big to fail that are going to get in trouble in the future are not going to have very many assets. They are going to be in trouble because of dramatic amounts of overleverage, leverage that goes far beyond their ability to continue to do business. And when the firm comes tumbling down, I fail to see where assets are going to exist in substantial quantity to repay the taxpayer.

 

But that was yesterday. I did not support that. That was yesterday. This issue of creating a circumstance of early warning on too-big-to-fail firms is not satisfactory to me. The only way to resolve too big to fail is to abolish too big to fail. I mean abolish too big to fail. That means having firms that are not too big to fail, that will not cause a moral hazard or a grave risk to the entire economy should they fail.

 

Do you believe that is the case with this graph? Is there anything here that--as this graph shows, we have firms that are too big, far too big to fail. Is there anything here that is going to solve that in this bill? The answer is no. The only direct and effective way to address this is to decide, if you are, in fact, too big to fail, then there has to be some sort of divestiture or dissolution to bring that firm back down to a point where in size and scope such firm is not too big to fail and is not causing the kind of dramatic special risk to the country's economy that it would bring the economy down with it.

 

That is the only direct and effective solution. Is that radical? Well, I have an amendment that requires that if you are determined to be too big to fail, then we begin a process, over 2 years, of breaking away those parts that make you too big to fail. Is it a radical idea? I do not think so.

 

One-fourth of the Board of Governors of the Federal Reserve Board says we ought to do that. Richard Fisher, president of the Dallas Fed: Too big to fail is not a policy, it is a problem. Too big to fail means too big period. We ought to break them up.

 

Federal Reserve Bank of St. Louis, James Bullard, president and chief executive officer: I do kind of agree that too big to fail is too big to exist.

The economist, Joe Stiglitz, Nobel Prize winner: Too-big-to-fail banks have perverse incentives. If they gamble and win, they walk off with the proceeds. If they fail, taxpayers, pick up the tab.

 

Alan Greenspan--I seldom, if ever, agree with Alan Greenspan, but I have used a quote of his to describe where we are now. He was around sitting on his hands for a good many years while these problems developed, despite the fact that he had the authority to have avoided them. Then he has written a book acting as if he was exploring the surface of Mars while all of this went on.

 

But now he says: The notion that risks can be identified in a sufficiently timely manner to enable the liquidation of a large failing bank with minimum loss has proved untenable during this crisis, and I suspect in the future crises as well.

 

Simon Johnson, professor of entrepreneurship, the Sloan School: There is simply no evidence, and I mean no evidence, that society gains from banks having a balance sheet larger than $100 billion.

 

I do not know whether I agree or disagree with that. But his point is that too big to fail means too big.

 

Arnold King, Cato--I seldom quote Cato on the floor of the Senate. But, you know, strange bed fellows: Big banks are bad for free markets. There is a free market case for breaking up large financial institutions--that our big banks are a product not of economics but of politics.

 

The president of the Federal Reserve Bank of Kansas City, this is the third Fed president: I think they should be broken up. And in doing so, I think you will make the financial system itself more stable, more competitive, and I think you will have long-run benefits over our current system.

 

We broke up Standard Oil in this country into 23 different pieces. It turned out the 23 pieces were more valuable than Standard Oil was. I am not saying just go in and break up things just for the purpose of breaking up. I am saying this: If there is a standard by which we judge that an institution is too big to fail and causes a dramatic risk to the economy as a whole should it fail, a moral hazard, unacceptable risk to the entire economy, then it seems to me like this issue of creating early warnings and stop signs and sirens and so on is largely irrelevant.

 

What we need to do is do something direct and effective and something we all knew we should do; that is to say, if you are too big to fail, and judged to be so, and judged to pose those kinds of risks to our economy, then you must break off pieces. We would, over a 2-year period, require that to happen until you are not too big to fail.

 

Let me show a couple of quick charts. This one shows the top financial institutions: The Big Get Bigger. This chart shows the same thing, measuring assets and liabilities: The Big Get Bigger. Much, much bigger. The first chart I showed today demonstrates why, if we do not pass the amendment I suggest, we can thumb our suspenders and crow all we want in every hallway in this Capitol Building, but we will have not done what was necessary to be done to address too big to fail. We just will not do it.

 

So I have an amendment. I am here because I am pestering those who are lining up amendments to make certain I have a chance to debate and vote on that amendment, and that will be the test of whether this Congress has learned a lesson; whether, when someday a Treasury Secretary leans over a lectern and says: If I do not get $700 billion to bail out the big interests that ran this country into the ditch, our whole economy is going into the ditch.

 

So I hope very much that we will have the opportunity to both simply and effectively do what is necessary to finally and thoughtfully address this issue of too big to fail.

[Guest Tea Party Patriot]

This bank statement and the word "plutonomy" is why I believe it essential to have strict bank reform. The United States economy SHOULD NOT be so greatly influenced by the very wealthy that the working class gets poorer and poorer.

 

[Guest LAW]

Mr. BENNET. Thank you, Madam President.

 

I see our chairman and the ranking member over here from the Banking Committee on which I serve, and I want to congratulate them for their hard work in getting this legislation to the floor. We are finally doing some work around here, and we are doing it in a bipartisan way.

 

I think this bill is going to improve over the course of this debate. It is an enormously important opportunity to safeguard our economy from the reckless danger that got us into this financial mess. I am hopeful we can wade through all this Washington wrangling and get something done to protect America's financial future.

 

There is a shared understanding of what got us here, and that is the good news. Some on Wall Street took all the risk. Yet it is the American people who paid the price. Small businesses, homeowners, and working families were forced to come in and clean up this mess.

 

It is our responsibility to learn the lessons from the last collapse to help this economy recover and to head off the kinds of problems that could lead to another financial crisis. In short, we have to fix this economy, ensuring there will never have to be another taxpayer-sponsored bailout.

 

As someone who sits on both the Agriculture and Banking Committees which share jurisdiction over this bill, I can assure you that this package reflects months of hard work and incorporates ideas and concepts from both political parties. We have examined the problems that brought us to the financial brink nearly 2 years ago, and together these two committee bills created a thoughtful and comprehensive plan to increase transparency, reduce systemic risk, and strengthen our commitment to protecting consumers.

 

In reviewing the merits of the bill, I think it is important to analyze how it would have addressed so many of the problems that led to the financial collapse in 2008. Too often, we do not ask the question, What problem is it we are trying to solve, and then we get busy either solving problems that did not exist or creating unintended consequences from our work. I think we have worked hard on this legislation for this not to be so.

 

Had this legislation been the law of the land, we would not be talking about that $700 billion taxpayer-funded rescue of our Nation's largest bank holding companies. We would have been able to see many of the dangerous trends develop earlier, and we would have required these systemically risky companies to have more capital and less debt. Had any of these companies failed, we would have resolved them without transforming them into wards of the state, like AIG.

 

Second, had a strong consumer protection infrastructure existed, we could have stopped the subprime mess before it spiraled out of control. For example, subprime giant Ameriquest would have been subject to meaningful rulemaking and enforcement authority. And while I prefer a wholly independent agency, this bill represents substantial and meaningful progress on a consumer protection front.

 

Third, had the bill's derivatives reforms been in place, it is much less likely--much less likely--that the Federal Government would have been forced to spend tens of billions of taxpayer dollars to rescue AIG from its own sloppiness and greed.

In total, the plan before us represents a strong and thoughtful measure that rewrites the rules of the road for Wall Street. And through the amendment process, we can make it even better.

 

For example, I think we need to ensure that certain State-chartered community banks that did little to contribute to the current crisis do not have to change their prudential regulator. In so many of our towns, community banks play an important role in providing credit to our local economies. Many of these small institutions are struggling due to this difficult economy, which means less available credit for families and small businesses. I have concerns that a change in prudential regulation may exert further pressure on these small banks which continue to serve their local communities. It is my hope we can balance the need to reduce regulatory arbitrage while preserving the existing prudential supervisory structure for some of these State-chartered banks.

 

I also believe it is time for us to take advantage of this opportunity to begin to move away from the last bank bailout, the TARP. While there are 100 opinions in this Chamber about how effective TARP was, there really is a broad consensus here and in the country that it is time to wind down TARP, recapture what we can for taxpayers, and prevent banks from tapping into the Treasury going forward. That is why in the coming days I will be pushing bipartisan legislation that will do exactly that. It would use recaptured TARP funds, borrowed from our children--$180 billion so far and counting--for deficit reduction, and it would take important steps to end the TARP.

 

More broadly, I also think we need to be aggressive about strengthening this bill to further protect consumers. I will be supporting amendments which do exactly that.

 

When it comes to Wall Street reform, we simply cannot afford to delay any longer. Recently, the TARP inspector general underscored this point better than I could. He stated:

 

 

[E]ven if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.

 

In short, bailing out companies has made the future risk to our financial system even worse, by creating the moral hazard that a financial firm that participates in risky behavior is going to somehow be bailed out by the government, by the taxpayer. This Wall Street reform package takes a strong step toward restoring some degree of sanity in our financial system and making that moral hazard a thing of the past.

 

Finally, Coloradans and the American people are expecting us to act. I am confident we are going to succeed. Lobbyists may have been able to slow down Wall Street reform temporarily, but the American people want it, as well they should. We are getting closer and closer every day to sustaining a workable bill that can pass this Chamber and that we can eventually send to the President for his signature. We cannot allow the status quo to maintain its grip on our financial system. We have to work together and pass this groundbreaking reform package.

 

I want to close, again, by thanking the chairman of the Banking Committee, who is here in the Chamber, for his leadership throughout the months, not just on this issue but on health care as well but particularly for sticking with this issue. I do not think we would be having this debate right now were it not for the work the chairman did. As a member of the Banking Committee, I appreciate it very much.

[Guest LAW]

Mr. SCHUMER. In fact, you have had the wisdom to encourage some of our new Members to actively participate, and confidence to do that as well.

 

I also do not want to fail to note my colleague from New York, Senator Gillibrand, the Presiding Officer, who has done a fabulous job, too, particularly on the agriculture portion of the bill on the committee on which she sits.

 

AMENDMENT NO. 3826

 

Madam President, I come to the floor today and rise against the consumer amendment posed by Senator Shelby that is before us. I come to the floor to speak about the need for a strong independent consumer watchdog. I am here to talk about the proposal put forward by some of my Republican colleagues to place a new consumer protection division within the FDIC and significantly reduce the ability of that division to carry out its mission.

 

The amendment before us greatly weakens the bill in terms of consumer protections. In fact, it is not just a step backward from the bill before us, it is a step backward from the status quo. If we were to pass the amendment on the floor, consumer protections, weak as they are today, would be even weaker. This amendment would leave the consumer unclothed and unprotected. This amendment strips the bill of some of its strongest protections. Not every financial institution preys on consumers, but those that do would be given too free a hand if this amendment were to pass. I urge strong opposition to it.

 

Let me explain. One of the roots of this financial crisis was, undoubtedly, that total failure of our consumer protection regime. Americans were sold products they did not understand and could not afford by mortgage originators eager for a fee and happy to sell those loans off into the great securitization machine which was given a virtual carte blanche by the credit rating agencies.

 

After the events of the last several years, no one can argue that fundamental reform of our consumer protection regime is not necessary. No one can argue the status quo is the way to go. The status quo simply will not do. There is no accountability in the current system. Consumer protection is split among seven different regulatory agencies. For that reason, I was an early supporter of efforts to create a truly independent consumer protection agency, and I am still working with many of my colleagues, including Senator Jack Reed and Senator Durbin, to strengthen the provisions of the bill proposed by Chairman Dodd.

 

One of the key authorities of any new consumer protection division or agency is that it must be able to adopt rules to protect consumers without being overruled by banking regulators who would rather allow banks to pad their bottom lines by fleecing consumers with hidden fees.

Some argue that you cannot split consumer protection from safety and soundness. But historically, in the present setup, every time there is a conflict, the consumer loses. Consumers deserve an accountable regulator with oversight of consumer financial products as its primary objective, not as an afterthought.

 

The Republican proposal being discussed is totally inadequate. It would allow the same bank regulators, who have stood in the way of meaningful consumer protections for years, to veto consumer protection rules proposed by the head of the new division.

 

For example, the Comptroller of the Currency, who publicly opposed the Fed's new credit card rules, would, under the Shelby amendment, get to vote on future credit card rules. So the regulators who do not really care--some of them--about consumer protection would be given veto power.

 

The division would have no examination or enforcement power over any bank of any size or any of its affiliates. Some of the worst actors in the subprime mess were bank affiliates or subsidiaries. Even worse, it could only do examinations of nonbank consumer finance companies if they ``demonstrate a pattern or practice of violations'' of consumer law--in other words, only after consumers have been harmed repeatedly. That is what one could call too little, too late. Even the Fed recently deleted this requirement from rules governing subprime mortgages because it hampered enforceability of those rules so severely.

 

Even the banks want the new consumer division to be able to enforce its rules at nonbanks. This is amazing. Some of the most rapacious institutions that prey on consumers are not banks. They operate outside the scope of the Federal regulatory authorities. They are often responsible for many of the most egregious abuses and predatory lending practices. Many of the products provided to consumers by these nonbanks played a direct role in the financial crisis. And many of these businesses--payday lenders, rent-to-own companies--currently operate below the radar screen to prey on vulnerable communities. How can we exempt some of these payday lenders and rent-to-own companies? I have seen them prey on poor people in my State. How can we exempt them from regulation when they often are worse than many of the financial institutions?

 

The Republican amendment would also prohibit the consumer division from issuing any rules ``that affect any underwriting standards'' of deposit institutions and their affiliates. After the crisis we just went through, which was in large part created by bad mortgage underwriting standards, I cannot believe anyone can propose this with a straight face because--let me repeat what it does. The consumer division cannot issue rules ``that affect any underwriting standards'' of deposit institutions. It is saying: Let's repeat the mortgage crisis. It makes no sense.

 

If this consumer division were in place in 2008--the one proposed by my colleagues here--it would not have had the power to write the mortgage rules establishing the minimum ability to pay standards the Fed issued. As we know, the Fed was not an extreme watchdog in any sense.

 

I have worked long and hard in the area of consumer protection. I have worked with these regulators. I have seen how slowly they work. It took more than 10 years to get them to go along with the so-called Schumer box, where credit card interest rates were made clear and visible to prospective credit card purchasers. It worked. But why did it take so long? Then, when the banks came with new ways of getting around the rules, again, it took me forever to get the Fed to move because the Fed, frankly--and Chairman Bernanke to his credit admitted this--did not make consumer protection a high enough priority.

 

So we need, in my judgment, an independent agency. That would be the best solution. Second best would be an agency, even if it is within the Fed, that is largely independent in both the rules it can promulgate and its enforcement. We need strong, forward-looking financial reform. I have always said I want the reform to be constructive, not punitive. But if we go through all this and fail to leave consumers better protected than they were before this crisis, we will have totally failed in our mission to serve the American people.

 

I strongly urge that this amendment be rejected by a large and hopefully bipartisan majority.

[Guest LAW]

Mr. FEINGOLD. Madam President, I am glad the Senate is finally considering the critically important issue of financial regulatory reform. Few things are as important as ensuring we never again suffer the kind of meltdown of the financial markets that shoved our economy into the worst recession since the Great Depression. I think it still remains to be seen if this bill will do that. While it certainly includes some good reforms, more needs to be done, and the track record of Congress in this area is, at best, checkered.

 

For the last 30 years, Presidents and Congresses have consistently given into Wall Street lobbyists and weakened essential safeguards. As has been the case in so many areas, members of both political parties are to blame. Legislation that paved the way for the creation of massive Wall Street entities and removed essential protections for our economy passed with overwhelming bipartisan support. From the savings and loan crisis in the late 1980s to the more recent financial crisis that triggered the horrible economic downturn from which we are still recovering, those three decades of bipartisan blunders have been devastating to our Nation. The price of those blunders has been paid by homeowners, Main Street businesses, retirees, and millions of families facing an uncertain economic future.

 

The impact of the recent financial crisis on the Nation's economy has been enormous. Millions have lost their jobs and millions more who are lucky enough to have a job are forced to work fewer hours than they want and need to work. According to a study done by the Pew Trust, the financial crisis caused American households an average of nearly $5,800 in lost income. Of course, families lost a significant amount of their personal savings. As a nation, we lost $7.4 trillion in stock wealth between July 2008 and March 2009 and another $3.4 trillion in real estate wealth during that same time. We simply cannot afford to continue down the path policymakers have set over the past 30 years.

The test for this legislation then is a simple one: Whether it will prevent another financial crisis. Central to that test will be how this bill will address too big to fail. This is a critical issue that has been growing for some time now as increased economic concentration in the financial services sector has put more and more financial assets under the control of fewer and fewer decisionmakers.

 

Years ago, a former Senator from Wisconsin, William Proxmire, noted that as banking assets become more concentrated, the banking system itself becomes less stable, as there is greater potential for systemwide failures. Sadly, Senator Proxmire was absolutely right, as recent events have proved. Even beyond the issue of systemic stability, the trend toward further concentration of economic power and economic decisionmaking, especially in the financial sector, simply is not healthy for the Nation's economy.

 

Banks have a very special role in our free market system: They are rationers of capital. When fewer and fewer banks are making more and more of the critical decisions about where capital is allocated, then there is an increased risk that many worthy enterprises will not receive the capital needed to grow and flourish. For years, a strength of the American banking system was the strong community and local nature of that system. Locally made decisions made by locally owned financial institutions--institutions whose economic prospects are tied to the financial health of the community they serve--have long played a critical role in the economic development of our Nation and especially for our smaller communities and rural areas.

 

But we have moved away from that system. Directly as a result of policy changes made by Congress and regulators, banking assets are controlled by fewer and fewer institutions, and the diminishment of that locally owned and controlled capital has not benefited either businesses or consumers. Of course, most dramatically, taxpayers across the country must now realize that Senator Proxmire's warning about the concentration of banking assets proved to be all too prescient when President Bush and Congress decided to bail out those mammoth financial institutions rather than allowing them to fail. That was a bailout I strongly opposed.

 

The trend toward increased concentration of capital was greatly accelerated in 1994 by the enactment of the Riegle-Neal Interstate Banking and Branching Act and especially in 1999 by the enactment of the Gramm-Leach-Bliley Act, which tore down the protective firewalls between commercial banking and Wall Street investment firms.

 

Those firewalls had been established in the wake of the country's last great financial crisis 80 years ago by the Banking Act of 1933, the famous reform measure also known as the Glass-Steagall Act.

 

Prior to Glass-Steagall, devastating financial panics had been a regular feature of our economy, but that changed with the enactment of that momentous legislation, which stabilized our banking system by implementing two key reforms. First, it established an insurance system for deposits, reassuring bank customers that their deposits were safe and, thus, forestalling bank runs. Second, it erected a firewall between securities underwriting and commercial banking so financial firms had to choose which business to be in. That firewall was a crucial part of establishing another protection--deposit insurance--because it prevented banks that accepted FDIC-insured deposits from making these speculative bets with that money.

 

The Gramm-Leach-Bliley Act tore down that firewall, as well as the firewall that separated insurance from Wall Street banks, and we have seen the disastrous results of that policy. I voted against tearing down the firewall that separated Main Street from the Wall Street banks. I did it for the same reason I voted against the Wall Street bailout: because I listened to the people of Wisconsin who did not want to give Wall Street more and more power. Wall Street was gambling with the money of hard-working families and too many Members of Congress voted to let them do it. I didn't support it before and I will not support it now. We have to get this legislation right and protect the people of Wisconsin and every State--protect them from something such as this ever happening again.

 

So I was pleased to join the Senator from Washington, Ms. Cantwell, and the Senator from Arizona, Mr. McCain, in introducing legislation to correct that enormous mistake Congress made in passing Gramm-Leach-Bliley. I look forward to supporting an amendment to this measure based on the Cantwell-McCain-Feingold bill.

 

The measure before us seeks to make up for the lack of a protective firewall between the speculative investment bets made by Wall Street firms and the safety net-backed activities of commercial banking by imposing greater regulatory oversight. We have seen how creative financial firms can be at eluding regulation when so much profit is at stake. No amount of regulatory oversight can take the place of the legal firewall established by Glass-Steagall. So when it is offered, I urge my colleagues to support Senator Cantwell's amendment to restore that sensible protection. Rebuilding the Glass-Steagall firewall is essential in preventing another financial crisis.

 

But even if we restore Glass-Steagall, there are additional steps we should take to address too big to fail in this bill. I am pleased to be joining the Senator from North Dakota in offering his amendment to address the problem directly by requiring that no financial entity be permitted to become so large that its failure threatens the financial stability of the United States. I am also looking forward to supporting an amendment that will be offered by the Senator from Ohio, Mr. Brown, and the Senator from Delaware, Mr. Kaufman, who is in the Chamber, that proposes bright line limits on the size of financial institutions. The disposition of those three proposals I have just reviewed will go a long way in determining my vote for the final version of this measure. I very much want to craft in this body a bill that can prevent the kind of crisis we experienced in the past, but the bill before us needs some work before we can legitimately make that claim.

[Guest Bad Day]

So what I'm gathering from the last few posts is the GOP basically wants to change nothing.

Zero.

They want an oversight committee that can be vetoed by the banks.

Ugh.

That's the same as criminals having veto power over the police: why even have law enforcement?

If you can commit armed robbery and when the police come to arrest you you can say "No, I don't think so, not today I don't want to be arrested" why would you EVER not commit the crime?

Morals? Bahahahaha. Don't think so.

They want the status quo. They want nothing to change.

Seems to me the Big Banks could pay everyone a few million dollars for their vote and it would be chump change, or, more accurately: The Cost of Doing Business.

Sick sick sick... this country's in a lot of trouble.

Change nothing or provide lax oversight (AGAIN) and see where that gets us.

[Guest Tea Party Patriot]

This bank statement and the word "plutonomy" is why I believe it essential to have strict bank reform. The United States economy SHOULD NOT be so greatly influenced by the very wealthy that the working class gets poorer and poorer.

 

 

This document clearly shows that the Banks do not believe in Democracy anymore. But, this is not true. We all have an equal power to vote and there is more of us than them. This election the People are going to revolt.

[Guest LPAC]

The only hope for avoiding a near-term collapse of the entire global financial system is for the U.S. Senate to pass the Cantwell-McCain amendment, reinstating the Glass Steagall Act, that separated commercial banks from brokerage and insurance firms in 1933. If the White House and the Senate Democratic leadership don't succeed in sabotaging the vote on the Cantwell-McCain amendment next week, I believe it will pass with significant bipartisan support.

 

The $1 trillion-plus 'super-TARP' bailout of the entire bankrupt European Monetary Union, which was announced on Sunday night by the Board of Governors of the Federal Reserve Bank, is doomed to fail. "The entire purpose of the way the Greek debt crisis was handled, was to destroy the United States. The Greek debt crisis could have simply been handled by a sovereign restructuring of their own debt. Instead, they saddled the Greek debt, and then the Portuguese, Spanish, Irish and Italian debt on Germany, which has no capacity to pay. So, now the United States has been drawn in, courtesy of President Obama and Tim Geithner, to subsidize the whole mass of unpayable and, for the most part, illegitimate debt. This will destroy the United States, just as I warned. If President Obama were not such a toy of the British, none of this would be even conceivable.

 

The only option is for the U.S. Senate to pass the Cantwell-McCain amendment to the Dodd bill, that would reinstate the Glass Steagall separation of commercial banking from the speculative mess. "Otherwise, under the policy announced on Sunday night by the Fed, the United States and Europe are headed for 1923 Weimar-style hyperinflation, right now! Unless we stop this madness through the restoration of Glass Steagall, the entire planet is doomed to a rapid plunge into a new dark age.

[Guest CC]

Everyone knows that it was private sector loan companies (ie. Countrywide, HSBC, Chase Home Finance, etc...) that triggered the financial crisis.

[Guest LAW]

Mr. ENZI. Mr. President, I have had some concerns over the consumer protection part of the financial reform bill, mostly because I do not think there are very many limitations on it. Particularly in the area of personal privacy, I have some major concerns. So I have developed an amendment that I think will solve that. It is the kind of amendment I have often seen brought up by both sides of the aisle to make sure no agency is going through your personal finances without your permission or any other thing that is personal.

 

So if you think full-body scans at the airport security is bad, they do pale in comparison to the consumer protection provisions in the financial regulatory bill we are debating. Even if you are okay with the heightened airport security measures, will you be OK with a full scan of your financial records?

 

If left alone, this bill will set up a Federal bureaucracy that will be able to comb through the personal financial records of millions of Americans in the name of protecting consumers.

 

Also, in the name of protecting us from ourselves, this bill would require banks to keep and maintain records of all bank account activity and financial activity of their clients for at least 3 years, while also requiring this information to be sent regularly to the bureau for safekeeping.

 

I have serious concerns about our government collecting information on the daily activities of its citizens and equal concerns about the government approving or disapproving the financial choices of its citizens. For those who agree with me, and even those who disagree with me on the consequences or meaning of the language in this bill, I have a straightforward and easy solution.

 

My amendment, 4018, simply says that if the new bureau created in this bill wants to investigate a consumer's individual transactions, then the bureau must get written permission from that individual. All this means is that the bureau cannot investigate someone's banking activities or credit card purchases without that person's permission.

 

The bill is simply that. This is one page going into thousands of pages. It says:

 

Notwithstanding any other provision of this Act, any provision of the enumerated consumer laws or any provision of Federal law, the Bureau may not investigate an individual transaction to which a consumer is a party without the written permission of that consumer.

 

It is pretty straightforward. It makes sure they aren't going to investigate a consumer's individual transactions without written permission from that individual, and they can't investigate someone's banking activities or their credit card purchases without that person's permission.

 

My amendment would also make it so that the government can't watch over my financial transactions without my saying so or without you saying so on yours. My amendment gives consumers a choice. I don't think the bureau should be allowed to look over my credit card statement to see if I am spending too much money. I don't think the bureau should be allowed to monitor my purchases and note that I bought a new car, a new boat, or a gun.

 

I recognize there are consumers out there who may want the government in their lives, monitoring their transactions. I don't claim to understand that desire. But my amendment would not take away their choice in the matter. In fact, as a consumer, if I get into credit card trouble and want the bureau's help, all I have to do is contact the bureau and give them permission to look at my financial documents. My amendment would also give consumers that ability. As long as the bureau has my written permission as a consumer, they can look at my financial past, present, and future.

 

Our State offices have that kind of a procedure when they do case work for individuals. Our State offices have a process where they will look into problems that an individual is having with the Federal Government. But in order to do that, they have to get a signed privacy release. That is so we can't just be looking into constituents' problems that we think might be a problem for them without their knowledge or their permission. That is all I am doing with this government bureau, is making sure the consumer knows that bureau will be going through their records with their permission.

 

In reality, this bill encourages consumers to rely on the government to protect them from bad decisions instead of empowering due diligence. The role of the Federal Government should not be to stand over our shoulders telling us if our decisions are right or good. I was here on the Senate floor just a few short days ago saying that you and I have the inherent freedom to make choices, even the freedom to make bad choices. In America, that is the way it works. Big Brother is not allowed to hang over your shoulder to decide whether you are making a poor decision.

 

Because of this bill and the actions of the current administration, people are more concerned about their freedoms right now than they ever have been, and this underlying bill--specifically title X, with its ironic name, ``consumer protection''--would take away those freedoms without this amendment.

 

The Consumer Financial Protection Bureau created through this bill would suddenly become the most powerful agency within the Federal Government. By placing this bureau within the Federal Reserve, Congress's last ability to oversee this agency would be when the director of the bureau is nominated by the President and the Senate gets to vet that candidate. That is it. Congress would have no oversight of the bureau's budget. Congress would have no oversight of the rules created by the bureau either.

 

By the way, this bureau would not only have the authority to create its own rules for banks and consumers to follow, it would have the authority to enforce those rules as well. No other agency has that kind of unchecked power. Let me tell my colleagues, unchecked power does not lend itself to accountability.

 

Why am I so concerned about this supposed consumer protection bureau? I am concerned about our freedoms. I know the Federal Government should not operate with the belief that it always knows best. Protecting consumers doesn't always mean naming advocates to work on their behalf. It also means allowing them the freedom and power to advocate for themselves.

 

I mentioned this earlier, but I want to illustrate an example of why I am concerned about this bureau's unchecked power and why every citizen in the country should be up in arms, beating down the doors of Congress to keep big government powers from getting even bigger in their lives. The example I am about to give would be small compared to the powers of this proposed bureau.

 

Let me tell my colleagues, this is not a small issue to the public. Not too long ago, the Transportation Security Administration, TSA, announced its intention to put full body scanning into major airports. Let me remind my colleagues, this was not even in every major airport, only a few. Many may not have seen one of these scanning machines. Travelers go into a three-sided piece of equipment fully clothed, and the machine essentially creates an x-ray-like scan of the traveler. The resulting image from the scan can be used to determine whether someone is carrying an explosive, has objects hidden under their clothing, or merely had a joint replaced. This new step in security was all done in the name of protecting citizens from terrorists. This new measure was for our physical safety.

 

I have heard from hundreds of Wyoming citizens and from hundreds of citizens across the country desperate not to have the government intrude into their lives even in the name of physical safety from terrorism. There was such a rush of emotion from these folks, anger at the inconvenience and intrusion, nervousness and anxiety that the government would be able to image them for 30 seconds or the possibility that the government could keep the scanned image in a file. I even had some of the more middle-of-the-road folks tell me they just wanted a choice of whether to have the full body scan or simply an in-person screening. That is what is done over most of the country.

 

My point with this story is that with TSA screening, we are talking about a single image of a person as they travel through the Nation's airports. What the bureau of consumer protection proposes to do in the name of financial security is not just a snapshot of us during a single day of travel. What the bureau proposes to do is scrutinize the transactions of our daily lives, our spending habits, monitor our financial decisions as we plan for retirement, as we plan and spend for our families, and, as consumers, as we make choices on loans for education, vehicles, homes, and any other expenses. This isn't a single step encroaching on privacy like a body scan image. What the bureau proposes to do skips over the privacy boundary. It is not a single scan; it is a life audit.

 

This bureau may create some much needed protections for consumers, but it could also go much further. Without my amendment, the bureau will be required to collect daily transactional information on every consumer. The government would see every time you needed money for a college loan, for $20 from the nearest ATM. The bureau would require your community bank to not only keep all the information on file but to regularly share that data with the government.

 

Some may say they don't care if the government knows they buy groceries at Safeway every Tuesday, but I daresay allowing the government to assess and analyze every transaction could easily escalate beyond mundane details and consumer protection to truly having Big Brother watching over us. You may not care about the government knowing your shopping habits or how and when you fill your car with gas, but you will care if the government has the ability to say how, when, and why you spend your own money.

 

We already give the government control of our tax dollars. I would say that isn't going so well for us. A $12 trillion, almost $13 trillion deficit shows this. So why should the public be OK with allowing the Federal Government to watch over our shoulders, saying whether our financial decisions are OK? The point is that the Federal Government should not have this power, but this bill will be giving it unless we have this amendment.

 

I have risen to bring light and awareness to the additional, enormous unchecked power that would be given to the bureau of consumer protection in the name of protecting consumers. This power would be given not in the name of protecting us from physical threat or harm but in the name of making decisions for us.

 

I offer another choice to my colleagues and to the people. This choice allows consumers to let the bureau into their personal lives if they so choose. My amendment would not stop the bureau from existing. My amendment would not prevent the bureau from assisting consumers with their finances or debt. My amendment would simply require the bureau to get written permission from consumers. It is that simple. I urge colleagues to consider the amendment so that we are empowering consumers, not perpetuating big government growth in the name of protecting us from ourselves.

[Guest LAW]

Mr. CORNYN. Mr. President, I continue to have deep concerns about the legislation we are debating. I mentioned some of those concerns last week, including the bailout provisions that still effectively remain in the bill and the so-called orderly liquidation process that could give some firms special treatment outside of the Bankruptcy Code.

 

I repeat my appreciation to Senator Sessions from Alabama for offering his amendment last week which would have corrected that. Unfortunately, it was defeated last Thursday, as most of the amendments have been.

 

At this time, I offer another amendment that would protect the American taxpayer from bailing out foreign governments. We all know that this scene, which we saw displayed across cable television and in the newspapers, is being played out now in Greece where literally a Greek tragedy is unfolding.

 

How did this happen? First, Greece's public debt was 115 percent of its gross domestic product, according to the International Monetary Fund. Putting that in context, according to the Congressional Budget Office report of March 2010, the public debt of the United States is currently 53 percent of our gross domestic product. However, the Congressional Budget Office, the official scorekeeper of the government, says, all else being equal--in other words, if nothing else happens--the baseline estimate for that debt in ten years will be 67.5 percent, up from 53 percent last year. Under the President's proposed budget, that number skyrockets to 90 percent of gross domestic product by 2020. While some may say here in America we are in relatively good shape because our debt is only 53 percent of our gross domestic product, the Congressional Budget Office estimates that under the President's own budget, that will soar from 53 percent of the gross domestic product to 90 percent of GDP by the year 2020, which makes that 115 percent number for Greece look not so much higher than what the American number will be come 2020.

 

Deficits are high in Greece for the same reason they are too high in the United States--too much government and too much reckless spending.

Similar to the U.S. Government, the Greek Government has been financing its operations by borrowing money. But over the last few weeks, the capital markets made clear investors--the people who buy that debt--do not trust the Greeks to be able to pay it back, hence, the need for these extraordinary bailouts by the International Monetary Fund.

 

But, again, the comparison is unavoidable. What happens if the United States does not change its current trajectory of going to 90 percent of our gross domestic product when it comes to our debt by 2020, as projected by the Congressional Budget Office? What do we do if we continue to borrow and spend? What do we do if China, for example--which is the primary country that buys that debt--either refuses to continue to finance our deficit spending and our debt or demands higher interest rates.

 

What is happening now in Greece with these kinds of demonstrations I do not think it takes a great imagination to say could happen in America if we are not more responsible in dealing with our out-of-control spending, our out-of-control debt--unless we say no to the President's proposed spending budget, which would grow that to 90 percent of our gross domestic product by 2020.

 

But back to my amendment. Why is it people are so upset about bailing out Greece, using the International Monetary Fund to do so? Well, I am referring to an article from the Associated Press entitled ``Europe bristles at paying for Greek retirement.'' Let me read a couple paragraphs:

 

In Greece, trombone players and pastry chefs get to retire as early at 50 on grounds their work causes them late career breathing problems. Hairdressers enjoy the same perk thanks to the dyes and other chemicals they rub into people's scalps.

 

Skipping down a couple paragraphs:

 

Like many [European Union] countries, the general retirement age in Greece is 65, although the actual average [retirement age] is about 61. However, the deeply fragmented system also provides for early retirement--as early as 55 for men and 50 for women--in many professions classified as ``arduous and unhealthy.''

 

So we see why people are reluctant, to say the least, to bail out Greece because of these reckless pensions that facilitate these early retirements under the thinnest of pretenses. But we know the European Union and the International Monetary Fund recently approved a $145 billion bailout for the Greek Government. Mr. President, $40 billion of that represents loan guarantees from the International Monetary Fund. Since the United States has funded about 17 percent of the IMF's budget, our share--that is, the American taxpayers' share--of that bailout would be at least $7 billion. That is right, U.S. taxpayers are on the hook to help bail out Greece to the tune of at least $7 billion.

 

We know a $1 trillion bailout fund is being discussed for other European nations. While the details are being discussed, once again, U.S. taxpayer funds could make their way through the International Monetary Fund to bail out irresponsible foreign governments.

 

As CNBC reported on Tuesday:

 

U.S. taxpayers could be on the hook for $50 billion or more as part of the European debt bailout, which is likely to be a close cousin to the strategy used to rescue the American financial system.

 

CNBC went on to say:

 

The entire bailout package has been nicknamed ``Le Tarp'' for its similarity to the Troubled Asset Relief Program that bailed out US companies with taxpayer-backed loans.

 

They are calling this bailout fund Le Tarp for a reason. Once again, billions of dollars will be in the hands of government bureaucrats, and the U.S. taxpayer will be asked simply to trust those so-called experts who have let us down before and who seem to be making much of this up as they go along.

 

It is no surprise that 63 percent of respondents to a recent Rasmussen poll have said they oppose using U.S. taxpayer funds to bail out foreign governments. I am actually surprised it is only 63 percent.

 

American taxpayers should not be involved in bailing out foreign governments. As George Will pointed out last week in the Washington Post, Greece has a gross domestic product that is less than the Dallas-Fort Worth metropolitan area's. Greece is simply not, under any stretch of the imagination, too big to fail. If Greece defaults on its debt, then the European banks that bought the debt need do write it off. If the European governments want to bail out their banks or prop up their currency, let them do it without help from the American taxpayer.

 

American taxpayers simply should not be involved in this process. Our first priority should be to unwind all the bailouts we have, thanks to this administration, not to create new ones overseas.

 

Moreover, there is a good chance this Greek bailout is not even going to work; in other words, that we will not even be able to get our money back. It will not be a loan; it will be throwing more good money after bad.

 

The chief executive of the Deutsche Bank doubts the Greeks can even repay this debt. We have all seen pictures of these protests that have continued under the ``austerity measures'' that have now been imposed that the government was forced to make in order to secure the deal.

 

As one blogger recently put it:

 

It was the Greeks who gave us the word for democracy. They also gave us the words for demagoguery, tyranny, crisis and chaos.

 

That is what this photograph looks like: chaos as a result of uncontrolled spending and out-of-control debt.

 

What we are seeing is what Robert Samuelson calls the ``Death Spiral of the [Modern] Welfare State.'' He said: ``The reckoning has arrived in Greece, but it awaits most wealthy countries,'' including, I might add, the United States of America--unless we change our ways.

 

The President of the European Council put it this way:

 

We can't finance our social model anymore--with 1 percent structural growth we can't play a role in the world.

 

What my amendment--which will be among the four amendments voted on when we gather again at 5:30--does is, it says the American people are tired of bailouts, and Congress should protect the American taxpayer from bailing out foreign governments, particularly when we cannot get our money back afterwards.

 

My amendment would bring needed transparency and accountability to what the International Monetary Fund is doing with American taxpayer dollars, including the roughly $60 billion our country has already provided to the IMF over the years.

 

Specifically, this amendment would require the administration to look more closely at any proposed IMF loan to see if that country's debt exceeds its GDP; and when it does, as Greece's does, to certify to Congress that the loan will be repaid.

 

If the U.S. Executive Director of the IMF cannot certify to Congress that the loan will be repaid, my amendment would require the President of the United States to direct the Executive Director to vote against the bailout by the International Monetary Fund.

 

The logic of this amendment could not be more clear: Any country that owes more money than its entire economy produces is, by definition, a very bad credit risk, and the United States should not be loaning money to such a nation, unless we are absolutely confident our taxpayers are not subsidizing failure and will ultimately get their money back.

 

So I urge my colleagues to support this amendment. We must act quickly, so the amendment will apply to future bailouts of nations like Greece that have spent way beyond their means.

[Guest LAW]

Mr. WHITEHOUSE. Mr. President, I wish to say a few words on the amendment I have pending and that we will be voting on in the next 2 days that will restore the historic power of States to control interest rates they charge to their citizens.

 

One of the things I hear most about when I am home in Rhode Island is from folks who can't understand why their credit card interest rate suddenly jumped to over 30 percent. For a long time, the tricks and the traps in those long credit card contracts pitched people into these penalty rates. I think a lot of people don't read all the fine print and aren't sure exactly what it means. We have individual consumers up against the craftiest lawyers the credit card industry can hire, and the result is when they trigger one of these traps and they get caught by one of these little tricks, they end up being kicked into a very high penalty rate.

 

Recently, after the credit card reform bill passed a year ago, we saw the credit card industry actually not even waiting for the tricks or traps to be triggered. They just began to spontaneously raise people's interest rates; again, very often over 30 percent. The Presiding Officer and I are both of an age where we can remember a time when interest rates of that level would have been a matter to refer to the authorities, not a commonplace business practice of our biggest industries. When we think of the pain and the suffering and the economic stress families get put under when they fall into these burdensome, exorbitant penalty rates--I think we should do something about it. My amendment would allow us to do just that.

 

It doesn't take any new risks. It doesn't create dramatic new policy. It does things that my friends on the other side of the aisle have been supportive of over the years. It honors the independent authority of States to make decisions to protect their citizens. It supports consumers--the little guy--against the huge corporations, and it puts our local banks on a level playing field with these big out-of-State banks.

 

We got here because of an unusual loophole that the Supreme Court opened 30 years ago. We did not have a debate on the Senate floor saying: What should our policy be? Should we take away the rights of States to protect their consumers, to protect their citizens from exorbitant out-of-State interest rates? We never had that discussion. This happened inadvertently.

 

It happened as a result of a Supreme Court decision back in 1978 that said when a bank in one State and a consumer in another State have a transaction, it will be the laws of the home State of the bank that govern. It didn't look like a very big deal at the time. It didn't take the crafty bank lawyers long to see that it opened a very tricky loophole, and they could move to the States in this country that had the worst consumer protection legislation, and from there--from those outposts of the worst consumer protection--they could market into other States. The fact that the other State they were marketing into had good consumer protections and protected those State's citizen didn't matter. It didn't help because of the Supreme Court decision.

 

I submit if, as a Senate, we were to have debated that proposition, there would not have been many votes for the outcome. The notion of the policy of the United States on protecting consumers from interest rates should be that the rules of the worst State in the country trump every other State is a rule that nobody in their right mind would vote for. But because of this inadvertent Supreme Court loophole and because of the crafty work of these big national banks and their lawyers, we are now in that exact situation--a situation that none of us would ever have voted for and that we shouldn't tolerate now.

 

So I urge my colleagues on the other side of the aisle to vote for this amendment. I wish to thank Senator Cochran from the other side of the aisle for cosponsoring it, and I wish to ask his colleagues in the Republican caucus to join him in supporting it.

 

This bill we are looking at right now is very esoteric and technical. It is preventive medicine. It engages in things such as trying to rebuild the Glass-Steagall firewall, trying to promptly regulate collateralized debt obligations, trying to put appropriate leverage limitations on banks. That is all pretty arcane stuff.

 

The American people want this reform, and it should happen. But here is a deliverable they can take right home. They will see a difference as soon as their States respond. They can be protected from these outrageous 30-percent interest rates as a result of this bill. It is not a big Federal Government that is coming to do this; it is the State governments, State by State. Indeed, if a State wants to have no consumer protections and have its citizens vulnerable to these predatory and exorbitant credit card deals, fine. They can do that. There is nothing in my amendment that requires a State to do anything. It just empowers them with the same power they had at the founding, with the same power they had for 202 years, until 1978 came along and this peculiar Supreme Court decision.

 

So I think it will be a good argument to go home with, and as voters in this country look at what Congress has done leading up to the November elections, to be able to say: You know what. Those 30-percent rates we never saw when we were children and that our parents never had to pay, the rates that you as a head of a family are now having to deal with with these credit card companies from out of State that you can barely reach on the phone, and if you do, you get pushed from phone tree to phone tree, we have done something about that. We have helped you. We have put you in a position where the States are sovereign again over these big national corporations rather than vice versa.

 

Right now, we, the big credit card companies, are sovereign over our States. That is not the way things should be in America. That is not the way the Founding Fathers set it up. It is not right for consumers. It violates the principle of the States being laboratories of democracy, and it completely eviscerates consumer protection.

 

So I urge my colleagues to support it and to put themselves in a position to be able to go home to their voters and say: We did something tangible for you. We didn't create bigger government. We let your existing State government make the decisions that for two centuries they were capable of making to protect you from the worst practices of the out-of-State credit card companies. The alternative is to have to go back and explain why people are still paying 30 percent when you have the chance to do something about it; why you chose the big out-of-State corporations and exorbitant interest rates over your own home State's protection of your own home State's citizens.

I think the position my colleagues would want to be in on that one is with your home State, with the doctrine of federalism, with the traditions of the United States of America, and with your consumers, rather than on the other side with the big out-of-State banks that charge these exorbitant rates.

 

So I hope I will have support, and I look forward to working with anyone who has questions.

[Guest LAW]

Mr. CRAPO. Thank you very much, Mr. President.

 

This amendment includes Fannie Mae and Freddie Mac as part of the Federal budget as long as either of these two institutions is under conservatorship or receivership. I wish to thank Senators Gregg, Shelby, McCain, and Vitter, Hutchison, and Corker for cosponsoring this amendment.

 

As I believe my colleagues will recall, several days ago we voted on a broader amendment which would actually have provided some significant coverage of Fannie Mae and Freddie Mac in this so-called financial regulatory reform legislation we are addressing on the floor of the Senate today.

 

That legislation would have provided a pathway for us to literally stop the bailouts of Fannie and Freddie and move us toward a path of resolving the continued taxpayer exposure to the excesses of Fannie Mae and Freddie Mac. But that amendment was defeated on the floor of the Senate--although I supported that amendment because now, since the amendment has been defeated, there is literally no piece of this legislation before us that addresses the core problem that started the entire collapse in our economy; namely, the securitization of the mortgage industry and the actions of Fannie Mae and Freddie Mac, which ran up so many of these toxic assets and helped to spread them throughout the globe.

As we debated then, the taxpayer is already on the hook for about $130 billion-plus for the problems Fannie and Freddie caused. Experts tell us, as we move forward, that liability to the taxpayer is likely to reach $380 billion to $400 billion. I personally think those are conservative estimates. When we get the full picture, I think the taxpayers will have been put on the hook for way more than that.

 

This amendment simply says: Let's tell the American public what's happening. Since we lost the fight last week to try to have the bill cover Fannie Mae and Freddie Mac and provide an exit strategy for the taxpayers to continue to bail them out, let's at least be open and clear about what we are doing with regard to Fannie and Freddie.

 

The purpose of this amendment is to show the American people the true picture of how much our national debt has increased as a result of the bailout of these two institutions--the bailout which I, again, point out is ongoing, uninterrupted in any way by this legislation.

 

According to the CBO Director Douglas Elmendorf:

 

After the U.S. Government assumed control in 2008 of Fannie Mae and Freddie Mac--two federally chartered institutions that provide credit guarantees for almost half of the outstanding residential mortgages in the U.S.--

 

This is his quote now, and because of what happened in the economy, Fannie and Freddie, together with the FHA, account for 96.5 percent of all of the residential mortgages in the U.S. Continuing with the quote:

 

the Congressional Budget Office concluded that the institutions had effectively become government entities whose operations should be included in the Federal budget.

 

What is the Director saying? He is saying that since the U.S. Government has now taken over control and management of Fannie Mae and Freddie Mac, and the taxpayer is on the hook for all of their debts and excesses, we ought to put it on budget and show the American people what is happening to our debt as a result of it, instead of using the creative accounting that we see here in Washington all the time, where we mount up spending and debt and figure out ways to keep it from showing up in the national debt or in the calculations of our spending.

 

At the end of 2009, per the financial statements, those figures that we are talking about, how much debt is not being reflected in our national debt because we don't choose to count it? Those figures are $774 billion for Fannie Mae and $781 billion for Freddie Mac, for a total of $1.555 trillion, which is out there for which the taxpayer is on the hook, and we have to figure out a way to pay it back. We as a Congress will not tell the American people that in the calculations of our national debt.

 

To put into perspective how large these entities are, their combined total books of business are nearly $5.5 trillion. As I indicated, they are currently run and operated by the U.S. Government.

Again, the amendment last week would have put us on a pathway to solve this and take the government out of the business, which should be a private sector business of mortgages. But at least this amendment would put us on record as telling the American people what exposure we are putting them to by not taking those actions.

By the way, the Congressional Budget Office has estimated that, in the wake of the housing bubble and the unprecedented deflation in housing values that resulted, the government's cost to bail out Fannie Mae and Freddie Mac will eventually reach, as indicated before, about $381 billion. I think that is too conservative.

On May 5, Freddie Mac reported losing another $8 billion in the first quarter and requested $10.6 billion from taxpayers, saying in the same breath they are going to need more in the future.

 

On May 10, Fannie Mae reported losing $11.5 billion, its 11th consecutive quarterly loss, and itself asked for another $8.4 billion more from the taxpayers. That is in addition to the $126.9 billion Fannie Mae and Freddie Mac already cost the taxpayers. Get this--there used to be some limits on this--$400 billion or $200 billion for each institution.

 

Last Christmas--literally on Christmas Eve--the Treasury announced that it was going to lift that $400 billion loss cap on these two companies, creating a potentially unlimited liability, and effectively providing the full faith and credit of the U.S. Government, the American taxpayers, for their unlimited debt. Now the limit, instead of $400 billion, which itself is unacceptable, is infinity. We will not even record it for the American people to see.

 

According to a January 2010 CBO background paper titled ``CBO's Budgetary Treatment of Fannie Mae and Freddie Mac,'' the Congressional Budget Office ``believes that the Federal Government's current financial and operational relationship with Fannie Mae and Freddie Mac warrants their inclusion in the budget.''

 

This isn't just my complaint. The CBO itself has said that now that the status is that the U.S. Government has taken control of the financing of and assumed the debt of the obligations and actions of Fannie Mae and Freddie Mac, we ought to recognize they are government entities, and we ought to include them in our budget. That is what we are seeking in this amendment.

 

By contrast, the current administration has taken a different approach by continuing to treat Fannie Mae and Freddie Mac as outside the Federal budget, recording and projecting outlays equal to the amounts of any cash infusions made by Treasury into the entities. They are creating the appearance that there is no debt here, no impact on our budget. That is the kind of nontransparency this amendment is aimed at stopping. We are seeking to create some kind of transparency that will at least allow Congress and the public to understand the finances we are now being engaged in and asking the American taxpayers to back.

 

The Office of Management and Budget, in contrast to the CBO, has said in their Budget of the U.S. Government for Fiscal Year 2011:

 

Under the approach in the budget, all of the GSEs' transactions with the public are non-budgetary because the GSEs are not considered to be government agencies.

 

We have the President and the OMB at the White House saying that we don't need to count this in the budget because they are not government agencies. The CBO, however, is saying: Wait a minute, we own them, we run them, we are backing all of their debt, and essentially they are government entities. We can engage in debates about whether Fannie Mae and Freddie Mac are Government entities, but the bottom line question is: Who is responsible for their debt? Who is paying for their debt?

 

Nobody denies the answer to that question. It is the U.S. taxpayer. If the U.S. taxpayer is on the hook for their debt--and after what I call the ``Christmas Eve massacre'' of last Christmas--and there is no limit to the amount of that liability, we at least ought to put it on record.

 

CBO has included the GSEs in its budget baseline but does not include their debt in the computations of debt because CBO took a narrow view of the Federal debt. But as CBO's report says:

 

CBO's treatment of the entities' debt does not constitute a statement about whether or not that debt should be considered Federal debt.

 

Figure that out. CBO is saying: We are not going to include this in the debt, even though we think they are

 

government entities and we ought to put them on budget. Their words were ``CBO's treatment of the entities' debt''--meaning not counting it--``does not constitute a statement about whether or not that debt should be considered Federal debt.''

 

Maybe CBO is saying Congress needs to give us some direction. Whether that is what they are saying, Congress does need to give some direction here, and that is the purpose of the amendment.

 

In light of Treasury's Christmas Eve ``taxpayer massacre'' and the government's decision to back all losses of Fannie Mae and Freddie Mac, we should include Fannie Mae and Freddie Mac as part of the Federal budget--at least as long as they are in receivership or conservatorship and run and backed up by the American taxpayer.

 

The amendment would also do a few other things. It would reestablish the $200 billion cap per entity and accelerate the 10-percent reductions of the mortgage portfolios, effectively requiring the companies to shrink those portfolios by holding a combined $100 billion from their current levels.

This will also limit the losses that taxpayers will face as a result of the blank check given by the administration last December 24.

 

The amendment will also require the Secretary of the Treasury and the Director of the Federal Housing Financing Agency to testify before the Banking Committee each time an additional $10 billion or more in taxpayer funds is provided to Fannie Mae and Freddie Mac combined. In other words, the next time, under this amendment, we have a May like this May, where Fannie and Freddie have asked for more than $10 billion of additional taxpayer bailout, we at least ought to have the Secretary of the Treasury and the Director of the Federal Housing Finance Agency, who manage this, come before the Banking Committee and testify as to what is happening, why, and where we are headed.

 

This will provide at least an opportunity for congressional oversight, which is currently totally lacking in the process. All that happens now is that they issue a press release saying we need another $10 billion and they get it--no limits, no caps, no accountability, no counting of the debt, and no explanation to Congress. It seems to me a little transparency and honesty with the American people about what our finances are doing here is appropriate.

 

The amendment is also going to require the Secretary of the Treasury to post on the Treasury Web site, 1, the aggregate portfolio holdings of each enterprise and, 2, a weekly summary of taxpayer funds provided for and at risk for each enterprise.

 

Again, all we are asking is to have the kind of transparency that will allow the American people to understand what the Federal Government is up to with their money. It will also help explain why some of us don't believe the rhetoric about the bill before us today. There is a lot of talk about ending bailouts. There is a lot of talk about ``too big to fail'' is never going to be allowed again in America. There are some provisions in the bill that end some of the bailouts and that go quite a bit of the way down the road toward making it clear that a company cannot get too big to fail, and that we will try to move them into a resolution process if they do fail.

 

It is not ironclad, however, and there is still the possibility that we will see bailouts in the future--something in other amendments we have tried to tighten.

 

But let's not mistake the fact that the biggest bailouts of all are not even addressed in this legislation and are allowed to not only continue unabated but to continue without even telling the American public what the facts are. When I say the biggest bailouts of all, the last numbers I saw, if you take the auto bailout and the financial bailouts everybody heard about, and total them all up, they won't even equal the amount of money being used to bail out Fannie Mae and Freddie Mac. Yet, Fannie and Freddie continue--because the government now owns them--to be untouched by this legislation.

 

It is time for true transparency as we debate these issues of bailouts and too big to fail. It is time for us to address the very core of the problem that caused so much of the economic disruption we are now dealing with--the financial mortgage industry and the securitization of those toxic mortgages.

 

Yet, again, what happens? We are simply asked, as American taxpayers, to pony up with a check for $10 billion here and $8 billion there, and we will continue to grow, unrestricted, uncontrolled, unnoticed, and unidentified, because we won't even put it on record and count it in our own budgeting.

 

It is time for us to include the obligations and the management of Fannie Mae and Freddie Mac in our Federal budget. I encourage all of my colleagues to support this amendment when we get an opportunity to vote on it.

[Guest AlwaysRed]

Now we are going to find about the real truth about the cap and trade scheme.

 

Rep. Chaffetz (R-UT), along with Rep. Issa (R-CA) sent a letter to David Kappos, the Director of the U.S. Patent and Trademark Office, as well as Michael Williams, President and CEO of Fannie Mae, seeking information concerning a patent issued to Fannie Mae regarding a residential Cap and Trade system.

 

On June 7, 2005, the U.S. Patent and Trademark Office (USPTO) issued Patent No. 6,904,336 for a "System and Method for Residential Emissions Trading." The patent was assigned to the Federal National Mortgage Association ("Fannie Mae") and CO2e.com, LLC of New York. The patent lists former Fannie Mae Chairman and Chief Executive Officer Franklin D. Raines as the primary inventor. Former Fannie Mae executives Scott Lesmes and Robert Sahadi are also listed as inventors.

 

"I have serious questions about why Fannie Mae, back in 2005, was working on a Cap and Trade scheme," said Rep. Chaffetz. "Why would they be spending their resources on something that is well outside of the scope of Fannie Mae's charter? We want to see all the information relating to the patents issued to these 'inventive' former Fannie Mae executives?"

 

"Having ventured far beyond sub-prime lending policies, Fannie Mae appears to have served as a full-blown liberal think tank for crony-capitalist ideas," said Rep. Issa. "While the crony-capitalist Democrats who ran Fannie Mae like Franklin Raines and Jim Johnson used these kinds of ideas to enrich themselves, it was the American taxpayers who were left holding the bag after they failed. It's disturbing that Fannie Mae executives were positioning themselves in 2005 for financial gain from an Obama Administration cap-and-trade system, but given the huge amount of campaign contributions Fannie Mae poured over President Obama it should be no surprise."

 

http://www.google.com/patents?id=ePQVAAAAEBAJ&zoom=4&pg=PA1#v=onepage&q&f=false