[Congressional Record (Bound Edition), Volume 156 (2010), Part 5] [Senate] [Pages 6468-6476] [From the U.S. Government Publishing Office, www.gpo.gov]RESTORING AMERICAN FINANCIAL STABILITY ACT OF 2010--MOTION TO PROCEED The PRESIDING OFFICER. Under the previous order, the Senate will resume consideration of the motion to proceed to S. 3217, which the clerk will report. The assistant legislative clerk read as follows: Motion to proceed to the consideration of S. 3217, a bill to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ``too big to fail,'' to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. The PRESIDING OFFICER. Under the previous order, the time until 12:20 p.m. will be equally divided and controlled between the two leaders or their designees. The Senator from Iowa is recognized. Mr. HARKIN. Mr. President, yesterday, in the Permanent Subcommittee on Investigations, chaired by the distinguished Senator from Michigan, Mr. Levin, we learned more about the reckless actions of traders and executives at Goldman Sachs. Goldman Sachs was hardly the only bad actor in bringing our financial system to the brink of collapse in 2008. Traders and executives at many other financial institutions got fabulously wealthy by gaming the unregulated casinos on Wall Street. They walked away with fortunes, even as millions of Americans lost their jobs, their savings, and their homes. Yet as we witnessed in yesterday's hearing, Wall Street remains quite arrogant and quite unrepentant and quite unwilling to change its ways. It has the gall to believe it should remain free to do business as usual. To that end, I am told it has mobilized a legion of lobbyists-- an estimated 1,500 of them; 15 lobbyists for every Senator--to try to kill or water down, stop this financial regulation reform from coming to the floor. It is deeply unfortunate that every one of our colleagues on the other side of the aisle--every single Republican--has joined with Wall Street in obstructing this legislation--every single Republican not just filibustering the bill but preventing it from even coming to the floor for debate and amendment. They keep saying they want to improve the bill. Well, is that not what the debate and amendment process is about? If someone has a better idea, offer it as an amendment. Let's debate it. Maybe it is a better idea. Maybe we will adopt it; maybe we will not. But it seems that is the way we ought to be conducting the Nation's business on the Senate floor. So I say to my Republican colleagues, Senator Dodd and Senator Lincoln have bent over backwards to consult with them and invite bipartisan cooperation. Their good-faith efforts have produced solid, commonsense legislation. But if people on the other side of the aisle want some changes, that is what the amendment process is for. We are not cutting off anyone. It will be open for amendment. Why are the Republicans so afraid of offering amendments on the Senate floor if they have a better idea on how we should do this? It is a bitter irony that, even as we spent a fortune in taxpayer dollars to rescue the global financial system, the self-appointed masters of the universe on Wall Street rewarded themselves with billions in bonuses and have geared up to fight the efforts to prevent--to prevent--this from happening again. Well, it seems Wall Street is all too used to living a different life, playing by different rules than the rest of the country. Nowhere is this disconnect between Wall Street and Main Street more stark than in the area of compensation. Over the last decades, compensation in the financial sector has [[Page 6469]] skyrocketed, with some executives walking away with annual compensation of hundreds of millions of dollars, even as the inflation-adjusted incomes of ordinary working Americans have remained stagnant. This chart I have in the Chamber traces the financial industry profits as a share of domestic profits since 1948. From 1948 to about 1980, as you can see, it remained fairly stable, between 8 percent and 18 percent. Think about everything in this country, all the profits made. About 8 percent to 18 percent was taken by the financial sector on Wall Street. But starting in 1984, financial profits began to rise dramatically. We can see it on the chart, going way up. In 2001, financial industry profits were almost 45 percent of all domestic profits in America--almost half; 45 percent--up from about 8 percent to 18 percent. Today, despite the 2008 meltdown, they are back above 35 percent. So 35 percent of all the profits made in America are going to Wall Street, going to the financial sector. This is a concentration of wealth unprecedented in our history. This second chart I have in the Chamber contrasts this explosion of wealth on Wall Street to what happened to ordinary Americans on Main Street. From 1990 to 2008, real median household income stagnated at about $50,000 per year. It just stagnated. Since 2000, real median household income has actually fallen. From 2000 to today, real median household income has stagnated and has actually fallen from where it was. We had a steady increase over the years. Then, since 1990, it stagnated. Since 2000, it has fallen. That is what is happening to the average household in America, the median household in America. Well, let's see what was happening to our friends on Wall Street then. Just as median household income was stagnating from about 1990 on, look what happened to the average Wall Street bonus--huge. Wall Street compensation skyrocketed nearly 300 percent during this period of time. Since 1990, the average Wall Street bonus--I am not even talking about salaries; I am just talking about bonuses--soared from just under $50,000 in the early 1990s to more than $200,000 in 2006. Now, go out and talk to our constituents, go out and talk to the Main Street businesspeople who run our shops, and talk to anybody out in America today. Did their income increase 300 percent during that period of time? No; it stayed level. But look at the bonuses--and that is just the bonuses. I am not even talking about their salaries. These are bonuses. Well, I dwell on this and point this out because I think it points to a larger issue. In my view, a big reason for the financial collapse of 2008 is that things got out of balance and they got out of whack. As Glass-Steagall was repealed--and I might say this forthrightly--there were eight Senators on this floor who voted against the repeal of Glass-Steagall. I am proud to say I was one of them. I remember at that time saying: Wait a minute, there is a reason in the 1930s, under President Roosevelt, we did not want to have this happening again. So we said to commercial banks: If you want to be a bank and take bank deposits, fine; you can be a bank. But you cannot do insurance and you cannot do investments. You cannot do swaps and derivatives and all that kind of stuff. You are a commercial bank, and for that we give you FDIC protection. We also give you Federal Reserve protection. We said to insurance companies: If you want to be insurance companies, fine; but you cannot be a bank. We said to investment houses: If you want to take money in to invest, fine; that is your deal. But you cannot take deposits. You are not a depository bank, and you do not get the protections of the FDIC and the Federal Reserve. Well, in 1999, this Congress repealed that, and allowed them all to come together. I said at the time--and the record will show I said it-- I hope it does not happen. I hope all these smart people know what they are doing, but I do not trust them. I do not trust them because we are going to start having a lot of funny games playing. In the last 10 years, we saw the games they played. Well, after Glass-Steagall was repealed, the special interests attacked the very idea of government regulation. The SEC and other watchdog agencies failed to regulate and Wall Street stepped into the void. And they just drove our economy off a cliff, and ordinary, hard- working Americans had to pick up the tab. That is why we need this serious financial reform. As others have noted--and I say again--financial crises in this country should not be looked upon as floods that just come every 10 years or some kind of natural disaster that we sort of accept; that every so often we are going to have a flood or have a hurricane hit the coast or we are going to have a drought someplace. Financial collapses that happened in the past were not preordained kinds of happenings to our system. They happen because we let people run amok with large sums of money and gamble it. So, again, to protect ourselves against floods, what do we do? Well, we do a lot of upland treatment. We build dams. We build levees. We do all kinds of things to protect ourselves from these things. Well, there are some things we can do to protect ourselves from a financial collapse too. It is putting into place the kinds of oversight and transparency and regulations that allow our capitalist system to operate, but to operate within some bounds. I don't think anyone wants to return to the boom and bust cycle of unbridled capitalism that we had in the 19th century and the early part of the 20th century. I don't think anybody wants to go back to those days. Yes, we believe in a capitalist system where people can take their savings and invest it, make their money work for them, loan it out to other people so they can start businesses. That is the capitalist model. But should we let people take our money we have saved up for pensions, for example, or other kinds of investments, and go to Las Vegas? I don't think so. We want some rules and regulations so they can make true investments, so those investments can be used to start businesses, to invest in economic growth on a broad basis, but not to be used for gross speculation on Wall Street. That is why we need this financial reform bill we are trying to get to the floor. It will guard against future massive meltdowns that always cost us, not only money, but also in ruined lives. Strong financial reform must include regulations of the derivatives market. This is something I have been involved in for a long time on the Agriculture Committee, for all the years I have served, working with the Commodities Futures Trading Commission. I am pleased to say the legislation we are trying to bring to the floor includes the provisions that passed out of the Agriculture Committee under the leadership of our chairman, Senator Lincoln. Derivatives contracts have been at the heart of Wall Street's financial manipulation. From December of 2000 to June of 2008, the height of the Wall Street boom, the notional value of over-the-counter derivatives grew from $95 billion in 2000 to $683 trillion in 2008. I wish to make it clear. People say, Are you against all derivatives? I say, No. There are basic derivatives that can be helpful for our economy and for individuals, from businesses to farmers. Farmers use derivatives. Businesses use them to protect against currency fluctuations. That is fine. These are basic derivatives. The PRESIDING OFFICER. The Senator's time has expired. Mr. HARKIN. Mr. President, since I see no one else on the floor, I ask unanimous consent for another 7 minutes. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. HARKIN. Thank you. As I said, I have no objection to basic derivatives. It is when these derivatives get out of hand; it is when you have a derivative on a derivative on a derivative and on and on and on. That is what is happening in the derivatives markets. [[Page 6470]] So, despite the usefulness of derivatives in certain cases, it got out of hand. The bill we reported out of the Agriculture Committee will bring all of these transactions into the light of day. No more behind the scenes; derivatives would be reported to regulators in real time. It would bring the vast majority of these into clearinghouses and exchanges. It would help to reduce the concentration of risk and bolster public transparency. The legislation we are trying to bring to the floor that the Republicans keep blocking gets to the heart of the too-big-to-fail problem by prohibiting swaps entities from also being commercial banks. A commercial bank backed by the government or the FDIC should not be able to use that government backing to support high- stakes gambling. That only magnifies the level of risk in the banking system. It is unfair to taxpayers, bank customers, and community banks. I met in my office yesterday with some of the community banks in Iowa. They don't deal in swaps and derivatives. They take deposits, they loan them out for business starts, people who need a loan for different things. They are not dealing in swaps and derivatives, so why should we allow these big banks on Wall Street to do it? We also need a strong, independent financial consumer protection agency to guard against rip-offs and abuses in mortgages, credit cards, payday loans, and other financial profits to protect consumers. It is sorely needed. We also need to slam the door on too-big-to-fail financial institutions. No more AIGs or Citigroups. When companies make bets and lose, there ought to be a process for liquidating those companies, period. To further improve the bill, I have cosponsored legislation introduced by Senator Cantwell that would recreate the Great Depression-era regulation that prohibited the mixing of commercial banks, investment banks, and insurance companies. We ought to return to the Glass-Steagall law that worked well for so many years. Senator Cantwell has been a strong leader for this, and I thank her. I am also a cosponsor of the SAFE Banking Act offered by Senators Brown and Kaufman that would limit the size of the largest institutions. No more too big to fail. In addition, I support legislation by Senators Merkley and Levin that blocks institutions that are insured by the FDIC from proprietary trading with their own funds. We can't have high-risk gambling with money that is backed by the taxpayers of this country. Mr. President, America has been through financial collapses and deep economic downturns before. In charting the way forward, we can learn important lessons from the financial crash of 1929 that led to the Great Depression. FDR answered that crisis by implementing tough new regulations to stabilize the financial system, rein in risk taking and recklessness on Wall Street, and made the economy work for ordinary Americans. Because of those reforms made in the 1930s, we had decades of shared economic prosperity unprecedented in our Nation's history. Well, what we did in the 1930s needs to be our model. Not exactly the same--we have a different system--but it needs to be our model as we shape today's financial reform legislation. Financial reform legislation ought to separate these big entities out. We can't have too big to fail. We need to have transparency. We need to stop banks from engaging in swaps and derivatives if they are backed by the FDIC. These amendments--the Cantwell amendment, the Merkley-Levin amendment, the Brown-Kaufman amendment, and others I happen to be supporting--again, we can't offer them unless we get the bill to the floor. I don't know if they will win, but we ought to have the right to offer those amendments. I wish to thank Senator Dodd. He has been at the forefront of this fight for a long time, trying to bring this bill to the floor, to crack down on abusive speculation, to put in strong regulation, to have a consumer protection agency to protect our consumers. Senator Dodd has led this effort. I know where his heart is. I know how he is trying to make certain this system works for everybody, not just Wall Street. I don't want to be on a roll of bashing Wall Street all the time. I know that is a popular sport. Wall Street has a role to play in our society. They surely do. But, let's get Wall Street back to what Wall Street does best: accumulating capital and investing that capital in the economic growth of America. That is what the Dodd bill does. It gets us back to that system. It straightens things out and helps to protect us from these kinds of collapses in the future. I do not understand why the Republicans will not let this bill come to the floor. I don't mind if they want to vote against it. If they want to be on the side of keeping Wall Street speculating with taxpayers' dollars and letting these banks get too big to fail, that is their right, but why not let the bill come to the floor so we can debate it and amend it. If they want to change it, let them offer amendments, but we can't do that unless we bring the bill to the floor. I hope the American people understand this. I hope they understand that the Republican side of the aisle will not let this bill even come to the floor for debate. The PRESIDING OFFICER. The Senator has used his 7 minutes. Mr. HARKIN. I ask unanimous consent for 1 more minute. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. HARKIN. I thank the Senator from Connecticut for all the hard work he has put into this, he and his staff and the committee. It is a good bill. Again, we may not agree on every detail. There are some things I would like to see in it; maybe they will, maybe they won't. It is a good bill, a solid bill, and it will help us get control back again over Wall Street and all the wild speculations and it will help our country grow as it should, not in one small area, but broadly-based economic growth in our country. I thank Senator Dodd for his great leadership on this. I hope my Republican friends will understand that we have to get this bill up on the floor so we can protect the American people from these financial collapses that have happened over the last couple of years. Mr. President, I yield the floor. The PRESIDING OFFICER. The Senator from Connecticut. Mr. DODD. Mr. President, it is my understanding that the time of the Democratic side has expired, is that correct? The PRESIDING OFFICER. That is correct. Mr. DODD. I don't have a Republican colleague to ask unanimous consent to speak for a couple of minutes. I ask unanimous consent to be allowed to speak for 5 minutes. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. DODD. I thank the Chair. Let me first thank my friend from Iowa for his tremendous work on so many issues but also his deep interest in this subject matter. Obviously, the subject of exotic instruments--derivatives and the like--is a critical issue for all of the country but particularly in the farm State of Iowa where he has played a considerable role. All of us have a higher degree of interest in one subject matter or the other, but I am grateful to him for his longstanding interest. His is not an interest that emerged with the problems that spiked 18 months ago, but go back 8 years. In fact, he has written legislation and held hearings in his former capacity as chairman of the Agriculture Committee, so he knows the subject well. I appreciate his kind comments about the effort of the Banking Committee and the effort of Blanche Lincoln, our colleague from Arkansas, and the Agriculture Committee she now chairs and where she has been working on a very important piece of our efforts here. There are only a few minutes left before this vote will occur again. As are most people, I am somewhat mystified. I have heard my colleagues over the last day or so raise issues, concerns they have with the bill. It is no great shock that would be the case. That is normally what happens with a bill of [[Page 6471]] this size and obviously this complexity, covering as much of an area as we do across the economic spectrum of our country. I am somewhat mystified. I understand having objections to parts of the bill and wanting to be heard and wanting to have an opportunity to change the bill, either add to it or subtract from it; that is how we normally engage in the legislative process, but I can't very well help on that front if I am not allowed to get to the bill. This morning, the major newspapers of the country of course reported about the hearings yesterday here in Washington. I don't need to say much more about it. Again, the headlines: Looking into mortgage deals and the like have reached a certain crescendo. Most people are probably aware of those things. There was another headline, however, that wasn't at the top of the newspaper but underneath it. In this case, the local paper here in Washington had the headline ``Greek debt downgraded to junk.'' It says, ``European crisis deepens. Dow falls 2 percent on global sell-off.'' The reason I mention that here is that obviously the Goldman Sachs story was the one that got the attention, but there are problems emerging around the world that affect us as well. Our legislation doesn't write international rules, but the United States has led, historically, in financial services. If we are unable to get a bill passed to change the rules, give us a greater sense of fairness and transparency and protection, then we are missing an opportunity to correct what over the last number of years helped create some of the problems we are now facing and then to lead globally so that other nations will harmonize their rules with ours so that the problems that exist in a Shanghai or a Greece can't affect us here. We have a lot of work to do. I expect that if we get on this bill, we are going to be working for weeks engaging in several amendments and ideas to try to strengthen this bill--make it better, if you will. I am one of the authors of the bill. I don't claim this is a perfect piece of legislation. I have never seen one of those in my 30 years here. Normally, you bring out a bill and do the best you can. Obviously, others have different points of view. It would be presumptuous of Senator Shelby and me to suggest that we can come to some great agreement here and tell everybody else that, whether you like it or not, this is the deal. That is not what we get elected to do here. I have colleagues on my side who are sympathetic to what I have tried to do, but they want to change this bill. There is one amendment by my colleague from Vermont, and I think it has 33 cosponsors, two-thirds of whom are on that side of the aisle and a third are over on this side. They ought to have the right to offer an amendment to change this bill, which is what they want to do. I am fully prepared as a manager of this product to allow that amendment process to go forward, engage in that debate. But I cannot get there if you won't even allow me to bring up the bill. So the incongruity of complaining about the product and simultaneously saying: I am not going to let you vote on it, I don't know how you explain that to people in this country. At the end of the day, if you want to vote against the bill, do so. If you want to vote for or against amendments, do it. I am not suggesting that anything I am offering at this juncture would preclude you from that conclusion, but you cannot get to that conclusion unless we have the product in front of us. All we have had is a series of speeches over 3 days, denying us the necessary votes in order to move effectively. In effect, a filibuster is ongoing here. The only way to break that is by getting 60 votes that will allow us to move to the product. Fifty-seven of us have said: Let's get there. I have said this before, and I will say it again. At this juncture, this ought not to be a partisan issue. It may get partisan over some of the ideas. I am fully aware that there are a number of my colleagues here who believe we ought to get to this debate. We ought to get there sooner rather than later. That is not to suggest they agree with the product by taking that position. In fact, I suspect they don't agree with at least some parts of this product. I think they understand the importance of getting to a point where we can try to change this in some way. I will conclude. I make that appeal once more. We have been through this twice already. I hate coming and getting into a partisan debate about this. We should not do this. It doesn't reflect well on this institution on a matter of this import not to allow this to go forward. I yield the floor, and I yield back all time. The PRESIDING OFFICER. All time is yielded back. The clerk will report the motion to invoke cloture. The assistant legislative clerk read as follows: Cloture Motion We, the undersigned Senators, in accordance with the provisions of rule XXII of the Standing Rules of the Senate, hereby move to bring to a close debate on the motion to proceed to Calendar No. 349, S. 3217, the Restoring American Financial Stability Act of 2010. Christopher J. Dodd, Blanche L. Lincoln, Jeff Bingaman, Mark Begich, Charles E. Schumer, Arlen Specter, Robert Menendez, Benjamin L. Cardin, Daniel K. Inouye, Jack Reed, Edward E. Kaufman, Byron L. Dorgan, Richard J. Durbin, Tom Udall, John F. Kerry, Sheldon Whitehouse, Robert P. Casey, Jr. The PRESIDING OFFICER. By unanimous consent, the mandatory quorum call has been waived. The question is, Is it the sense of the Senate that debate on the motion to proceed to S. 3217, the Restoring American Financial Stability Act of 2010, shall be brought to a close? The yeas and nays are mandatory under the rule. The clerk will call the roll. The legislative clerk called the roll. Mr. DURBIN. I announce that the Senator from West Virginia (Mr. Byrd), is necessarily absent. Mr. KYL. The following Senator is necessarily absent: the Senator from Utah (Mr. Bennett). The PRESIDING OFFICER (Mrs. Hagan). Are there any other Senators in the Chamber desiring to vote? The yeas and nays resulted--yeas 56, nays 42, as follows: [Rollcall Vote No. 127 Leg.] YEAS--56 Akaka Baucus Bayh Begich Bennet Bingaman Boxer Brown (OH) Burris Cantwell Cardin Carper Casey Conrad Dodd Dorgan Durbin Feingold Feinstein Franken Gillibrand Hagan Harkin Inouye Johnson Kaufman Kerry Klobuchar Kohl Landrieu Lautenberg Leahy Levin Lieberman Lincoln McCaskill Menendez Merkley Mikulski Murray Nelson (FL) Pryor Reed Rockefeller Sanders Schumer Shaheen Specter Stabenow Tester Udall (CO) Udall (NM) Warner Webb Whitehouse Wyden NAYS--42 Alexander Barrasso Bond Brown (MA) Brownback Bunning Burr Chambliss Coburn Cochran Collins Corker Cornyn Crapo DeMint Ensign Enzi Graham Grassley Gregg Hatch Hutchison Inhofe Isakson Johanns Kyl LeMieux Lugar McCain McConnell Murkowski Nelson (NE) Reid Risch Roberts Sessions Shelby Snowe Thune Vitter Voinovich Wicker NOT VOTING--2 Bennett Byrd The PRESIDING OFFICER. On this vote, the yeas are 56, the nays are 42. Three-fifths of the Senators duly chosen and sworn not having voted in the affirmative, the motion is rejected. The majority leader. Mr. REID. Madam President, I enter a motion to reconsider the vote by which cloture was not invoked on the motion to proceed. The PRESIDING OFFICER. The motion is entered. The Senator from New Jersey. Mr. LAUTENBERG. Madam President, I think it has been said before, but here we go again. What we have just seen tells us what the American people ought to know. There are fundamental questions being asked of Senators this week, principal of those: Whose side are you on? Whom do you work for? [[Page 6472]] On Monday, Tuesday, and yet again today we got an answer. On the other side of the aisle they made it clear. They stand with the big banks. They do not stand with the infrastructure of everyday people who make this country the great place we have become. They do not stand for opportunities such as the ones that allowed Americans to come together after World War II to get an education, get jobs, become the greatest generation that built our Nation into the greatest on Earth. Instead, our friends across the aisle stand with Wall Street lobbyists who demand that we do not take up this bill. What an outrage. They stand for maintaining a banking system that denies people and businesses the funds they need and sells people mortgages they cannot afford, while lining executives' pockets with billions in compensation. The picture is quite clear. It is very obvious as to what has taken place here. After hearing the demands of the Wall Street lobbyists, the other side of the aisle systematically marches down here and votes no in lockstep, not once, not twice but three times. There is no one bold enough to say: Yes, we ought to do something about this situation that hurt our economy so; that destroyed jobs, lives, and homes. What the Republicans voted against three times this week was simply to start debating the Wall Street reform bill, to make it an even fairer system. The banking lobbyists may not want us to take up this bill, but everyday people do want reform. They do want change. They do want to see capital flowing into small businesses so they can get on with work and planning their families' and their children's future. On behalf of the everyday people, whose side we are on, we will keep voting to take up this bill until the other side understands that is what the American people want and gives them a break. Some say they voted no because they wanted more time to make a deal. The reality is, the American people are fed up with backroom deals that leave them out in the cold. We have carefully listened to testimony that has been developed these days. We are shocked to find out how they think hiding the deals was OK, but they didn't want it to be known to the public. They want us to roll up our sleeves, talk aloud about this bill, tell the public the truth, vote on amendments, and pass a strong Wall Street reform bill. That is what the average person in this country wants. Why don't the banking lobbyists like our bill? There are several reasons: Because it puts an end to giant, taxpayer-funded bailouts by creating a safe, responsible way to liquidate failing firms. They don't like it because it will end the era of too big to fail and stop protecting irresponsible executives who mismanaged their companies and because it will help prevent reckless gambling with investors' money by starting a new consumer protection watchdog. They don't want those things to happen. They don't like it because it moves the derivatives markets from the shadows to the sunlight so these transactions are transparent, so people understand what is going on. Right now across our country, ordinary Americans are facing real tough problems. Many struggle to find a job, meet their monthly bills. Many are struggling to pay for a college education. Far too many of our people are unable to keep their homes from falling into foreclosure. That is why we have been working so hard to reform our financial system, to make big banks accountable, and shine the light on Wall Street--but not on the other side of the aisle. They literally have taken their marching orders directly from Wall Street. We know key Republicans met with Wall Street executives and political consultants about how to attack this bill, about not permitting us to exercise the responsibility we have. But it is not working because we are on the side of everyday people, the people who sent us here. They sent us here with a plea: Help us, help us with our lives, help us take care of our families, help us educate our kids, help us protect ourselves when health care is required. The American people have made it clear they are not fooled by the delaying tactics and secret deals. They want Wall Street reformed. In the last decade, we saw how much power the financial sector has over our entire economy. Irresponsible actions by big banks led to the subprime bubble that led homes to appreciate far beyond their worth and led millions of Americans to take on loans for which they should never have qualified. The results were catastrophic and the collateral damage immense. Many of these people were seduced into taking loans they were advised they could handle. They didn't use good judgment, but they paid a heck of a price for it. Eight million jobs were lost, retirement accounts shriveled, and small businesses shut their doors. The ethical failures of Wall Street almost brought our economy to the brink of a second Great Depression. As a former CEO of a major company, I understand the need for a strong financial sector. But I also come to work every day reminded of the millions of people who have lost their jobs through no fault of their own. Make no mistake, Wall Street reform, Wall Street change is absolutely necessary, and that is why we are going to keep moving forward on this critical bill. We have to continue to take our message to the American people and let the other people, on the other side of the aisle, say: No, no, no. Those on the other side of the aisle may try to disrupt. They may try to distort. They may try to destruct. But we are going to continue the fight for ordinary Americans, for people who wake every morning and play by the rules and work hard. I repeat something I said a moment ago; that is, how can we ignore supporting the infrastructure in our country, the people who make the things happen every day, who are there to do whatever the jobs are that are necessary, and reserve the best and the most for those few at the top? We can't do it that way. We have an infrastructure that is even far more precious than our fiscal infrastructure; that is, our human infrastructure. We are going to continue to tell the American people what is happening so we can make changes necessary to avoid the catastrophe we have had over this last couple years. Thank goodness that through the leadership of President Obama and the administration and the work of colleagues we are making progress, but the progress is not rapid enough nor broad enough. We are going to insist on moving down the road of progress. We are going to insist on doing what is right for our country and for our families and for our future. I hope somebody, someone on the other side of the political aisle, will say: Listen, we are not getting anywhere by just walking down the steps together and saying no and not permitting change to take place that is critical for our society and our world. I yield the floor. The PRESIDING OFFICER. The Senator from North Dakota. Mr. DORGAN. Madam President, first, I wish to make a couple comments about what has just transpired on the floor of the Senate. For the third time, we had a vote, not on anything relating to the ingredients of a bill dealing with financial reform or Wall Street reform, just on the question of the motion to proceed to debate the bill. Just the motion to proceed, yes or no, shall we proceed to bring the bill to the floor and debate it? For the third day in a row, all the members of the minority voted, no, we will not even allow the Senate to proceed to debate Wall Street reform. It is unbelievable to me. In the shadow of yesterday's hearings, with one of the major investment banks of this country and the disclosure of e-mails deep from the bowels of that bank that clearly suggested they were peddling securities to clients and customers that they knew to be bad securities and also betting against the position of their clients, betting against a recovery for our country--in the shadow of all that, how on Earth can the minority decide we should not even move to debate Wall Street reform? [[Page 6473]] I find it interesting we have people saying government cannot solve this. There is too much government, too much this, too much that. When we had suffered a Great Depression in this country, it was the Federal Government that took action to put in place some things to try to protect our country's economy and did so for about 60 or 70 years. They said: We are not going to allow banks and FDIC-insured banks and investment banks and securities dealers and others to commingle under one corporation. We are not going to take banks and put risky enterprises fused to those banks. It doesn't make any sense. So legislation was passed to protect this country. About 10 years ago, there were a bunch of smart people who decided that stuff is old-fashioned. We have to compete with the Europeans, let's allow holding companies to be created, and we will bring banks and investment banks and real estate and all these things together into one big holding company, under one roof. It will be fine. It turns out it was not fine. At the same time this was happening, big holding companies now being created in which you brought risky things in the middle of banking enterprises whose very perception of safety and soundness is critical to their future--at the very same time that was happening, we had a bunch of people come to town who were supposed to be regulators, the referees, who said: You know what. We are going to be willfully blind. We are not going to regulate. We don't even like government. So do what you want. We will not watch, we will not look. At the same time that was going on, Alan Greenspan, at the Federal Reserve Board, decided we will let all these institutions behave in their own self-interest, and their self-interest will be what governs what will be the right thing. He now says that was a huge mistake. Yes, I guess so, probably a $15 trillion mistake. But the fact is, those who were supposed to be regulating and decided not to regulate, those who were supposed to be the referees to call the fouls, wear the striped shirts, blow the whistle, call the fouls when the free market system was being abused, were not around. They were out to lunch someplace for years and years and years. My colleagues who say, well, we do not want government to do this-- look, I do not know who else is going to set the rules here to decide we are not going to let this happen again. Does it take any amount of intelligence to understand a mortgage company advertising to people in the following way: Do you have no credit? Slow credit? No pay? Bankrupt? Come to us. We would like to give you a loan. On the floor of the Senate, I have shown solicitation after solicitation by companies that said: If you have got bad credit, slow pay, no pay, come to us. We would like to give you a home loan. It does not take a lot of intelligence to understand that does not work. And by the way, they also said: If you have got bad credit, come to us. In fact, we will not even ask you what your income is. We will give you a no-document loan. You do not have to document your income. It is called a no doc. By the way, we will give you a liar's loan. They do not call it that, but a no-doc is a liar's loan. It does not take a genius to understand that is not working very well. But why was everyone anxious to do all of that? Because you could wrap it into a big fat security. Then you could sell it to an investment bank. They could sell it to a hedge fund. They could sell it back again. And, meanwhile, whoever made the original loan got rid of the liability once they sold it upstream. They got the rating agencies to rate these things as triple A. Incidentally, conveniently, the rating agencies are paid by the very companies whose securities they rate. Sounds like trouble to me. So all of these things were happening, and everybody understands that is not going to hold up. Ultimately all of this is going to collapse. It is a house of cards that is being built. So how do you put this back together? Well, Senator Dodd and the Banking Committee put a bill together. That is the bill we are trying to get to the floor of the Senate. I think it is a pretty good bill. It tightens things up. It gives authorities to regulators they are going to need and will try to prevent this from ever happening again. This was not some Hurricane Katrina that came ashore and flattened a bunch of buildings. This was not a volcano erupting. This was not a tornado that came sweeping through and destroyed the town. This was an economic catastrophe that took away $15 trillion from this country. It devastated a lot of families, put a lot of people out of work, a lot of people out of their homes, and in the meantime we see what has happened. And while there are substantial amounts of misery around this country for families and people who have still not recovered from the devastation of this financial near collapse, the folks at the top are now making record profits. Yes, the investment bank that testified yesterday, record profits, big bonuses. I described earlier bonuses of $142 billion were projected on Wall Street. I talked about in the year 2008, at a point when this all began to collapse, we had something like $36 billion in losses just on Wall Street. And those firms that had $36 billion of losses paid $17 billion in bonuses to their employees. I have an MBA and went to business school. There is not any book that teaches that in business school: Lose a ton of money and get big bonuses. Yet that is what has been happening. It is a carnival of greed at the top. By the way, the instruments they created with these mortgage securities and others, securitizing almost anything they could get their hands on, with exotic titles such as credit default swaps--credit default swaps. We have always known about derivatives. I wrote an article which was the cover story for the ``Washington Monthly'' magazine in 1994. That is almost 16 years ago. My cover story for that magazine was titled ``Very Risky Business.'' It was about the danger that derivatives posed to the banking system. That is almost 16 years ago now. I made the same point in the year 1999 when Glass-Steagall was repealed, and I opposed it. Very risky business. So they create synthetic credit default swaps. Synthetic would be the same as calling it naked credit default swaps. That means, instead of having something at either end of a contract, there is nothing. It is two people making a wager or a bet that something else will happen. I happen to think there ought not be what is called a naked credit default swap. I think they ought to be outlawed. That is gambling. That is not investing. That is betting. If you want to bet, there are plenty of places to bet in this country, starting with Las Vegas and Atlantic City. They have a business doing that. No one ought to show up on an airplane in Las Vegas or Atlantic City, however, with their depositors' money or with their clients' money and decide that is what they are going to wager on a craps table or a keno table. Yet that is exactly what has been happening with what are called naked credit default swaps. One study I have seen suggests that of the credit default swaps in England, and I suspect it would hold true here, 80 percent of them had no insurable value on the other side. I would not be allowed today, this afternoon, to decide I am going to buy an insurance policy on the house of the Presiding Officer in North Carolina. It would be illegal for me to say my interest today is to invest in fire insurance on the Presiding Officer's home, because I have no insurable interest in that home. And it might be that I would buy fire insurance, if I could, and walk around with a box of matches. That is a problem. Right? So I have no insurable interest. It would be against the law for me to buy fire insurance on the home of the Presiding Officer. That is not the case with respect to naked credit default swaps. You do not have to have an insurable interest in anything. You, with someone else, say [[Page 6474]] let's make a wager here on what is going to happen to this bond. There is an investment bank. Perhaps the investment bank will take part of that wager. They will certainly want to arrange it because they get great big fat fees. That is not investing in America. That is not making loans to small and medium-sized businesses. That is not investing in America's future and strength; that is gambling. And that is what we have come to. You cannot, in a country such as ours, expand our economy without two things: production and finance. There have been, over 200 years, times when production has the upper hand and when finance has the upper hand. We have been through a period here in the last couple of decades where the financing system of our country has the upper hand. We need a banking system, we need a financing system, with all of the levels of finance. Yes, FDIC-insured banks. Yes, investment banks, venture capital. We need all of those things. But we need to get back to the basics of the old-fashioned standard of what banking should and used to be; that is, taking deposits and then making loans. When you make a loan, you do what is called underwriting; that is, you sit across the desk from someone who needs a loan, and you look them in the eye and you evaluate: What is their income? What is their idea; their need; their property; and you decide, yes or no. There has been no underwriting on many of those loans that helped create this foundation of sand in this economy. There was no underwriting. Because if you could say to someone: You know what, we will give you a new home mortgage and you do not have to pay any interest, and you do not have to pay any principal, even, and you do not have to tell us what your income is--that is a no-doc liar's loan--we will do that for you. Why would someone do that? Because they are not going to have any risk. The minute they do it, they get it wrapped into a fat security and sell it to someone else. And because the rating agencies think all of these things are triple A, whoever else bought it thought it was a safe security, and then they sold it again and again and again. You passed the risk forward. This was a cesspool of greed with a lot of people making a lot of money and creating a structure that was destined to fall. The question is: Are we going to do something about that? Is somebody going to take some action to say that you cannot do that any more? That is what the Senator from Connecticut asks with a bill coming from the Banking Committee. The fact is, he brought that bill out of the Banking Committee, and not one Republican offered an amendment. Not one. They said, we are not going to participate. After they had had hearings for a year, and the Senator from Connecticut had negotiated with them for 5, 6 months, following all of that, they had a markup on a bill to write the bill, and the Republicans said, we are not going to participate. We will not offer any suggestions, no amendments. Then when the bill is now brought to the floor of the Senate, the Republicans say: Well, we were not part of it. Well, sure, they decided they did not want to be part of it, and that is why they were not part of it. That was an action they took. They say: Well, we believe this is a bailout bill. It is not a bailout bill. I will tell them what a bailout bill is. I voted against it. A bailout bill was when George W. Bush and his Treasury Secretary came to the Congress and said: I want you to pass a three-page bill in the next 3 days, putting up $700 billion to bail out America's biggest financial firms. Yes, that was a bailout bill. And most of those who called this a bailout bill voted for that. They know what a bailout is because they voted for it. I did not. But, nonetheless, this is not a bailout bill. This is a bill that finally begins to shut the door on activities that should never have been taking place. Is the bill perfect? No. Should it be changed? There are a number of areas where I think it will be changed once it gets to the floor. But you cannot even address those unless you get past the motion to proceed. What the minority is doing is saying, we do not intend to let you proceed at all. Well, how about deciding that we are going to do this together and we will get the best of what both political parties have to offer, get the best amendments that can be offered. I have suggested one; that is, naked credit default swaps. If you have no insurable interest, ban them. Mr. Pearlstein, who writes a column for the Washington Post, made a suggestion that makes a lot of sense to me. Why would you allow more securities in the form of credit default swaps to insure bonds? Why would you allow more of them than there are bonds to insure? Well, the answer is obvious, because that is gambling above that level. It is very much like about a year and a half ago when the price of oil, or almost 2 years ago, the price of oil went to $147 a barrel in day trading, and I made the point on the floor: There was 20 times more oil bought and sold each day than there was produced each day--an unbelievable orgy of speculation in the oil market. Nearly broke that market. Well, it finally came back down and the people who made the money on the upside also made money on the downside. But, you know, that is what has been happening in this country now for too long. The bill that should come to the floor of the Senate--and my hope is that perhaps the next vote will have a couple of folks on the other side who agree with us, let us bring a bill to the Senate, let us address these issues that caused this unbelievable avalanche of greed on Wall Street and elsewhere, and let us tighten the reins so this cannot happen again. Do we want to continue the practice? I showed yesterday on the floor of the Senate I think four examples of companies that are still advertising: Do you have bad credit? Come to us. We will give you a loan. Do you have no credit? Slow pay? Come to us, we will give you a loan. Okay. Are you bankrupt? Come to us, we will give you a loan. It is still going on. All of this is about securitizing everything and everybody making big fees and being paid big bonuses. There is a smarter way to do financing and banking in this country. We have watched it work for decades, and it has gotten far afield in the past decade or two. We need to pull it back in and say, that is not what our country is about. The free market system is the best allocator of goods and services that I am aware of, but it is not perfect. Sometimes there are fouls in the free market system. Sometimes people try to manipulate it and do so successfully. That is why you need a referee and that is why you need effective regulations that work. That is what the bill is about. Put together those effective regulations that work. Prevent this kind of economic collapse from happening again. This is not just some academic exercise. There are somewhere around 16 to 17 million people today in this country who woke up this morning and they are jobless and do not have any work. Some of them not only feel jobless, but they feel helpless and hopeless because they cannot find work. Some of them, by the way, have not only lost their jobs, they have lost their homes. This is a very deep recession we have been in, and it has caused unbelievable pain across this country. But not for everybody. Because once again, some of the largest financial institutions in this country are now showing record profits and paying record bonuses. The question is, are they doing that because they are making loans out there to businesses that are ready to recover and to expand? No. The answer is, unfortunately, no. Once again they are trading securities back and forth, exchanging fees, securitizing virtually everything. There is a much better way to do financing and banking in this country that will strengthen the future of this country. I want to get at the business of getting this bill to the floor, having the minority stop blocking us, and begin offering amendments so we can get the best of what both parties have to offer. It has been a long time since we have had that sort of thing happen on the floor of the Senate. I was hoping that if [[Page 6475]] there is one thing that might galvanize some bipartisanship in this body, it might be an understanding of the unbelievably excruciating pain the American people have felt as a result of the deepest recession since the Great Depression and perhaps an understanding that the American people demand that this Congress stand up and do something about it, to try to do the things that plug the holes and shut the gates and prevent this sort of thing from ever happening again. I guess that was too much to hope for, at least until now, on Wednesday. We will have an opportunity on Thursday and Friday, perhaps, and I hope perhaps we can get one or two people who agree with us to say: Yes, let's bring this to the floor, have it wide open for amendments, offer amendments, debate amendments, and do what is necessary for the people. I know the biggest financial institutions have some big disagreements with this bill, but I have some big disagreements with them. I think what has gone on is pretty unbelievable. They have a role to play in this country's future going ahead, but it is not a role I consider betting; it is a role I consider to be investing. If they want to continue to simply make wagers about America and about securities, that is not the financing system we have known and grown to believe is important for this country's future. I know there is a lot of disappointment after this last vote. My hope is there will be some who continue to think and rethink. Is this what my constituents want? Do they want me to decide to block even the opportunity to address these unbelievable gaping holes in our financing structure that allowed this country to be steered right into the ditch, the biggest economic wreck in 70 years? I think they would understand that is not what citizens and their constituents want for the future. I yield the floor and suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The assistant legislative clerk proceeded to call the roll. Mr. CARDIN. I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. CARDIN. Madam President, let me express to my colleagues how disappointed I am that we were unable to move forward with debate on Wall Street reform. People should know that what we recently voted on was a motion to proceed so a bill could be brought to the floor for debate. It did not speak to how that bill would be considered. It is open to amendment. Each Member of the Senate would have the opportunity to submit amendments for consideration. The bill Senator Dodd has brought out of his committee is a bill that establishes the types of reforms of Wall Street that are necessary, strict new regulations to stop Wall Street gambling so that we have a clear responsibility in the regulatory framework, so each of the financial institutions understands the clear roles which they must operate under and how those regulations will take place. The framework is based upon the size of the institution and the jurisdiction. The bill provides for adequate capital to prevent too big to fail. Our first goal is to avoid an institution from becoming so large, so vulnerable that its failure jeopardizes the economy. If we have a clear regulatory structure and the right capital rules and the right regulatory oversight, we have a much better chance of protecting the public's interest. That is why the strict new guidelines to stop Wall Street gambling are critically important, so that we don't run into that situation from the past. No more taxpayer bailouts. I hear that over and over again from my constituents. I agree. If an institution can't make it, it should fail. It should not be getting a government bailout. This bill makes it clear: no more government bailouts. It gives the regulators the authority they need to intervene a lot earlier and, if necessary, to restructure the institution or to break it apart or to have it merge or to close it down. It does not involve public funds. We will have a regulatory structure. Today, we see institutions that call themselves banks that are not regulated under banking statutes. We find insurance companies that claim they are insurance companies but they do things other than insurance and get themselves into trouble, and there is no regulatory consistency. That will change with the bill Senator Dodd has brought to the floor. This bill puts consumers in control of information in plain English, by a strong consumer provision within the bill. This is absolutely necessary. We know today that consumers and small businesses are being victimized under the current financial structure. Consumers have been victimized by predatory lending. Small businesses have been victimized by banks that won't make loans to small businesses. We need a strong consumer presence. Senator Dodd, in his bill, has brought out an independent consumer agency. What this bill provides is tough regulation, the framework in which we can intervene earlier in order to protect the economy, no government bailout, and a way in which consumer issues can be handled independently to protect consumers. Why not move forward? I am puzzled. I listened to my colleagues who oppose bringing this bill forward speak on the floor. I still don't understand their argument. If we move forward, amendments are in order. Amendments that are germane will have to be considered, will have to be voted on. Those are the rules of the Senate. For us to move the bill off the floor, we will need at least 60 votes. We know that. It should not take it. It should be an up-or-down vote. But we know from the prior record that the minority will insist upon 60 votes. We should be willing, on an important issue such as this, to vote up or down on amendments and final passage, but they will still have that right. So they are not jeopardizing the ability of the minority to block final consideration of the bill. What they are doing is blocking debate on the bill. The only thing I can think of is that they would prefer to work out their issues behind closed doors rather than on the floor of the Senate. The reason is kind of self-evident: If you are trying to weaken the regulatory framework and you don't want your fingerprints on it, it would be easier to do that outside of the spotlight of the Chamber. If you are trying to diminish the consumer protections in the bill, you certainly would rather have that in a bill brought to the floor than having to offer an amendment to change it. I can only presume from the delay that the opposition is not to negotiate in good faith; the opposition is to avoid the public knowing the changes they are seeking in the bill or to weaken this bill or, even worse, in the hopes that major sections of this bill will be deleted or struck. That is not what the process should be about. We need to move forward with Wall Street reform. We all know how our economy was brought to near the brink of destruction. We know how many millions of Americans have been adversely affected by what happened on Wall Street. People of Maryland, the people of the Nation are saying: Let's reform Wall Street. Let's make sure the reckless gambling doesn't take place in the future. Let's make sure too big to fail ends. Let's make sure those who are responsible are held accountable. The Dodd bill is a very good start to the process. Debating the issue is what we should be doing in the Senate. The delay is aimed at preventing the public from knowing what is going on or, even worse, weakening this bill or making sure it doesn't pass. I urge my colleagues to reconsider. Let's move forward and debate the Wall Street reform bill. Let's get on with the people's business first, our Nation's security first, our Nation's economic growth first. Let's bring this bill to the floor for immediate debate. I yield the floor and suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The assistant legislative clerk proceeded to call the roll. [[Page 6476]] ____________________