E PL UR UM IB N U U S Congressional Record United States th of America PROCEEDINGS AND DEBATES OF THE 111 CONGRESS, SECOND SESSION

Vol. 156 WASHINGTON, THURSDAY, JULY 15, 2010 No. 105 Senate The Senate met at 9:30 a.m. and was APPOINTMENT OF ACTING She has been the chaplain at the Ari- called to order by the Honorable PRESIDENT PRO TEMPORE zona State Legislature for over 10 KIRSTEN E. GILLIBRAND, a Senator from The PRESIDING OFFICER. The years through her nonprofit organiza- the State of New York. clerk will please read a communication tion called Leadership Challenge of Ar- to the Senate from the President pro izona. She also serves as the Arizona PRAYER tempore (Mr. INOUYE). area coordinator of the Daughters of The PRESIDING OFFICER. Today’s The assistant legislative clerk read Destiny Network, which is a women’s opening prayer will be offered by the the following letter: prison ministry based out of Colorado Springs. She travels throughout the Reverend Donna R. Kafer, Chaplain of U.S. SENATE, the Arizona State Legislature. PRESIDENT PRO TEMPORE, United States sharing her testimony The guest Chaplain offered the fol- Washington, DC, July 15, 2010. with incarcerated women, encouraging lowing prayer: To the Senate: them and sharing the freedom that is Let us pray. Under the provisions of rule I, paragraph 3, offered through the saving grace of Dear Holy and Righteous Father, we of the Standing Rules of the Senate, I hereby Jesus Christ. come before You this day with humble appoint the Honorable KIRSTEN E. Donna is an Arizona native. She and GILLIBRAND, a Senator from the State of New hearts, thoughtful minds, and a pro- her husband Ross, a firefighter para- York, to perform the duties of the Chair. medic for almost 20 years, live in the found understanding of Your majesty. DANIEL K. INOUYE, As the Senate body convenes today, I President pro tempore. Phoenix metropolitan area and have a daughter, Andrea Elizabeth. ask, Lord, that You give each and Mrs. GILLIBRAND thereupon as- every one of our Senators a unique It is our proud opportunity to help to sumed the chair as Acting President host her today and thank her for open- sense of their role in shaping this great pro tempore. Nation. We understand this mantle of ing the Senate with that beautiful leadership holds a great measure of re- f prayer. sponsibility, so we petition You, Fa- RESERVATION OF LEADER TIME f ther, to impart Your wisdom, peace, The ACTING PRESIDENT pro tem- RECOGNITION OF THE MAJORITY and comfort to each one of them. Pro- pore. Under the previous order, the LEADER vide them, Lord, with clarity of mind, leadership time is reserved. vision for the future, and a renewed The ACTING PRESIDENT pro tem- sense of purpose. Fill their hearts with f pore. The majority leader is recog- nized. compassion, discernment, focus, and RECOGNITION OF THE ACTING Mr. REID. Madam President, every the strength to meet the complex tasks MINORITY LEADER at hand. Father, give them complete Thursday Senator ENSIGN and I greet health: mentally, physically, emotion- The ACTING PRESIDENT pro tem- people from Nevada. We had a lot of ally, and spiritually. Embrace them pore. The Senator from Arizona. them today. I was late getting here. I with Your love that they may know f am sorry to have missed the prayer. But I will read the prayer and recog- Your boundless affection for them and WELCOMING THE GUEST nize what Senator KYL said about the Your indepth concern for their well- CHAPLAIN being. We thank You, Lord, for hearing guest Chaplain. She is welcome to the our petitions this day. Mr. KYL. Madam President, it is my Senate. It is in Your precious Name we pray. honor to help host our guest Chaplain f Amen. from Arizona, Rev. Donna Kafer. On be- half of Senator MCCAIN and myself, I SCHEDULE f thank the Senate Chaplain and all oth- Mr. REID. Madam President, fol- ers who have been so courteous to Rev- lowing leader remarks, the Senate will PLEDGE OF ALLEGIANCE erend Kafer on her visit to Washington. resume consideration of the conference The Honorable KIRSTEN E. She, I understand from the Chaplain, is report to accompany H.R. 4173, which is GILLIBRAND led the Pledge of Alle- the first legislative chaplain to provide the Wall Street reform legislation. At giance, as follows: the opening prayer in the Senate and about 11 a.m. this morning, the Senate I pledge allegiance to the Flag of the only the second woman to have done will proceed to a rollcall vote on the United States of America, and to the Repub- so. There are milestones achieved motion to invoke cloture on that con- lic for which it stands, one nation under God, today, and we appreciate her being ference report. If cloture is invoked, we indivisible, with liberty and justice for all. with us. would like to yield back some of the

∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor.

S5869

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VerDate Mar 15 2010 04:29 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00001 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.000 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5870 CONGRESSIONAL RECORD — SENATE July 15, 2010 postcloture debate time so we may urable goals and benchmarks, must be such as the mishandling of information complete action on the Wall Street re- developed. The administrator of the bu- that could have exposed ponzi schemes form legislation today. There could be reau will serve as vice-chairman of the much earlier. We also worked with our additional rollcall votes this afternoon. Financial Literacy and Education colleagues in the other Chamber to in- For the benefit of Senators, I have Commission to ensure meaningful par- clude an ombudsman that will be ap- spoken to the two Republican leaders. ticipation in Federal efforts intended pointed by and report to the investor We still have some hope of being able to help educate, protect, and empower advocate. to set up votes on the small business working families. I also worked to include in the legis- jobs bill. I hope we can do that; other- The conference report also addresses lation clarified authority for the SEC wise, we will have to proceed to a clo- investor literacy. A financial literacy to effectively require disclosures prior ture vote on that sometime next week. study must be conducted by the Securi- to the sale of financial products and f ties and Exchange Commission, SEC. services. Working families rely on The SEC will be required to develop an their mutual fund investments and MEASURE PLACED ON THE investor financial literacy strategy in- other financial products to pay for CALENDAR—S. 3588 tended to bring about positive behav- their children’s education, prepare for Mr. REID. Madam President, S. 3588 ioral change among investors. retirement, and be better able to attain is at the desk and due for a second Essential consumer and investor pro- other financial goals. This provision reading. tections for working families are in- will ensure that working families have The ACTING PRESIDENT pro tem- cluded in the conference report. A reg- the relevant and useful information pore. The clerk will read the bill for ulatory structure that will have a they need when they are making deci- the second time. greater emphasis on investor and con- sions that determine their financial fu- The assistant legislative clerk read sumer protections is established. Regu- ture. as follows: lators failed to protect consumers and Unfortunately, too many investors A bill (S. 3588) to limit the moratorium on that contributed significantly to the fi- do not know the difference between a certain permitting and drilling activities nancial crisis. Prospective homebuyers broker and an investment advisor. issued by the Secretary of the Interior, and were steered into mortgage products Even fewer are likely to know that for other purposes. that had risks and costs that they their broker has no obligation to act in Mr. REID. I object to any further could not understand or afford. The their best interest. Investment advi- proceedings with respect to this bill. Consumer Financial Protection Bureau sors currently have fiduciary obliga- The ACTING PRESIDENT pro tem- will be empowered to restrict preda- tions. However, brokers must only pore. Objection is heard. The bill will tory financial products and unfair busi- meet a suitability standard that fails be placed on the calendar. ness practices in order to prevent un- to sufficiently protect investors. f scrupulous financial services providers In a complicated financial market- from taking advantage of consumers. place, for investors in which revenue WALL STREET REFORM AND CON- I take great pride in my contribu- sharing agreements and commissions SUMER PROTECTION ACT—CON- tions to the investor protection portion can vary significantly for similar prod- FERENCE REPORT of the legislation. Section 915 will ucts, we must ensure that all invest- The ACTING PRESIDENT pro tem- strengthen the ability of the Securities ment professionals that offer personal- pore. Under the previous order, the and Exchange Commission to better ized investment advice have a fiduciary Senate will resume consideration of represent the interests of retail inves- duty imposed on them. the conference report to company H.R. tors by creating an investor advocate In 2005, I first introduced legislation 4173, which the clerk will report. within the SEC. The investor advocate that would have imposed a fiduciary The assistant legislative clerk read is tasked with assisting retail investors duty on brokers. I knew then that ac- as follows: to resolve significant problems with tion was necessary. I am proud that a Conference report to accompany H.R. 4173, the SEC or the self-regulatory organi- vital investor protection was also in- to provide for financial regulatory reform, to zation, SROs. The investor advocate’s cluded in the conference report that protect consumers and investors, to enhance mission includes identifying areas will ensure that a fiduciary duty is im- Federal understanding of insurance issues, to where investors would benefit from posed on brokers when giving personal- regulate the over-the-counter derivatives changes in Commission or SRO policies ized investment advice. This change is markets, and for other purposes. and problems that investors have with necessary because it will ensure that The ACTING PRESIDENT pro tem- financial service providers and invest- all financial professionals, whether pore. Under the previous order, the ment products. The investor advocate they are an investment advisor or a time until 11 a.m. shall be equally di- will recommend policy changes to the broker, have the same duty to act in vided and controlled by the Senator Commission and Congress on behalf of the best interests of their clients. In- from Connecticut, Mr. DODD, and the investors. vestors must be able to trust that their Senator from Alabama, Mr. SHELBY, or The investor advocate is precisely broker is acting in their best interest their designees, with the final 20 min- the kind of external check, with inde- and we must not allow brokers to push utes divided equally between the two pendent reporting lines and independ- higher commission products that may managers and the two leaders. ently determined compensation, that be inappropriate for a particular client. The Senator from Hawaii. cannot be provided within the current I appreciate all of the efforts of Chair- Mr. AKAKA. Madam President, I structure of the SEC. It is not that the man FRANK, Senator MENENDEZ, and strongly support the Dodd-Frank con- SEC does not advocate on behalf of in- Senator JOHNSON for all of their efforts ference report. I commend the chair- vestors, it is that it does not have a on this important new investor protec- man for all of his work to address so structure by which any meaningful tion. many issues vitally important to work- self-evaluation can be conducted. This This legislation also includes land- ing families. I thank my friend from would be an entirely new function. The mark consumer protections for remit- Connecticut for working closely with investor advocate would help to ensure tance transactions. Working families me to ensure this legislation will edu- that the interests of retail investors often send substantial portions of their cate, protect, and empower consumers are built into rulemaking proposals earnings to family members living and investors. from the outset and that agency prior- abroad. In Hawaii, many of my con- An Office of Financial Education ities reflect the issues confronting in- stituents remit money to their family within the Consumer Financial Protec- vestors. The investor advocate will act members living in the Philippines. tion Bureau is created by the legisla- as the chief ombudsman for retail in- Consumers can have serious problems tion. The office is tasked with devel- vestors and increase transparency and with their remittance transactions, oping and implementing initiatives to accountability at the SEC. The inves- such as being overcharged or not hav- educate and empower consumers. A tor advocate will be best equipped to ing their money reach the intended re- strategy to improve financial literacy act in response to feedback from inves- cipient. Remittances are not currently among consumers, that includes meas- tors and potentially avoid situations regulated under Federal law, and State

VerDate Mar 15 2010 04:29 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00002 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.001 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5871 laws provide inadequate consumer pro- balances or afford monthly fees. Poor tection Act and to vote for final pas- tections. credit histories may also limit their sage. The conference report modifies the ability to open accounts. Cultural dif- First, I congratulate Senator DODD Electronic Fund Transfer Act to estab- ferences or language barriers also for the leadership he has shown in mar- lish consumer protections for remit- present challenges that can hinder the shaling this legislation through some tances. It will require simple disclo- ability of consumers to access financial very difficult challenges in the Con- sures about the cost of sending remit- services. I also want to clarify that in gress, getting it through the Senate tances to be provided to the consumer section 1204, small dollar-value loans floor, working out the differences be- prior to and after the transaction. A and financial education and counseling tween the House and Senate, so we now complaint and error resolution process relating to conducting transactions in are on the verge of passing the most for remittance transactions would be and managing accounts are only exam- significant reform of Wall Street in established. I appreciate all of the ef- ples of, and not limitations on, eligible many years. forts of the chairman, Representative activities. This bill corrects a regulatory struc- GUTIERREZ, and the Department of the More must be done to promote prod- ture that today allows reckless gam- Treasury for working with me on this uct development, outreach, and finan- bling on Wall Street; that creates too important piece of the bill for immi- cial education opportunities intended big to fail, where government bailouts grant communities. to empower consumers. Title XII au- are necessary to keep companies afloat This legislation also includes essen- thorizes programs intended to assist because there are no other options tial economic empowerment opportuni- low and moderate-income individuals available to our regulators. It ends ties for working families. Title XII, Im- establish bank or credit union accounts reckless gambling on Wall Street. It proving Access to Mainstream Finan- and encourage greater use of main- ends the need for government bailouts cial Institutions, is the most important stream financial services. It will also of institutions that are too big to fail. economic empowerment provision in encourage the development of small, It provides for strong consumer protec- the bill. I appreciate the assistance affordable loans as an alternative to tion—protection for many forms of provided by my friend from Wisconsin, more costly payday loans. lending but, most importantly, the res- Senator KOHL in helping me put this There is a great need for working idential mortgage market. We saw in this financial crisis that title together. I appreciate the support families to have access to affordable even responsible consumers suffered at and contributions made to this title small loans. This legislation would en- the hands of aggressive lenders with provided Senators SCHUMER, BROWN, courage banks and credit unions to de- dubious intentions. This legislation MERKLEY, and MENENDEZ. velop consumer friendly payday loan will create a consumer bureau that will I grew up in a family that did not alternatives. Consumers who apply for end those types of practices, that will have a bank account. My parents kept these loans would be provided with fi- be on the side of the consumer, that is their money in a box divided into dif- nancial literacy and educational oppor- independent, so the consumer is rep- ferent sections so that money could be tunities. separated for various purposes. Church resented in the financial structure. The National Credit Union Adminis- I want to highlight some provisions donations were kept in one part. tration has provided assistance to de- that were included in this legislation I Money for clothes was kept in another velop these small consumer-friendly worked on with our colleagues to get and there was a portion of the box re- loans. Windward Community Credit included in the bill. I am very grateful served for food expenses. When there Union in Hawaii implemented a very to Senator DODD, the leadership of the was no longer any money in the food successful program for the U.S. Ma- Banking Committee, and our rep- section, we did not eat. Obviously, rines and other community members in resentatives in conference who were money in the box was not earning in- need of affordable short term credit. able to include provisions that I think terest. It was not secure. More working families need access to add to the importance of this bill. I know personally the challenges affordable small loans. This program The first provision I want to talk that are presented to families unable will encourage mainstream financial about is a provision I worked on with to save or borrow when they need small service providers to develop affordable Senator ENZI and Senator BROWNBACK loans to pay for unexpected expenses. small loan products. that will make permanent the feder- Unexpected medical expenses or a car I thank the Banking Committee staff ally insured deposit limits from $100,000 repair bill may require small loans to for all of their extraordinary work, in- to $250,000. We did that recently in help working families overcome these cluding Levon Bagramian, Julie Chon, order to encourage more deposits, to obstacles. Brian Filipowich, Amy Friend, Cath- help our economy, to provide capital Mainstream financial institutions erine Galicia, Lynsey Graham Rea, for businesses. This limit included in are a vital component to economic em- Matthew Green, Marc Jarsulic, Mark this bill is now made permanent at powerment. Unbanked or underbanked Jickling, Deborah Katz, Jonathan Mil- $250,000. families need access to credit unions ler, Misha Mintz-Roth, Dean Insured deposits have been the stabi- and banks and they need to be able to Shahinian, Ed Silverman, and Charles lizing force for our Nation’s banking borrow on affordable terms. Banks and Yi. system for the past 75 years. They pro- credit unions provide alternatives to I also express my appreciation for all mote public confidence in our banking high-cost and often predatory fringe fi- of the work done by the legislative as- system and prevent bank runs. They nancial service providers such as check sistants of members of the Committee, are particularly important to commu- cashers and payday lenders. Unfortu- including Laura Swanson, Kara Stein, nity banks. I know many of us talk nately, approximately one in four fam- Jonah Crane, Ellen Chube, Michael about what we can do to help our small ilies are unbanked or underbanked. Passante, Lee Drutman, Graham businesses, how can we free up more Many of the unbanked and under- Steele, Alison O’Donnell, Hilary Swab, credit to get small businesses the loans banked are low and moderate-income Harry Stein, Karolina Arias, Nathan they need in order to create the jobs families that cannot afford to have Steinwald, Andy Green, Brian Appel, that are needed for our economy. We their earnings diminished by reliance and Matt Pippin. all know community banks are the on these high-cost and often predatory In conclusion, this bill will improve most stable source of funds for invest- financial services. Unbanked families the lives of working families in our ments in our communities and small are unable to save securely for edu- country because it will educate, pro- businesses. cation expenses, a down payment on a tect, and empower consumers and in- Community banks rely more on in- first home, or other future financial vestors. sured deposits than large banks. needs. Underbanked consumers rely on The ACTING PRESIDENT pro tem- Madam President, 85 percent to 90 per- nontraditional forms of credit that pore. The Senator from Maryland. cent of the funds community banks often have extraordinarily high inter- Mr. CARDIN. Madam President, I have are included in insured deposits. est rates. Regular checking accounts take this time to urge my colleagues to So this amendment that will make per- may be too expensive for some con- vote for cloture on the Dodd-Frank manent the $250,000 limit will help pro- sumers unable to maintain minimum Wall Street Reform and Consumer Pro- vide a more steady source of funds for

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00003 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.002 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5872 CONGRESSIONAL RECORD — SENATE July 15, 2010 our community banks which will allow cluded in this bill—will require public the so-called shadow banking system, them to be able to invest in our com- disclosure of those payments. which evolved in large part simply to munities. Why is that so important? And why avoid regulation. Another provision that is included in was it included in the final conference Decreased regulation led to irrespon- this conference report is one I worked report? First, transparency encourages sible behavior by financiers, investors, on with my colleague from Maryland, and provides for more stable govern- lenders, and consumers. Collectively, Senator MIKULSKI, dealing with the en- ments. We rely on these energy sources we failed to mitigate risk and we ig- hanced supervision for nonbank finan- or mineral supplies in countries that nored established principles of fi- cial companies. What we are talking are of questionable stability. nance—prudence, solvency, and ac- about are mutual funds and their ad- If this disclosure will help make countability. We can shift risk, but we visers, to make sure they are not inad- those countries more stable, it provides cannot make it magically disappear. vertently subjected to unworkable security for the United States in their Bubbles do burst eventually. standards. Here we are talking about supply source, whether it is an energy Everyone played a part in the crisis. promoting funds necessary for venture or mineral supply source. So this Together, we suffer the consequences. capital and equity investments in our amendment that is included in the con- No man is an island; we are all con- communities, to make sure there is a ference report will help with U.S. en- nected. difference between the type of activi- ergy security. Risky mortgage lending—practices ties of mutual fund operators who rely Secondly, investors have a right to including no-doc or stated income primarily on risk investment and those know. If you are going to invest in an loans—no down payments, and that are primarily involved in insured oil company, you have a right to know subprime lending led to unprecedented deposits. I appreciate the conference where they are doing business, where foreclosures. committee clarifying that provision in they are making payments. I would Consumers securing mortgages be- the conference report, which Senator think this is information that may af- yond their means and horrible preda- MIKULSKI and I encouraged them to do. fect your decision as to whether you tory lending practices permeated our Another provision I want to talk want to take this risk in investing in culture. about very briefly is one I worked on that company. So this amendment pro- Even responsible consumers suffered with Senator GRASSLEY dealing with vides greater disclosure for investors to at the hands of aggressive lenders with whistleblower protections at nation- be able to make intelligent decisions as dubious intentions. ally recognized statistical rating orga- to whether to invest in an oil or gas or The mortgage lending system was se- nizations, NRSROs as they are known. mineral company. riously flawed. America got hit by a But I think most people in our country Third, as we know, with the lack of tidal wave of foreclosures. Declining know them as credit rating agencies. transparency, the payments become a home values affect everyone in the These are companies such as Moody’s source of corruption for government of- community. and Standard & Poor’s. There are about ficials in many of these resource- And problems in mortgage lending 10 in our country that are supposed to wealthy countries. It is interesting; it became exacerbated when these bad do independent credit ratings for secu- is known as the ‘‘resource curse,’’ not mortgages were packaged into securi- rities. the ‘‘resource blessing’’ in many coun- ties and sliced and diced and sold to in- As I am sure many people are now tries around the world. It is interesting vestors with AAA credit ratings. aware, they played a significant role in that some of our most wealthy mineral Careful underwriting went out the the unrealistic confidence in securities countries are the poorest countries as window because the loan originators during our recent economic downturn. far as their people in the world. The sold the notes as fast as they could We want to make sure our credit rat- citizens of these countries are entitled write them. ing agencies, in fact, carry out the re- to have their mineral wealth be used to The bill the Senate is considering sponsibilities they are supposed to elevate their personal status. By giving goes a long way to restore the order we carry out as independent evaluators. the citizens the information about how need in the financial markets, improve But competition, pressure, and inher- payments are made to their country, oversight of the mortgage industry, ent conflicts have made that uncertain. they have a much better chance to hold and address the numerous other issues The whistleblower protections that are their government officials accountable. that led to the worst financial crisis extended in this legislation will allow So we not only are protecting inves- since the Great Depression. This bill employees to come forward with infor- tors and helping in energy security, we holds Wall Street more accountable mation without fear of retribution by are helping to alleviate poverty inter- and provides the strongest consumer their employer. It is a very important nationally by allowing the people of protections ever for American families provision, and I am glad it was in- the countries that have mineral wealth and small businesses. cluded in the final legislation. to hold their officials accountable, to I know there are partisan disagree- Lastly, let me talk about the extrac- use those payments to help the people ments on some parts of this legislation tive industries transparency initiative, of that nation. and it was a challenge to get to this an amendment Senator LUGAR and I This proposal has been endorsed by point, but the chairman and ranking worked very hard on, that is included the G8, the International Monetary member of the Banking Committee did in the final conference report. I have Fund, and the World Bank. With the an outstanding job on this bill and are spoken on the Senate floor previously passage of the conference report, the to be commended for their effort. This about this provision, and I particularly United States will be the leader inter- is a landmark bill, like Sarbanes-Oxley thank Senator LEAHY for his leadership nationally on extractive industries and the original Securities and Ex- in the conference on this issue and Sen- transparency, and I think that is a change Commission Act. The lesson we ator DODD for his help in getting it in- proud moment not only for the Senate had to learn, again, is that business— cluded in the final conference report. but for our Nation. especially big business—cannot regu- Oil, gas, and mining companies reg- This is a good bill for many reasons. late itself adequately. I think H.R. 4173 istered with the U.S. Securities and It is a well-organized, commonsense strikes the right balance in reining in Exchange Commission will be required regulatory structure to protect our Na- the financial services industry without under this legislation to disclose their tion from another financial crisis, with being unduly burdensome. payments to governments for access to strong investor and consumer protec- I would like to review some of the oil, gas, or minerals. Many of these oil tion, placing limits on institutions provisions I worked on that have been companies or gas companies or mineral deemed too big to fail, protecting not included in the bill. companies operate in countries that only investors and consumers but also As I have said, Senators ENZI and are autocratic, unstable, or both, and taxpayers. BROWNBACK joined me in proposing they have to make payments to those Over the past 30 years, our regulatory changes to the deposit insurance pro- countries in order to be able to get ac- framework did not keep pace with fi- gram. The Independent Community cess to those mineral rights. This legis- nancial innovation. It was particularly Bankers of America, ICBA, the Amer- lation—the amendment that is in- impotent with regard to oversight of ican Bankers Association, ABA, and

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00004 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.003 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5873 the National Credit Union Association, A Permanent Subcommittee on In- plies is undermined by the instability NCUA, all supported our amendment— vestigations, PSI, hearing made it caused when local populations do not now found in section 335 of the bill—to quite clear that competitive pressures receive the benefit of their resource ex- make the temporary increase in the and inherent conflicts of interest af- ports. Enhancing openness in revenue federally insured deposit limit from fected the objectivity of the ratings flows allows for greater public scrutiny $100,000 to $250,000—a permanent in- issued by the NRSROs. of how revenues are used. Increased crease. An increase in the Federal De- Since NRSRO ratings are used for transparency can help create more sta- posit Insurance Corporation, FDIC, and various regulatory purposes, such as ble, democratic governments, as well National Credit Union Share Insurance determining net capital requirements as more reliable energy suppliers. Fund, NCUSIF, limit is significant be- and the soundness of insurance com- No. 2, strengthening energy markets. cause deposit insurance has been the pany reserves, it makes sense to extend The extractive industries are capital- stabilizing force of our Nation’s bank- whistleblower protections to employ- intensive and dependent on long-term ing system for 75 years. ees who might come across malfea- stability to generate favorable returns. By raising the limit permanently, we sance at a credit rating agency. Leading energy companies recognize provide safe and secure depositories for There are many reasons for the mas- that more transparent investment cli- small businesses and individuals alike. sive failure of the NRSROs. The Wall mates are better for their bottom lines. FDIC insurance prevents bank runs and Street reform bill contains several pro- No. 3, helping to alleviate poverty. has been proven to increase public con- visions to improve SEC and congres- Too many resource-rich countries that fidence in the system. FDIC insurance sional oversight of the NRSROs and should be well off are home to many of limits are especially significant to how they function. Extending whistle- the world’s poor instead. This is a phe- community banks, which rely on de- blower status to the employees of these nomenon known as the ‘‘resource posits much more heavily than larger firms enhances the provisions already curse.’’ Oil, gas reserves, and minerals banks. On average, smaller banks de- in the underlying bill. don’t automatically confer wealth on rive 85 percent to 90 percent of their As I have also said, my distinguished the people who live in countries where funding from deposits. Ensuring a sta- colleague, Senator LUGAR, and I those resources are located. Many re- ble funding source for community worked particularly hard on the energy source-rich countries rank at the bot- banks helps these institutions to con- security through transparency provi- tom of most measures of human devel- tinue providing crucially important sion in this bill, which is section 1504— opment, making them a breeding capital to the small businesses whose Disclosure of Payments by Resource ground for poverty and instability. growth is at the heart of our economic Extraction Issuers. I am especially Revenue transparency will help the recovery. grateful to Senator LEAHY, who cham- citizens of resource-rich countries hold And as I mentioned earlier, during pioned this provision in the conference their governments more accountable Senate consideration of the bill, I of- committee. and ensure that their country’s natural fered an amendment with Senator MI- The geography and nature of the oil, resource wealth is used wisely for the KULSKI to ensure that mutual funds and gas, and mining industry is such that benefit of the entire nation and for fu- their advisers are not inadvertently companies often have to operate in ture generations. subjected to unworkable standards in countries that are autocratic, unstable, The wave of the future is trans- the unlikely event the Financial Sta- or both. Investors need to know the parency, and these principles of trans- bility Oversight Council designates full extent of a company’s exposure parency have been endorsed by the G8, them as systemically risky. In section when it operates in countries where it the International Monetary Fund, the 115 of the bill, the new council is given is subject to expropriation, political World Bank, and a number of regional the flexibility to consider capital and social turmoil, and reputational development banks. It is clear to the fi- structure, riskiness, complexity, finan- risks. nancial leaders of the world that trans- cial activities, size, and other factors In Nigeria, for example, American parency in natural resource develop- when determining heightened regu- companies have had to take oil fields ment is vital to holding the rulers in latory standards. This is important for offline because of rebel activity and in- these countries accountable for the addressing the unique characteristics stability in the Niger Delta. Last year, needs of their citizens and preventing of companies that are structured dif- Nigeria was producing almost a million them from simply building up their ferently from banks and bank holding barrels of oil less than it was able to personal offshore bank accounts. I am companies. produce because of conflict and insta- proud to stand here today and say that Further, I am gratified the House and bility. With so much production off- the United States is now the leader in Senate conferees saw fit to retain an line, American oil companies such as creating a new standard for revenue amendment, amendment No. 3840, Sen- Chevron and Exxon have laid off work- transparency in the extractive indus- ator GRASSLEY and I offered to the bill ers and paid higher production costs tries. to extend whistleblower protections to because of added security. These are some of the provisions I employees of nationally recognized sta- This bipartisan amendment goes a worked on, but they are a small part of tistical rating organizations, NRSROs. long way to achieving transparency in the overall bill, which is very strong. The provision is section 922(b) of the this critical sector by requiring all for- Forty years ago, conservative econo- bill. eign and domestic companies reg- mist Milton Friedman wrote a New NRSROs are the companies, such as istered with the U.S. Securities and York Times Magazine article entitled Moody’s and Standard & Poor’s, which Exchange Commission, SEC, to include ‘‘The Social Responsibility of Business issue credit ratings that the U.S. Secu- in their annual report to the SEC how is to Increase its Profits.’’ In this arti- rities and Exchange Commission, SEC, much they pay each government for ac- cle, quoting from his earlier book permits other financial firms to use for cess to its oil, gas, and minerals. This ‘‘Capitalism and Freedom,’’ from 1962, certain regulatory purposes. There are amendment is a critical part of the in- he concluded: 10 NRSROs at present, including some creased transparency and good govern- There is one and only one social responsi- privately held firms. ance that we are striving to achieve in bility of business—to use its resources and The NRSROs played a large role—by the financial industry. engage in activities designed to increase its overestimating the safety of residen- Our amendment is vitally important. profits so long as it stays within the rules of tial mortgage-backed securities, Transparency helps create more stable the game, which is to say, engages in open RMBS, and collateralized debt obliga- governments, which in turn allows U.S. and free competition without deception or tions, CDOs—in creating the housing companies to operate more freely—and fraud. bubble and making it bigger. Then, by on a level playing field—in markets Even this minimalist position sug- making tardy but massive simulta- that are otherwise too risky or unsta- gests that markets need rules. And yet neous downgrades of these securities, ble. we embarked on a 30-year path to de- they contributed to the collapse of the Let me point out three key results regulate financial services, to ease the subprime secondary market and the we expect from this provision: rules, and remove the watchdogs. We ‘‘fire sale’’ of assets, exacerbating the No. 1, enhancing U.S. energy secu- have learned a bitter lesson that mar- financial crisis. rity. The reliability of oil and gas sup- kets are not self-correcting—at least

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00005 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.004 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5874 CONGRESSIONAL RECORD — SENATE July 15, 2010 not without catastrophic consequences. proponents of the legislation have ac- house. So this bill will not eliminate Millions of Americans have lost their knowledged government failures were a risk, but it simply transfers risk from jobs, their savings, their homes, and significant cause of our economic tur- one place to another and imposes costs their retirement security. Businesses moil. But they still believe bigger gov- on market participants who had noth- have been wiped out. We have gone ernment is the solution going forward, ing to do with creating the financial from easy credit to no credit. and despite failure after failure among crisis. I truly fear that consumers will Now that the financial hurricane has various regulatory agencies, a new ultimately pay the price. wreaked its devastation, it is time to agency is the answer to these short- For example, this legislation would rebuild. comings, and this time it is going to be force the farm credit system institu- H.R. 4173 is part of that process. The different. tions to run their interest rate swaps bill creates well-organized, common- Instead of addressing the problems of through a clearinghouse which will re- sense regulatory structures to protect the consumer protections in place sult in additional costs in the form of our Nation from another financial cri- under our current regulatory structure, higher interest rates to their cus- sis. Chairman DODD and Chairman this new oversight agency is an added tomers without doing anything to less- FRANK have produced a bill that ad- layer of bureaucracy with the author- en the systemic risk. Let me be clear dresses the feasibility of our reliance ity to examine and enforce new regula- as to who this will ultimately affect. It on credit rating agencies, our appetite tions for not only all mortgage-related is very clear that our farmers and for systemic risk, and the need to limit businesses, but also small mom-and- ranchers, our electric cooperatives, and the regulatory burden on our small in- pop businesses on Main Street such as our ethanol facilities which seek fi- stitutions. They have produced a bill payday lenders, check cashers, and nancing from these institutions will that provides strong investor and con- other nonfinancial firms. These types bear this burden. sumer protections, encourages whistle- of entities were clearly not the cause of Institutions such as Cobank will be blowers, reduces interchange fees for the economic crisis, yet they will now forced to clear their swaps and execute small businesses, and places limits on be subject to the same regulations as them on a trading facility which will institutions deemed too big to fail. I the large financial institutions on Wall impose significant new costs and result know that Maryland banks and invest- Street. This is simply another example in higher rates for their customer, or, ment companies appreciate the atten- of the majority party’s preference for a worse, discourage them from managing tion paid in this bill to their concerns one-size-fits-all regulatory structure, their risk which will again result in regarding bank and thrift oversight, stifling economic growth. higher costs for their borrowers. And systemic risk regulation, and the ef- Having participated in the con- why? Because this legislation broadly fects of the mortgage crisis. ference committee, I unfortunately applies regulation, treating all finan- While Members of Congress may not witnessed firsthand the complete dis- cial institutions the same. Cobank and agree on every aspect of this bill, it is regard for addressing the real issues at Goldman Sachs are not the same and worthy of our support. Indeed, given hand. As ranking member of the Agri- should not be regulated in the same the stakes, it is imperative that we culture Committee, I have spent a manner. Cobank should have the op- pass H.R. 4173. great deal of time understanding the tion to clear their swaps, not be man- I urge my colleagues to vote for clo- over-the-counter derivatives market— dated to do so. ture and support passage. its complexities, and its legitimate While the conference report provides Madam President, I yield the floor. utility. I have found that both Repub- an exemption for some businesses from The ACTING PRESIDENT pro tem- pore. The Senator from Georgia. licans and Democrats generally agree this derivative clearing mandate, it Mr. CHAMBLISS. Madam President, on the major issues relating to deriva- also imposes new margin requirements I rise today in strong opposition to tives regulation. We all generally agree on derivative dealers for these same H.R. 4173. I think it is interesting to there needs to be greater transparency, uncleared transactions. Who will likely note we have had a number of speakers registration, more clearing, and com- pay for these new margin requirements who are proponents of this legislation pliance with a whole host of business in the form of higher fees? Again, it is come forward—just as my good friend conduct and efficient market operation pretty clear the public and private from Maryland just did—and say we regulations. This is important, because companies across the Nation that had are going to be the leader, the United it is a 180-degree shift away from cur- nothing to do with the financial crisis States is going to be the leader in the rent law where over-the-counter swaps and that are simply seeking to mini- financial world market with these are essentially unregulated today. mize risk will bear this burden. The en- changes. Within this general agreement that tire point of exempting some of them Well, the fact is, other countries that swaps need to go from unregulated to from the clearing mandate was to en- have strong financial markets have fully regulated, we have had disagree- sure that they do not bear the burden said publicly just the opposite. What I ments about who should be required to of increased margin costs, but this lan- am afraid we are setting ourselves up clear their transactions and how best guage would indirectly subject these for, and what I talked about a lot dur- to require swaps to be transacted and businesses to the expense of margins ing the course of the debate on the reported. These disagreements are sig- imposed on their dealer counterpar- Senate floor relative to this bill, is nificant because they involve real bur- ties—counterparties that will be forced that what we are going to wind up dens and duties which will result in to recoup this cost in the form of fees, doing is we are going to be driving jobs real costs to businesses and consumers. and businesses will be forced to pass and business overseas with this mas- I wish to make sure our new regula- their costs on to consumers. sive piece of legislation that truly does tions are targeted to serve a useful pur- I encourage all Members of this body not address the problem. pose. Unfortunately, this legislation to look at yesterday’s Wall Street There is nothing in these 2,300 pages will enable regulators to impose re- Journal. There is a front-page story on that deals with the primary catalyst of strictions on businesses that had abso- derivatives. When we come to the floor the market instability in our econ- lutely nothing to do with creating the and start debating derivatives, most omy—the bailout behemoths, Fannie financial crisis. Every industry in the people’s eyes glaze over because it is Mae and Freddie Mac. The bill simply country uses derivatives to manage complex and an issue that is very dif- ignores the devastating impact these their business risks and many of them ficult to understand. But in that arti- two entities continue to have not only will now be forced to clear their deriva- cle it explains the simplicity that the on our capital markets but also on our tive transactions. This seems simple derivatives world imparts itself in. The Nation’s deficit, already demanding enough, until you realize that clearing article goes through a process of a over $145 billion in taxpayer assistance, does not make risk within the financial farmer in Nebraska and his use of de- and with no end in sight as to what it system disappear. Risk is simply trans- rivatives; then his ultimate purchaser is ultimately going to cost the tax- ferred from the individual counterpar- of his product—the rancher—and how payers of this country. ties to the clearinghouses, a service that rancher uses derivatives to elimi- The newly created consumer protec- provided at considerable expense in the nate risk and hopefully guarantee a tion bureau is an affirmation that the form of margin posted to the clearing- profit in his business. Then it describes

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00006 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.004 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5875 how the slaughterhouse takes the prod- ficult job, and while we disagreed on a Mr. SHELBY. Madam President, I uct from the livestock operator, the lot of major issues, he was always open rise today to offer some remarks on the market operator, and uses derivatives for discussion. He allowed participation Dodd-Frank regulation conference re- in their business; and then ultimately on the floor as well as discussions off port, which is now before the Senate. the guy who owns the trucking com- the floor, and for that I thank him. He Nearly 2 years ago, the financial cri- pany and how he uses derivatives. It is knows that I obviously cannot vote for sis exposed massive deficiencies in the very clear in this article that these this bill, but he has proven himself to structure and culture of our financial guys’ lives are going to change from a be a very valued Member of the Senate regulatory system. Years of techno- business perspective. They are not by the way he has conducted himself logical advances, product development, going to be able to use derivatives in throughout this whole process, and for and the advent of global capital mar- the way they used them before. They that I thank him. kets rendered the system ill-suited to had nothing to do with the financial I yield the floor. achieve its mission in the modern crisis that developed in this country. Mr. DODD. Madam President, before economy. Decades of insulation from Also related to derivatives were con- my colleague leaves the floor, let me accountability distracted regulators siderable improvements made to the thank him as well. Of course, hope al- from focusing on that mission. Instead so-called ‘‘swap desk push out’’ provi- ways springs eternal. The vote hasn’t of acting to preserve safe and sound sion. I commend the chairman for his occurred yet, so we never know. We markets, the regulators primarily be- work on that. Banks would be able to might get his vote yet. came focused on expanding the scope of I don’t serve on the Agriculture Com- continue to engage in interest rate and their bureaucratic reach. mittee with him. Senator CHAMBLISS foreign currency swaps which is essen- After the crisis, which cost trillions was a very valued member of this con- of dollars and millions of jobs, it was tial to the business of banks. However, ference. Obviously, a lot of work took I remain concerned that forcing swap clear that significant reform was nec- place in the Agriculture Committee essary. Despite broad agreement on the dealer banks to spin off their com- dealing with areas of the bill that he modity trading will hurt those utilities need for reform, the majority decided has spent several minutes talking it would rather move forward with a and airlines wishing to hedge their en- about. He raises very good points. I ergy risks in the immediate future. partisan bill. The result is the 2,300- would be the last person to suggest as page legislative monster before us that They will be forced to establish new a coauthor of the bill that we have credit ratings and standings with these expands the scope and the power of in- crafted the perfect piece of legislation. effective bureaucracies. It creates vast affiliates rather than take advantage As he points out, these are highly com- of their longstanding relationship with new bureaucracies with little account- plicated areas. One of the reasons we ability and seriously undermines the their current bank. I fail to understand tried not to write a series of regula- why forcing these entities to spin off competitiveness of the American econ- tions far beyond the competency of omy. any aspect of their swap business is those of us in this Chamber is because Unfortunately, the bill does very lit- necessary. it is complicated. Obviously, we have tle to make our financial system safer. I wholeheartedly support efforts to delegated the ultimate responsibility Therefore, I will oppose the Dodd- make the swaps market more trans- that we now have, which is to watch, Frank bill and urge my colleagues to parent. It needs to be. I believe this the oversight, to the regulatory com- do the same. will be accomplished once regulators munity, to make sure they do this This was not a preordained outcome; have access to the data which has to right. it is the direct result of decisions made date been completely unavailable to I pointed out yesterday, and he has by the Obama administration. Had them. The public will benefit from pointed out again today, when we get they sincerely wanted to produce a bi- knowing who is participating in these into a situation such as this crisis, cer- partisan bill, I have no doubt we could markets, and we will finally have the tain words become pejorative, and ‘‘de- have crafted a strong bill that would data we need to make informed policy rivatives’’ unfortunately has become garner 80 or more votes in the Senate. decisions related to derivatives. that, and it shouldn’t. These are very If the American people haven’t noticed Our economy needs more opportuni- critical components for capital forma- by now, that is not how things work tion, job growth, and wealth in our ties for all businesses to grow and pros- under the Democratic rule. per. Time and again, it is the small- country. Hedging against risk is abso- Unfortunately, the partisan manner and medium-sized businesses that cre- lutely essential. So they are vitally in which this bill was constructed is ate the lion’s share of jobs after a important elements in our economy. I not its greatest shortcoming. One major economic recession. We need to hope people, when they hear the word would have assumed that the scope of foster and incubate these small- and ‘‘derivative’’ being spoken won’t as- the crisis—trillions of dollars lost and medium-sized businesses right now and sume this is somehow a bad idea. One millions of jobs eliminated—would almost gets the sense that people feel not hamper them. We need to ensure have compelled the Banking Com- that way. I don’t at all. they are able to access capital and mittee to spend the time necessary to I look forward in the coming weeks manage their risk through the use of thoroughly examine the crisis and de- derivatives. Right now, there are a lot and months, as regulators begin to work with this bill if, in fact, it passes, velop the best possible legislation in of these small- and medium-sized com- response. Unfortunately, such an as- panies that are ready to expand but that we will do that. A lot of the record has been established in this area, and sumption would be entirely unfounded. cannot get adequate access to capital The Banking Committee never pro- because lenders are saying it is too through no small measure due to the Senator from Georgia, and I thank him duced a single report on or conducted risky and regulators won’t allow these for his work as well. an investigation into any aspect of the lenders to help. Madam President, I yield the floor. financial crisis. So I believe there is a need to re- Madam President, I note the absence In contrast, during the Great Depres- spond to what went wrong in our finan- of a quorum, and I ask that the time be sion, the Banking Committee set up an cial system and I support doing so in a equally divided on both sides. entire subcommittee to examine what responsible way that will continue to The ACTING PRESIDENT pro tem- regulatory reforms were needed. The allow Main Street businesses to man- pore. Without objection, it is so or- Pecora Commission, as it came to be age their risk appropriately, hold those dered. known, interviewed, under oath, the responsible for this mess accountable, The clerk will call the roll. big actors on Wall Street and produced and not create huge new government The legislative clerk proceeded to a multivolume report. bureaucracies. Unfortunately, this leg- call the roll. Unfortunately, this time around, the islation falls short of these goals. Mr. SHELBY. Madam President, I Democratic-run committee gave Wall I am pleased the chairman of the ask unanimous consent that the order Street executives a pass, I believe. Banking Committee is here, because I for the quorum call be rescinded. There were no investigations, no depo- do want to say publicly—and I have The ACTING PRESIDENT pro tem- sitions, and no subpoenas. In fact, told him this privately and I will con- pore. Without objection, it is so or- Chairman DODD, my friend and col- tinue to say it—that he had a very dif- dered. league, never called on the likes of

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On the government-sponsored the Federal Reserve System.’’ Make no tioned by the committee or its staff. enterprises, Fannie and Freddie, the mistake, ‘‘paid for by the Fed’’ means Although Congress did establish the Fi- bill is silent, aside from a mere study. paid for ultimately by the taxpayers. nancial Crisis Inquiry Commission to On the triparty repo market, the bill is Taxpayers will be on the hook for bil- do the work that the majority party, I silent. On runs in money markets, the lions of dollars of unchecked, believe, refused to do, the Commis- bill is silent. On the reliance of market unencumbered, and unappropriated sion’s work will not be completed until participants on short-term commercial spending financed by the inflationary the end of this year. paper funding, the bill is silent. On ma- money printing authority of the Fed- Most amazingly, the Banking Com- turity transformations that allowed eral Reserve which will be hidden from mittee didn’t even hold a single hear- the shadow banking system to effec- the American people in the arcane Fed- ing on the final bill before its markup. tively create money out of AAA-rated eral budget. The committee never took the time to securities, thereby making the system Congress could have also used this receive public testimony or survey ex- much more vulnerable, the bill is si- legislative opportunity to begin the perts about the likely outcomes the lent. On the financial system’s overall process of reforming the failed mort- legislation would produce. We know vulnerability to liquidity crises, the gage giants Fannie and Freddie, whose the majority heard from Wall Street bill again is silent. We know with cer- ever growing bailouts have no upper lobbyists, government regulators, and tainty that all of these factors—none limit. When it became clear that this liberal activists, but they clearly de- of which is addressed in the bill—were was not the intention of the Demo- cided they did not want the American integral to the recent financial crisis. crats, Republicans sought to address people to have a chance to understand While we don’t want to write legisla- the current and worsening conditions and comment on the bill before us tion that only deals with the last cri- of the GSEs. today before it was enacted. The ques- sis, we do want to enact a law that ad- We suggested establishing taxpayer tion is, Why? The majority knows that dresses what we know were systemic protections, such as portfolio caps, on this bill is a job killer and will saddle the mortgage giants. We recommended Americans with billions of dollars in problems. This bill fails to do so. Congress could have written a bill to making the cost of Freddie and Fannie hidden taxes and fees. Allowing the streamline regulation and eliminate bailouts transparent to the public; that public to weigh in on this bill would the gaps that firms exploit in a race to is, to the taxpayer. We offered initial have spelled the end of the Democratic the regulatory bottom. This bill does steps toward the inevitable unwinding version of reform. I believe we owed the opposite by making our financial of these failed institutions. Yet at more to those who lost their jobs, their regulatory system even more complex. every turn, the Democratic majority homes, and their life savings. I believe We will still have the Fed, FDIC, SEC, this truly was a missed opportunity. blocked Republican efforts to establish The difference between what we need- CFTC, OCC, and the remainder of the at least a foundation for reform. ed to do, what we could have done, and regulatory alphabet soup. In fact, most The Democratic-preferred approach what the majority has chosen to do is of the existing regulators that so re- in this bill to reforming the mortgage considerable. I will speak on this. cently failed us have been given ex- giants is a study. Let me repeat that Congress could have focused this leg- panded power and scope. This bill will notion. In order to address a bailout islation on financial stability. It could also add new letters to the already-con- that has already cost American tax- have utilized the findings of the Finan- fused soup, such as the CFPB and the payers roughly $150 billion to date, cial Crisis Inquiry Commission. In- OFR. In addition to increased regu- with unlimited future taxpayer expo- stead, the Democratic majority chose latory complexity, there will be new sure, the Democrats propose a study. It to adopt legislative language penned special activist offices within each reg- does not take a study to determine by Federal regulators in search of ex- ulator for almost every imaginable spe- that $150 billion in unlimited loss expo- panded turf. They chose to legislate for cial interest. sure needs to be addressed imme- the political favor of community orga- Congress could have set up reason- diately—now. nizing groups and liberal activists able new research capabilities in its Congress could have focused on secu- seeking expansive new bureaucracies new Stability Oversight Council to rities market practices that were that they could leverage for their own complement financial research per- known to have contributed to systemic political advantage. The result is an formed by the Federal Reserve and oth- risks in our financial system. Instead, activist bill that has little to do with ers. Instead, the Democrats decided to Democrats overreached once again. the recent or any crisis and a lot to do establish the Office of Financial Re- For example, the bill gives the Secu- with expanding the government to sat- search with an unconstrained director rities and Exchange Commission, isfy special interests. and a focus on broad information col- which has failed to carry out its exist- Congress could have written a bill to lecting and processing. ing mandates, a new systemic risk address the problem of too big to fail I believe this office will not only fail mandate to oversee advisers to hedge once and for all. In fact, the Shelby- to detect systemic threats in the asset funds and private equity funds. Yet no Dodd amendment began to address this price bubbles in the future, it will one contends private funds were a problem right here on the floor. Unfor- threaten civil liberties and the privacy cause of the recent crisis or that the tunately, the Democrats once again of Americans, waste billions of dollars demise of any private fund during the overreached at the eleventh hour and of taxpayer resources, and lull markets crisis resulted in a systemwide shock. undermined the seriousness of our ef- into the false belief that this new gov- Congress could have acted to curtail fort by emphasizing social activism ernment power will protect the finan- Wall Street’s speculative excesses and over financial stability. Democrats in- cial system from risky trades. enhance Main Street’s access to credit. sisted that the overall financial sta- Congress could have been transparent But instead, in this bill large financial bility mission of the Financial Sta- in identifying the bill’s fiscal effects firms on Wall Street seem to have ben- bility Oversight Council was less im- and costs. Instead, the majority wrote efited, judging by the behavior of the portant than the political needs of cer- a bill that hijacks taxpayer resources stock prices, while the legislation al- tain preferred constituencies. This dan- but hides that fact from public view. most surely will increase uncertainties gerous mixing of social activism and fi- Just as the administration refuses to and costs for Main Street and Amer- nancial stability follows the exact acknowledge trillions of dollars of con- ica’s job creators. same model that led us to the crisis in tingent taxpayer liabilities residing The actual provisions in the bill will the first place; that is, private enter- with Fannie and Freddie, this bill re- benefit big Wall Street institutions be- prise co-opted through political man- fuses to provide Americans with a cause they substantially increase the dates to achieve social goals. Fannie transparent view of the costs of the amount and cost of financial regula- and Freddie proved this combination new multibillion-dollar consumer pro- tion. Only large financial institutions can be highly destructive. tection bureaucracy. will have the resources to navigate all

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00008 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.021 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5877 of the new laws and regulations that Congress could have written a bill to lated financial institution wants is a this legislation will generate. As a re- put an end to overreliance on credit new regulator. After all, they spent sult, this bill, disproportionately will agencies and underreliance on their years and millions of dollars devel- hurt small and medium-sized banks own due diligence. Instead, the Dodd- oping a relationship with our current which had nothing to do with the cri- Frank bill sets up new regulations and regulators. sis. liability provisions to give the impres- A major regulatory reorganization While the largest financial institu- sion that ratings are accurate. It then would seriously upset the status quo tions will get special regulation under takes a contradictory direction and in- and cost them a great deal of money. this bill, the unintended result will be structs regulators to replace references Neither Chairman DODD nor I were per- lower funding costs for these firms. to ratings with other standards of cred- suaded, however. Change was necessary That will benefit the big banks and itworthiness. and change was going to come. hurt the small banks. Therefore, this To make matters even more con- Unfortunately, that vision of reform bill will result in higher fees, less fusing, the bill also provides for the es- began to die as the bureaucrats and the choice, and fewer opportunities to re- tablishment of a government-sponsored liberal left began to exercise their in- sponsibly obtain credit for blameless body that will select a credit rating fluence over the bill. When it became consumers. agency to perform an initial rating of a apparent that I was not willing to em- Moreover, this bill raises taxes security issue. brace the left’s expansive consumer bu- which, as we all know, are ultimately I anticipate the net effect of these reaucracy, it also became apparent borne by consumers. Make no mistake, conflicting provisions will be a reduc- that actual regulatory reform was not when Wall Street writes a check to pay tion of competition among credit rat- what the majority was seeking. its higher taxes, the ones who end up ing agencies. Potential competitors ei- All other serious reform was scuttled paying those taxes are American con- ther will be deterred by all of the new by the Democrats in defense of the new sumers and workers. regulatory requirements or be de- consumer bureaucracy. That was the Congress could have written legisla- stroyed by the liability provisions set point at which Chairman DODD and I tion for consumer protection that re- up in the bill. The lack of competition began to seek a new negotiating part- spects both American consumers and led to poor quality ratings in the runup ner, ultimately to no avail. the need for safety and soundness in to the crisis. This bill perpetuates and, As the Fed and the other regulators our financial system. in fact, worsens that problem. began to regain their foothold with the Instead, the Dodd-Frank bill was ba- Congress could have eased regulatory Democrats and the administration and sically constructed by architects in the burdens on small and medium-sized the activist left consolidated its sup- Treasury Department who have a cer- businesses not integral to the recent port around an expansive new bureauc- tain condescension for American con- crisis or any crisis. Instead, Main racy, all the Democrats will succeed in sumers and their choices. Street corporations will be subject to a doing, with the help of a few Repub- The ultimate goal is to substitute panoply of new corporate governance licans, is give the failed bureaucracies the judgment of a benevolent bureau- and executive compensation require- more power, more money, and a pat on crat for that of the American con- ments. the back with the hope they will do a These new requirements will be cost- sumer, thereby controlling consumer better job next time. ly and potentially harmful to share- behavior without regard for the safety That is not real reform. That is just holders because they empower special and soundness of our banking system. more of the same. The American people are being told interests and encourage short-term We had an opportunity to lead the thinking by managers. These features not to worry, however, because it is all world by creating a modern, efficient, were included solely for the purpose of being done for their own good. and competitive regulatory structure appeasing unions and other special in- While a consumer protection agency that will serve our economy for years terest lobbyists, and there is no dem- might sound like a good idea, the way to come. Instead, I believe we squan- onstrated link between these changes it is constructed in this bill will slow dered that opportunity by barely ex- and the enhanced stability of our fi- economic growth and kill jobs by im- panding our obsolete, inefficient, and nancial system or improved investor posing massive new regulatory burdens uncompetitive system. To make it protection. on businesses, large and small. It will We are getting toward the end. Con- even worse, they have added to the bu- stifle innovation in consumer financial gress could have held hearings or ana- reaucratic morass several more unre- products, and it will reduce small busi- lyzed a number of changes this bill strained and unaccountable agencies. ness activity. It will lead to reduced makes to the securities laws. Instead, It became apparent early on to me consumer credit and higher costs for dramatic changes in those laws were that the administration and the Demo- available credit. written with little discussion and no cratic majority were not interested in Less credit at higher price will analysis. regulatory reform. All they were try- dampen the very small business en- Throughout this process, there has ing to do is exploit the crisis in order gines of job creation that our economy been a lot of talk about the influence to expand government further and re- desperately needs right now. That is a of Wall Street over this bill. To be ward special interests. price I am not willing to pay. sure, in the early stages of the negotia- The Dodd-Frank bill will not enhance Congress could have implemented re- tions, Wall Street and the big banks systemic stability. It will not prevent forms to improve derivatives market were very engaged. future bailouts of politically favored activities. Instead, the bill’s deriva- I think the American people know, institutions and groups by the govern- tives title seems to be inspired by a de- however, that in the end, the real influ- ment. sire to be punitive or to provide short- ence peddlers on this bill were not Wall The bill serves only to expand the term political support during an elec- Street lobbyists but rather liberal ac- Federal bureaucracy and the govern- tion, or both. Instead of imposing a ra- tivists and Washington bureaucrats. ment control of the private sector. It tional and effective regulatory frame- Wall Street and the big banks just hap- will impose large costs on the tax- work on the OTC derivatives market, pen to be the incidental beneficiaries of payers and businesses. the bill runs roughshod over the Main their success. For these reasons, I urge my col- Street businesses that use derivatives When Chairman DODD and I began leagues to reject this bill. to protect themselves every day. this process, we agreed that the bu- The ACTING PRESIDENT pro tem- The Dodd-Frank bill will increase reaucratic status quo was unacceptable pore. The Senator from Connecticut. companies’ costs and limit their access and that radical change was necessary. Mr. DODD. Madam President, I to risk-mitigating derivatives without With that in mind, we agreed to con- thank my colleague from Alabama. making our financial system safer in solidate all the financial regulators Once again—I say this with the re- the process. As a result, there will be and constrain the Fed to its monetary spect—I feel as if I am listening to the fewer opportunities for businesses to policy role. first speech back in November when I grow, fewer jobs for the unemployed, This was not a result the big banks offered the original proposal of this bill and higher prices for consumers. wanted. The last thing a large regu- and wonder if we have been in the same

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00009 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.022 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5878 CONGRESSIONAL RECORD — SENATE July 15, 2010 Chamber and same city over the last caused so much of the difficulty. The So this is a major undertaking, one several years. derivatives market was a $90 billion that is historic in its proportions, and I am not going to use the time be- market, and it mushroomed in less it is an attempt to set in place a struc- tween now and 11 a.m. when we are than a decade to $600 trillion, putting ture that will allow us to minimize going to vote on the cloture motion. I our Nation at risk because of a lack of problems in the future. I can’t legislate will not go through the long list, page transparency and accountability to de- integrity. I can’t legislate wisdom. I after page of amendments that were termine what was occurring in those can’t legislate passion or competency. adopted as part of this bill offered by markets. To consider it a radical idea What we can do is to create the tools my good friends on the minority side. that we might want to have account- and the architecture that allow good We had 80 hearings held over 2 years, ability and transparency I find remark- people to do a good job on behalf of the with countless efforts to reach out and able considering what our country has American public. That is what a bill bring in people. One can make a lot of been through. like this is designed to do. accusations about the bill, but this was Also, we provided a consumer protec- I regret I can’t give jobs back, re- a very inclusive process. Half the tion bureau. What a radical idea that store foreclosed homes, or put retire- amendments adopted on the floor in is—the idea that people who buy mort- ment monies back into accounts. What this Chamber during consideration of gages or have a student loan, a credit I can do is to see to it that we never, this legislation over 4 weeks were ones card, a car loan, might have someplace ever again have to go through what offered by the minority and were ac- in this city that watches out for them this Nation has been through. That is cepted and bipartisan amendments. so their jobs, their homes, their retire- what this effort has been about over There was never an alternative offered. ment accounts are not lost. So while the last several years, to try to create There was never a substitute offered. It this bureau is in place in this bill, the that structure, that architecture. It was a question of whether people want- idea was at least to see to it that peo- will be incumbent now on the present ed to amend this legislation. It is not a perfect bill, I will be the ple, when they have the problems they administration and those who follow to first to admit. We do not know ulti- have been through or are going nominate good people to head up these mately how well the ideas we incor- through, someone is watching out for operations, to attract good public serv- porated will achieve the results we all them. ants who will fill the jobs of these var- desire. It will take the next economic We have a Consumer Product Safety ious regulatory bodies to see to it that crisis—as certainly it will come—to de- Commission to address the purchase of they do the work we all want them to termine whether the provisions of this a faulty product, but what happens do. bill will provide this generation or the when someone abuses or takes advan- Again, I can’t legislate that. I can next generation of regulators with the tage, as happens in so many cases in fi- merely create the opportunity for that tools necessary to minimize the effects nancial areas? People should have a kind of protection to occur—to mod- of that crisis when it happens. But we chance to have a redress of their griev- ernize a financial system, to lead the believe we have done the best we could ance or to at least from the outset world, if we can, in harmonizing rules under the circumstances to see to it we have an opportunity to address that be- so we don’t have the kind of sovereign never have another bailout of another fore it becomes a broader problem. shopping that was going on with regu- major financial institution at taxpayer So, Madam President, again, we have latory bodies, where major financial expense. debated this now for 2 years and count- institutions would shop around the In fact, it was the Shelby-Dodd less opportunities. We spent 4 weeks on world as to the nation of least resist- amendment adopted in this Chamber— the floor of this Chamber, amendments ance or the regulator of least resist- it was the second amendment we con- were offered, and never once—I guess ance. sidered—that actually completed the on one occasion we had a super- We need to see to it that we have the process of seeing to it there would be majority vote. There was only one ta- unanimity or at least the harmoni- bankruptcy or resolution of financial bling motion I know of. I did every- zation of rules that will allow us to institutions that got themselves into thing I could to make this as inclusive have a more orderly system in our so much trouble that they put the en- a process as possible. globe because, as we have all painfully tire system at risk. We set up an over- I understand some people don’t like learned, matters that occur thousands sight council to make sure we could ob- the bill. It saddens me, in a way, that of miles away can affect the economy serve what was occurring not only here it has once again become sort of a in our own country. at home but around the globe—matters mindless partisan argument rather So for all those reasons, Madam such as Greece or Spain that could put than talking about what we need to be President, I thank my colleagues for our economy at risk. So it isn’t just doing. This is not the end of all of it, their efforts over the last 2 years. I one set of eyes but having those re- obviously. Oversight will be required, thank the leadership for providing the sponsible for seeing to it that our econ- consultation in the coming weeks and opportunity and time for us to do this omy remains safe and sound have the months and years, to make this work in this Chamber. I thank my colleague opportunity to provide the early warn- well. But, Madam President, I can’t in the House, BARNEY FRANK, and his ing that never occurred. imagine another process that has been colleagues for the work in which they We didn’t need a Pecora Commission as inclusive. engaged in order to produce a bill to find out what was going wrong. We My colleagues will recall that almost there. We spent 2 weeks, some 70 hours had mortgages being sold in this coun- 10 months, going on almost a year ago, of debating the conference report, try to people who couldn’t afford them, I invited both Democrats and Repub- where more amendments were adopt- marketing them in a way that guaran- licans on the Banking Committee to ed—again, offered by my colleagues, teed failure, securitizing them so they assume responsibility for major sec- Republicans and Democrats—to make could be paid and then skipping town tions of this bill, which they did do, by this as good a bill as we could in all of in a sense. I didn’t need to have hours the way, and made a significant con- this. of hearings to find out what was the tribution to the product. So while I re- So with that, Madam President, I cause of it. The question was, How do spect those who want to vote against will reserve some comments for later, we try to put a system in place to min- the bill, and that is their right to do so, but as we approach this vote in the imize the future kind of risks our Na- find some arguments based on the mer- next few minutes, I urge my colleagues tion would face. It wasn’t just to deal its rather than arguing about whether to invoke cloture, to allow us to then with those who created the problem there was a process that was inclusive have an up-or-down vote on this bill, but, rather, to look ahead—not in a pu- or that allowed people the opportunity and to do what we can to restore some nitive way—and to set up an architec- to be heard. trust and confidence and optimism for ture and structure to allow us to get to Again, we have the right to be heard, the American people. In the midst of that point where we could be confident but we don’t have the right necessarily the worst economic crisis in the lives we were addressing these issues. to have our ideas become the law of the of most Americans, this institution— Thirdly, of course, we tried to deal land. That is what a body like this is the Senate—rose to the occasion and with exotic instruments that had for. crafted a bill to address the financial

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It is just hit anywhere as hard as it hit Nevada. for the next generation of Americans. this kind of uncertainty that busi- You can draw a straight line from un- I urge my colleagues to support the nesses cite time and time again as one checked greed on Wall Street to the cloture motion, and I urge them to sup- of the greatest challenges to our eco- collapse of the housing market on Main port the bill when the vote occurs later nomic recovery. Streets throughout my State and today. So here is a bill that fails to address around the country. As soon as the big I yield the floor. the root causes of the kind of crisis it banks went down, foreclosure signs The ACTING PRESIDENT pro tem- is meant to prevent, that creates a vast went up. pore. The Republican leader. new unaccountable bureaucracy, that— How did this happen? Let’s put it this Mr. MCCONNELL. Madam President, if past experience is any guide—will way: When you go to any of the great later today, we will have a decisive lead to countless burdensome, unin- casinos across Nevada and put your vote on the financial regulatory bill tended consequences for individuals chips on the table, you are gambling that does nothing to reform the gov- and small businesses; a bill that con- with your own money. If you win, you ernment-sponsored enterprises that stricts credit and stifles growth in the win, and if you lose, you lose. But Wall many people believe to have been at middle of the worst economic period in Street rigged the game. They put our the root of the financial crisis this bill memory; and perhaps most distressing money on the table. When they won, grew out of—a bill that was meant to of all, a bill that punishes farmers, flo- they won big. The jackpots they took rein in Wall Street but which is now rists, doctors, retailers, and countless home were in the billions. And when supported by some of Wall Street’s big- others across the country and far away they lost—and, boy, did they lose— gest banks and opposed by small com- from Wall Street who had absolutely they came crying to the taxpayers for munity banks in my State; a bill that nothing to do with the panic of 2008. help. The winnings were theirs to enjoy is meant to help the economy but In other words, once again, the ad- but the losses were all of ours, to share which is widely expected to stifle ministration and its Democratic allies and to shoulder. growth and kill more jobs in the mid- in Congress have taken a crisis and That is the way the market worked. dle of a deep recession; and a bill that, used it rather than solving it. How else It worked for a few fortunate ones in according to the papers, the vast ma- can you explain the fact a bill that was the big firms and worked against ev- jority of Americans simply don’t think meant to address the excesses on Wall eryone else. So when I say that is how will work. Street is expected to hit individuals the market worked, what I mean is As it turns out, the American people and industries that had nothing to do that it didn’t work at all. It was badly don’t seem to like this government- with the crisis it was meant to pre- broken and it nearly bankrupted us. It driven solution to the financial crisis vent? cost 8 million workers their jobs, mil- any more than they liked the Demo- Did anybody think when this bill was lions of retirees their savings, and mil- crats government-driven solution to first proposed that it would end up lions of families their homes. It shat- the Nation’s health care crisis. They do hurting storefront check cashers, city tered our faith in our financial system. not think this bill will solve the prob- governments, small manufacturers, But there is another problem. We lems in the financial sector any more home buyers, credit bureaus, and farm- have been talking about this rigged than they think the health care bill ers in places such as Kansas and Ken- system, this raw deal, in the past will lead to lower costs or better care. tucky? tense, but it is not a thing of the past. One survey this week indicates that 7 This is precisely the kind of thing It is very much in the present. The in 10 Democrats have little confidence Americans are tired of—a government rules that allowed Nevada’s economy the proposals in this bill will avert or simply out of control. Only in Wash- to collapse are still the same rules of lessen the impact of another financial ington would you create a commission the road today. That means every new catastrophe, and nearly 70 percent of aimed at looking into the causes of a day we do not act we run the risk of it them doubt it will make their savings crisis, then put together and pass a happening all over again. That is a more secure. 2,300-page bill in response to that crisis gamble I am not willing to take. It is easy to see why. The Wall Street before the commission even has a The bill before us makes sure we do Journal calls this bill’s 2,300 pages ‘‘the chance to report its findings and issue not have to take that gamble. The first biggest wave of new Federal financial recommendations. The White House question was, How did this happen? The rulemaking in three generations.’’ The will call this a victory. But as credit next question is, What are we going to chairman of the Banking Committee tightens, regulations multiply, and job do about it? has famously said last month we would creation slows even further as a result No. 1, we are saying to those who not know how this bill works until it is of this bill, they will have a hard time gamed the system that the game is in place. But here are some initial indi- convincing the American people this is over. We are cracking down on those cators about its scope according to a a victory for them. who gambled away what so many have study by the U.S. Chamber of Com- Obviously, I will be opposing this worked so hard to put away. merce on the new bureaucratic land- bill, and I would encourage my col- No. 2, we are saying to the families scape under this bill: 70 new Federal leagues to oppose it as well. and taxpayers, never again will you be regulations through the new Bureau of Madam President, I yield the floor. asked to bail out a big bank when the Consumer Financial Protection, 54 new Mr. DODD. Madam President, I sug- bank loses its risky bets. Federal regulations through the U.S. gest the absence of a quorum, and I ask Let me say that again because it is Commodity Futures Trading Commis- unanimous consent the time during the one of the most important parts of this sion, 11 new Federal regulations quorum be equally charged to both bill: No more bailouts because no bank through the Federal Deposit Insurance sides. is too big to fail. We are going to give Corporation, 30 new Federal regula- The ACTING PRESIDENT pro tem- consumers and investors the strongest tions through the Federal Reserve, and pore. Without objection, it is so or- protections they have ever had against 205 new regulations through the Secu- dered. abusive banks, mortgage companies, rities and Exchange Commission. The clerk will call the roll. credit card companies, and credit rat- Those are just some of them. All The legislative clerk proceeded to ing agencies. We are going to bring de- told, this bill would impose 533 new call the roll. rivative markets that operate in the regulations on individuals and small Mr. REID. Madam President, I ask darkness out into the light. We are businesses, regulations that will inevi- unanimous consent the order for the going to hold Wall Street accountable tably lead to the kind of confusion and quorum call be rescinded. because we know we are accountable to uncertainty that will make it even The ACTING PRESIDENT pro tem- the American people. This is about our harder for struggling businesses to dig pore. Without objection, it is so or- ability to trust our financial system, it themselves out of the recession. It is dered. is about giving families the peace of

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But there also have to be some adoption of the conference report. rules, not to stifle but to safeguard us; The ACTING PRESIDENT pro tem- pore. By unanimous consent the man- The ACTING PRESIDENT pro tem- rules so that when these firms fail they pore. Without objection, it is so or- don’t bring us down with them. datory quorum call has been waived. The question is, Is it the sense of the dered. When this earthquake hit there was Mr. DODD. I yield the floor. Senate that debate on the conference not nearly enough oversight, trans- The ACTING PRESIDENT pro tem- report to accompany H.R. 4173, Restor- parency, or accountability to shield us pore. The Senator from New Hamp- ing Financial Security Act of 2010, from the fallout. This law will change shire. shall be brought to a close? that. It will strengthen all three. Mr. GREGG. Madam President, I rise The yeas and nays are mandatory We are at the finish line this morning to make a point of order that the Sen- under the rule. but getting here has not been easy. ator from Connecticut alluded to. We The clerk will call the roll. Wall Street doesn’t like this bill. Of have rules around here we have set up course it doesn’t. Why would they want The legislative clerk called the roll. Mr. KYL. The following Senator is to discipline ourselves on spending. Un- us to change the system they rigged, fortunately, we consistently ignore and the system that made them all rich? necessarily absent: the Senator from Idaho (Mr. CRAPO). waive them. That is one of the reasons Their cronies in Washington don’t like we have a $13 trillion debt. That is one it either. The top Republican in the The ACTING PRESIDENT pro tem- pore. Are there any other Senators in of the reasons we will have a $1.4 tril- House very publicly said the plight of lion deficit this year alone. This bill millions was as small and insignificant the Chamber desiring to vote? The yeas and nays resulted—yeas 60, violates those rules. This bill violates as an ant, an insect; foreclosures, one of the sections of those rules which homes underwater, jobs lost—like an nays 38, as follows: [Rollcall Vote No. 206 Leg.] says that in any 10-year period, we ant. The head of the Republican party shall not have more than a $5 billion YEAS—60 asked us to simply trust Wall Street to effect on the deficit in a negative way; look after itself. Akaka Franken Murray that we need to otherwise pay for what We all know this crisis is enormous Baucus Gillibrand Nelson (NE) we are doing. Therefore, this bill does and we all know Wall Street is not Bayh Hagan Nelson (FL) Begich Harkin Pryor violate the Budget Act. going to reform itself. Rather than Bennet (CO) Inouye Reed If we are going to have any fiscal dis- standing up for the taxpayers, those Bingaman Johnson Reid cipline around here—and we hear a lot who are about to vote no are standing Boxer Kaufman Rockefeller Brown (MA) Kerry Sanders of people talking about that—we with the same bankers who gambled Brown (OH) Klobuchar Schumer should be living by the rules we have to away our jobs and homes and our eco- Burris Kohl Shaheen assert fiscal discipline. Therefore, I nomic security in the first place. Just Cantwell Landrieu Snowe make a point of order that the pending like their Wall Street friends, it seems Cardin Lautenberg Specter Carper Leahy Stabenow bill violates section 311(b) of S. Con. our opponents care more about making Casey Levin Tester Res. 70 of the 110th Congress. Collins short-term gains than they do about Lieberman Udall (CO) Mr. DODD. Madam President, pursu- what is right for the economy in the Conrad Lincoln Udall (NM) Dodd McCaskill Warner ant to section 904 of the Congressional long run. I think that is a mistake and Dorgan Menendez Webb Budget Act of 1974 and the waiver pro- I think it is a shame. Durbin Merkley Whitehouse visions of applicable budget resolu- This is not about dollars and cents Feinstein Mikulski Wyden tions, I move to waive all applicable only, it is about fairness. It is about NAYS—38 sections of that act and those budget justice. It is about making sure there Alexander Ensign Lugar resolutions for purposes of the pending is not a next time. It is about jobs. It Barrasso Enzi McCain conference report and ask for the yeas is about rescuing our economy. Bennett (UT) Feingold McConnell I know Wall Street reform is com- Bond Graham Murkowski and nays. Brownback Grassley Risch The ACTING PRESIDENT pro tem- plicated. There are not many people Bunning Gregg who know all the ins and outs of deriv- Roberts pore. Is there a sufficient second? Burr Hatch Sessions There appears to be a sufficient sec- ative trading and credit default swaps Chambliss Hutchison Shelby Coburn Inhofe ond. or mortgage-backed securities. But the Thune Cochran Isakson Vitter The yeas and nays were ordered. principle before us is quite simple. It is Corker Johanns Voinovich Mr. GREGG. I understand the vote not complicated at all. You either be- Cornyn Kyl DeMint LeMieux Wicker will occur somewhere around 2 o’clock. lieve that we need to strengthen the The ACTING PRESIDENT pro tem- oversight of Wall Street or you don’t. NOT VOTING—1 pore. The Senator is correct. You either believe we need to strength- Crapo Mr. DODD. Madam President, I see en protections for consumers or you The ACTING PRESIDENT pro tem- my colleague from Texas is seeking don’t. pore. On this vote, the yeas are 60 and recognition. I wish to publicly thank Our choice today is between learning the nays are 38. Three-fifths of the Sen- her. She made a substantial contribu- from the mistakes of the past or dan- ators duly chosen and sworn having tion to this bill on several amendments gerously letting them happen all over voted in the affirmative, the motion is that were adopted during debate on the again. agreed to. floor. I thank her for them. They added CLOTURE MOTION Mr. DODD. Madam President, I am to the value of the legislation. I am not The ACTING PRESIDENT pro tem- about to propose a unanimous-consent sure what her comments will be right pore. The cloture motion having been request that has been agreed to by the now, but I thank her for her contribu- presented under rule XXII, the Chair respective leaders. tions. directs the clerk to report the motion I ask unanimous consent that the The ACTING PRESIDENT pro tem- to invoke cloture. postcloture time be considered expired pore. The Senator from Texas is recog- The legislative clerk read as follows: at 2 p.m., with the time until then nized. CLOTURE MOTION equally divided and controlled between Mrs. HUTCHISON. Madam President, We, the undersigned Senators, in accord- Senators DODD and SHELBY or their I appreciate the comments of the ance with the provisions of rule XXII of the Standing Rules of the Senate, hereby move designees; that during this period, if chairman. He accommodated many of to bring to a close debate on the conference and when a budget point of order is the amendments I had, particularly as report to accompany H.R. 4173, the Wall raised against the conference report, it concerns community banks. That Street Reform and Consumer Protection Act. then an applicable waiver of the point was a huge concern in the original

VerDate Mar 15 2010 04:29 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00012 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.026 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5881 draft of the bill. I thank the chairman Street banks and executives to create a impose margin requirements, I worry for accommodating those concerns. It cumbersome new bureaucracy which that there is not a statutory exemption did make it a better bill. will impose job-killing regulation at for end users. End users may even I wish to return to the aftermath of the expense of Main Street small busi- choose market volatility instead of the financial crisis, when Congress was nesses and families. The Consumer Fi- risk-controlling derivatives altogether, tasked with the responsibility of mod- nancial Protection Bureau, with end- exposing Americans to higher prices, ernizing our financial regulatory struc- less authority over all facets of our slower economic growth, and more job ture so that we would have proper economy, is not the answer. losses. oversight of today’s banking system I am particularly concerned about We should seek transparency through and financial markets. We were called the effect this bureau will have on greater reporting requirements, but to fill in gaps in regulations which al- well-regulated, safe, sound community businesses should not be forced to arbi- lowed American home buyers to simply banks. These banks largely avoided the trarily move money to margin ac- sign on the dotted line to purchase a subprime market, and they didn’t en- counts. house that was in many instances be- gage in the risky speculative trades I am concerned that this legislation yond their means, to let companies that contributed to the financial melt- will cost more jobs at a particularly hide trillions of dollars in assets from down. However, these community harmful time with national unemploy- regulators, and ultimately led our gov- banks are going to have 27 new or ex- ment hovering around 10 percent. The ernment to lose hundreds of billions of panded types of regulation after this Chamber of Commerce reports that the taxpayer dollars to bail out financial bill is passed. The consumer bureau margin requirement on OTC deriva- institutions—Fannie Mae, Freddie could ultimately determine what prod- tives could cost 100,000 to 120,000 jobs in Mac, GM, Chrysler, and AIG. Thus, ucts community banks can offer, on S&P 500 companies alone. were financial regulatory reform to what terms they can offer these prod- This legislation does nothing to rein succeed, we needed to enhance mort- ucts, and under what settings and cir- in Fannie Mae and Freddie Mac. Since gage underwriting standards, bring cumstances. Overall, the consumer bu- the government takeover of these two greater transparency to the derivatives reau will result in fewer products and GSEs, taxpayers have paid $145 billion markets, and once and for all end too services for American families and to keep them afloat. The CBO reports big to fail. The conference report be- small businesses. that the government’s cost to bail out fore us takes steps toward these goals. The Texas Bankers Association tells Fannie and Freddie will eventually The legislation puts in place meas- me consumer bureau rules could result reach $381 billion. ures to address too big to fail; however, in the end of free checking accounts, These costs contributed to a Federal it falls short in fully addressing the higher fees on all consumer services, deficit which has topped $1 trillion for risk of future government bailouts by and less opportunity to negotiate on the first 9 months of fiscal year 2010. failing to make changes to the Bank- loans. It is not the big banks on Wall They have helped push our national ruptcy Code. In this legislation, we Street voicing concerns and opposition debt to $13 trillion. A couple of weeks have also made strides to strengthen to this bill. The opposition is coming ago, the CBO reported that United mortgage underwriting standards. from community bankers in Texas who States debt will reach 62 percent of I am concerned that a newly formed are worried they will be unduly penal- GDP by the end of this year, the high- Consumer Financial Protection Bureau ized for faults they did not commit. est since just after World War II. We will take the lead rather than our Small businesses are also against cannot continue to this dangerous path banking regulators, and this is one of this new consumer bureau. The U.S. and mirror the crisis that currently Chamber of Commerce and the Na- the biggest concerns I have with the ravages Europe. tional Federation of Independent Busi- bill. We cannot sustain these debts and I am pleased that the conference re- ness are very concerned about this bu- deficits. We offered solutions to rein in port includes numerous measures for reau. Fannie Mae and Freddie Mac. During We need community banks to con- which I fought. I thank Chairman DODD Senate consideration of this legisla- tinue extending credit to worthy fami- for his willingness to work with me and tion, I cosponsored amendments—No. lies looking for a home and to small his constructive approach to making 3839 and No. 4020—which would have re- businesses to invest in and create jobs. changes to the bill, including a more imposed the cap of Federal assistance I cosponsored an amendment during level playing field for community Senate consideration to ensure that to the GSEs at $200 billion each. These banks across the country to compete safety and soundness regulators would amendments would have brought through my amendment to bring parity have a say in the rules and regulations Fannie Mae and Freddie Mac onto our to FDIC insurance assessments; my imposed on their institutions. That budget so that Americans could see amendment, along with Senator amendment was rejected, leaving com- their true cost. And they would have KLOBUCHAR, to allow State-chartered munity banks subject to this new bu- brought an end to Fannie and Freddie’s banks and small and medium-size bank reau’s unlimited and unchecked rule- government conservatorship in 2 years. holding companies to retain Federal making authority. Unfortunately, these amendments were Reserve supervision so that our mone- I am also concerned with the treat- rejected. Furthermore, the conference tary policy truly reflects economic ment of derivatives in this legislation. committee would not even permit conditions throughout the country, not I am concerned that the lack of trans- amendments to be offered on the GSEs. just on Wall Street; relief for small and parency that needed reform has been Instead, this legislation calls for a re- medium-size public companies from the exchanged for a regulation I do not port, punting the plan for Fannie and burden of rule 404(b) of Sarbanes-Oxley; think is going to properly regulate de- Freddie that we need to the future. We and assurance that the Volcker rule’s rivatives. need reform of Fannie Mae and Freddie proprietary trading restrictions will However, we must also protect end Mac now, but this legislation does not not extend to the insurance affiliates users such as airlines, utilities, manu- even allow for debate of the GSEs. of insurance companies with depository facturers, and oil and gas companies. The American people are frustrated institutions. These are positive These companies use derivatives as a with our government, and this legisla- changes for which I give the chairman cost effective strategy to control price tion is an example of why. Under the great credit. However, these positive and risk. Many structure derivatives guise of financial regulatory reform, changes are greatly outweighed by mis- contracts are unique to their business, this legislation continues the unprece- placed priorities to create new layers making it difficult to clear and trade dented growth in government. of bureaucracy while failing to address on a market. I share concerns from de- The American people want sensible the root causes of the financial crisis— rivatives end users that this mandate financial reform. However, this pur- Fannie Mae and Freddie Mac. to post margins with cash, rather than ported financial regulatory reform leg- Additionally, there are a series of collateral, will remove capital from in- islation does not even address the root provisions that are troubling to me. vestment and job creation. causes of the crisis: Fannie Mae and No. 1 is this consumer protection bu- While Senator DODD and Senator LIN- Freddie Mac. Instead, it uses the crisis reau. It is using the faults of Wall COLN say that this legislation will not to add layers of Federal bureaucracy,

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00013 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.030 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5882 CONGRESSIONAL RECORD — SENATE July 15, 2010 and threatens to slow down our eco- has been criticized by both the left and of our institutions, just on size alone, I nomic recovery, risking job loss and re- the right. Some on the left, some on think the chairman wisely decided as stricting access to credit. the Democratic side, have said the bill we went through a year and a half of For these reasons, this legislation is has not gone far enough in putting hearings, what often precipitated the not the reform we need, which is why I more requirements and restrictions on greatest risks to our system was not must oppose the conference report for our financial institutions. Some of my size alone—America has only 4 of the 50 H.R. 4173. colleagues on the Republican side, on largest banks in the world—but it was We need to fully look at some of the the right, have said this bill goes too the interconnectedness, their leverage, concerns in this bill with the hope that far. their failure to have appropriate risk when it passes—I cannot support it, but The fact that it is getting perhaps management plans in place. it will pass—these cautions will be that left-and-right criticism puts us This new systemic risk council is looked at going forward to perhaps, maybe in that right-in-the-middle sec- specifically charged with making sure when the problems come to light later, tion, which is the appropriate balance our large, more complex institutions make some changes to the law that we tried to strike since the chairman have more stringent capital require- will better accommodate the needs of started this effort well over 2 years ments, leverage ratios, liquidity re- consumers and small businesses and ago. quirements, and risk management community banks in the country. I think it is important at times we tools. We even created two whole new There are good parts of this bill. I remember why we are here. Two years categories, that while not fully test- think the chairman deserves a lot of ago, the markets were in chaos. Presi- ed—both of these categories actually credit for pushing this financial re- dent Bush and Secretary Paulson had came from colleagues on the other side form, knowing that we needed to do it. created TARP with a $700 billion un- of the aisle—they could be important I don’t think it fully meets the test of precedented bailout to shore up our fi- new steps to prevent these large insti- doing what we should be doing, but I do nancial system. President Obama was tutions from failing. One is contingent debt that large in- think it is a first step, and the chair- in crisis mode with our economy still stitutions would have to have that if man is to be commended for his leader- in free-fall from day one. The Dow was they get themselves even close to trou- ship. at 6,500, and there was a lot of talk of ble, that debt would convert into eq- I yield the floor. nationalizing banks. The ACTING PRESIDENT pro tem- Well, close to a year and a half to 2 uity, consequently diluting existing pore. The Senator from Connecticut. years later, we have seen stimuluses shareholders and management and Mr. DODD. Madam President, my and stress tests. We have seen a DOW keeping pressure on the board to make friend and colleague from Texas serves that now has touched 11,000. While the sure management would not take that on the Banking Committee. I thank economy is not creating jobs at the risk. rate any of us would like to see, the Finally, a tool that, again, if imple- her and Senator KLOBUCHAR. There was talk of financial Armageddon or com- mented correctly, will be tremendously a series of amendments in which Sen- plete collapse has disappeared. powerful; that is, to ensure that all ator HUTCHISON was involved. They I think we went into this process these large, complex institutions pro- added value to this bill, and I thank with three goals: First, the taxpayers vide a plan about how they will be able her for it. must never again hear that a company to unwind in an orderly fashion I mentioned yesterday, as a rel- is too big to fail. Second, we had to fix through traditional bankruptcy provi- atively junior member of the Banking our regulatory system to make sure sions. Our goal is to always have bank- Committee, there was no Member of the huge gaps that existed that allowed ruptcy be the appropriate response. If this Chamber who added as much to systemic regulatory arbitrage could no that liquidation plan or if that debt the bill as the Senator from Virginia. longer take place. And, finally, con- plan is not blessed by the council of There are not words nor time for me to sumers and investors had to have con- regulators, the council of regulators adequately express my gratitude for fidence that our markets were fair, can dismember, break up, or put other his involvement. Literally almost on transparent, and that there would be restrictions on these large institutions. an hourly basis, he was involved, along an officer on the beat to make sure I think Senator DODD made the deci- with Senator CORKER of Tennessee. some of the excesses that took place in sion to task my good friend, Senator They spent hours on their own talking 2005, 2006, and 2007—where folks were CORKER of Tennessee, and I with this with other people about how to fashion being put into homes they could never issue: If those processes still do not two of the most critical titles of this afford to pay for or having financial in- work, how do we make sure we have an bill. Let me express my gratitude once struments that were being created orderly liquidation process? Our goal again to Senator MARK WARNER of Vir- under the guise of lowering the cost of was twofold: One, taxpayers should ginia and thank him immensely for his risk that were more about simply cre- never have to bear the risk; and, two, if contribution. He did a great job. ating fee income—would never again an entity goes into liquidation, it will The ACTING PRESIDENT pro tem- prey on unweary investors or on home- not come out. Liquidation or resolu- pore. The Senator from Virginia. owners who got themselves into trou- tion is not an attempt to stand up an Mr. WARNER. Madam President, I ble. institution. But we wanted to make thank the chairman for those kind re- I think one of the most interesting clear to shareholders, to management, marks. It is a good feeling for all of us critiques that some still make of the if you go into resolution, you are toast, who have labored on this legislation— bill is that we have not addressed too as my colleague, Senator CORKER, Members and staff—that we are finally big to fail. Well, candidly, with the often said. coming to a successful conclusion on United States moving first on this leg- We think we have reached that goal, the Dodd-Frank Wall Street Reform islation, and the rest of the world wait- and I am particularly proud of titles I and Consumer Protection Act and it is ing for the United States to move, we and II of this bill. Actually, when going to be enacted into law. hear from our European colleagues Chairman DODD and Senator SHELBY As those equally controversial pieces that the framework we have set up, ac- put some amendments to it, it was en- of legislation in the 1930s stood the test tually, they hope to emulate. We have dorsed by 95 of our colleagues. It is the of time for decades, I think this bill created a new regulatory structure so broadest bipartisan section of this leg- will stand the test of time for decades the regulators can get out of their islation. This bill addresses a number as well in terms of creating a new set silos—depository institutions on one of other vital areas as well. It allows a of rules of the road for not just Amer- side, security institutions on another, single depository place to get the ap- ica’s financial sector but, in a sense, derivatives trading on a third—and propriate day-to-day information on the world’s financial sector for decades make sure we have a full systemic risk our financial institutions—that still to come. council so we can measure risk wher- did not exist until we created the Fi- While not perfect—no piece of legis- ever it exists, regardless of the charter nancial Services Oversight Council— lation is—one of the things that gives of the organization. and having the ability to get on a daily me some confidence that the right bal- While some said we ought to go basis the level of interconnectiveness ance has been struck is that this bill ahead and limit the asset size of some of a future AIG.

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00014 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.004 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5883 It puts in place a consumer protec- morning, 4 o’clock in the morning, I is the harm to the availability of cred- tion bureau to make sure, for example, believe at one point, telephone calls it, something our colleague, Senator mortgages are regulated in a way that and meetings with other Members. GREGG from New Hampshire, has consumers can understand, regardless As the Senator from Texas men- talked a lot about. It implements one- of the charter of the organization. We tioned earlier, even though the Senator size-fits-all capital standards and uses often found banks had a fairly good from Texas could not support the over- flawed funding mechanisms. It also ability to regulate some of their mort- all bill, our chairman has worked with perpetuates bailouts, and burdens gages; whereas, mortgage lenders and all Members regardless of party to try small businesses with new regulations, others, who were unregulated, had no to accommodate their interests. I com- which I will speak about in a moment. such restrictions. Now we have an even mend the Senator from Texas for Let me address a few of these prob- playing field. pointing out, for example, the commu- lems in more detail: First, the cost and It finally puts in place—there is some nity-based and independent banks offsets of the bill; second, the failure to debate on this issue—an appropriate come out of this legislation as one of address the GSEs, Fannie Mae and process to regulate derivatives and to the real winners in terms of their abil- Freddie Mac; and, third, the job-killing bring these critical but potentially ity to have more fair competition with Consumer Financial Protection Bureau dangerous instruments out of the shad- the larger institutions. that will reduce available credit for ows, and the vast majority of these in- So I commend the chairman, and I American businesses and thus reduce struments will now be traded in a more commend all of my colleagues on both job creation. transparent way on exchanges. sides of the aisle, even those who per- First, the cost and offsets. The Con- There is more to be done. Domestic haps will not vote for the final product gressional Budget Office has put the 10- and international implementation is but were a part of building the product, year cost of the conference report bill vitally important. As I mentioned at where their ideas were implemented. at approximately $19 billion. That is the outset, the United States—and this When we think about the Glass- the cost of this alleged new reform. is one of the things that is kind of re- Steagalls, and when we think about the Democrats initially tried to fund this markable, when I hear from some of bills that created the SEC, when we obligation with a new tax imposed on my colleagues we have moved too think about the legislation in the 1930s, large financial institutions. When that quickly or this bill does too much— in the moment of crisis, that created could not be sustained, they decided on a new funding mechanism that, as Na- candidly, the whole rest of the world the financial framework for 20th-cen- tional Review recently editorialized, has been waiting on America to act to tury American capitalism, what this ‘‘were a corporation to try it, would set the template for broad-based finan- bill has done—there will be work done get its accountants sent to prison for cial reform. Now that we have acted, I to improve and fully implement it, but what this bill has done has set a frame- fraud.’’ think particularly Europe and Asia Here is how it works. The bill would will follow our stead. But making sure work for 21st-century American cap- italism and, in a certain way, a frame- now ‘‘cancel’’ the Troubled Asset Relief we do this with appropriate inter- work for 21st-century capitalism across Program, or TARP, a few months national implementation is terribly the world in a way that America can early, thus ‘‘saving,’’ theoretically, the important—the Basel circumstances— remain the center for financial mar- government around $11 billion, even but also making sure we have the regu- kets but at the same time making sure though it is highly unlikely that latory approach across the world cor- both consumers and the investing pub- money would ever have been used to rect so there is not an international lic are protected in this new and very make additional TARP loans. That $11 ability to arbitrage with these large fi- challenging world. billion would then be used to partially nancial institutions. With that, I yield the floor. I again offset the cost of the bill. I know some of my colleagues on the extend my compliments to the chair- Remember, that is money that has to other side of the aisle have also raised man and all who have been involved in be borrowed. So instead of simply bor- the question that this bill does not this legislation. rowing 11 billion fewer dollars, we are fully address the GSEs. They are right. The ACTING PRESIDENT pro tem- going to pretend as though we already But I think it was the right and con- pore. The Senator from Arizona. have that money and that we can save scious decision of the chairman and Mr. KYL. Madam President, I, too, it by not spending it on TARP, so we others that to disrupt an already still would like to speak to the conference will spend it on this legislation. It is a fragile housing market at this moment report on financial regulatory reform, double counting that National Review in time in a piece of legislation that which we will presumably vote on in a is right about: It would have put a pri- has already been accused by some as couple of hours. I think we all agree vate business CEO or CFO in jail if he being too broad and covering too many that the purpose of financial regu- had tried to do an accounting trick items was not the appropriate choice. latory reform should have been to such as that. We will have to come back and deal tackle the problems that led to the fi- The TARP law moreover states that with GSEs. We have to make sure, as nancial crisis in the first place. That any money rescinded from TARP shall we deal with GSEs, international im- means serious reform must, at the very not be counted for the purpose of budg- plementation, we stay vigilant. We least, end too-big-to-fail financial in- et enforcement. But to avoid violating have given the regulators the tools. stitutions and rein in two government- the so-called pay-go rule in the House, How they use these tools will be up to sponsored enterprises, the GSEs, the conference report nevertheless uses us in Congress to make sure they are Fannie Mae and Freddie Mac. this alleged savings to pay for the fi- implemented correctly with appro- But despite its size and the hype be- nancial reform provisions, thereby vio- priate oversight. hind it, the bill before us fails in those lating both the letter and the spirit of I am, in certain ways, disappointed two key respects. Moreover, even the TARP law. And, as I said, taking this bill is not being passed with broad- though Main Street did not cause the these funds to pay for something else er bipartisan legislation. But we have problem, the bill is so pervasive in its rather than rescinding them simply only gotten here because there is bipar- regulatory reach that it creates new pushes our Nation deeper into debt. tisan support. burdens for Main Street businesses. I So with regard to the cost of the I want to close acknowledging am not sure that is what the bill’s sup- bill—$19 billion—and the offset, much again—the chairman was very kind in porters want or its authors intend, but of which is not a true offset but simple his remarks—I cannot think, in my that will be the result. double accounting with money we short tenure in the Senate, of any For example, a July 4 Wall Street don’t own or have anyway, but have to other Senator who has worked harder Journal news article entitled ‘‘Finance borrow, is a bad way to do business, to on a piece of legislation, who has been Overall Casts Long Shadow on the say the least, especially on something more relentless, who has had more Plains’’ explains how new derivatives that is called a financial reform bill. twists and turns, who has had more rules will harm America’s livestock Now, I guess, fortunately, we have ‘‘we are there; but, oh, my gosh, we farmers. changed the name to reflect the au- may not be there,’’ who has had prob- There are other problems with the thors of the bill. It is no longer the fi- ably more 10 o’clock, 2 o’clock in the bill. The biggest new problem it causes nancial reform bill; it is now the Dodd-

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00015 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.033 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5884 CONGRESSIONAL RECORD — SENATE July 15, 2010 Frank bill. I appreciate the naming of By 2008 they held nearly $5 trillion in The new bureau will have a say in al- the bill for my good friend, the Senator mortgages and mortgage-backed secu- most every aspect of American busi- from Connecticut, but it is supposed to rities. They were overleveraged but, ness. In an attempt to ensure—and I be about financial reform, and it isn’t unfortunately, deemed too big to fail. am quoting now—‘‘ensure the fair, eq- financial reform when you take money So what do we have today? Fannie uitable and nondiscriminatory access you don’t have, spend it for something and Freddie hold a combined $8.1 tril- to credit for individuals and commu- you are not legally able to spend it for, lion of outstanding debt. Think of that: nities’’—the wording in the law—the and call that an offset for the cost of $8.1 trillion. In total, taxpayers have new bureau will have latitude to im- the bill. lost already $145 billion bailing them pose its will, with few checks and bal- Nevertheless, problem No. 2: Fannie out. When Secretary of the Treasury ances, on American credit providers, and Freddie. It is just unconscionable Geithner lifted the bailout cap last De- all of which will result in more ex- that this bill doesn’t attempt to reform cember, it put the taxpayers on the pense, more regulation, higher costs in any way the two biggest causes of hook for the remainder of these losses, for consumers, and less availability of the problem: Fannie Mae and Freddie for unlimited losses at these two insti- credit. Mac. It was their reckless behavior tutions. The CFPB also exposes companies to that was a major cause of the financial So let’s be clear. Every day that very costly compliance and extensive crisis. It is not for lack of trying on Fannie and Freddie remain in their enforcement proceedings, including po- Republicans’ part. Our Democratic current form is a day that U.S. tax- tentially frivolous lawsuits, by elimi- friends say: Well, we will do that later, payers are subsidizing the failed poli- nating national preemption and other maybe next year. I suggest doing that cies of the past. I think it is very means. is highly improbable. The way things doubtful we are going to get meaning- In my view, the potentially serious work around here is, when you do a ful reform of Fannie and Freddie when costs of this bureau do not justify its comprehensive bill such as this, there it couldn’t be done in the bill that is purported benefits. Consumer protec- are a lot of tradeoffs, a lot of different supposed to deal with all of the under- tion could have been accomplished in lying problems that created the reces- interests involved. If you can’t include much less intrusive and fairer ways. sion we are in now. all of the elements in one bill, it is We all want to shield consumers from The third problem: Harming small abuses and exploitation, but this is ob- very difficult to find the political will business through ‘‘consumer protec- viously not the right way to do it. to tackle the biggest problem of all— tion.’’ It harms far more than small So we should ask ourselves one ques- Fannie and Freddie—next year without business; it harms everyone who is at- tion: Why is it that the CEOs of some the leverage of the other provisions of tempting to get credit. As our friend the bill to deal with. of the largest companies on Wall and colleague, Senator GREGG, has said The behavior of these two institu- Street, some of the largest financial in- many times on this floor, perhaps the tions—these GSEs that have come to stitutions, actually favor this bill? biggest problem with this legislation is epitomize too big to fail—has surged the fact that it is going to make credit Well, it is no skin off their backs. They through the entire commercial banking much more expensive for everyone. But have the money, and they have the re- sector and our economy as a whole and let’s start with small businesses. sources and the personnel to deal with has turned out to be one of the most In my home State of Arizona and its complexity and to put the money up expensive aftereffects of the financial across the country, these are the enti- front and then charge the consumers crisis. For years, Fannie and Freddie ties that hire. They are supposed to be on down the line. It would entrench made mortgages available to too many the first ones that hire coming out of a their privileged status, as they have people who could not afford them. recession. The way they do that is to the resources to maneuver around its Smaller companies were crushed while have access to credit. Well, they are provisions, as I said, and would cer- the two GSEs and their shareholders obviously very wary of the intrusive tainly institutionalize the idea that reaped enormous profits, recklessly new bureaucracy that masquerades as certain big financial firms deserve pref- taking advantage of the government’s consumer protection in this bill, but erential treatment by Federal regu- implicit guarantee to purchase tril- which would compound the problem of lators. lions of dollars worth of bad mort- credit availability. So for all of the reasons I have dis- gages, including those made to risky, All of us here support the concept of cussed, as well as others, and despite so-called subprime borrowers. It was a consumer protection, so let’s don’t get my strong desire to enact prudent fi- textbook example of moral hazard on a off on a tangent of being for or against nancial reforms, I think this legisla- massive scale. consumer protection. We all support tion is misguided. I can’t support it, I was reminded of what I am speak- that. The question is, How do you do and I urge my colleagues to vote ing of this morning driving in and it? Safeguards can be strengthened against it. hearing an ad on the radio which said without creating a new regulatory bu- The PRESIDING OFFICER (Mrs. that through Fannie Mae, you could reaucracy with the powers that exist in HAGAN). The Senator from Con- get a mortgage for 105 percent of the this bill and all of the untoward rami- necticut. value of your home. Now that means fications that result. Unfortunately, Mr. DODD. Madam President, I rec- that immediately you are so-called un- the conference report maintains, with ognize my friend and colleague from derwater; that is to say, you owe more very little change, the flawed Con- Delaware. than your home is worth. sumer Financial Protection Bureau The PRESIDING OFFICER. The Sen- Why are we immediately making the from the bill that was passed in the ator from Delaware. same mistake with Fannie Mae that Senate, the so-called CFPB. It is Mr. KAUFMAN. Madam President, I got us into the problem in the first housed in and funded by the Federal rise today to speak on the Dodd-Frank place, where the mortgages exceeded Reserve but theoretically would oper- bill. I must start by expressing my the value of the homes? I don’t under- ate as an independent agency with an awe—that old expression from Iraq, stand it. enormous budget and with rule-writing ‘‘shock and awe’’—at what Chairman The easy credit that was provided be- ability and enforcement authority that DODD has been able to do during this fore is what helped to fuel the rising I think will, in fact, create independ- session of the Congress. I have been home prices that created the inflated ence from the Fed. around this place since 1973, and I housing bubble, especially in the The CFPB could significantly reduce genuinely cannot think of an example subprime mortgage market. As prices credit access for small businesses and where an individual Senator ever par- rose, so too did the demand for even thereby jeopardize America’s economic ticipated in passing three bills in one larger mortgages, so Fannie and recovery. Without available credit, Congress of the magnitude of the Freddie looked for ways to make even companies cannot grow and con- health care bill, the credit card reform more credit available to borrowers. sequently will not hire additional bill, and now the Dodd-Frank bill. If But, of course, when the market col- American workers. Obviously, that is there is a legislative hall of fame, there lapsed, the two GSEs were left with bil- not what the bill’s authors intended, is a spot for CHRIS DODD in that hall of lions of dollars of bad debt. but it is the inevitable result. fame.

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00016 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.039 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5885 I am going to speak today about clearing of standardized over-the- mental problem of ‘‘too big to fail.’’ In- areas where I don’t agree with this bill. counter derivatives contracts, as well stead of erecting enduring statutory Anyone who has followed my speeches as more robust collateral margin re- walls as we did in the 1930s, the bill in- on the floor would recognize that I quirements. The bill’s inclusion of the vests the same regulators who failed to have a difference of opinion on a num- Kanjorski provision will give regu- prevent the financial crisis with addi- ber of issues. However, I wish to make lators the explicit authority to break tional discretion and relies upon a res- it clear from the beginning—and I will up megabanks that pose a ‘‘grave olution regime to successfully unwind raise it again in my speech—to the ex- threat’’ to financial stability. complex and interconnected mega- tent this bill doesn’t reach where I I was pleased that the bill includes a banks engaged across the globe. I am want it to reach, the responsibility lies provision I helped develop to give regu- also disappointed that key reform pro- on my friends—and I truly mean my lators enhanced tools and powers to visions like the Volcker Rule and the friends—and colleagues on the other pursue financial fraud. Through the Lincoln swaps dealers spin-off provi- side of the aisle. Collins provision, the bill also estab- sion were scaled back in conference. Time and again, vote after vote, they lishes minimum leverage and risk- The bill mainly places its faith and voted as a block to block meaningful based capital requirements for bank trust in regulatory discretion and on reform on many issues. We can talk holding companies and systemically international agreements on bank cap- about the Brown-Kaufman amendment risky nonbank institutions that are at ital requirements and supervision. to break up the banks or we can talk least as stringent as those that apply After decades of deregulation and in- about the maneuvers that were done on to insured depository institutions, an dustry self-regulation, it is incumbent the Brownback bill so we never got a important reform in this bill. upon the regulators now to reassert In light of the failures of past inter- vote, and on Levin-Merkley. So as I themselves and establish rulemaking national capital accords, this require- give this speech today, the reason we and supervisory frameworks that not ment will set a much-needed floor on didn’t get the things I wanted in this only correct their glaring mistakes of how low capital can drop in the upcom- bill is because 41 Republicans, time and the past, but also anticipate future ing Basel III negotiations on capital re- time and time again—when there was a problems, particularly risks to finan- quirements. It will also ensure that the cial stability. Unfortunately, the early vote up they could have changed the capital base of megabanks is not adul- indications we are seeing out of the G– way we do things; they could have in- terated with debt that masquerades as 20 and so-called Basel III discussions stituted the kinds of reforms I wanted equity capital. in this bill—voted against it. That being said, unfortunately, I be- are not encouraging, as critical re- So Chairman DODD was left with the lieve the bill suffers from two major forms are already being watered down problem of, How do we get the votes to- problems. First, the bill delegates too and pushed back in part because some gether to pass the bill? It is essential much authority to the regulators. I foreign regulators carelessly refuse to that we pass a bill, and a good bill, and have been around the Senate for 37 heed the risks posed by their we did, and I am voting for it. But it years. As I said on the Senate floor on megabanks. The legislation also puts in place a could have been, in my opinion, a bet- February 4 of this year and in several ter bill if several votes had gone the speeches since then, I know that many resolution authority to deal with these other way. times laws are not written with hard institutions when they inevitably get After months of careful consider- and clear lines. Laws are a product of into trouble. While such authority is ation, landmark financial reform legis- legislative compromise, which often absolutely necessary, it is not suffi- lation moves toward final passage. means they are vague and ambiguous. cient. That is because no matter how While this bill is a vast improvement We often justify our vagueness by say- well Congress crafts a resolution mech- over the existing regulatory structure, ing the regulators to whom we grant anism, there can never be an orderly I believe it should go further with re- statutory authority are in a better po- wind-down of a $2-trillion financial in- spect to erecting statutory rules that sition than we are to write the rules— stitution that has hundreds of billions address the fundamental problem of and then to apply those regulatory of dollars of off-balance-sheet assets, too big to fail. rules on a case-by-case basis. But, as I relies heavily on wholesale funding, Anyone who has heard my speeches have said, this was not one of those and has more than a toehold in over 100 on the Senate floor starting 4 or 5 times. This was a time for Congress to countries. Of course, since financial months ago will understand my posi- draw hard lines that get directly at the crises are macro events that will un- tion on that. I made it abundantly structural problems that afflict Wall doubtedly affect multiple megabanks clear. I will support the conference re- Street and our largest banks. simultaneously, resolution of these in- port, but I do so with reservations Despite repeated urging from me and stitutions will be enormously expen- about a missed opportunity to enact others to pass laws that would help sive. And until there is international meaningful reforms that would prevent regulators to succeed, Congress largely agreement on resolution authority, it another financial crisis. But as I said has decided instead to punt decisions is probably unworkable. before, ultimately, given the makeup to the regulators, saddling them with a Given the history of financial regu- of the Senate and the requirement for mountain of rulemakings and studies. latory failures and the enormous bur- 60 votes and the intransigence on the The law firm Davis Polk has estimated den of rulemakings and studies with other side of the aisle, this was the that the SEC alone must undertake which the regulators are being tasked, best bill that could pass. close to 100 rulemakings and more than Congress has a critical oversight re- For those who wish the bill were a dozen studies. Indeed, Congress has sponsibility. Congress first must en- stronger, let there be no confusion so choked the agencies with sure that the regulators have enough about where the blame lies. It is be- rulemakings and studies, the totality staff and resources at their disposal to cause almost every Senator on the of the burden threatens to undermine follow through on their serious obliga- other side of the aisle did everything the very ability of the agencies to ac- tions. Just as important, Congress they could to stall, delay, and oppose complish their ongoing everyday mis- must monitor the regulatory phase of Wall Street reform. sion. I for one urge the agencies care- this bill’s implementation closely to To be sure, the bill that has come out fully to triage these required ensure that the regulators don’t return of conference includes some extremely rulemakings and studies, establish a to ‘‘business as usual’’ when the experi- important reforms. It establishes an hierarchy of priorities, and ensure that ence of the most recent financial crisis independent Consumer Financial Pro- the agencies do not shift all resources fades into memory. tection Bureau with strong and auton- to new rules meant to address old prob- How quickly we forget. Time and omous rulemaking authority and the lems to such a degree that they fail to again, I have heard people speak as if ability to enforce those rules for large stay on top of current and growing there was no big financial crisis, say- banks and nonbank entities such as problems. I will have more to say on ing: I have a bank in my hometown payday lenders and mortgage finance this subject in a future speech. that is going to have a problem with companies. In addition, it requires Second, the legislation does not go this legislation. So we should let all electronic trading and centralized far enough in addressing the funda- the banks be free to do whatever they

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00017 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.040 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5886 CONGRESSIONAL RECORD — SENATE July 15, 2010 want to do. We had a crisis here that megabanks began to falter. Because of task of safeguarding our financial sta- practically destroyed the country, the the reputational consequences of liqui- bility. Like many others, I am con- world, and these people are bringing up dating these funds and allowing them cerned whether they have the capacity anecdotal evidence to give these banks to default on their funding obligations, and wherewithal to succeed in this en- more responsibility and not go after they were bailed out by the megabanks deavor. the root cause. that spawned them even though the I repeat again, Congress has an im- For example, in addition to granting SIVs themselves were generally sepa- portant role to play in overseeing the great discretion to regulators on how rate, off-balance-sheet entities with no enormous regulatory process that will they interpret the ban on proprietary official backing from the banks. ensue following the bill’s enactment. trading at banks, the scaled-back Finally, the strength of the core part The American people, for that matter, Volcker Rule contains a large loophole of the Volcker Rule—the ban on propri- must stay focused on these issues, if that allows megabanks to continue to etary trading—will depend greatly on just to help ensure that Congress in- own, control and manage hedge funds the interpretation of the regulators. deed will fulfill its oversight duty and and private equity funds under certain They will ultimately be the arbiter of its duty to intervene if the regulators conditions. Most notably, it includes a whether broad statutory exceptions for fail. Likewise, although I will be leav- de minimis exception that permits ‘‘market making’’ or ‘‘risk-mitigating ing the Senate in November, I will be banks to invest up to three percent of hedging’’ or ‘‘purchases’’ or ‘‘sales’’ of watching closely to see how the regu- Tier 1 capital in hedge funds and pri- securities on ‘‘behalf of customers’’ are lators follow through on the enormous vate equity funds so long as their in- allowed to swallow the putative prohi- responsibilities they are being handed. vestments don’t constitute more than bition. I therefore urge the regulators Let us not forget why reform is so three percent ownership in the indi- to construe narrowly those activities necessary and important. After years vidual funds. that constitute exceptions to propri- of Wall Street malfeasance and the sys- The impact of a supposedly small etary trading to ensure that the tematic dismantling of our regulatory three percent de minimis exception for Volcker Rule has some teeth in it. structure, our financial system went investments in hedge funds and private Senator LINCOLN’s original swap deal- into cardiac arrest and our economy equity firms has the potential to be er spin-off provision would have prohib- nearly fell into the abyss. Wall Street, massive. For example, a $2 trillion ited banks with swap dealers from re- which had grown out of control on le- bank that has $100 billion in Tier 1 cap- ceiving emergency assistance from the verage and financial gimmickry, blew ital would be able to invest $3 billion Federal Reserve or FDIC. By essen- up. More than 8 million jobs were into hedge funds. Since that $3 billion tially forcing megabanks to spin off wiped out; millions more have lost could only constitute three percent their swap dealers into an affiliate or their homes. We spent trillions of dol- ownership, it would need to be invested separate company, this section would lars in monetary easing and emergency alongside at least $97 billion of funds have helped restore the wall between measures to avert the wholesale failure from outside investors. The bank would the government-guaranteed part of the of many of our megabanks. Not sur- therefore be able to manage $100 billion financial system and those financial prisingly, we continue to feel the after- in hedge fund assets, a massive amount entities that remain free to take on shocks of the worst financial crisis equal to the current size of the largest greater risk. It would also have forced since the Great Depression. Every single thing you look at, al- hedge funds in the world combined. derivatives dealers to be adequately most without exception, when you read What’s more, that $100 billion in assets capitalized. our newspapers, is related to our can be leveraged several times over While the final bill includes the Lin- present economic situation, which was through the use of borrowed funds and coln provision, it limits its application caused by lack of regulatory action on to derivatives that reference assets derivatives into overall exposures that Wall Street. could exceed a trillion dollars. And that are permissible for banks to hold The banks are not lending. Fed given the ambiguity of the legislative and invest in under the National Bank Chairman Bernanke just days ago language, unless clarified by a rule- Act. Since that exception covers inter- urged them to do more for small busi- making, some commentators have indi- est rates, foreign exchange and other nesses. Companies and consumers alike cated that megabanks could poten- swaps, it ultimately exempts close to remain shaken in their confidence. And tially provide prime brokerage loans to 90 percent of the over-the-counter de- despite dramatic stimulus measures, hedge funds they partially own and rivatives market. Regulators must the economic recovery has been slow run. therefore reduce counterparty expo- and tentative. Many of the opponents Fortunately, the final bill does place sures by requiring the vast majority of of Wall Street reform would like to costs on banks’ de minimis invest- derivatives contracts to be cleared and make the dubious claim that the recov- ments in hedge funds and private eq- calibrate carefully the amount of cap- ery is being held back by uncertainty uity funds. Specifically, the legislation ital that bank derivatives dealers must about future regulations and taxes. requires a 100 percent capital charge on maintain. Only then can we be sure we Can you believe that? In reality, it is these proprietary investments, making never again face a meltdown caused by being held back by the financial shock them expensive for banks to hold. excessively leveraged derivatives expo- and the fact that we are still in a pe- While this may be a helpful deterrent, sure that no regulator helps to keep in riod of financial instability and under- I am concerned that it will not be check. going an excruciating process of enough of one, particularly when con- The financial reform bill places enor- deleveraging. Even now it is unclear sidering how lucrative and risky an ac- mous responsibilities and discretion whether a European banking crisis tivity it is for banks to run hedge funds into the hands of the regulators. Its ul- based on their holdings of sovereign and private equity funds. timate success or failure will depend debt will continue to impede that re- The overarching problem is that on the actions and follow-through of covery. banks will continue to be able to offer these regulators for many years to It is also being caused by the fact and run—never mind, partially own— come. that Americans are losing faith in the risky investment funds. Even though One of my main concerns is, if we credibility of our markets. Who the scaled-back Volcker Rule includes elected another President who believed wouldn’t, after what has happened? a ‘‘no bailout’’ provision, I have con- we should not have regulators and reg- I think it has been an important fac- cerns about the credibility of that ulation, they would again have the tor in our present hiccup—hopefully, it edict. Under any circumstance, the ability to do what they did to cause a was a hiccup and not a double dip. failure of a massive hedge fund run by meltdown. It is, therefore, imperative that we a megabank would pose serious It is estimated that various Federal build a financial system on a firmer reputational and financial risks to that agencies will be charged with writing foundation. The American economy institution. over 200 rulemakings and dozens of cannot succeed—cannot succeed—un- Just look at what happened when the studies. Many of the same regulators less we restore and maintain financial structured investment vehicles, or who failed in the run-up to the last cri- stability—not only restore and main- SIVs, of Citigroup and other sis will once again be given the solemn tain financial stability but maintain

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00018 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.041 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5887 the credibility of our financial system. this bill. I do not want the record to with a bill—every one of my concerns I We simply cannot afford another finan- persist in suggesting that was not the raised today, if we had gotten some cial crisis or continued financial insta- case. Even people on the other side who help from the other side might have bility if the American economy is to ended up not voting for the bill—at gone another way. But they were not succeed in the coming decades. Getting least have not so far—added substan- going to go another way with the group financial regulation right and main- tially to the value of this bill. In some we had. taining it for years to come should be cases, they might not want to acknowl- I could not agree with Senator DODD one of this Nation’s highest priorities edge that, but they did. more. I think it is easy to stand up in because the price of failure is far too In the case of our two colleagues our caucus and be for this bill. I think high. from Maine and our colleague from what they did was truly courageous. I yield the floor. Massachusetts, they have taken an But I also think that on every major The PRESIDING OFFICER. The Sen- awful lot of abuse in the last number of issue, to have to figure out how we get ator from Connecticut. weeks because they worked with us on 60 votes is a special, difficult problem. Mr. DODD. Madam President, I the bill and made significant contribu- It is not like a swan dive. It is not, like thank my colleague from Delaware. He tions. While they do not agree with they do in the Olympics, a double sum- highlighted the difficulty in passing every dotted ‘‘i’’ and crossed ‘‘t,’’ as I mersault. Putting all those things to- legislation. There are those who think do not with this bill, they decided our gether is a triple summersault in the it goes too far and those who think it country would be better off with the pike position. That is the point I want does not go far enough. We do not write passage of this legislation than not. to make—the difficulty of getting a a bill on our own. There are 100 of us in I do not want the record to be uncor- bill when we need to get 60 votes on this Chamber and 435 in the other. rected when it comes to the number of every issue and there is a constant There are stakeholders, the adminis- people, including those three in par- pressure on the other side for all to tration—all sorts of people we deal ticular, who will, I presume, continue vote together one way. with on these matters. What we try to to take some abuse from others be- Mr. DODD. Madam President, I see do is fashion the best proposal we can cause they did not toe the party line, our colleague from New Hampshire is that moves us forward and addresses nor have they on repeated occasions. here. I will save this for a later debate, the underlying causes, as we tried to They have acted as U.S. Senators, but I know there is talk about chang- with this bill. which is our first responsibility. I ing the rules of the Senate because of I appreciate the Senator’s points that know what that feels like. I have been the frustration Senators feel. I will were raised during the debate and dis- there on numerous occasions in my 30 make, in my waning hours here, as cussion. We tried to accommodate years. Several times, I was the only strong a plea as I can to not succumb them where we could in fashioning leg- Democrat to vote with Republicans on to the temptation to change the insti- islation. It is always a difficult process. substantive matters. It is a lonely mo- tution because of the current frustra- You do not get to write your own bill. ment. I can tell my colleague what tions people feel. There is a reason this You can write your own bill and intro- happens. It is painful, and you get institution exists and has the rules it duce it, but ultimately, for it to be- those long looks from your colleagues. does. All of us one day are in the mi- come law requires cooperation. We had It is uncomfortable, to put it mildly. I nority or majority. The fact that some that cooperation. I appreciate his in- will also tell my colleague that some of may abuse the rules, as has happened volvement very much. the proudest moments a colleague will here without any question, ought not The PRESIDING OFFICER. The Sen- have when they serve here is when they to be a justification for fundamentally ator from Delaware. make those decisions and do so for the changing them. There are ways to deal Mr. KAUFMAN. Madam President, I right reasons. with the problem without losing the es- just laid it out. I taught a course on While I am deeply grateful to my sence of the Senate. He is no longer Congress in law school for 20 years. I Democratic colleagues, many of whom with us, but my seatmate, Robert C. say this in all sincerity: Houdini could had concerns about the bill, as my Byrd, would speak for hours on end not have gotten through this process. friend from Delaware did, and have about the importance of not letting the Really and truly, when one looks at it, been supportive all the way through, I vagaries of the moment dictate the Houdini could not have gotten through guess there is a bit of the prodigal long-term interests of the institution. this process with a bill. son—prodigal daughter in the case of I will leave that for another day, but I try very hard to be bipartisan in ev- our colleagues from Maine and prodigal I appreciate it. erything I do, and I try to speak well of son in the case of our colleague from My colleague from New Hampshire is my colleagues because I really do like Massachusetts—when they decided to here. every one of my colleagues on the stand up and help us get a bill done de- The PRESIDING OFFICER. The Sen- other side. That is not hyperbole. But spite the criticism they have received. ator from New Hampshire. when we start out with 41 Senators Everyone who has been supportive and Mrs. SHAHEEN. Madam President, I bound and determined to slow down, helpful deserves credit, but I think am pleased to join my colleague from delay, stop, and block, it makes the job those who were willing to take an Connecticut, Senator CHRIS DODD, and the Senator from Connecticut has done awful lot of abuse in the process of be here on the floor this afternoon to even more incredible. And then we doing so deserve commendation. talk about the financial regulatory re- have to get 60 votes on anything of sub- I did not want to let that number form bill that is pending. stance. Then we have to go over to the stand—41—because it implies somehow Before I begin my remarks, I wish to House side. And God bless our friends there were people on the other side who recognize Senator DODD for his leader- on the House side. When I talk with were not helpful, and they were, in- ship and hard work in getting this con- them, they just look over here and can- cluding people who did not vote for the ference report to the floor so that we not believe we ever get anything done. bill who were helpful as well. can hopefully adopt it this afternoon. Getting this bill done, getting it Mr. KAUFMAN. Madam President, I It is important because of what has through the Senate, dealing with all totally agree with the Senator. It is happened in this country and what has the stakeholders, dealing with the ad- oversimple. I know the Senator from happened in my State of New Hamp- ministration, dealing with the folks on Connecticut received a lot of support shire. the House side, and, with all due re- from the Republican side. I know how Over the past 2 years, people in New spect, doing it three times in one Con- difficult it is to be the person standing Hampshire and across the country have gress, is definitely a Hall of Fame per- in your caucus when everyone in your suffered the consequences of Wall formance. caucus wants to vote another way. I Street’s gambles. While we are seeing I thank the Senator again. appreciate that. our economy in New Hampshire begin Mr. DODD. Madam President, my What is amazing to me is what to rebound, which is thanks in no small colleague talked about 41. There are a passed was what the three of them part to the job creation that was number of Republicans who played a would sign on to or others would sign spurred by the Recovery Act, it is crit- very critical and supportive role on on to. The idea that the Senator came ical that we act to prevent Wall

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We afternoon when we get to the vote on sumer confidence plummeted. need to protect consumers from abu- the conference report. Americans were rightly angry that sive practices and empower them to The PRESIDING OFFICER. The Sen- while they were losing their homes, make sound financial decisions for ator from Connecticut. jobs, and long-term savings, they were their families. We need more trans- Mr. DODD. Madam President, briefly, also expected to foot the bill for the ir- parency and regulation in the now I thank my colleague from New Hamp- responsible actions of Wall Street shadowy markets where Wall Street shire. I see my other colleague from CEOs. Their outrage only grew when executives and investment banks have New Hampshire as well. It is a New these same CEOs continued collecting made gambles. In those shadowy mar- Hampshire moment. I thank Senator unprecedented bonuses—presumably kets, the Wall Street firms got all the SHAHEEN and our colleague from for their work in recklessly taking our upside and American families got all Maine, Senator SNOWE, for working as Nation to the brink of collapse. Frank- the downside. We need to do everything they did on the community bank ly, I share that anger. we can to ensure that a financial crisis, issues. It is clear that our economy has not such as the one we experienced in late I was pleased, as I noted yesterday, yet fully recovered, but in the last year 2008, never happens again. We need to that the Independent Community and a half, Congress has dedicated ensure that taxpayers will not be asked Bankers Association, while not endors- itself to turning our economy around. to bail out Wall Street. In short, we ing the entire bill but specifically on We are now on the verge of passing his- need to pass the strong Wall Street re- their issues involving community toric legislation that creates better ac- form bill that is before us today. banks expressed strong support for this countability and transparency for Wall It is also important to note that bill and how much stronger these Street and the financial sector. while this bill requires Wall Street banks are today as a result of our ef- banks to be held more accountable, it forts than would be the case if we were As a senior member of the Banking does not unfairly burden community to defeat the legislation. Their ability Committee, and a member of the con- banks. Community banks did not cause to compete with these larger banks has ference committee, I have worked hard the financial crisis, and they should been enhanced tremendously by what to identify the causes of the crisis and not have to pay for Wall Street’s reck- we have done in this bill. If these provi- find the right solutions to address less behavior. That is particularly im- sions were not adopted, they would be these causes. I have talked at length portant to us in New Hampshire, where back in a situation where there would with South Dakotans of all back- community banks make a huge dif- be significant disadvantages for them grounds and political stripes to gain ference for our cities and towns. That under the current law. their perspective, and there are some is why I joined with Senator SNOWE on I am very grateful to Senator things that get mentioned time and again: there were many causes for the her amendment to eliminate the un- SHAHEEN and Senator SNOWE and oth- necessary, burdensome requirement ers who supported their efforts to meltdown, but gaps in regulation con- that community banks and credit strengthen the role of our community tributed to the problem; rules that ap- unions collect and report on various banks that play such a critical role. As plied to some financial companies but data about their depositors. the Senator from New Hampshire not all opened loopholes that bad ac- I also sponsored another bipartisan pointed out, they were never a source tors could exploit; the lack of a system amendment, one to make large, riskier of the problems in the residential to monitor risks across the banking banks pay their fair share of FDIC pre- mortgage market at all. That deserves sector left taxpayers vulnerable; regu- miums and lower assessments for com- to be repeated over and over. lators were not very focused on looking munity banks. Community bank lend- I thank the Senator for her com- out for consumers; and large Wall ing is really the lifeblood of New ments. Street firms operated with little or no Hampshire’s economy. Every dollar Mr. JOHNSON. Madam President, accountability to either their share- community banks have to pay for Wall Congress is now on the brink of passing holders or their customers. In addition, Street’s mistakes is a dollar that could a landmark deal on legislation to re- it became clear we needed a system to be going to extend credit to small busi- form Wall Street and prevent another unwind big financial firms like AIG, nesses and to home and consumer loans financial crisis like the one we faced Lehman Brothers, and Bear Stearns in to families. nearly 2 years ago. This legislation is an orderly fashion and without tax- I also joined Senator COLLINS on her payer bailouts. Doing nothing is not an amendment to require Wall Street an important and long overdue meas- ure that will help to safeguard the option, and I do not think anyone can banks to follow the same capital and say with a straight face that our cur- risk standards small depository banks long-term stability of our economy. In the closing months of the Bush ad- rent system of financial regulation must follow. This amendment will works for America. make the risky banks that led us into ministration, our Nation faced an eco- While not perfect, the Wall Street re- this financial crisis—banks such as nomic situation so dire that many form measure does a great deal to ad- Bear Stearns and Lehman Brothers— feared our financial system was on the dress many of these problems. It cre- follow the same standards that already verge of collapse. Though we were able ates a mechanism to monitor systemic apply to small depository banks. to avert such a collapse, the impact of This bill requires the big Wall Street the crisis spread across America, leav- risk in the financial sector, as well as banks to have adequate capital to pre- ing few untouched. regulating risky derivatives, credit de- vent taxpayers from having to bail Virtually all of us have been im- fault swaps and other complicated fi- them out again. pacted by the economic meltdown in nancial products that were not trans- I am very pleased that those bipar- some way: businesses shed jobs, work- parent and had previously gone unregu- tisan amendments, which have ers’ hours were cut, some folks had lated. It affords consumers better rules strengthened the bill by protecting great difficulty making their mortgage governing the products they use and community banks, have been adopted. payments when their pay was cut, better information about those prod- It speaks to the conversation Senator small businesses lost customers and ucts by creating a consumer watchdog DODD was having with Senator KAUF- revenue in the downturn. South Da- agency. Importantly, it also creates a MAN earlier that this is a bill that has kota homeowners, regardless of wheth- way to unwind large financial firms gotten broad support in this body and a er they had a mortgage or owned their without having to bail them out. lot of input that has made it better. home outright, saw their equity drop, Specifically, I want to mention two I am glad we have been able to work and most folks with investments for re- provisions. First, I am pleased that the in this bipartisan manner to craft a tirement or other long-term goals suf- conference committee accepted the

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00020 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.046 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5889 Carper-Bayh-Warner-Johnson amend- There are certainly provisions in this tations under section 619(d)(4)(B)(ii)— ment, which I strongly supported, re- bill that I would have written dif- will only apply to a banking entity at garding the preemption standard for ferently as any of my colleagues would the end of the period that is 2 years State consumer financial laws. This if we wrote this legislation ourselves. after the section’s effective date. This amendment received strong bipartisan But that is not how the Senate and our date for the regulators to begin apply- support on the Senate floor and passed legislative system works, and overall I ing the new rules can also be extended by a vote of 80 to 18. One change made think this conference report is very into the future for up to three 1-year by the conference committee was to re- strong legislation. I look forward to its periods under section 619(c)(2) and can state the preemption standard in a passage. also separately be extended for illiquid slightly different way, but it is clear There is no doubt that after the funds with contractual commitments that this legislation is codifying the President signs this bill into law, there as of May 1, 2010, under section preemption standard expressed by the will be an important focus on imple- 619(c)(3), on a one-time basis for up to U.S. Supreme Court in Barnett Bank of menting this legislation correctly, as 5 years. Only after all of these time pe- Marion County, N.A. v. Nelson, Florida well as continued oversight by Con- riods and extensions have run will any Insurance Commissioner, 517 U.S. 25 gress of the agencies and covered finan- of the limitations under section (1996) case. This will provide certainty cial institutions, and efforts at inter- 619(d)(1)(G) and section 619(d)(4) be ap- to consumers and those that offer con- national coordination with our coun- plied by regulators. sumers financial products. terparts in other countries. It is also Second, as an added protection, sec- Also, section 913 of the conference re- likely that there may need to be cor- tion 619(f) applies sections 23A and 23B port reflects a compromise between the rections and adjustments to the bill in of the Federal Reserve Act to trans- House and Senate provisions on the the future. That said, passage of this actions between all of a banking enti- standard of care for brokers, dealers, bill is important to our nation’s eco- ty’s affiliates and hedge or private eq- and investment advisers. It includes nomic recovery, and we must get it to uity funds where the banking entity the original study provisions passed by the President’s desk. organizes, offers, serves as an invest- the Senate, together with additional Mrs. HAGAN. Madam President, I ment manager, investment adviser, or areas of study requested by the rise today to discuss the conference sponsor of such funds under section House—a total of 13 separate consider- agreement on financial services regu- 619(d). These restrictions are also ap- ations and a number of subparts, where latory reform and specifically an issue plied to transactions between a bank- we expect the SEC to thoroughly, ob- in section 619 of title VI, known as the ing entity’s affiliates and other funds jectively and without bias evaluate Volcker rule. The section’s limitations that are ‘‘controlled’’ by a hedge or pri- legal and regulatory standards, gaps, on financial organizations that own a vate equity fund permitted for the shortcomings and overlaps. We expect depository institution from investing banking entity under 619(d). Impor- the SEC to conduct the study without or sponsoring in hedge funds or invest- tantly, these 23A and 23B restrictions prejudging its findings, conclusions, ments in private equity to 3 percent of do not apply to funds not ‘‘controlled’’ and recommendations and to solicit an organization’s assets, in the aggre- by funds permitted for the banking en- and consider public comment, as the gate, references ‘‘tier 1 capital.’’ tity under section 619(d), and it should statute requires. As Chairman FRANK The term ‘‘tier 1 capital’’ is a concept also be clear that under section 619 described the compromise when he pre- currently applied strictly to banks and there are no new restrictions or limita- sented it to the committee, section 913 bank holding companies and consists of tions of any type placed on the port- does not immediately impose any new core capital, which includes equity folio investments of any hedge or pri- duties on brokers, dealers and invest- capital and disclosed reserves. How- vate equity fund permitted for a bank- ment advisers nor does it mandate any ever, there are financial organizations ing entity under section 619. particular duty or outcome, but it subject to the Volcker rule’s invest- Third, as a condition of sponsorship, gives the SEC, subsequent to the con- ment constraints that do not have a section 619(d)(1)(G)(v) requires that a clusion of the study, the authority to principal regulator that utilizes tier 1 banking entity does not, directly or in- conduct a rulemaking on the standard capital measurements to determine an directly, guarantee or assume or other- of care, including the authority to im- entity’s financial strength. In order to wise insure the obligations or perform- pose a fiduciary duty. I think this is a ensure a level playing field with tradi- ance of any sponsored hedge or private strong compromise between the House tional banks, I would hope the appro- equity fund or of any other hedge or and Senate positions. priate regulators would determine a private equity fund in which the spon- This bill gives financial institutions, suitable equivalent of tier 1 capital to sored fund invests. While this restricts regulators and consumers the right determine the investment limit, while guarantees by the banking entity as tools to make good decisions, and it still satisfying the intent of the well as the insuring of obligation or also provides the right tools to prevent Volcker rule. performance, it does not limit other another crisis like the one we recently I ask the regulators to make certain normal banking relations with funds experienced. Many of the bill’s provi- that these types of financial organiza- merely due to a noncontrol investment sions, including those mentioned pre- tions will be subject to the Volcker by a fund sponsored by the banking en- viously, have bipartisan support; in rule in a manner that takes into ac- tity. As described above, section 619(f) fact, many of the core ideas incor- count their unique structure. limits transactions under 23A and 23B porated into the bill originated from In addition, I am pleased that as part of the Federal Reserve Act with a fund my Republican colleagues. of the conference report that the ‘‘controlled’’ by the banking entity or Critics of this legislation have said Volcker language was modified to per- a fund sponsored by the banking enti- that it tackles the wrong problems, mit a banking entity to engage in a ty. However, 619(f) does not limit in hurts small banks and businesses, and certain level of traditional asset man- any manner transactions and normal burdens struggling financial institu- agement business, including the ability banking relationships with a fund not tions. I appreciate those points of view, to sponsor and offer hedge and private ‘‘controlled’’ by the banking entity or but feel very confident in saying we equity funds. With that in mind, I a fund sponsored by the banking enti- have taken specific steps to ensure wanted to clarify certain details ty. that small banks and businesses are around this authority. Finally, section 619(d)(4)(I) permits not negatively affected, to make it First, I was pleased to see that the certain banking entities to operate more difficult for firms to take dan- Volcker Rule, as modified, will permit hedge and private equity funds outside gerous risks, and to strike the right banking entities several years to bring of the United States provided that no balance between regulation and flexi- their full range of activities into con- ownership interest in any hedge or pri- bility. But the bottom line is this: the formance with the new rule. In par- vate equity fund is offered for sale or kind of free-wheeling, self-regulating, ticular, section 619(c)(2) ensures that sold to a U.S. resident. For consist- anything goes environment that we the new investment restrictions under ency’s sake, I would expect that, apart had before the crisis is simply not an section 619(d)(1)(G)(iii) and section from the U.S. marketing restrictions, option. 619(d)(4)—including the numerical limi- these provisions will be applied by the

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00021 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.006 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5890 CONGRESSIONAL RECORD — SENATE July 15, 2010 regulators in conformity with and in- tiatives which will hopefully mute that allow people to do business and make corporating the Federal Reserve’s cur- type of potential for another event of a sure they can insure over the risks that rent precedents, rulings, positions, and systemic meltdown. they have in a business. This bill cre- practices under sections 4(c)(9) and The second purpose of this bill—and ates a new regime for how we handle 4(c)(13) of the Bank Holding Company it is an equally important purpose—is derivatives in this country. Act so as to provide greater certainty that we not do something that harms Our goal should have been to make and utilize the established legal frame- one of the unique strengths and charac- derivatives more transparent and work for funds operated by bank hold- teristics of our Nation, where if you sounder. That could have been done ing companies outside of the United are an entrepreneur and have an idea easily by making sure most derivatives States. and are willing to take a risk and try were on over-the-counter exchanges— The PRESIDING OFFICER. The Sen- to create jobs, you can get credit and went through clearinghouses I mean, ator from New Hampshire. capital reasonably easily compared to and had adequate margins behind Mr. GREGG. Madam President, let the rest of the world. That has been the them, adequate liquidity behind them, me begin by thanking the Senator from engine of the economic prosperity of and were reported immediately to the Connecticut and congratulating him. our Nation—the availability of credit credit reporting agencies as to what He has been pretty effective in his last and capital, reasonably priced and rea- they were doing. It didn’t involve a lot year in the Senate. He got a lot of stuff sonably available to entrepreneurs in of complications, just changing the moving and a lot of stuff through. And our Nation. rules of the road. Instead of doing that, I have not agreed with all of it, by the Those should have been our two we have changed the entire process. In way. Most importantly, he has done it goals. If we match this bill to those changing the entire process, we are ba- in a fair and balanced way, always with goals, does it meet the test of meeting sically going to contract significantly a sense of humor and an openness and those goals? Unfortunately, I don’t the availability of these products to willingness to listen to those with think it does. There are some very basically fund and to be the engine or whom he may not agree entirely and positive things in the bill. The resolu- the grease or the lubricant for the abil- allow us to participate at the table in tion authority is a good product in this ity of a lot of American businesses to discussions about the problems at the bill, and it will, in my opinion—though do business. very beginning of the process in a very I know there is a lot of discussion End users in this country who use de- substantial way. So I thank him for his about this—pretty much bring an end rivatives are going to find it very hard courtesy and for the way he runs the to the concept of too big to fail. to have an exemption. They are basi- committee and the way he ran the If an institution gets overleveraged cally going to have to put up capital, HELP Committee when he succeeded to to a point where it is no longer sustain- put up margin—something they do not that leadership on the unfortunate able, and it is a systemic risk institu- do today on commercial derivative passing of Senator Kennedy. It has tion, it is going to be collapsed. The products—and that is going to cause been a pleasure to serve with him on stockholders will be wiped out, the un- them to contract their business. They this bill and on some very significant secured bond holders will be wiped out, will have to contract their business or issues as we tried to work through and the institution will be resolved they are going to have to go overseas. them. under this bill. Believe me, there is a vibrant market I have reservations about this bill— That is positive because we do not in derivatives overseas. They will go to they are more than reservations. I, ob- want to send to the markets a signal London, and this business will end up viously, believe the bill doesn’t get us that the American taxpayer is going to offshore. to where we need to go. When we start- stand behind institutions which are Then we have this push to put every- ed on this effort, our purpose was, in simply large. That perverts capital in thing on an exchange. Well, there are a the beginning, twofold: First, we want- the markets, and it perverts flow of lot of derivatives that obviously should ed to make sure we could do everything economic activity in the markets when go through clearinghouses but are too we could to build into the system of people think there is that sort of guar- customized to go on exchanges, and we regulatory atmosphere and the mar- antee standing behind certain institu- are going to end up inevitably with a ketplace the brakes and the ability to tions in this country. And I think contraction in the derivatives market avoid another systemic meltdown of progress is made in this bill on the as a result. the type we had in late 2008, which was issue of resolution. Then we have the swap desk initia- a traumatic event. But, unfortunately, in a number of tive, which was simply a punitive exer- Nobody should underestimate how other areas, the opportunity to do cise, in my opinion. It is going to ac- significant the events of late 2008 were. something constructive was not accom- complish virtually nothing in the area If action had not been taken under the plished. In fact, in my opinion, there of making the system sounder or more TARP proposal, and under the leader- will be results from this bill which will stable. But what it will do is move a ship of President Bush, Secretary cause us to see a negative effect from large section of derivative activity—es- Paulson, and then President Obama this bill. The most negative effects I pecially the CDS markets—offshore. and Secretary Geithner, this country think will occur from this bill lie in They will go offshore because they will would have gone into a much more se- two areas. First, in the area of the for- not be done here any longer. Banks and vere economic situation—probably a mation of credit. financial houses which historically depression. Secretary Paulson once es- It is very obvious that under this bill have written these instruments are not timated the unemployment rate would there is going to be a very significant going to put up the capital to write have gone to 25 percent. The simple contraction of credit in this country as them because they don’t get a return fact is the entire banking system we head into the next year, 2 years, that makes it worth it to them. would have probably imploded—most maybe even 3 years. We are in a tough I guarantee we are going to see a likely imploded—and certainly Main fiscal time right now. It is still very massive contraction in a number of de- Street America would have been put in difficult on Main Street America to get rivatives markets as a result of this dire straits. credit. The economy is slow. We should swap desk initiative, which was more a But action was taken. It was difficult not be passing a bill which is going to political initiative than a substantive action. We are still hearing about the significantly dampen down credit, but initiative, and which is counter- ramifications of it, but it was the right it will. This bill will. It will for three productive. It is a ‘‘cut off your nose to action, and it has led to a stabilization reasons: spite your face’’ initiative, and it will of the financial industry. But we never First, the derivatives language in move overseas a lot of the products we want to have to see that happen again. this bill is not well thought out. It just do here and make it harder for Ameri- We never want to have to go through isn’t. Most people don’t understand cans to be competitive—especially for that type of trauma again as a nation, what derivatives are, but let’s describe financial services industries to be com- where our entire financial community them as the grease that gets credit petitive—in the United States. So that is teetering. So the purpose of this bill going in this country and everywhere. will cause a contraction and a fairly should be to put in place a series of ini- It is basically insurance products that big one.

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00022 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.009 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5891 The estimates are that the contrac- problems in the industry did exist and come out of a government entity. They tion may be as high as $3⁄4 trillion. should have been addressed. used to say: You know, the government That is a lot of credit taken out of the Another area of concern, of course, is produces a camel when it is supposed system. On top of that, there is the this consumer agency. Consumer pro- to be producing a horse. issue of the new capital rules in this tection is critical. We all agree to that. There is just a disconnect between bill. What we proposed on our side of the the reality of what we are supposed to It isn’t constructive for the Congress aisle was that we link consumer pro- be doing in the area of producing effec- to set arbitrary capital rules. That tection and safety and soundness at the tive regulation relative to protecting should be left to the regulators. But same level of responsibility and the consumers and what this bill ends up this bill pretty much does that. As a same level of authority within the en- finally doing. result, a lot of the regional banks, the tire bank regulatory system so that I would not be here to oversee it or middle-sized banks—the larger banks the prudential regulator—whether it is participate in it. In fact, nobody gets would not be affected too much—will the Fed or the Office of the Comp- to oversee it, by the way. This con- find they are under tremendous pres- troller—when they go out to regulate a sumer protection agency is not respon- sure as their tier I capital has to be re- bank and check on it for safety and sible to the Banking Committee of the structured relative to trust preferred soundness—or the FDIC—they, at the Senate or the Banking Committee of stock. same time, have the same standard of the House. It is not responsible to the This is not a good idea because, as a importance placed on making sure that Fed. This person is a true czar. practical matter, we will again cause a the consumer is being protected in the The term ‘‘czar’’ is thrown around contraction in the market of capital— way that bank deals with the con- here a lot, but this person is a true czar of credit. As banks grow their capital, sumers. That is the way it should be in the area of consumer activity. I sus- they will have to contract credit. When done. The two should be linked because pect we will see that this agency be- a bank has to get money back in order the regulator that regulates the bank comes a very controversial agency, to build its capital position up, it for safety and soundness is the logical with a very political social justice type doesn’t go to its bad loans because the regulator to regulate the bank to make agenda, not an agenda which is aimed bad loans aren’t performing. It goes to sure it is complying with consumers’ at primarily protecting consumers. its good loans, and it doesn’t lend to needs. So that is a big problem with this them. Or it says: We are going to draw But this bill sets up this brandnew bill, and there are a lot of other issues down your line of credit, because that agency, which it calls consumer protec- with this bill. At the margin, the issue is where they can get capital. That is tion, but it will not be at all, in my of how we restructure the regulatory what will happen, and we will see cap- opinion. It will be the agency for polit- regimes is of some concern, the whole ital contract there. ical correctness or correcting political question of how stockholders’ rights in On top of that, we have the Volcker justice or issues of political justice this bill—and probably not relevant to rule. The concept is a very good idea. that somebody is concerned about. It is the banking issue so much—could have We should never have banks using in- totally independent of everybody else. been improved on. The bill overall sured deposits to do their proprietary It doesn’t answer to anyone except on a could have been a much better product. activity. But straightening out what very limited and narrow way to the But the primary concern I have goes this Volcker rule means will take a systemic risk council. It is a single per- back to this issue of what was the while. It may be a year or two before son with an $850 million unoversighted original purpose—to protect systemic anybody can sort out what it means revenue stream with no appropriations. risk in the outyears and make sure we and before the regulations come down Basically, the person just gets the continue to have a strong and vibrant that define it. So there will be a period money and can go off and do whatever credit market for Americans who want of uncertainty, and that uncertainty they want. There is no relationship be- to take risks and create jobs. means less credit available. tween this person and the prudential Two major issues were totally ig- Of course, this is another situation regulator. So what we will have is an nored in the bill which would address where the international banks are the individual who may get on a cause of that question: What drove the event of winners and the domestic banks are social justice and say that XYZ group this meltdown? What caused this finan- the losers because the international isn’t getting enough loans, and they go cial downturn? It was the real estate banks will be able to go and do the out to the banks and say: You have to market and the way it was being lent same business—the proprietary trade— send XYZ group more loans. into. Two things were the basic engines in London, if they are based in London We might have the bank regulator of that problem, that were government or in Singapore, if they are based in over here saying to the local banks, the controlled. There were a lot of things Singapore or Tokyo, if they are based regional banks: You can’t lend to XYZ which caused it, but the two things in Tokyo. But the American banks group because we know they are not which the government controlled were, they compete with aren’t going to be going to pay you back or they will not No. 1, underwriting standards. Basi- able to do it. So that makes no sense at pay you back at a rate that is reason- cally we divorced underwriting stand- all. able. So we are going to have this in- ards from the issue of whether a person But as a practical matter, that is herent conflict. got a loan, so loans were being made on what this bill does. So we will end up Now, what will be the result of that? assets which could not cover the cost again with a tentativeness in the mar- The banks will probably have to lend of the loan. It was presumed the asset kets as to what they are supposed to be to the XYZ group, which means the was going to appreciate, a home was al- doing and what they can do in the area people borrowing from that bank who ways going to appreciate in these com- relative to the Volcker rule, and this pay their loans back will have to pay munities and therefore they could loan will end up creating further credit con- more because the bank will have to at 100 percent of the value of the home tractions. make up for the loss of revenues. As a or 105 percent of the value and still So my guess is, when we add it all to- result, the cost of credit will go up, es- have a safe loan. That was a foolish as- gether, this bill will lead to a credit pecially for individuals who are respon- sumption, to say the least. contraction of probably $1 trillion or sible and paying down their debts and Second, we didn’t look at whether more in our economy. What does that paying for their credit—paying back the person could pay the loans back translate into? It translates into fewer their loans. We are going to end up when these loans were made at zero in- jobs and less economic activity. It with layers and layers of conflicting terest for a year or 2 years. But then didn’t have to happen this way. This regulation which will cost the banking they reset, these loans reset at a fairly could have been done in a way that community money—a significant reasonable or sometimes very unrea- would have been clearer, where the amount of unnecessary money. sonable interest rate and nobody clarity would have been greater, and Who pays for that? Well, the con- looked at whether the person could pay where we would not have had to take sumer pays for it. Clearly, that gets them back. arbitrary action which was more polit- passed through. This is one of those These loans were being made not for ical than substantive to address what Rube Goldberg ideas that can only the purposes of actually recovering the

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00023 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.050 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5892 CONGRESSIONAL RECORD — SENATE July 15, 2010 loans. That was not the reason these poorly structured derivatives language, Mr. SPECTER. I ask unanimous con- loans were being made. These subprime the Consumer Protection Agency— sent I may have 30 minutes when the loans were being made because there which I think is going to end up being two votes which are scheduled for 2 were fees on the loans and the people counterproductive to consumers—and o’clock conclude. making the loans were getting the fees. the failure to take up the Freddie and Mr. DODD. Certainly I would have no There was a whole cottage industry of Fannie issue, and the failure to do objection to that whatsoever. Take people down in Miami who had just stronger underwriting standards. some time at this juncture too, if you gotten out of prison who figured this For that reason, I remain opposed to wish. out while they were in prison and they this bill. I understand it is going to Mr. SPECTER. I will do it all at developed an entire cottage industry of pass. I hope some of my concerns do once. I don’t want to truncate it. former prisoners who had been re- not come to fruition because, if they I ask unanimous consent that I may leased, legally, and actually went back do, unfortunately this economy is have the floor for 30 minutes at the into the loan business and were making going to be slowed and our Nation will conclusion of the two votes scheduled these loans and getting the fees. be less viable economically. But I am for 2 o’clock. Then what aggravated it—first what afraid they will come to fruition. The PRESIDING OFFICER. Is there aggravated it was the underwriting I yield the floor. objection? standards, but then it was that these The PRESIDING OFFICER (Mr. Mr. DODD. Again, let me reserve the loans got securitized. They got picked BURRIS). The Senator from Connecticut right to object. I see the minority up by Freddie Mac and Fannie Mae, is recognized wants to check on such a request. I with the understanding—it was im- Mr. DODD. I see my other colleagues have no objection myself but obviously plicit but it was obvious, as we found here, including Senator SPECTER who that is a matter—in fairness to the mi- out—that Fannie Mae and Freddie Mac wants to be heard, but I want to ad- nority, we want to let them know of would essentially insure these loans. dress my colleague from New Hamp- such a request. Here we are eating up So if you bought one of these shire because we are both going to be time right now. I see my friend from securitized loans, Fannie Mae and walking out of this Chamber in about 5 North Dakota here as well. I am deeply Freddie Mac would be standing behind months. I thank him for his work going grateful to the chairman of the Budget it even though the loans were not via- back to 20-some-odd months ago when Committee. ble. we were involved in the critical weeks Go ahead with that request. I am told This bill ignores both those issues. It and days in September and October. it is OK. has very marginal language on the JUDD GREGG was invaluable putting to- The PRESIDING OFFICER. Without issue of underwriting. It doesn’t get us gether a moment here while, not ter- objection, it is so ordered. back to standards which would basi- ribly popular, I think saved the econ- Mr. SPECTER. I thank the Chair and cally protect us from overly aggressive omy and the country. I will not address my colleague and the unknown persons underwriting. all his concerns here. We have a dif- in the cloakroom. People say Canada did not have a ferent point of view on the issues he Mr. DODD. I thank my colleague problem, Australia didn’t have a prob- raised. They are not illegitimate from Pennsylvania and the unknown lem. Why didn’t they have a problem? issues. We think we addressed them persons in the cloakroom. Let the They didn’t have a problem because properly. He has a different view, and I record show they acknowledged the they required people who were bor- respect that. I appreciate his work and Senator’s request. rowing to put money down and they re- that of his staff on this bill. He made a The PRESIDING OFFICER. The Sen- quired that people who were borrowing significant contribution to this effort ator from North Dakota is recognized. actually be able to pay the money and I thank him for it. Mr. CONRAD. Mr. President, I come back. It seems like a perfectly reason- I see my colleague from Pennsyl- to the floor to discuss the budget point able thing to require, but this bill ig- vania here and I yield the floor. of order that has been raised against nores it. The PRESIDING OFFICER. The Sen- the financial reform conference report. Second, this bill does nothing about ator from Pennsylvania is recognized. I will be voting to waive this point of Fannie or Freddie—nothing. Talk Mr. SPECTER. Mr. President, at the order. As Budget Committee chairman, about ignoring the elephant in the outset I wish to ascertain with preci- I do not take this step lightly. In fact, room, this is the whole herd of ele- sion that I have 20 minutes, as had the point of order that has been offered phants in the room. The American tax- been arranged with the floor monitors. is a point of order that I created in the payer today is on the hook for some- I had looked for 30 but I ask consent I 2008 budget, so it is something I feel thing like $500 billion to $1 trillion. may speak for up to 20 minutes now. strongly about as a general matter. The estimates vary. Some people say it The PRESIDING OFFICER. Is there But its applicability here is false in the is even higher than that—the American objection? face of the importance of the legisla- taxpayer, for bad loans, securitized by Mr. DODD. Reserving the right to ob- tion we need to consider. Fannie and Freddie. This bill says ject, I want to be clear so my colleague The legislation before us is critical to nothing. It is as if this problem doesn’t will understand this. I had a sheet of our economic strength. I think we all exist. It is as if this problem doesn’t paper in front of me—I do not have it understand that financial reform is exist. Not only was it one of the pri- in front of me now—with the order of long overdue. It has been almost 2 mary drivers of the financial meltdown those who sought time. I want to be years since the financial sector col- but it is one of the biggest problems we careful, as my colleague from Pennsyl- lapse brought our economy to the have going forward. The administra- vania will understand. We are going to brink of global financial collapse. I was tion says we will do it next year. Well, vote at 2 o’clock. I want to be sure I in the room and Senator DODD was in if you do a financial reform bill with- can accommodate my colleagues. the room when we were informed by out Fannie and Freddie, you essen- The PRESIDING OFFICER. Twenty- the Chairman of the Federal Reserve tially are not doing a financial reform three minutes remains to the majority. and the Secretary of the Treasury in bill at all. I apply the same to the issue Mr. DODD. I know Senator CONRAD, the previous administration that if we of underwriting. chairman of the Budget Committee, failed to act at that dire moment, we In my opinion, this bill has some has to be heard and it is critical to me could face a global financial collapse. pluses. I know this was worked very he be heard on the budget point of That is how serious it was. hard and I admire the efforts of the order. Now that the economy has stabilized, Senator from Connecticut and actually Could you make it a little less than it is easy to forget the crisis that swept the chairman in the House, Congress- 20? through the financial markets and man FRANK from Massachusetts. But Mr. SPECTER. I really cannot. I had threw us into the worst downturn since the negatives of this bill unfortunately started at 30 and 20 is tough. How early the Great Depression—in fact, which are too significant to ignore, especially might I return for my 30 minutes? risked a second great depression. But in the area of the short-term credit Mr. DODD. After 2 o’clock? Any point we cannot afford to forget. We need to contraction that is going to occur, the after—— remember that the problems on Wall

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00024 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.052 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5893 Street and in our financial sector have Second, we must bear in mind the issue. He has it, as we saw as well, ex- a direct impact on Main Street and the risk of failing to act because that actly right. In fact, it is not only re- lives of every American. We need to en- would burden taxpayers in a way far paying 100 percent but with interest. sure that taxpayers are never again beyond anything we see with this budg- There is an interest requirement, that asked to bail out Wall Street. et point of order. None of us wants if we borrow from the taxpayers in This financial reform legislation will that. This bill is an insurance policy order to wind down substantially risky prevent another financial sector col- against an expensive future taxpayer firms, then not only do you get paid lapse, or at least will help prevent it. I bailout. back, but the interest on the cost of do not think any of us can say this will The point of order that has been that money is also part of the deal. So prevent any future collapse, but it is raised is the long-term deficit point of it is 100 percent-plus coming back to critically important to helping us pre- order, a point of order I established in the Treasury. vent another collapse. It will allow the the budget resolution of 2008. This But his analysis and that of his com- government to shut down firms that point of order prohibits legislation that mittee—and there is no one who has threaten to crater our economy and en- worsens the deficit by more than $5 bil- been more disciplined or guarded about sure that the financial industry, not lion in any of the four 10-year periods the budgetary process over the years taxpayers, is on the hook for any costs. following 2019. we have served together, and so I ap- It will rein in risky derivatives and CBO has determined that at least in preciate the Senator’s analysis of this other risky trading practices that un- one of those four 10-year periods, the particular point on the long-term def- dermined some of our largest financial conference report would exceed this icit. institutions. It will help level the play- threshold. But this is really just a tim- I commend the Senator for including ing field for smaller banks and credit ing issue caused by the new bipartisan the provisions he has and trying to unions by cracking down on the risky resolution authority created by the build some discipline into the process practices of Wall Street and nonbank bill. This is the new authority given to of how we expend taxpayer moneys, financial institutions that caused the the government to wind down failing collect taxes in the first place to pay financial crisis. financial firms. Under the resolution for the needed expenditures of our gov- I am grateful to Senator DODD, the authority, if a financial firm is about ernment. So I thank the Senator for Banking Committee, and members of to collapse, the government will use that. the conference for working with me to the firm’s assets to wind it down and I thank him for his comments as well make certain that the final bill recog- put it out of business. If the firm’s as- about the bill and his support and also nizes the special circumstances of com- sets are insufficient, the government the substantive contributions the Sen- munity banks and credit unions in will temporarily borrow funds from the ator from North Dakota has made, be- rural States such as mine. In par- Treasury. The financial industry will cause one of the things we tried to be ticular, I appreciate the committee’s then reimburse the government and very careful about—JON TESTER of modification to the lending limit the taxpayers for 100 percent of the Montana, who sits on the committee standards. This is very important to cost. Again, 100 percent of the money with me, has been very careful and farming communities across the coun- will be paid back by the banks. So the been tremendously active in seeing to try. net impact on the deficit is zero. it that rural America is going to be The final bill also provides added Overall, the bill saves $3.2 billion well served by this legislation. And flexibility for rural lenders in the new over the first 10 years, according to the there are differences. It is not all Wall mortgage standards as well as provi- Congressional Budget Office. So while Street, New York, and major financial sions to improve interchange reform technically this budget point of order centers. The importance of the avail- for smaller financial institutions. Fi- lies, if you pierce the veil and look at ability of credit in rural communities nally, I am pleased the committee in- what really happens, this bill reduces is critical, as my colleague from North cluded a risk-focused deposit insurance the deficit, according to the Congres- Dakota has informed me over the years fund assessment formula and modified sional Budget Office, which is the non- we have served together. That ability risk retention requirements for high partisan scorekeeper here in the Sen- of a local farmer to borrow that money quality loans. ate. Because there is a lag time for the in the spring, to be able to pay back in Especially I thank Senator DODD for government to collect this money from the fall, at harvest time, has been es- his extraordinary leadership. What a the financial industry, CBO scores the sential, and knowing how difficult it final year in the Senate. What a re- bill as increasing the deficit in some of has been throughout the country to markable legacy he is leaving. I think the later decades. But all of that have access to credit is essential. the annals of the Senate will show very money will be paid back in ensuing So his contributions to the legisla- few Senators have had a record of ac- years, and that is what matters most tion make sure that what we do here is complishment that matches what Sen- in this case. going to enhance the capability of ator DODD will have done in this year. So although this bill does technically rural America to not only come out of With respect to the budget point of violate the long-term deficit point of this crisis we are in but to prosper in order that has been raised against the order, it is insignificant. The fact is, the years ahead with this legislation. conference report, let me make a cou- this bill reduces the deficit, according So beyond the budgetary consider- ple of general points. First, this budget to the Congressional Budget Office. So ations and the points of order before violation is not significant enough to I urge my colleagues to waive the point us, I thank him for his contributions to merit derailing this important legisla- of order, to support passage of this fi- the substance of the bill, which has tion. Second, we must bear in mind the nancial reform legislation, which is made it a far better bill to begin with. risks of failing to act. If we fail to pro- clearly a significant step in the right I see my colleague from Oregon is tect against a future collapse and cre- direction in preventing the kind of risk here. I yield the floor. ate an orderly process for dealing with to our Nation’s economy that is so ap- The PRESIDING OFFICER. The Sen- giant insolvent financial institutions, parent with the current structure. ator from Oregon is recognized. it is inevitable that taxpayers will Again, I thank the chairman for his Mr. MERKLEY. Mr. President, I again at some future point be asked to extraordinary work not only on this thank Chairman DODD for yielding to bail out the financial sector and pre- bill but throughout the year and, I me and for his leadership on financial vent a catastrophic financial collapse. think all of us know, throughout his reform. If one measures on any scale the dif- career. I yield to Senator LEVIN. ferences between the technical viola- I yield the floor. Mr. LEVIN. Mr. President, Senator tion in this budget point of order The PRESIDING OFFICER. The Sen- MERKLEY and I, as the principal au- against what would happen if this leg- ator from Connecticut thors of sections 619, 620, and 621 of the islation fails, they cannot even be com- Mr. DODD. Mr. President, before my Dodd-Frank Act, thought it might be pared. I mean, it is a gnat against an friend, the chairman of the Budget helpful to explain in some detail those elephant. So let’s keep things in mind Committee, leaves, let me thank him sections, which are based on our bill, S. here. immensely for his analysis of this 3098, called the Protect Our Recovery

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Such quantitative lim- ference Committee. blame squarely on proprietary trading. its and capital charges are to be set by I yield the floor to my colleague, This report, largely authored by former the regulators to address risks similar Senator MERKLEY. Federal Reserve System Chairman to those which lead to the flat prohibi- Mr. MERKLEY. I thank Senator Paul Volcker, recommended prohib- tion for banking entities. LEVIN and will be setting forth here our iting systemically critical banking in- Subsection (h), paragraph (1) defines joint explanation of the Merkley-Levin stitutions from trading in securities ‘‘banking entity’’ to be any insured de- provisions of the Dodd-Frank Act. Sec- and other products for their own ac- pository institution (as otherwise de- tions 619, 620 and 621 do three things: counts. In January 2010, President fined under the Bank Holding Company prohibit high-risk proprietary trading Barack Obama gave his full support to Act), any entity that controls an in- at banks, limit the systemic risk of common-sense restrictions on propri- sured depository institution, any enti- such activities at systemically signifi- etary trading and fund investing, ty that is treated as a bank holding cant nonbank financial companies, and which he coined the ‘‘Volcker Rule.’’ company under section 8 of the Inter- prohibit material conflicts of interest The ‘‘Volcker Rule,’’ which Senator national Banking Act of 1978, and any in asset-backed securitizations. LEVIN and I drafted and have cham- affiliates or subsidiaries of such enti- Sections 619 and 620 amend the Bank pioned in the Senate, and which is em- ties. We and the Congress specifically Holding Company Act of 1956 to broad- bodied in section 619, embraces the rejected proposals to exclude the affili- ly prohibit proprietary trading, while spirit of the Glass-Steagall Act’s sepa- ates and subsidiaries of bank holding nevertheless permitting certain activi- ration of ‘‘commercial’’ from ‘‘invest- companies and insured depository in- ties that may technically fall within ment’’ banking by restoring a protec- stitutions, because it was obvious that the definition of proprietary trading tive barrier around our critical finan- restricting a bank, but not its affiliates but which are, in fact, safer, client-ori- cial infrastructure. It covers not sim- and subsidiaries, would ultimately be ented financial services. To account for ply securities, but also derivatives and ineffective in restraining the type of the additional risk of proprietary trad- other financial products. It applies not high-risk proprietary trading that can ing among systemically critical finan- only to banks, but also to nonbank fi- undermine an insured depository insti- cial firms that are not banks, bank nancial firms whose size and function tution. holding companies, or the like, the sec- render them systemically significant. The provision recognizes the modern tions require nonbank financial compa- While the intent of section 619 is to reality that it is difficult to separate nies supervised by the Federal Reserve restore the purpose of the Glass- the fate of a bank and its bank holding Board, the ‘‘Board’’, to keep additional Steagall barrier between commercial company, and that for the bank hold- capital for their proprietary trading and investment banks, we also update ing company to be a source of strength activities and subject them to quan- that barrier to reflect the modern fi- to the bank, its activities, and those of titative limits on those activities. In nancial world and permit a broad array its other subsidiaries and affiliates, addition, given the unique control that of low-risk, client-oriented financial cannot be at such great risk as to im- firms who package and sell asset- services. As a result, the barrier con- peril the bank. We also note that not backed securities (including synthetic structed in section 619 will not restrict all banks pose the same risks. Accord- asset-backed securities) have over most financial firms. ingly, the paragraph provides a narrow transactions involving those securities, Section 619 is intended to limit pro- exception for insured depository insti- section 621 protects purchasers by pro- prietary trading by banking entities tutions that function principally for hibiting those firms from engaging in and systemically significant nonbank trust purposes and do not hold public transactions that involve or result in financial companies. Properly imple- depositor money, make loans, or access material conflicts of interest. mented, section 619’s limits will tamp Federal Reserve lending or payment First, it is important to remind our down on the risk to the system arising services. These specialized entities colleagues how the financial crisis of from firms competing to obtain greater that offer very limited trust services the past several years came to pass. and greater returns by increasing the are elsewhere carved out of the defini- Beginning in the 1980’s, new financial size, leverage, and riskiness of their tion of ‘‘bank,’’ so we do not treat products and significant amounts of de- trades. This is a critical part of ending them as banks for the purposes of the regulation undermined the Glass- too big to fail financial firms. In addi- restriction on proprietary trading. Steagall Act’s separation of commer- tion, section 619 seeks to reorient the However, such institutions are covered cial banking from securities brokerage U.S. banking system away from lever- by the restriction if they qualify under or ‘‘investment banking’’ that had kept aged, short-term speculation and in- the provisions covering systemically our banking system relatively safe stead towards the safe and sound provi- important nonbank financial compa- since 1933. sion of long-term credit to families and nies. Over time, commercial and invest- business enterprises. Subsection (h), paragraph (3) defines ment banks increasingly relied on pre- We recognize that regulators are es- nonbank financial companies super- carious short term funding sources, sential partners in the legislative proc- vised by the Board to be those financial while at the same time significantly ess. Because regulatory interpretation companies whose size, interconnected- increasing their leverage. It was as if is so critical to the success of the rule, ness, or core functions are of suffi- our banks and securities firms, in com- we will now set forth, as the principal ciently systemic significance as to peting against one another, were race authors of Sections 619 to 621, our ex- warrant additional supervision, as di- car drivers taking the curves ever more planations of how these provisions rected by the Financial Stability Over- tightly and at ever faster speeds. Mean- work. sight Council pursuant to Title I of the while, to match their short-term fund- Section 619’s prohibitions and restric- Dodd-Frank Act. Given the varied na- ing sources, commercial and invest- tions on proprietary trading are set ture of such nonbank financial compa- ment banks drove into increasingly forth in a new section 13 to the Bank nies, for some of which proprietary risky, short-term, and sometimes theo- Holding Company Act of 1956, and sub- trading is effectively their business, an retically hedged, proprietary trading. section (a), paragraph (1) establishes outright statutory prohibition on such When markets took unexpected turns, the basic principle clearly: a banking trading was not warranted. Instead, the such as when Russia defaulted on its entity shall not ‘‘engage in proprietary risks posed by their proprietary trad- debt and when the U.S. mortgage- trading’’ or ‘‘acquire or retain . . . own- ing is addressed through robust capital backed securities market collapsed, li- ership interest[s] in or sponsor a hedge charges and quantitative limits that quidity evaporated, and financial firms fund or private equity fund’’, unless increase with the size, interconnected- became insolvent very rapidly. No otherwise provided in the section. ness, and systemic importance of the

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As with banking in paragraph (4) covers a wide range of tecting against risks arising from asset entities, these restrictions should also financial instruments, including secu- management services. help reduce the size and risk of these rities, commodities, futures, options, Subsection (h), paragraph (2) sets financial firms. derivatives, and any similar financial forth a broad definition of hedge fund Naturally, the definition of ‘‘propri- instruments. Pursuant to the rule of and private equity fund, not distin- etary trading’’ is critical to the provi- construction in subsection (g), para- guishing between the two. The defini- sion. For the purposes of section 13, graph (2), the definition should not tion includes any company that would proprietary trading means ‘‘engaging generally include loans sold in the be an investment company under the as a principal for the trading account’’ process of securitizing; however, it Investment Company Act of 1940, but is in transactions to ‘‘purchase or sell, or could include such loans if such loans excluded from such coverage by the otherwise acquire or dispose of’’ a wide become financial instruments traded to provisions of sections 3(c)(1) or 3(c)(7). range of traded financial products, in- capture the change in their market Although market practice in many cluding securities, derivatives, futures, value. cases distinguishes between hedge and options. There are essentially Limiting the definition of propri- funds, which tend to be trading vehi- three key elements to the definition: etary trading to near-term holdings cles, and private equity funds, which (1) the firm must be acting ‘‘as a prin- has the advantage of permitting bank- tend to own entire companies, both cipal,’’ (2) the trading must be in its ing entities to continue to deploy cred- types of funds can engage in high risk ‘‘trading account’’ or another similar it via long-term capital market debt activities and it is exceedingly difficult account, and (3) the restrictions apply instruments. However, it has the dis- to limit those risks by focusing on only to the full range of its financial instru- advantage of failing to prevent the one type of entity. ments. problems created by longer-term hold- Despite the broad prohibition on pro- Purchasing or selling ‘‘as a prin- ings in riskier financial instruments, prietary trading set forth in subsection cipal’’ refers to when the firm pur- for example, highly complex collat- (a), the legislation recognizes that chases or sells the relevant financial eralized debt obligations and other there are a number of low-risk propri- instrument for its own account. The opaque instruments that are not read- etary activities that do not pose unrea- prohibition on proprietary trading does ily marketable. To address the risks to sonable risks and explicitly permits not cover trading engaged with exclu- the banking system arising from those those activities to occur. Those low- sively client funds. longer-term instruments and related risk proprietary trading activities are The term ‘‘trading account’’ is in- trading, section 620 directs Federal identified in subsection (d), paragraph tended to cover an account used by a banking regulators to sift through the (1), subject to certain limitations set firm to make profits from relatively assets, trading strategies, and other in- forth in paragraph (2), and additional short-term trading positions, as op- vestments of banking entities to iden- capital charges required in paragraph posed to long-term, multi-year invest- tify assets or activities that pose unac- (3). ments. The administration’s proposed ceptable risks to banks, even when held While paragraph (1) authorizes sev- Volcker Rule focused on short-term in longer-term accounts. Regulators eral permitted activities, it simulta- trading, using the phrase ‘‘trading are expected to apply the lessons of neously grants regulators broad au- book’’ to capture that concept. That that analysis to tighten the range of thority to set further restrictions on phrase, which is currently used by investments and activities permissible any of those activities and to supple- some bank regulators was rejected, for banking entities, whether they are ment the additional capital charges however, and the ultimate conference at the insured depository institution or provided for by paragraph (3). report language uses the term ‘‘trading at an affiliate or subsidiary, and Subparagraph (d)(1)(A) authorizes the account’’ rather than ‘‘trading book’’ whether they are short or long term in purchase or sale of government obliga- to ensure that all types of accounts nature. tions, including government-sponsored used for proprietary trading are cov- The new Bank Holding Company Act enterprise, GSE, obligations, on the ered by the section. section 13 also restricts investing in or grounds that such products are used as To ensure broad coverage of the pro- sponsoring hedge funds and private eq- low-risk, short-term liquidity positions hibition on proprietary trading, para- uity funds. Clearly, if a financial firm and as low-risk collateral in a wide graph (3) of subsection (h) defines were able to structure its proprietary range of transactions, and so are appro- ‘‘trading account’’ as any account used positions simply as an investment in a priately retained in a trading account. ‘‘principally for the purpose of selling hedge fund or private equity fund, the Allowing trading in a broad range of in the near term (or otherwise with the prohibition on proprietary trading GSE obligations is also meant to recog- intent to resell in order to profit from would be easily avoided, and the risks nize a market reality that removing short-term price movements)’’ and to the firm and its subsidiaries and af- the use of these securities as liquidity such other accounts as the regulators filiates would continue. A financial in- and collateral positions would have sig- determine are properly covered by the stitution that sponsors or manages a nificant market implications, includ- provision to fulfill the purposes of the hedge fund or private equity fund also ing negative implications for the hous- section. In designing this definition, we incurs significant risk even when it ing and farm credit markets. By au- were aware of bank regulatory capital does not invest in the fund it manages thorizing trading in GSE obligations, rules that distinguish between short- or sponsors. Although piercing the cor- the language is not meant to imply a term trading and long-term invest- porate veil between a fund and its view as to GSE operations or structure ments, and our overall focus was to re- sponsoring entity may be difficult, re- over the long-term, and permits regu- strict high-risk proprietary trading. cent history demonstrates that a finan- lators to add restrictions on this per- For banking entity subsidiaries that do cial firm will often feel compelled by mitted activity as necessary to prevent not maintain a distinction between a reputational demands and relationship high-risk proprietary trading activities trading account and an investment ac- preservation concerns to bail out cli- under paragraph (2). When GSE reform count, all accounts should be presumed ents in a failed fund that it managed or occurs, we expect these provisions to to be trading accounts and covered by sponsored, rather than risk litigation be adjusted accordingly. Moreover, as the restriction. or lost business. Knowledge of such is the case with all permitted activities Linking the prohibition on propri- concerns creates a moral hazard among under paragraph (1), regulators are ex- etary trading to trading accounts per- clients, attracting investment into pected to apply additional capital re- mits banking entities to hold debt se- managed or sponsored funds on the as- strictions under paragraph (3) as nec- curities and other financial instru- sumption that the sponsoring bank or essary to account for the risks of the ments in long-term investment port- systemically significant firm will res- trading activities. folios. Such investments should be cue them if markets turn south, as was Subparagraph (d)(1)(B) permits un- maintained with the appropriate cap- done by a number of firms during the derwriting and market-making-related

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On the other hand, pur- providing two-sided markets for speedy viding a two-sided market for clients chasing commodity futures to ‘‘hedge’’ acquisition or disposition of certain fi- buying and selling existing securities. inflation risks that may generally im- nancial instruments. Done properly, it The reality was that Goldman Sachs pact the banking entity may be noth- is not a speculative enterprise, and rev- was creating new securities for sale to ing more than proprietary trading enues for the firm should largely arise clients and building large speculative under another name. Distinguishing from the provision of credit provided, positions in high-risk instruments, in- between true hedges and covert propri- and not from the capital gain earned cluding credit default swaps. Such etary trades may be one of the more on the change in the price of instru- speculative activities are the essence challenging areas for regulators, and ments held in the firm’s accounts. Aca- of proprietary trading and cannot be will require clear identification by fi- demic literature sets out the distinc- properly considered within the cov- nancial firms of the specific assets and tions between making markets for cus- erage of the terms ‘‘market-making’’ risks being hedged, research and anal- tomers and holding speculative posi- or ‘‘market-making-related.’’ ysis of market best practices, and rea- tions in assets, but in general, the two The subparagraph also specifically sonable regulatory judgment calls. types of trading are distinguishable by limits such underwriting and market- Vigorous and robust regulatory over- the volume of trading, the size of the making-related activities to ‘‘reason- sight of this issue will be essential to positions, the length of time that posi- ably expected near term demands of the prevent ‘‘hedging’’ from being used tions remains open, and the volatility clients, customers, and counterpar- as a loophole in the ban on proprietary of profits and losses, among other fac- ties.’’ Essentially, the subparagraph trading. tors. Regulations implementing this creates two restrictions, one on the ex- Subparagraph (d)(1)(D) permits the permitted activity should focus on pected holding period and one on the acquisition of the securities and other these types of factors to assist regu- intent of the holding. These two re- affected financial instruments ‘‘on be- lators in distinguishing between finan- strictions greatly limit the types of half of customers.’’ This permitted ac- cial firms assisting their clients versus risks and returns for market-makers. tivity is intended to allow financial those engaged in proprietary trading. Generally, the revenues for market- firms to use firm funds to purchase as- Vigorous and robust regulatory over- making by the covered firms should be sets on behalf of their clients, rather sight of this issue will be essential to made from the fees charged for pro- than on behalf of themselves. This sub- the prevent ‘‘market-making’’ from viding a ready, two-sided market for fi- paragraph is intended, in particular, to provide reassurance that trading in being used as a loophole in the ban on nancial instruments, and not from the ‘‘street name’’ for customers or in proprietary trading. changes in prices acquired and sold by The administration’s draft language, trust for customers is permitted. the financial institution. The ‘‘near In general, subparagraph (d)(1)(E) the original section 619 contemplated term’’ requirement connects to the provides exceptions to the prohibition by the Senate Banking Committee, and provision in the definition of trading on investing in hedge funds or private amendment 4101 each included the account whereby the account is defined equity funds, if such investments ad- term ‘‘in facilitation of customer rela- as trading assets that are acquired vance a ‘‘public welfare’’ purpose. It tions’’ as a permitted activity. The ‘‘principally for the purpose of selling permits investments in small business term was removed in the final version in the near term.’’ The intent is to investment companies, which are a of the Dodd-Frank Act out of concern focus firms on genuinely making mar- form of regulated venture capital fund that this phrase was too subjective, kets for clients, and not taking specu- in which banks have a long history of ambiguous, and susceptible to abuse. lative positions with the firm’s capital. successful participation. The subpara- At the same time, we recognize that Put simply, a firm will not satisfy this graph also permits investments ‘‘of the the term was previously included to requirement by acquiring a position on type’’ permitted under the paragraph permit certain legitimate client-ori- the hope that the position will be able of the National Bank Act enabling ented services, such pre-market-mak- to be sold at some unknown future date banks to invest in a range of low-in- ing accumulation of small positions for a trading profit. come community development and that might not rise to the level of fully Subparagraph (d)(1)(C) permits a other projects. The subparagraph also ‘‘market-making’’ in a security or fi- banking entity to engage in ‘‘risk-miti- specifically mentions tax credits for nancial instrument, but are intended gating hedging activities in connection historical building rehabilitation ad- to nonetheless meet expected near- with and related to individual or aggre- ministered by the National Park Serv- term client liquidity needs. Accord- gated positions, contracts, or other ice, but is flexible enough to permit the ingly, while previous versions of the holdings of the banking entity that are regulators to include other similar low- legislation referenced ‘‘market-mak- designed to reduce the specific risks to risk investments with a public welfare ing’’, the final version references ‘‘mar- the banking entity in connection with purpose. ket-making-related’’ to provide the and related to such positions, con- Subparagraph (d)(1)(F) is meant to regulators with limited additional tracts, or other holdings.’’ This activ- accommodate the normal business of flexibility to incorporate those types of ity is permitted because its sole pur- insurance at regulated insurance com- transactions to meet client needs, pose is to lower risk. panies that are affiliated with banks. without unduly warping the common While this subparagraph is intended The Volcker Rule was never meant to understanding of market-making. to permit banking entities to utilize affect the ordinary business of insur- We note, however, that ‘‘market- their trading accounts to hedge, the ance: the collection and investment of making-related’’ is not a term whose phrase ‘‘in connection with and related premiums, which are then used to sat- definition is without limits. It does not to individual or aggregated positions isfy claims of the insured. These activi- implicitly cover every time a firm buys . . .’’ was added between amendment ties, while definitionally proprietary an existing financial instrument with 4101 and the final version in the con- trading, are heavily regulated by State the intent to later sell it, nor does it ference report in order to ensure that insurance regulators, and in most cases cover situations in which a firm cre- the hedge applied to specific, identifi- do not pose the same level of risk as ates or underwrites a new security able assets, whether it be on an indi- other proprietary trading. with the intent to market it to a cli- vidual or aggregate basis. Moreover, However, to prevent abuse, firms ent. Testimony by Goldman Sachs hedges must be to reduce ‘‘specific seeking to rely on this insurance-re- Chairman Lloyd Blankfein and other risks’’ to the banking entity arising lated exception must meet two essen- Goldman executives during a hearing from these positions. This formulation tial qualifications. First, only trading before the Permanent Subcommittee is meant to focus banking entities on for the general account of the insur- on Investigations seemed to suggest traditional hedges and prevent propri- ance firm would qualify. Second, the

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Similarly, clause hibiting a foreign bank from improp- company investment regulations will (viii) ensures that investors recognize erly offering its hedge fund and private not qualify for protection here. that the funds are subject to market equity fund services to U.S. persons Further, where State laws and regu- discipline by requiring that funds pro- when such offering could not be made lations do not exist or otherwise fail to vide prominent disclosure that any in the United States. appropriately connect the insurance losses of a hedge fund or private equity Subparagraph (J) permits the regu- company investments to the actual fund are borne by investors and not by lators to add additional exceptions as business of insurance or are found to the firm, and the firm must also com- necessary to ‘‘promote and protect the inadequately protect the firm, the sub- ply with any other restrictions to en- safety and soundness of the banking paragraph’s conditions will not be met. sure that investors do not rely on the entity and the financial stability of the Subparagraph (d)(1)(G) permits firms firm, including any of its affiliates or United States.’’ This general exception to organize and offer hedge funds or subsidiaries, for a bailout. power is intended to ensure that some private equity funds as an asset man- Fifth, the firm or its affiliates cannot unforeseen, low-risk activity is not in- agement service to clients. It is impor- make or maintain an investment inter- advertently swept in by the prohibition tant to remember that nothing in sec- est in the fund, except in compliance on proprietary trading. However, the tion 619 otherwise prohibits a bank with the limited fund seeding and subparagraph sets an extremely high from serving as an investment adviser alignment of interest provisions pro- bar: the activity must be necessary to to an independent hedge fund or pri- vided in paragraph (4) of subsection (d). promote and protect the safety and vate equity fund. Yet, to serve in that This paragraph allows a firm, for the soundness of the banking entity and capacity, a number of criteria must be limited purpose of maintaining an in- the financial stability of the United met. vestment management business, to States, and not simply pose a competi- First, the firm must be doing so pur- seed a new fund or make and maintain tive disadvantage or a threat to firms’ suant to its provision of bona fide a ‘‘de minimis’’ co-investment in a profitability. trust, fiduciary, or investment advi- hedge fund or private equity fund to Paragraph (2) of section (d) adds ex- sory services to customers. Given the align the interests of the fund man- plicit statutory limits to the permitted fiduciary obligations that come with agers and the clients, subject to several activities under paragraph (1). Specifi- such services, these requirements en- conditions. As a general rule, firms cally, it prevents an activity from sure that banking entities are properly taking advantage of this provision qualifying as a permitted activity if it engaged in responsible forms of asset should maintain only small seed funds, would ‘‘involve or result in a material management, which should tamp down likely to be $5 to $10 million or less. conflict of interest,’’ ‘‘result directly on the risks taken by the relevant Large funds or funds that are not effec- or indirectly in a material exposure fund. tively marketed to investors would be . . . to high-risk assets or high-risk Second, subparagraph (d)(1)(G) pro- evasions of the restrictions of this sec- trading strategies’’ or otherwise pose a vides strong protections against a firm tion. Similarly, co-investments de- threat to the safety and soundness of bailing out its funds. Clause (iv) pro- signed to align the firm with its clients the firm or the financial stability of hibits banking entities, as provided must not be excessive, and should not the United States. Regulators are di- under paragraph (1) and (2) of sub- allow for firms to evade the intent of rected to define the key terms in the section (f), from entering into lending the restrictions of this section. paragraph and implement the restric- or similar transactions with related These ‘‘de minimis’’ investments are tions as part of the rulemaking proc- funds, and clause (v) prohibits banking to be greatly disfavored, and subject to ess. Regulators should pay particular entities from ‘‘directly or indirectly, several significant restrictions. First, a attention to the hedge funds and pri- guarantee[ing], assum[ing], or other- firm may only have, in the aggregate, vate equity funds organized and offered wise insur[ing] the obligations or per- an immaterial amount of capital in under subparagraph (G) to ensure that formance of the hedge fund or private such funds, but in no circumstance such activities have sufficient distance equity fund.’’ To prevent banking enti- may such positions aggregate to more from other parts of the firm, especially ties from engaging in backdoor bail- than 3 percent of the firm’s Tier 1 cap- those with windows into the trading outs of their invested funds, clause (v) ital. Second, by one year after the date flow of other clients. Hedging activi- extends to the hedge funds and private of establishment for any fund, the firm ties should also be particularly scruti- equity funds in which such subpara- must have not more than a 3 percent nized to ensure that information about graph (G) hedge funds and private eq- ownership interest. Third, investments client trading is not improperly uti- uity funds invest. in hedge funds and private equity funds lized. Third, to prevent a banking entity shall be deducted on, at a minimum, a The limitation on proprietary trad- from having an incentive to bailout its one-to-one basis from capital. As the ing activities that ‘‘involve or result in funds and also to limit conflicts of in- leverage of a fund increases, the cap- a material conflict of interest’’ is a terest, clause (vii) of subparagraph (G) ital charges shall be increased to re- companion to the conflicts of interest restricts directors and employees of a flect the greater risk of loss. This is prohibition in section 621, but applies banking entity from being invested in specifically intended to discourage to all types of activities rather than hedge funds and private equity funds these high-risk investments, and just asset-backed securitizations. organized and offered by the banking should be used to limit these invest- With respect to the definition of entity, except for directors or employ- ments to the size only necessary to fa- high-risk assets and high-risk trading ees ‘‘directly engaged’’ in offering in- cilitate asset management businesses strategies, regulators should pay close vestment advisory or other services to for clients. attention to the characteristics of as- the hedge fund or private equity fund. Subparagraphs (H) and (I) recognize sets and trading strategies that have Fund managers can have ‘‘skin in the rules of international regulatory com- contributed to substantial financial game’’ for the hedge fund or private eq- ity by permitting foreign banks, regu- loss, bank failures, bankruptcies, or uity fund they run, but to prevent the lated and backed by foreign taxpayers, the collapse of financial firms or finan- bank from running its general em- in the course of operating outside of cial markets in the past, including but ployee compensation through the the United States to engage in activi- not limited to the crisis of 2008 and the hedge fund or private equity fund, ties permitted under relevant foreign financial crisis of 1998. In assessing other management and employees may law. However, these subparagraphs are high-risk assets and high-risk trading not. not intended to permit a U.S. banking strategies, particular attention should Fourth, by stating that a firm may entity to avoid the restrictions on pro- be paid to the transparency of the mar- not organize and offer a hedge fund or prietary trading simply by setting up kets, the availability of consistent private equity fund with the firm’s an offshore subsidiary or reincor- pricing information, the depth of the name on it, clause (vi) of subparagraph porating offshore, and regulators markets, and the risk characteristics

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00029 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.012 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5898 CONGRESSIONAL RECORD — SENATE July 15, 2010 of the assets and strategies themselves, Indeed, a large part of protecting that a banking entity should not be including any embedded leverage. Fur- firms from bailing out their affiliated prohibited, under proper restrictions, ther, these characteristics should be funds is by limiting the lending, asset from providing limited services to un- evaluated in times of extreme market purchases and sales, derivatives trad- affiliated funds, but in which its own stress, such as those experienced re- ing, and other relationships that a advised fund may invest. Accordingly, cently. With respect to trading strate- banking entity or nonbank financial paragraph (3) is intended to only cover gies, attention should be paid to the company supervised by the Board may third-party funds, and should not be role that certain types of trading strat- maintain with the hedge funds and pri- used as a means of evading the general egies play in times of relative market vate equity funds it advises. The rela- prohibition provided in paragraph (1). calm, as well as times of extreme mar- tionships that a banking entity main- Put simply, a firm may not create ket stress. While investment advisors tains with and services it furnishes to tiered structures and rely upon para- may freely deploy high-risk strategies its advised funds can provide reasons graph (3) to provide these types of serv- for their clients, attention should be why and the means through which a ices to funds for which it serves as in- paid to ensure that firms do not utilize firm will bail out an advised fund, be it vestment advisor. them for their own proprietary activi- through a direct loan, an asset acquisi- ties. Barring high risk strategies may tion, or through writing a derivative. Further, in recognition of the risks be particularly critical when policing Further, providing advisory services to that are created by allowing for these market-making-related and hedging a hedge fund or private equity fund cre- services to unaffiliated funds, several activities, as well as trading otherwise ates a conflict of interest and risk be- additional criteria must also be met permitted under subparagraph cause when a banking entity is itself for the banking entity to take advan- (d)(1)(A). In this context, however, it is determining the investment strategy of tage of this exception. Most notably, irrelevant whether or not a firm pro- a fund, it no longer can make a fully on top of the flat prohibitions on bail- vides market liquidity: high-risk assets independent credit evaluation of the outs, the statute requires the chief ex- and high-risk trading strategies are hedge fund or private equity fund bor- ecutive officer of firms taking advan- never permitted. rower. These bailout protections will tage of this paragraph to also certify Subsection (d), paragraph (3) directs significantly benefit independent hedge that these services are not used di- the regulators to set appropriate addi- funds and private equity funds, and rectly or indirectly to bail out a fund tional capital charges and quantitative also improve U.S. financial stability. advised by the firm. limits for permitted activities. These Accordingly, subsection (f), para- Subsection (f), paragraph (4) requires restrictions apply to both banking en- graph (1) sets forth the broad prohibi- the regulatory agencies to apply addi- tities and nonbank financial companies tion on a banking entity entering into supervised by the Board. It is left to any ‘‘covered transactions’’ as such tional capital charges and other re- regulators to determine if those re- term is defined in the Federal Reserve strictions to systemically significant strictions should apply equally to both, Act’s section 23A, as if such banking nonbank financial institutions to ac- or whether there may appropriately be entity were a member bank and the count for the risks and conflicts of in- a distinction between banking entities fund were an affiliate thereof. ‘‘Cov- terest that are addressed by the prohi- and non-bank financial companies su- ered transactions’’ under section 23A bitions for banking entities. Such cap- pervised by the Board. The paragraph includes loans, asset purchases, and, ital charges and other restrictions also mandates diversification require- following the Dodd-Frank bill adop- should be sufficiently rigorous to ac- ments where appropriate, for example, tion, derivatives between the member count for the significant amount of to ensure that banking entities do not bank and the affiliate. In general, sec- risks associated with these activities. deploy their entire permitted amount tion 23A sets limits on the extension of To give markets and firms an oppor- of de minimis investments into a small credit between such entities, but para- tunity to adjust, implementation of number of hedge funds or private eq- graph (1) of subsection (f) prohibits all section 620 will proceed over a period of uity funds, or that they dangerously such transactions. It also prohibits several years. First, pursuant to sub- over-concentrate in specific products transactions with funds that are con- section (b), paragraph (1), the Financial or types of financial products. trolled by the advised or sponsored Stability Oversight Council will con- Subsection (e) provides vigorous fund. In short, if a banking entity orga- duct a study to examine the most effec- anti-evasion authority, including nizes and offers a hedge fund or private tive means of implementing the rule. record-keeping requirements. This au- equity fund or serves as investment ad- Then, under paragraph (b)(2), the Fed- thority is designed to allow regulators visor, manager, or sponsor of a fund, eral banking agencies, the Securities to appropriately assess the trading of the fund must seek credit, including and Exchange Commission, and the firms, and aggressively enforce the text from asset purchases and derivatives, Commodity Futures Trading Commis- and intent of section 619. from an independent third party. sion shall each engage in rulemakings The restrictions on proprietary trad- Subsection (f), paragraph (2) applies for their regulated entities, with the ing and relationships with private section 23B of the Federal Reserve Act rulemaking coordinated for consist- funds seek to break the internal con- to a banking entity and its advised or ency through the Financial Stability nection between a bank’s balance sheet sponsored hedge fund or private equity Oversight Council. In coordinating the and taking risk in the markets, with a fund. This provides, inter alia, that rulemaking, the Council should strive view towards reestablishing market transactions between a banking entity to avoid a ‘‘lowest common denomi- discipline and refocusing the bank on and its fund be conducted at arms nator’’ framework, and instead apply its credit extension function and client length. The fact that section 23B also the best, most rigorous practice from services. In the recent financial crisis, includes the provision of covered trans- each regulatory agency. when funds advised by banks suffered actions under section 23A as part of its significant losses, those off-balance arms-length requirement should not be Pursuant to subsection (c), paragraph sheet funds came back onto the banks’ interpreted to undermine the strict (1), most provisions of section 619 be- balance sheets. At times, the banks prohibition on such transactions in come effective 12 months after the bailed out the funds because the inves- paragraph (1). issuance of final rules pursuant to sub- tors in the funds had other important Subsection (f), paragraph (3) permits section (b), but in no case later than 2 business with the banks. In some cases, the Board to allow a very limited ex- years after the enactment of the Dodd- the investors were also key personnel ception to paragraph (1) for the provi- Frank Act. Paragraph (c)(2) provides a at the banks. Regardless of the motiva- sion of certain limited services under 2-year period following effective date of tions, in far too many cases, the banks the rubric of ‘‘prime brokerage’’ be- the provision during which entities that bailed out their funds ultimately tween the banking entity and a third- must bring their activities into con- relied on taxpayers to bail them out. It party-advised fund in which the fund formity with the law, which may be ex- is precisely for this reason that the managed, sponsored, or advised by the tended for up to 3 more years. Special permitted activities under subpara- banking entity has taken an ownership illiquid funds may, if necessary, re- graph (d)(1)(G) are so narrowly defined. interest. Essentially, it was argued ceive one 5-year extension and may

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00030 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.014 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5899 also continue to honor certain contrac- The intent of section 621 is to pro- BYRON DORGAN, who opposed the repeal tual commitments during the transi- hibit underwriters, sponsors, and oth- of Glass-Steagall and has been speak- tion period. The purpose of this ex- ers who assemble asset-backed securi- ing about the risks from proprietary tended wind-down period is to mini- ties, from packaging and selling those trading for a number of years. Above mize market disruption while still securities and profiting from the secu- all, we pay tribute to the tremendous steadily moving firms away from the rities’ failures. This practice has been labors of Chairman CHRIS DODD and his risks of the restricted activities. likened to selling someone a car with entire team and staff on the Senate The definition of ‘‘illiquid funds’’ set no brakes and then taking out a life in- Banking Committee, as well as the sup- forth in subsection (h) paragraph (7) is surance policy on the purchaser. In the port of Chairman BARNEY FRANK and meant to cover, in general, very il- asset-backed securities context, the Representative PAUL KANJORSKI. We liquid private equity funds that have sponsors and underwriters of the asset- extend our deep gratitude to our staffs, deployed capital to illiquid assets such backed securities are the parties who including the entire team and staff at as portfolio companies and real estate select and understand the underlying the Permanent Subcommittee on In- with a projected investment holding assets, and who are best positioned to vestigations, for their outstanding period of several years. The Board, in design a security to succeed or fail. work. And last but not least, we high- consultation with the SEC, should They, like the mechanic servicing a light the visionary leadership of Paul therefore adopt rules to define the con- car, would know if the vehicle has been Volcker and his staff. Without the sup- tours of an illiquid fund as appropriate designed to fail. And so they must be port of all of them and many others, to capture the intent of the provision. prevented from securing handsome re- the Merkley-Levin language would not To facilitate certainty in the market wards for designing and selling mal- have been included in the Conference with respect to divestiture, the Board functioning vehicles that undermine Report. is to conduct a special expedited rule- the asset-backed securities markets. It We believe this provision will stand making regarding these conformance is for that reason that we prohibit the test of time. We hope that our reg- and wind-down periods. The Board is those entities from engaging in trans- ulators have learned with Congress also to set capital rules and any addi- actions that would involve or result in that tearing down regulatory walls tional restrictions to protect the bank- material conflicts of interest with the without erecting new ones undermines ing entities and the U.S. financial sys- purchasers of their products. our financial stability and threatens tem during this wind-down period. Section 621 is not intended to limit economic growth. We have legislated We noted above that the purpose of the ability of an underwriter to sup- to the best of our ability. It is now up section 620 is to review the long-term port the value of a security in the to our regulators to fully and faithfully investments and other activities of aftermarket by providing liquidity and implement these strong provisions. banks. The concerns reflected in this a ready two-sided market for it. Nor I yield the floor to Senator MERKLEY. Mr. MERKLEY. I thank my colleague section arise out of losses that have ap- does it restrict a firm from creating a peared in the long-term investment for his remarks and concur in all re- synthetic asset-backed security, which portfolios in traditional depository in- spects. inherently contains both long and stitutions. Mr. DODD. Mr. President, I said so Over time, various banking regu- short positions with respect to securi- yesterday, and I will say it again: I ties it previously created, so long as lators have displayed expansive views thank Senator MERKLEY. I guess there and conflicting judgments about per- the firm does not take the short posi- are four new Members of the Senate missible investments for banking enti- tion. But a firm that underwrites an serving on the Banking Committee. ties. Some of these activities, includ- asset-backed security would run afoul Senator MERKLEY, Senator WARNER, ing particular trading strategies and of the provision if it also takes the Senator TESTER, and Senator BENNET investment assets, pose significant short position in a synthetic asset- are all new Members of the Senate risks. While section 619 provides nu- backed security that references the from their respective States of Oregon, merous restrictions to proprietary same assets it created. In such an in- Virginia, Montana, and Colorado. To be trading and relationships to hedge stance, even a disclosure to the pur- thrown into what has been the largest funds and private equity funds, it does chaser of the underlying asset-backed undertaking of the Banking Com- not seek to significantly alter the tra- security that the underwriter has or mittee, certainly in my three decades ditional business of banking. might in the future bet against the se- here—and many have argued going Section 620 is an attempt to reevalu- curity will not cure the material con- back almost 100 years—was certainly ate banking assets and strategies and flict of interest. an awful lot to ask. see what types of restrictions are most We believe that the Securities and I have already pointed out the con- appropriate. The Federal banking agen- Exchange Commission has sufficient tribution Senator WARNER has made to cies should closely review the risks authority to define the contours of the this bill. But I must say as well that contained in the types of assets re- rule in such a way as to remove the Senator BENNET of Colorado has been tained in the investment portfolio of vast majority of conflicts of interest invaluable in his contributions. I just depository institutions, as well as risks from these transactions, while also mentioned Senator TESTER a moment in affiliates’ activities such as mer- protecting the healthy functioning of ago for his contribution on talking chant banking. The review should our capital markets. about rural America and the impor- dovetail with the determination of In conclusion, we would like to ac- tance of those issues. And Senator what constitutes ‘‘high-risk assets’’ knowledge all our supporters, co-spon- MERKLEY, as a member of the com- and ‘‘high risk trading strategies’’ sors, and advisers who assisted us mittee, on matters we included here under paragraph (d)(2). greatly in bringing this legislation to dealing particularly with the mortgage At this point, I yield to Senator fruition. From the time President reforms, the underwriting standards, LEVIN to discuss an issue that is of par- Obama announced his support for the the protections people have to go ticular interest to him involving sec- Volcker Rule, a diverse and collabo- through, and credit cards as well—we tion 621’s conflict of interest provi- rative effort has emerged, uniting com- passed the credit card bill—again, it sions. munity bankers to old school fin- was Senator JEFF MERKLEY of Oregon Mr. LEVIN. I thank my colleague for anciers to reformers. Senator MERKLEY who played a critical role in that whole the detailed explanation he has pro- and I further extend special thanks to debate not to mention, of course, work- vided of sections 619 and 620, and fully the original cosponsors of the PROP ing with CARL LEVIN, one of the more concur in it. I would like to add our Trading Act, Senators TED KAUFMAN, senior Members here, having served for joint explanation of section 621, which SHERROD BROWN, and JEANNE SHAHEEN, many years in the Senate. But the addresses the blatant conflicts of inter- who have been with us since the begin- Merkley-Levin, Levin-Merkley provi- est in the underwriting of asset-backed ning. sions in this bill have added substan- securities highlighted in a hearing with Senator JACK REED and his staff did tial contributions to this effort. So I Goldman Sachs before the Permanent yeoman’s work in advancing this thank him for his contribution. Subcommittee on Investigations, cause. We further tip our hat to our I see my colleague from North Da- which I chair. tireless and vocal colleague, Senator kota is here. I suggest the absence of a

VerDate Mar 15 2010 00:56 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00031 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.015 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5900 CONGRESSIONAL RECORD — SENATE July 15, 2010 quorum and ask unanimous consent CBO cannot factor in the costs to our had been planned. I think that is some- that the time be equally divided among nation of a failure to address the possi- thing everyone should be happy about. both sides. bility of future bailouts. We have lived And ending TARP saves the govern- The PRESIDING OFFICER. Without through that nightmare and it has cost ment money. That is not just my con- objection, it is so ordered. The clerk our country dearly. clusion. It is the conclusion of the Con- will call the roll. Now I would like to discuss the way gressional Budget Office, $11 billion in The assistant legislative clerk pro- in which we address the budget con- savings. ceeded to call the roll. sequences of the legislation. In par- It is true that the original TARP leg- Mr. DODD. I ask unanimous consent ticular, I would like to respond to some islation passed as an emergency, its that the order for the quorum call be comments that have been made about costs were declared an emergency when dispensed with. the provisions increasing the long-term it passed, so rescinding those funds or The PRESIDING OFFICER. Without minimum target for the FDIC and ending the program now is ending objection, it is so ordered. thereby strengthening the Deposit In- spending that is considered ‘‘emer- Mr. DODD. Mr. President, we listened surance Fund, a goal that no one can gency’’ spending. to Senator CONRAD, the chairman of credibly argue with in light of the re- But the savings are no less real be- the Budget Committee, address the cent crisis. cause of that. Interestingly, my Repub- budget point of order. I urge my col- In fact, this provision is supported by lican colleague who has raised the leagues to waive the point of order. FDIC Chairman Sheila Bair, and she point of order offered an amendment in We came up with an alternative off- has sent us a letter expressing her sup- conference that would have rescinded set in the conference committee, much port. I will submit that for the RECORD stimulus funding to pay for this bill. at the insistence—and I thanked him at the end of this statement. Why is that relevant? Because the for that—of Senator BROWN of Massa- Some of my colleagues on the other stimulus money was also designated as chusetts, looking for a better offset side of the aisle have claimed that the an emergency, so it would have re- than the ones which were originally in use of the FDIC in this way is unprece- ceived the same accounting treatment the conference report. I know my col- dented and questioned how this could here in the Senate as TARP. Both were league from Maine as well had reserva- count as budget savings or offsets and emergencies. tions about what we originally in- at the same time preserve the funds for Both ending TARP early and rescind- cluded. bank failures. ing stimulus funding would reduce the The offset here ends TARP, which I Let us clear up the misinformation. deficit, but the burden of cuts in stim- presume most people would welcome First, no FDIC funds are being spent ulus funding would fall disproportion- with open arms, saving us $11 billion by on, or transferred to, other programs. ately on families and small businesses terminating it early, as well as then Premiums paid by banks remain, as who have been victims of the economic complying with the request by the they have for over 75 years, in the fallout from the Wall Street crisis. chairperson of the Federal Deposit In- FDIC fund solely to protect insured de- Cutting such spending would be exactly surance Corporation, Sheila Bair, to posits. the wrong thing to do as we try to get provide for additional assessments to And counting FDIC premiums as the economy back on track and people meet the obligations of the FDIC and budget savings in legislation abso- back to work. the insurance fund. Both of those items lutely does have precedent. We have to The fact is that overall this bill does provide the necessary offsets to the look no further than relatively recent not do damage to our budgetary out- cost of this bill. actions of Republican Congresses to look. The long-term deficit point of order find them. It does make vital changes to make is caused by the orderly liquidation au- Budget reconciliation legislation en- our financial system stronger and more thority for systemically significant fi- acted in February 2006 and sponsored stable and should be passed as soon as nancial institutions. by my colleague from New Hampshire, possible. Let me note that this critically im- who was then the Chairman of the So I urge my colleagues to support a portant aspect of the legislation was Budget Committee, included FDIC re- motion to waive the long-term deficit developed in very close cooperation forms authored by my colleague from point of order. with Senator SHELBY in the Shelby- Alabama, who was then Chairman of FEDERAL DEPOSIT Dodd amendment. It also reflects the the Banking Committee. Those provi- INSURANCE CORPORATION, bipartisan cooperation of Senators sions resulted in higher FDIC pre- Washington, DC, June 29, 2010. Hon. CHRIS DODD, CORKER and WARNER. The Shelby-Dodd miums, which CBO said yielded almost Chairman, Committee on Banking, U.S. Senate, amendment passed this body over- $2 billion in budget savings over 10 Washington, DC. whelmingly with over 90 votes. years. Hon. RICHARD SHELBY, Even though the liquidation author- So, my colleagues from New Hamp- Ranking Minority Member, Committee on Bank- ity is the source of long-term budget shire and Alabama in fact relied on re- ing, U.S. Senate, Washington, DC. costs, it is still 100 percent paid for. forms to the Deposit Insurance Fund to Hon. BARNEY FRANK, The Shelby-Dodd amendment and the obtain savings that CBO favorably Chairman, Committee on Financial Services, Boxer amendment made sure that this scored. House of Representatives, Washington, DC. would be the case. Let me repeat, the And 10 years earlier, Congress at- Hon. SPENCER BACHUS, Ranking Minority Member, Committee on Fi- liquidation authority, which is the tached to an omnibus spending bill en- nancial Services, House of Representatives, dominant source of the budget cost in acted in September 1996 a provision Washington, DC. the bill, is 100 percent paid for over calling for a special premium on thrifts DEAR CHAIRMEN DODD AND FRANK AND time. to capitalize the FDIC’s thrift insur- RANKING MEMBERS SHELBY AND BACHUS: The only reason that the liquidation ance fund. Thank you for your interest in our views re- authority scores at all is because of The appropriators in that earlier Re- garding increasing the Deposit Insurance timing. The FDIC may initially have to publican Congress justified higher dis- Fund (DIF) ratio to 1.35. Federal deposit insurance promotes public borrow funds from the Treasury in cretionary spending based partly on confidence in our nation’s banking system order to wind down the failed company the budget savings scored by CBO for by providing a safe place for consumers’ and put it out of business. Because it the FDIC assessment. funds. Deposit insurance has provided much will take time to liquidate a large, I would also like to respond to some needed stability throughout this crisis. interconnected financial company, comments that have been made about Moreover, insured deposits provide banks there is a lag between when the funds the treatment of TARP in this legisla- with a stable and cost-effective source of are borrowed and when they are repaid tion. funds for lending in their communities. Im- by the sale of the failed companies’ as- We end TARP in the conference re- portantly, the DIF is funded by the insured banking industry. sets, its creditors and assessments on port. With the comprehensive financial A key measure of the strength of the insur- the industry if necessary. reform put in place under this bill, we ance fund is the reserve ratio, which is the One more important point on budget think it is the right time to bring amount in the DIF as a percentage of the in- scoring and the liquidation authority. TARP to a close, ending it earlier than dustry’s estimated insured deposits. Current

VerDate Mar 15 2010 05:37 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00032 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.055 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5901 law requires us to maintain a reserve ratio of Second, I would like to clarify the in- some rewards for designing and selling at least 1.15 percent. One of the lessons tent of subsection (f)’s provisions to malfunctioning vehicles that under- learned from the current crisis is that a min- prohibit banking entities from bailing mine the asset-backed securities mar- imum reserve ratio of 1.15 is insufficient to out funds they manage, sponsor, or ad- kets. It is for that reason that we pro- avoid the need for pro-cyclical assessments in times of stress. One of my first priorities vise, as well as funds in which those hibit those entities from engaging in when I assumed the Chairmanship of the funds invest. The ‘‘permitted services’’ transactions that would involve or re- FDIC in June of 2006 was to begin building provisions outlined in subsection (f) are sult in material conflicts of interest our reserves. Regrettably, there was insuffi- intended to permit banks to maintain with the purchasers of their products. cient time before the crisis hit. Indeed, we certain limited ‘‘prime brokerage’’ First, I would like to address certain started this crisis with a DIF reserve ratio of service relationships with unaffiliated areas which we exclude from coverage. 1.22 percent (as of December 31, 2007). Begin- funds in which a fund-of-funds that While a strong prohibition on material ning in mid–2008, as bank failures increased they manage invests, but are not in- conflicts of interest is central to sec- and the insurance fund incurred losses, the tended to permit fund-of-fund struc- Fund balance and reserve ratio dropped pre- tion 621, we recognize that under- cipitously. The reserve ratio became nega- tures to be used to weaken or under- writers are often asked to support tive in the third quarter of 2009 and hit a low mine the prohibition on bailouts. Given issuances of asset-backed securities in of negative 0.39 percent as of December 31, the risk that a banking entity may the aftermarket by providing liquidity 2009. To date, we have collected more than want to bail out a failing fund directly to the initial purchasers, which may $65 billion in assessments, and are projected or its investors, the ‘‘permitted serv- mean buying and selling the securities to collect another $80 billion by 2016 to re- ices’’ exception must be implemented for some time. That activity is con- store the fund. in a narrow, well-defined, and arms- sistent with the goal of supporting the Given this experience, we believe it is clear that as the economy strengthens and the length manner and regulators are not offering, is not likely to pose a mate- banking system heals, the reserve ratio empowered to create loopholes allow- rial conflict, and accordingly we are needs to be increased. In fact, our Board has ing high-risk activities like leveraged comfortable excluding it from the gen- acted through regulation to target the re- securities lending or repurchase agree- eral prohibition. Similarly, market serve ratio at 1.25 percent, and a further in- ments. While we implement a number conditions change over time and may crease to 1.35 percent is consistent with our of legal restrictions designed to ensure lead an underwriter to wish to sell the view that the Fund should build up in good that prime brokerage activities are not securities it holds. That is also not economic times and be allowed to fall in used to bail out a fund, we expect the likely to pose a conflict. But regulators poor economic times, while maintaining rel- atively steady premiums throughout the eco- regulators will nevertheless need to be must act diligently to ensure that an nomic cycle, thereby reducing the vigilant. underwriter is not making bets against procyclicality of the assessment system. Before I yield the floor to Senator the very financial products that it as- Please let me know if you have any ques- LEVIN to discuss several additional sembled and sold. tions or would like to discuss further. items, let me say a word of thanks to Second, I would like to address the Sincerely, my good friend, Chairman DODD, for role of disclosures in relations to con- SHEILA C. BAIR. taking the time to join me in clari- flicts of interest. In our view, disclo- I again urge my colleagues to vote to fying these provisions. I also honor him sures alone may not cure these types of waive the budget point of order, and, of for his extraordinary leadership on the conflicts in all cases. Indeed, while a course, I urge them as well to support entire financial reform package. As a meaningful disclosure may alleviate the legislation when that vote occurs. fellow member of the Banking Com- the appearance of a material conflict of INTENT BEHIND SECTIONS 691–621 mittee, it has been a privilege to work interest in some circumstances, in oth- Mr. MERKLEY. Mr. President, I rise with him on the entire bill, and not ers, such as if the disclosures cannot be to engage my colleagues, Senators just these critical provisions. I also made to the appropriate party or be- DODD and LEVIN, in a colloquy regard- would like to recognize Senator LEVIN, cause the disclosure is not sufficiently ing some key aspects of our legislative whose determined efforts with his Per- meaningful, disclosures are likely in- intent behind sections 619 through 621, manent Subcommittee on Investiga- sufficient. Our intent is to provide the the Merkley-Levin rule on proprietary tions helped highlight the causes of the regulators with the authority and trading and conflicts of interest as in- recent crisis, as well as the need for re- strong directive to stop the egregious cluded in the conference report. form. It has been a privilege working practices, and not to allow for regu- First, I would like to clarify several with him on this provision. lators to enable them to continue be- issues surrounding the ‘‘de minimis’’ Mr. LEVIN. I thank the Senator, and hind the fig leaf of vague, technically investment provisions in subsection I concur with his detailed explanations. worded, fine print disclosures. (d)(4). These provisions complement His tireless efforts in putting these These provisions shall be interpreted subsection (d)(1)(G), which permits commonsense restrictions into law will strictly, and regulators are directed to firms to offer hedge funds and private help protect American families from use their authority to act decisively to equity funds to clients. ‘‘De minimis’’ reckless risk-taking that endangers protect our critical financial infra- investments under paragraph (4) are in- our financial system and our economy. structure from the risks and conflicts tended to facilitate these offerings The conflicts of interest provision inherent in allowing banking entities principally by allowing a firm to start under section 621 arises directly from and other large financial firms to en- new funds and to maintain coinvest- the hearings and findings of our Per- gage in high risk proprietary trading ments in funds, which help the firm manent Subcommittee on Investiga- and investing in hedge funds and pri- align its interests with those of its cli- tions, which dramatically showed how vate equity funds. ents. During the initial start-up period, some firms were creating financial Mr. President, I would like to thank during which time firms may maintain products, selling those products to Chairman DODD for his extraordinary 100 percent ownership, the fund should their customers, and betting against dedication in shepherding this massive be relatively small, but sufficient to ef- those same products. This practice has financial regulatory reform package fectively implement the investment been likened to selling someone a car through the Senate and the conference strategy. After the start up period, a with no brakes and then taking out a committee. This has been a long proc- firm may keep an ongoing ‘‘alignment life insurance policy on the purchaser. ess, and he and his staff have been very of interest’’ coinvestment at 3 percent In the asset-backed securities context, able and supportive partners in this ef- of a fund. Our intent is not to allow for the sponsors and underwriters of the fort. large, revolving ‘‘seed’’ funds to evade asset-backed securities are the parties Mr. DODD. I thank the Senator, and the strong restrictions on proprietary who select and understand the under- I strongly concur with the intentions trading of this section, and regulators lying assets, and who are best posi- and interpretations set forth by the will need to be vigilant against such tioned to design a security to succeed principal authors of these provisions, evasion. The aggregate of all seed and or fail. They, like the mechanic serv- Senators MERKLEY and LEVIN, as re- coinvestments should be immaterial to icing a car, would know if the vehicle flecting the legislative intent of the the banking entity, and never exceed 3 has been designed to fail. And so they conference committee. I thank Sen- percent of a firm’s Tier 1 capital. must be prevented from securing hand- ators MERKLEY and LEVIN for their

VerDate Mar 15 2010 05:37 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00033 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.019 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5902 CONGRESSIONAL RECORD — SENATE July 15, 2010 leadership, which was so essential in pany that does not have FDIC insur- Ms. COLLINS. As the Senator knows, achieving the conference report provi- ance and that does not offer demand insurance companies are already heav- sions governing proprietary trading deposit accounts or other deposits that ily regulated by State regulators who and prohibiting conflicts of interest. may be withdrawn by check or similar impose their own, very different regu- ASSESSING INDIVIDUAL ENTITIES means for payment to third parties. latory and capital requirements. The Mr. KOHL. Mr. President, I thank the Ms. COLLINS. I thank my colleague fact that those capital requirements Chairman for his continued work to en- for his clarification. are not the same as those imposed by sure that appropriate resources are NONBANK FINANCIAL COMPANIES section 171 should not increase the available to protect the economy from Ms. COLLINS. Mr. President, as we likelihood that the council will des- a future failure of a systemically risky move to final passage of this historic ignate an insurer. Does the Senator financial institution and to help pay legislation, I would like to thank Sen- agree? back taxpayers for the recent failures ator DODD again for his leadership and Mr. DODD. Yes, I do not believe that we experienced. strong support for my amendment to the council should decide to designate With regard to assessments under the ensure that all insured depository in- an insurer simply based on whether the orderly liquidation authority of the stitutions and depository institution insurer would meet bank capital re- bill, the bill requires that a risk-based holding companies regardless of size, as quirements. matrix of factors be established by the well as nonbank financial companies PREEMPTION STANDARD FDIC, taking into account the rec- supervised by the Federal Reserve, Mr. CARPER. Mr. President, I am ommendations of the Financial Sta- meet statutory minimum capital very pleased to see that the conference bility Oversight Council, to be used in standards and thus have adequate cap- committee on the Dodd-Frank Wall connection with assessing any indi- ital throughout the economic cycle. Street Reform and Consumer Protec- vidual entity. One of the factors listed Those standards required under section tion Act retained my amendment re- in the bill’s risk matrix provision 171 serve as the starting point for the garding the preemption standard for would take into account the activities development of more stringent stand- State consumer financial laws with of financial entities and their affili- ards as required under section 165 of only minor modifications. I very much ates. Is it the intent of that language the bill. appreciate the effort of Chairman DODD that a consideration of such factors I did, however, have questions about in fighting to retain the amendment in should specifically include the impact the designation of certain nonbank fi- conference. of potential assessments on the ability nancial companies under section 113 for Mr. DODD. I thank the Senator. As of an institution that is a tax-exempt, Federal Reserve supervision and the the Senator knows, his amendment re- not-for-profit organization to carry out significance of such a designation in ceived strong bipartisan support on the their legally required charitable and light of the minimum capital standards Senate floor and passed by a vote of 80 educational activities? established by section 171. While I can to 18. It was therefore a Senate priority As the Senator knows, many Mem- envision circumstances where a com- to retain his provision in our negotia- bers of the Senate—like me—feel pany engaged in the business of insur- tions with the House of Representa- strongly that we must ensure that our ance could be designated under section tives. constituents and communities con- 113, I would not ordinarily expect in- Mr. CARPER. One change made by tinue to have access to these vital re- surance companies engaged in tradi- the conference committee was to re- sources, and any potential assessment tional insurance company activities to state the preemption standard in a on tax-exempt groups which are chari- be designated by the council based on slightly different way, but my reading table and/or educational by mission those activities alone. Rather, in con- of the language indicates that the con- could severely hamper these groups’ sidering a designation, I would expect ference report still maintains the ability to fulfill their obligations to the council to specifically take into ac- Barnett standard for determining when carry out their legally required activi- count, among other risk factors, how a State law is preempted. ties. the nature of insurance differs from Mr. DODD. The Senator is correct. Mr. DODD. Yes, that is correct. The that of other financial products, in- That is why the conference report spe- language is not intended to reduce such cluding how traditional insurance cifically cites the Barnett Bank of charitable and educational activities products differ from various off-bal- Marion County, N.A. v. Nelson, Florida that are legally required for tax-ex- ance-sheet and derivative contract ex- Insurance Commissioner, 517 U.S. empt, not-for-profit organizations that posures and how that different nature 25(1996) case. There should be no doubt are so important to communities is reflected in the structure of tradi- that the legislation codifies the pre- across the country. I thank the Sen- tional insurance companies. I would emption standard stated by the U.S. ator for his continued help on these ef- also expect the council to consider Supreme Court in that case. forts. whether the designation of an insur- Mr. CARPER. I again thank the Sen- SECTION 603 TRUST COMPANIES ance company is appropriate given the ator. This will provide certainty to ev- Ms. COLLINS. Mr. President, I ask existence of State-based guaranty eryone—those who offer consumers fi- the chairman of the Senate Banking funds to pay claims and protect policy- nancial products and to consumer Committee, my colleague from Con- holders. Am I correct in that under- themselves. necticut, Senator DODD, to clarify the standing? f types of trust companies that fall with- Mr. DODD. The Senator is correct. NONBANK FINANCIAL COMPANIES in the scope of section 603(a), a provi- The council must consider a number of sion that prohibits the Federal Deposit factors, including, for example, the ex- Mr. KERRY. Mr. President, the con- Insurance Corporation from approving tent of leverage, the extent and nature ference report to accompany H.R. 4173, an application for deposit insurance for of off-balance-sheet exposures, and the the Dodd-Frank Wall Street reform certain companies, including certain nature, scope, size, scale, concentra- bill, creates a mechanism through trust companies, until 3 years after the tion, interconnectedness, and mix of which the Financial Stability Over- date of enactment of this act. the company’s activities. Where a com- sight Council may determine that ma- Mr. DODD. I would be glad to clarify pany is engaged only in traditional in- terial financial distress at a U.S. the nature of trust companies subject surance activities, the council should nonbank financial company could pose to the moratorium under section 603(a). also take into account the matters you such a threat to the financial stability The moratorium applies to an institu- raised. of the United States that the company tion that is directly or indirectly Ms. COLLINS. Would the Senator should be supervised by the Board of owned or controlled by a commercial agree that the council should not base Governors of the Federal Reserve Sys- firm that functions solely in a trust or designations simply on the size of the tem and should be subject to height- fiduciary capacity and is exempt from financial companies? ened prudential standards. It is my un- the definition of a bank in the Bank Mr. DODD. Yes. The size of a finan- derstanding that in making such a de- Holding Company Act. It does not cial company should not by itself be termination, the Congress intends that apply to a nondepository trust com- determinative. the council should focus on risk factors

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00034 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.057 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5903 that contributed to the recent finan- amendment that Senator COLLINS of- Our intention in imposing the inde- cial crisis, such as the use of excessive fered on the Senate floor, and I truly pendent representative requirement leverage and major off-balance-sheet appreciate the constructive contribu- was to ensure that there was always exposure. The fact that a company is tion she has made to this legislative someone independent of the swap deal- large or is significantly involved in fi- process. My understanding also is that er or the security-based swap dealer re- nancial services does not mean that it the capital requirements under para- viewing and approving swap or secu- poses significant risks to the financial graph 7 are intended to apply only to rity-based swap transactions. However, stability of the United States. There insured depository institutions, deposi- we did not intend to require that the are large companies providing financial tory institution holding companies, special entity hire an investment man- services that are in fact traditionally and nonbank financial companies su- ager independent of the special entity. low-risk businesses, such as mutual pervised by the Board of Governors. I Is that your understanding, Senator funds and mutual fund advisers. We do thank my friends from Maine and New HARKIN? not envision nonbank financial compa- Hampshire for this clarification. Mr. HARKIN. Yes, that is correct. We nies that pose little risk to the sta- INSURANCE COMPANY DEFINITION certainly understand that many special bility of the financial system to be su- Mr. NELSON of Nebraska. Mr. Presi- entities have internal managers that pervised by the Federal Reserve. Does dent, first, I would like to commend may meet the independent representa- the chairman of the Banking Com- Chairman DODD for his hard work on tive requirement. For example, many mittee share my understanding of this the Wall Street reform bill and for public electric and gas systems have provision? maintaining an open and transparent employees whose job is to handle the Mr. DODD. The Senator from Massa- process while developing this legisla- day-to-day hedging operations of the chusetts is correct. Size and involve- tion. With regard to the orderly liq- system, and we intended to allow them ment in providing credit or liquidity uidation authority under title II of the to continue to rely on those in-house alone should not be determining fac- bill, an ‘‘insurance company’’ is defined managers to evaluate and approve swap tors. The Banking Committee intends in section 201 as any entity that is en- and security-based swap transactions, that only a limited number of high- gaged in the business of insurance, sub- provided that the manager remained risk, nonbank financial companies ject to regulation by a State insurance independent of the swap dealer or the would join large bank holding compa- regulator, and covered by a State law security-based swap dealer and met the nies in being regulated and supervised that is designed to specifically deal other conditions of the provision. Simi- by the Federal Reserve. with the rehabilitation, liquidation, or larly, the named fiduciary or in-house CAPITAL REQUIREMENTS insolvency of an insurance company. Is asset manager—INHAM—for a pension Ms. COLLINS. Mr. President, I un- it the intent of this definition that a plan may continue to approve swap and derstand that it is the intent of para- mutual insurance holding company or- security-based swap transactions. graph 7 of section 171(b) of this legisla- ganized and operating under State in- FOREIGN BANKS tion to require the Federal banking surance laws should be considered an Mrs. LINCOLN. Mr. President, I wish agencies, subject to the recommenda- insurance company for the purpose of to engage my colleague, Senator DODD, tions of the council, to develop capital this title? in a brief colloquy related to the sec- requirements applicable to insured de- Mr. DODD. Yes, that is correct. It is tion 716, the bank swap desk provision. pository institutions, depository insti- intended that a mutual insurance hold- In the rush to complete the con- tution holding companies, and nonbank ing company organized and operating ference, there was a significant over- financial companies supervised by the under State insurance laws should be sight made in finalizing section 716 as Board of Governors that are engaged in considered an insurance company for it relates to the treatment of unin- activities that are subject to height- the purpose of title II of this legisla- sured U.S. branches and agencies of ened standards under section 120. It is tion. I thank the Senator from Ne- foreign banks. Under the U.S. policy of well understood that minimum capital braska for this clarification. national treatment, which has been requirements can help to shield various INDEPENDENT REPRESENTATIVES part of U.S. law since the International public and private stakeholders from Mrs. LINCOLN. Mr. President, as Banking Act of 1978, uninsured U.S. risks posed by material distress that chairman of the Agriculture, Nutri- branches and agencies of foreign banks could arise at these entities from en- tion, and Forestry Committee, I be- are authorized to engage in the same gaging in these activities. It is also un- came acutely aware that our pension activities as insured depository institu- derstood and recognized that minimum plans, governmental investors, and tions. While these U.S. branches and capital requirements may not be an ap- charitable endowments were falling agencies of foreign banks do not have propriate tool to apply under all cir- victim to swap dealers marketing deposits insured by the FDIC, they are cumstances and that by prescribing swaps and security-based swaps that registered and regulated by a Federal section 171 capital requirements as the they knew or should have known to be banking regulator, they have access to correct tool with respect to companies inappropriate or unsuitable for their the Federal Reserve discount window, covered by paragraph 7, it should not clients. Jefferson County, AL, is prob- and other Federal Reserve credit facili- be inferred that capital requirements ably the most infamous example, but ties. should be required for any other com- there are many others in Pennsylvania It is my understanding that a number panies not covered by paragraph 7. and across the country. That is why I of these U.S. branches and agencies of Mrs. SHAHEEN. I also understand worked with Senator HARKIN and our foreign banks will be swap entities that the intent of this section is not to colleagues in the House to include pro- under section 716 and title VII of Dodd- create any inference that minimum tections for pension funds, govern- Frank. Due to the fact that the section capital requirements are the appro- mental entities, and charitable endow- 716 safe harbor only applies to ‘‘insured priate standard or safeguard for the ments in the Dodd-Frank Wall Street depository institutions’’ it means that council to recommend to be applied to Reform and Consumer Protection Act. U.S. branches and agencies of foreign any nonbank financial company that is Those protections—set forth in sec- banks will be forced to push out all not subject to supervision by the Fed- tion 731 and section 764 of the con- their swaps activities. This result was eral Reserve under title I of this legis- ference report—place certain duties not intended. U.S. branches and agen- lation, with respect to any activity and obligations on swap dealers and se- cies of foreign banks should be subject subject to section 120. Rather, the curity-based swap dealers when they to the same swap desk push out re- council should have full discretion not deal with special entities. One of those quirements as insured depository insti- to recommend the application of cap- obligations is that a swap dealer or the tutions under section 716. Under sec- ital requirements to any such nonbank security-based swap dealer entering tion 716, insured depository institu- financial company engaged in any such into a swap or security-based swap tions must push out all swaps and secu- activity. with a special entity must have a rea- rity-based swaps activities except for Mr. DODD. I concur with Senator sonable basis for believing that the spe- specifically enumerated activities, COLLINS and Senator SHAHEEN. Section cial entity has an independent rep- such as hedging and other similar risk 171 of this legislation came from an resentative evaluating the transaction. mitigating activities directly related

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00035 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.008 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5904 CONGRESSIONAL RECORD — SENATE July 15, 2010 to the insured depository institution’s types of companies when implementing management and employment struc- activities, acting as a swaps entity for new regulatory requirements. tures and arrangements employed by swaps or security-based swaps that are Mrs. LINCOLN. Mr. President, I ask family offices; and not exclude any per- permissible for investment, and acting unanimous consent to have printed in son who was not registered or required as a swaps entity for cleared credit de- the RECORD the letter that Chairman to be registered under the Advisers Act fault swaps. U.S. branches and agencies DODD and I wrote to Chairmen FRANK from the definition of the term ‘‘family of foreign banks should, and are willing and PETERSON to which I referred. office’’ solely because such person pro- to, meet the push out requirements of INVESTMENT ADVISER vides investment advice to natural per- section 716 as if they were insured de- Mrs. LINCOLN. Mr. President, I rise sons who, at the time of their applica- pository institutions. to discuss section 409 of the Dodd- ble investment, are officers, directors This oversight on our part is unfortu- Frank bill, which excludes family of- or employees of the family office who nate and clearly unintended. Does my fices from the definition of investment have previously invested with the fam- colleague agree with me about the need adviser under the Investment Advisers ily office and are accredited investors, to include uninsured U.S. branches and Act. In section 409, the SEC is directed any company owned exclusively by agencies of foreign banks in the safe to define the term family offices and to such officers, directors or employees or harbor of section 716? provide exemptions that recognize the their successors-in-interest and con- Mr. DODD. Mr. President, I agree range of organizational, management, trolled by the family office, or any completely with Senator LINCOLN’s and employment structures and ar- other natural persons who identify in- analysis and with the need to address rangement employed by family offices, vestment opportunities to the family this issue to ensure that uninsured U.S. and I thought it would be worthwhile office and invest in such transactions branches and agencies of foreign banks to provide guidance on this provision. on substantially the same terms as the are treated the same as insured deposi- For many decades, family offices family office invests, but do not invest tory institutions under the provisions have managed money for members of in other funds advised by the family of- of section 716, including the safe harbor individual families, and they do not fice, and whose assets to which the language. pose systemic risk or any other regu- family office provides investment ad- END USERS latory issues. The SEC has provided ex- vice represent, in the aggregate, not Mrs. LINCOLN. Mr. President, I will emptive relief to some family offices in more than 5 percent of the total assets ask unanimous consent to have printed the past, but many family offices have as to which the family office provides in the RECORD a letter that Chairman simply relied on the ‘‘under 15 clients’’ investment advice. DODD and I wrote to Chairmen FRANK exception to the Investment Advisers Mrs. LINCOLN. I appreciate the Sen- and PETERSON during House consider- Act, and when Congress eliminated this ator’s explanation and ask that the ation of this Conference Report regard- exception, it was not our intent to in- Senator work with me to make this ing the derivatives title. The letter em- clude family offices in the bill. point in a technical corrections bill. phasizes congressional intent regarding The bill provides specific direction Mr. DODD. I agree that this position commercial end users who enter into for the SEC in its rulemaking to recog- should be raised in a corrections bill swaps contracts. nize that most family offices often and I look forward to working with the As we point out, it is clear in this have officers, directors, and employees Senator towards this goal on this legislation that the regulators only who may not be family members, and point. who are employed by the family office have the authority to set capital and Mrs. LINCOLN. I thank the Senator itself or affiliated entities owned, di- margin requirements on swap dealers for his leadership and his assistance rectly or indirectly, by the family and major swap participants for and cooperation in ensuring the pas- members. Often, such persons co-invest uncleared swaps, not on end users who sage of this important bill. qualify for the exemption from manda- with family members, which enable VOLCKER RULE tory clearing. those persons to share in the profits of As the letter also makes clear, it is investments they oversee and better Mrs. BOXER. Mr. President, I wish to our intent that the any margin re- align the interests of those persons ask my good friend, the Senator from quired by the regulators will be risk- with those of the family members Connecticut and the chairman of the based, keeping with the standards we served by the family office. In addition, Banking Committee, to engage in a have put into the bill regarding cap- family offices may have a small num- brief discussion relating to the final ital. It is in the interest of the finan- ber of co-investors such as persons who Volcker rule and the role of venture cial system and end user counterpar- help identify investment opportunities, capital in creating jobs and growing ties that swap dealers and major swap provide professional advice, or manage companies. participants are sufficiently capital- portfolio companies. However, the I strongly support the Dodd-Frank ized. At the same time, Congress did value of investments by such other per- Wall Street Reform and Consumer Pro- not mandate that regulators set a spe- sons should not exceed a de minimis tection Act, including a strong and ef- cific margin level. Instead, we granted percentage of the total value of the as- fective Volcker rule, which is found in a broad authority to the regulators to sets managed by the family office. Ac- section 619 of the legislation. set margin. Again, margin and capital cordingly, section 409 directs the SEC I know the chairman recognizes, as standards must be risk-based and not not to exclude a family office from the we all do, the crucial and unique role be punitive. definition by reason of its providing in- that venture capital plays in spurring It is also important to note that few vestment advice to these persons. innovation, creating jobs and growing end users will be major swap partici- Mr. DODD. I thank the Senator. Pur- companies. I also know the authors of pants, as we have excluded ‘‘positions suant to negotiations during the con- this bill do not intend the Volcker rule held for hedging or mitigating com- ference committee, it was my desire to cut off sources of capital for Amer- mercial risk’’ from being considered as that the SEC write rules to exempt cer- ica’s technology startups, particularly a ‘‘substantial position’’ under that tain family offices already in operation in this difficult economy. Section 619 definition. I would ask Chairman DODD from the definition of investment ad- explicitly exempts small business in- whether he concurs with my view of viser, regardless of whether they had vestment companies from the rule, and the bill. previously received an SEC exemptive because these companies often provide Mr. DODD. I agree with the Chair- order. It was my intent that the rule venture capital investment, I believe man’s assessment. There is no author- would: exempt family offices, provided the intent of the rule is not to harm ity to set margin on end users, only that they operated in a manner con- venture capital investment. major swap participants and swap deal- sistent with the previous exemptive Is my understanding correct? ers. It is also the intent of this bill to policy of the Commission as reflected Mr. DODD. Mr. President, I thank my distinguish between commercial end in exemptive orders for family offices friend, the Senator from California, for users hedging their risk and larger, in effect on the date of enactment of her support and for all the work we riskier market participants. Regu- the Dodd-Frank Act; reflect a recogni- have done together on this important lators should distinguish between these tion of the range of organizational, issue. Her understanding is correct.

VerDate Mar 15 2010 05:37 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00036 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.060 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5905 The purpose of the Volcker rule is to Is it the Senator’s understanding ents products and these swaps con- eliminate excessive risk taking activi- that manufacturers and companies tracts are used for non-speculative ties by banks and their affiliates while that are using derivatives to hedge le- hedging? at the same time preserving safe, sound gitimate business risk and do not en- Mrs. LINCOLN. Yes, this legislation investment activities that serve the gage in speculative behavior will not recognizes that captive finance compa- public interest. It prohibits proprietary be subjected to the capital or margin nies support the jobs and investments trading and limits bank investment in requirements in the bill? of their parent company. It would en- hedge funds and private equity for that Mrs. LINCOLN. I thank the Senator sure that clearing and margin require- reason. But properly conducted venture for her efforts to protect manufactur- ments would not be applied to captive capital investment will not cause the ers. I share the Senator’s concerns, finance or affiliate company trans- harms at which the Volcker rule is di- which is why our language preserves actions that are used for legitimate, rected. In the event that properly con- the ability of manufacturers and busi- nonspeculative hedging of commercial ducted venture capital investment is nesses to use derivatives to hedge le- risk arising from supporting their par- excessively restricted by the provisions gitimate business risk. ent company’s operations. All swap of section 619, I would expect the ap- Working closely with the Senator, I trades, even those which are not propriate Federal regulators to exempt believe the legislation reflects our in- cleared, would still be reported to regu- it using their authority under section tent by providing a clear and narrow lators, a swap data repository, and sub- 619(J). end-user exemption from clearing and ject to the public reporting require- CAPTIVE FINANCE margin requirements for derivatives ments under the legislation. Ms. STABENOW. Mr. President, I held by companies that are not major This bill also ensures that these ex- would like to discuss the derivatives swap participants and do not engage in emptions are tailored and narrow to title of the Wall Street reform legisla- speculation but use these products ensure that financial institutions do tion with chairman of the Senate Agri- solely as a risk-management tool to not alter behavior to exploit these le- culture, Nutrition, and Forestry Com- hedge or mitigate commercial risks. gitimate exemptions. Ms. STABENOW. Again, I appreciate mittee, Senator LINCOLN. Based on the Senator’s hard work I would like to first commend the the Senator’s efforts to work with me on language that ensures manufactur- and interest in captive finance entities Senator and her staff’s hard work on of manufacturing companies, I would this critically important bill, which ers are not forced to unnecessarily di- vert working capital from core busi- like to discuss briefly the two captive brings accountability, transparency, finance provisions in the legislation and oversight to the opaque derivatives ness activities, such as investing in new equipment and creating more jobs. and how they work together. The first market. captive finance provision is found in For too long the over-the-counter de- As you know, large manufacturers of section 2(h)(7) of the CEA, the ‘‘treat- rivatives market has been unregulated, high-cost products often establish ment of affiliates’’ provision in the transferring risk between firms and wholly owned captive finance affiliates end-user clearing exemption and is en- creating a web of fragility in a system to support the sales of its products by titled ‘‘transition rule for affiliates.’’ where entities became too inter- providing financing to customers and This provision is available to captive connected to fail. dealers. It is clear that unregulated deriva- Captive finance affiliates of manufac- finance entities which are predomi- tive markets contributed to the finan- turing companies play an integral role nantly engaged in financing the pur- cial crisis that crippled middle-class in keeping the parent company’s plants chase of products made by its parent or families. Small businesses and our running and new products moving. This an affiliate. The provision permits the manufacturers couldn’t get the credit role is even more important during captive finance entity to use the clear- they needed to keep the lights on, and downturns and in times of limited mar- ing exemption for not less than two many had to close their doors perma- ket liquidity. As an example, Ford’s years after the date of enactment. The nently. People who had saved money captive finance affiliate, Ford Credit, exact transition period for this provi- and played by the rules lost $1.6 tril- continued to consistently support over sion will be subject to rulemaking. The lion from their retirement accounts. 3,000 of Ford’s dealers and Ford Credit’s second captive finance provision differs More than 6 million families lost their portfolio of more than 3 million retail in two important ways from the first homes to foreclosure. And before the customers during the recent financial provision. The second captive finance recession was over, more than 7 million crisis—at a time when banks had al- provision does not expire after 2 years. Americans had lost their jobs. most completely withdrawn from auto The second provision is a permanent The status quo is clearly not an op- lending. exclusion from the definition of ‘‘finan- tion. Many finance arms securitize their cial entity’’ for those captive finance The conference between the Senate loans through wholly owned affiliate entities who use derivatives to hedge and the House produced a strong bill entities, thereby raising the funds they commercial risks 90 percent or more of that will make sure these markets are need to keep lending. Derivatives are which arise from financing that facili- accountable and fair and that the con- integral to the securitization funding tates the purchase or lease of products, sumers are back in control. process and consequently facilitating 90 percent or more of which are manu- I particularly want to thank the Sen- the necessary financing for the pur- factured by the parent company or an- ator for her efforts to protect manufac- chase of the manufacturer’s products. other subsidiary of the parent com- turers that use derivatives to manage If captive finance affiliates of manu- pany. It is also limited to the captive risks associated with their operations. facturing companies are forced to post finance entity’s use of interest rate Whether it is hedging the risks related margin to a clearinghouse it will divert swaps and foreign exchange swaps. The to fluctuating oil prices or foreign cur- a significant amount of capital out of second captive finance provision is also rency revenues, the ability to provide the U.S. manufacturing sector and found in Section 2(h)(7) of the CEA at financial certainty to companies’ bal- could endanger the recovery of credit the end of the definition of ‘‘financial ance sheets is critical to their viability markets on which manufacturers and entity.’’ Together, these 2 provisions and global competitiveness. their captive finance affiliates depend. provide the captive finance entities of I am glad that the conference recog- Is it the Senator’s understanding manufacturing companies with signifi- nizes the distinction between entities that this legislation recognizes the cant relief which will assist in job cre- that are using the derivatives market unique role that captive finance com- ation and investment by our manufac- to engage in speculative trading and panies play in supporting manufactur- turing companies. our manufacturers and businesses that ers by exempting transactions entered Ms. STABENOW. I agree that the in- are not speculating. Instead, they use into by such companies and their affil- tegrity of these exemptions is critical this market responsibly to hedge le- iate entities from clearing and margin to the reforms enacted in this bill and gitimate business risk in order to re- so long as they are engaged in financ- to the safety of our financial system. duce volatility and protect their plans ing that facilitates the purchase or That is why I support the strong anti- to make investments and create jobs. lease of their commercial end user par- abuse provisions included in the bill.

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It is also critical to funds and wrap contracts like swaps. underwriting or market making activi- ensure that we only exempt those This provision is intended to apply to ties, provided that activity does not ex- transactions that are used to hedge by all stable value fund and wrap con- ceed the reasonably expected near term manufacturers, commercial entities tracts held by employee benefit plans— demands of clients, customers, or and a limited number of financial enti- defined contribution, defined benefit, counterparties. I want to clarify this ties. We were surgical in our approach health, or welfare—subject to any de- language would allow banks to main- to a clearing exemption, making it as gree of direction provided directly by tain an appropriate dealer inventory narrow as possible and excluding specu- participants, including benefit pay- and residual risk positions, which are lators. ment elections, or by persons who are essential parts of the market making In addition to a narrow end-user ex- legally required to act solely in the in- function. Without that flexibility, mar- emption, this bill empowers regulators terest of participants such as trustees. ket makers would not be able to pro- to take action against manipulation. If the SEC and CFTC determine that vide liquidity to markets. Also, the Commodity Futures Trading it is in the public interest to regulate Mr. DODD. The gentleman is correct Commission and the Securities Ex- stable value fund and wrap contracts as in his description of the language. change Commission will have a broad swaps, then they would have the power EVENT CONTRACTS authority to write and enforce rules to to do so. I think this achieves the pol- Mrs. FEINSTEIN. I thank Chairman prevent abuse and to go after anyone icy goals underlying the derivatives LINCOLN and Chairman DODD for main- that attempts to circumvent regula- title while still making sure that we taining section 745 in the conference tion. don’t cause unintended harm to peo- report accompanying the Dodd-Frank America’s consumers and businesses ple’s pension plans. Wall Street Reform and Consumer Pro- deserve strong derivatives reform that Mrs. LINCOLN. Mr. President, I tection Act, which gives authority to will ensure that the country’s financial share Chairman HARKIN’s concern the Commodity Futures Trading Com- oversight system promotes and fosters about possible unintended con- mission to prevent the trading of fu- the most honest, open and reliable fi- sequences the Dodd-Frank Wall Street tures and swaps contracts that are con- nancial markets in the world. Reform and Consumer Protection Act trary to the public interest. Ms. STABENOW. I thank the Chair- could have on pension and welfare Mrs. LINCOLN. Chairman DODD and I man for this opportunity to clarify plans which provide their participant maintained this provision in the con- some of the provisions in this bill. I ap- with stable value fund options. These ference report to assure that the Com- preciate the Senator’s help to ensure stable value fund options and their mission has the power to prevent the that this bill recognizes that manufac- contract wrappers could be viewed as creation of futures and swaps markets turers and commercial entities were being a swap or a security-based swap. that would allow citizens to profit from victims of this financial crisis, not the As Chairman HARKIN has stated, there devastating events and also prevent cause, and that it does not unfairly pe- is a significant amount of retirement gambling through futures markets. I nalize them for using these products as savings in stable value funds, $640 bil- thank the Senator from California for part of a risk-mitigation strategy. lion, which represents the retirement encouraging Chairman DODD and me to It is time we shine a light on deriva- funds of millions of hardworking Amer- include it. I agree that this provision tives trading and bring transparency icans. One of my major goals in this will strengthen the government’s abil- and fairness to this market, not just legislation was to protect Main Street. ity to protect the public interest from for the families and businesses that We should try to avoid doing any harm gaming contracts and other events con- were taken advantage of but also for to pension plan beneficiaries. When the tracts. the long-term health of our economy stable value fund issue was brought to Mrs. FEINSTEIN. It is very impor- and particularly our manufacturers. my attention, I knew it was something tant to restore CFTC’s authority to STABLE VALUE FUNDS we had to address. That is why I prevent trading that is contrary to the Mr. HARKIN. Mr. President, as chair- worked with Chairman HARKIN and public interest. As you know, the Com- man of the Health, Education, Labor, Senators LEAHY and CASEY to craft a modity Exchange Act required CFTC to and Pensions Committee, the pensions provision that would give the CFTC prevent trading in futures contracts community approached me about a and the SEC time to study the issue of that were ‘‘contrary to the public in- possible unintended consequence of the whether the stable value fund options terest’’ from 1974 to 2000. But the Com- derivatives title of the Dodd-Frank and/or the contract wrappers for these modity Futures Modernization Act of Wall Street Reform and Consumer Pro- stable value funds are ‘‘swaps’’ or some 2000 stripped the CFTC of this author- tection Act. They were concerned that other type of financial instrument such ity, at the urging of industry. Since the provisions regulating swaps might as an insurance contract. I think sub- 2000, derivatives traders have bet bil- also apply to stable value funds. jecting this issue to further study will lions of dollars on derivatives con- Stable value funds are a popular, con- provide a measure of stability to par- tracts that served no commercial pur- servative investment choice for many ticipants and beneficiaries in employee pose at all and often threaten the pub- employee benefit plans because they benefit plans—including those partici- lic interest. provide a guaranteed rate of return. As pants in defined benefit pension plans, I am glad the Senator is restoring I understand it, there are about $640 401(k) plans, annuity plans, supple- this authority to the CFTC. I hope it billion invested in stable value funds, mental retirement plans, 457 plans, was the Senator’s intent, as the author and retirees and those approaching re- 403(b) plans, and voluntary employee of this provision, to define ‘‘public in- tirement often favor those funds to beneficiary associations—while allow- terest’’ broadly so that the CFTC may minimize their exposure to market ing the CFTC and SEC to make an in- consider the extent to which a pro- fluctuations. When the derivatives formed decision about what the stable posed derivative contract would be title was put together, I do not think value fund options and their contract used predominantly by speculators or anyone had stable value funds or stable wrappers are and whether they should participants not having a commercial value wrap contracts—some of which be regulated as swaps or security-based or hedging interest. Will CFTC have could be viewed as swaps—specifically swaps. It is a commonsense solution, the power to determine that a contract in mind, and I do not think it is clear and I am proud we were able to address is a gaming contract if the predomi- to any of us what effect this legislation this important issue which could affect nant use of the contract is speculative would have on them. the retirement funds of millions of pen- as opposed to a hedging or economic Therefore, I worked with Chairman sion beneficiaries. use? LINCOLN, Senator LEAHY, and Senator VOLCKER RULE Mrs. LINCOLN. That is our intent. CASEY to develop a proposal to direct Mr. BAYH. I thank the Chairman. The Commission needs the power to, the SEC and CFTC to conduct a With respect to the Volcker Rule, the and should, prevent derivatives con- study—in consultation with DOL, conference report states that banking tracts that are contrary to the public

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Mr. President, I rise contract’’ around sporting events such ital requirements set by a Federal today as a supporter of the Wall Street as the Super Bowl, the Kentucky banking regulator, and maintain a sub- Transparency and Accountability Act, Derby, and Masters Golf Tournament. stantial position in outstanding swaps. but also as one who has concerns over These types of contracts would not I understand when the CFTC and SEC how the derivatives title of the bill will serve any real commercial purpose. are making the determination as to be implemented. I applaud the chair- Rather, they would be used solely for whether a person dealing in swaps is a man of the Senate Banking Committee gambling. major swap participant or major secu- for his work on the underlying bill. At Mrs. FEINSTEIN. And does the Sen- rity-based swap participant, it is the the same time, I am concerned that ator agree that this provision will also intent of the conference committee some of the provisions in the deriva- empower the Commission to prevent that both the CFTC and the SEC focus tives title will harm U.S. businesses trading in contracts that may serve a on risk factors that contributed to the unnecessarily. limited commercial function but recent financial crisis, such as exces- I would like to engage the chairman threaten the public good by allowing sive leverage, under-collateralization of the Senate Banking Committee in a some to profit from events that threat- of swap positions, and a lack of infor- colloquy that addresses an important en our national security? mation about the aggregate size of po- issue. The Wall Street Transparency Mrs. LINCOLN. I do. National secu- sitions. Is this correct? and Accountability Act will regulate rity threats, such as a terrorist attack, Mrs. LINCOLN. Yes. My good friend ‘‘swap dealers’’ for the first time by war, or hijacking pose a real commer- from North Carolina is correct. We subjecting them to new clearing, cap- cial risk to many businesses in Amer- made some important changes during ital and margin requirements. ‘‘Swap ica, but a futures contract that allowed the conference with respect to the dealers’’ are banks and other financial people to hedge that risk would also in- ‘‘major swap participant’’ and ‘‘major institutions that hold themselves out volve betting on the likelihood of security-based swap participant’’ defi- to the derivatives market and are events that threaten our national secu- nitions. When determining whether a known as dealers or market makers in rity. That would be contrary to the person has a ‘‘substantial position,’’ swaps. The definition of a swap dealer public interest. the CFTC and the SEC should consider in the bill includes an entity that ‘‘reg- Mrs. FEINSTEIN. I thank the Sen- the person’s relative position in cleared ularly enters into swaps with counter- ator for including this provision. No versus the uncleared swaps and may parties as an ordinary course of busi- one should profit by speculating on the take into account the value and qual- ness for its own account.’’ It is possible likelihood of a terrorist attack. Firms ity of the collateral held against the definition could be read broadly facing financial risk posed by threats counterparty exposures. The com- and include end users that execute to our national security may take out mittee wanted to make it clear that swaps through an affiliate. I want to insurance, but they should not buy a the regulators should distinguish be- make clear that it is not Congress’ in- derivative. A futures market is for tween cleared and uncleared swap posi- tention to capture as swap dealers end hedging. It is not an insurance market. tions when defining what a ‘‘substan- users that primarily enter into swaps COLLATERALIZED INVESTMENTS tial position’’ would be. Similarly to manage their business risks, includ- Mrs. HAGAN. Mr. President, I would where a person has uncleared swaps, ing risks among affiliates. like to engage Senator LINCOLN, chair- the regulators should consider the I would ask the distinguished chair- man of the Agriculture, Nutrition and value and quality of such collateral man whether he agrees that end users Forestry Committee, in a colloquy. when defining ‘‘substantial position.’’ that execute swaps through an affiliate Title VII of the Dodd-Frank Wall Bilateral collateralization and proper should not be deemed to be ‘‘swap deal- Street Reform and Consumer Protec- segregation substantially reduces the ers’’ under the bill just because they tion Act, which Chairman LINCOLN was potential for adverse effects on the sta- hedge their risks through affiliates. the primary architect of, creates a new bility of the market. Entities that are Mr. DODD. I do agree and thank my regulatory framework for the over-the- not excessively leveraged and have colleague for raising another impor- counter derivatives market. It will re- taken the necessary steps to segregate tant point of clarification. I believe the quire a significant portion of deriva- and fully collateralize swap positions bill is clear that an end user does not tives trades to be cleared through a on a bilateral basis with their counter- become a swap dealer by virtue of centralized clearinghouse and traded parties should be viewed differently. using an affiliate to hedge its own com- on an exchange, and it will also in- In addition, it may be appropriate for mercial risk. Senator COLLINS has been crease reporting and capital and mar- the CFTC and the SEC to consider the a champion for end users and it is a gin requirements on significant players nature and current regulation of the pleasure working with her. in the market. The new regulatory entity when designating an entity a Mr. MCCAIN. Mr. President, we are framework will help improve trans- major swap participant or a major se- poised to pass what some have termed parency and disclosure within the de- curity-based swap participant. For in- a ‘‘sweeping overhaul’’ of our Nation’s rivatives market for the benefit of all stance, entities such as registered in- financial regulatory system. Unfortu- investors. vestment companies and employee ben- nately, this legislation does little, if Under the bill, the Commodity Fu- efit plans are already subject to exten- anything—to tackle the tough prob- tures Trading Commission, CFTC, and sive regulation relating to their usage lems facing the financial sector, nor the Securities and Exchange Commis- of swaps under other titles of the U.S. does it institute real, meaningful and sion, SEC, are instructed to further de- Code. They typically post collateral, comprehensive reform. This bill is sim- fine the terms ‘‘major swap partici- are not overly leveraged, and may not ply an abysmal failure and serves as pant’’ and ‘‘major security-based swap pose the same types of risks as unregu- yet another example of Congress’s in- participant.’’ The definitions of major lated major swap participants. ability to make the choices necessary swap participant and major security- Mrs. HAGAN. I thank the Senator. If to bring our country back into eco- based swap participant included in the I may, I have one additional question. nomic prosperity. bill require the CFTC and the SEC to When considering whether an entity What this bill does represent is a determine whether a person dealing in maintains a substantial position in guarantee of future bailouts. In a re- swaps maintains a ‘‘substantial posi- swaps, should the CFTC and the SEC cent Wall Street Journal op-ed titled tion’’ in swaps, as well as whether such look at the aggregate positions of ‘‘The Dodd-Frank Financial Fiasco,’’ outstanding swaps create ‘‘substantial funds managed by asset managers or at John Taylor—a professor of economics counterparty exposure’’ that could the individual fund level? at Stanford and a senior fellow at the have ‘‘serious adverse effects on the fi- Mrs. LINCOLN. As a general rule, the Hoover Institution—wrote: nancial stability of the United States CFTC and the SEC should look at each The sheer complexity of the 2,319-page banking system or financial markets.’’ entity on an individual basis when de- Dodd-Frank financial reform bill is certainly

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00039 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.064 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5908 CONGRESSIONAL RECORD — SENATE July 15, 2010 a threat to future economic growth. But if tracts with institutions they deem government subsidies—on a level play- you sift through the many sections and sub- have ‘‘failed to make a good faith ef- ing field with their private sector com- sections, you find much more than com- fort to include minorities and women petitors. Unfortunately that amend- plexity to worry about. The main problem with the bill is that it is in their workforce.’’ ment was defeated by a near-party-line based on a misdiagnosis of the causes of the Diana Furchtgott-Roth, former chief vote. financial crisis, which is not surprising since economist at the U.S. Department of The majority, however, did offer an the bill was rolled out before the congres- Labor and senior fellow at the Hudson alternative proposal to my amend- sionally mandated Financial Crisis Inquiry Institute, spotlighted the controversial ment. Was it a good, well thought out, Commission finished its diagnosis. section in an article on Real Clear Mar- comprehensive plan to end the tax- The biggest misdiagnosis is the presump- kets on July 8th. She wrote: payer-backed free ride of Fannie and tion that the government did not have Freddie and require them to operate on enough power to avoid the crisis. But the This is a radical shift in employment legis- Federal Reserve had the power to avoid the lation. The law effectively changes the a level playing field with their private monetary excesses that accelerated the standard by which institutions are evaluated sector competitors? Nope. It was a housing boom that went bust in 2007. The from anti-discrimination regulations to study. The majority included language New York Fed had the power to stop quotas. In order to be in compliance with the in this bill to study the problem of Citigroup’s questionable lending and trading law these businesses will have to show that Fannie and Freddie for 6 months. Wow! decisions and, with hundreds of regulators on they have a certain percentage of women and Instead of dealing head-on with the two the premises of such large banks, should a certain percentage of minorities. enterprises that brought our entire have had the information to do so. The Secu- This provision was never considered economy to its knees—the majority rities and Exchange Commission (SEC) could or debated in the Senate. I do not have insisted on reasonable liquidity rules to wants to study them for 6 more prevent investment banks from relying so think it is unreasonable to expect that months. much on short-term borrowing through re- such a major change in government According to a recent article pub- purchase agreements to fund long-term in- policy—indeed a complete shift from lished by the Associated Press, these vestments. And the Treasury working with anti-discrimination regulations to a two entities have already cost tax- the Fed had the power to intervene with system of quotas for the financial in- payers over $145 billion in bailouts troubled financial firms, and in fact used dustry—be fully aired and debated by and—according to CBO—those losses this power in a highly discretionary way to both Chambers before it is enacted. could balloon to $400 billion. And if create an on-again off-again bailout policy that spooked the markets and led to the Finally, let me return to Mr. Tay- housing prices fall further, some ex- panic in the fall of 2008. lor’s piece from the Wall Street Jour- perts caution, the cost to the taxpayer But instead of trying to make implementa- nal. Mr. Taylor added: could hit as much as $1 trillion. And all tion of existing government regulations By far the most significant error of omis- the majority is willing to do is study more effective, the bill vastly increases the sion in the bill is the failure to reform them for 6 months. It is no wonder the power of government in ways that are unre- Fannie Mae and Freddie Mac, the govern- American people view us with such lated to the recent crisis and may even en- ment sponsored enterprises that encouraged contempt. courage future crises. the origination of risky mortgages in the The Federal Government has set a Mr. Taylor then goes on to highlight first place by purchasing them with the sup- dangerous precedent here. We sent the the many ‘‘false remedies’’ contained port of many in Congress. Some excuse this wrong message to the financial indus- in this legislation including the ‘‘or- omission by saying that it can be handled try: when you engage in bad, risky later. But the purpose of ‘‘comprehensive re- derly liquidation’’ authority given to business practices, and you get into the FDIC—which effectively institu- form’’ is to balance competing political in- terests and reach compromise; that will be trouble, the government will be there tionalizes the bailout process. Other much harder to do if the Frank-Dodd bill be- to save your hide. It amounts to noth- examples are the new Bureau of Con- comes law. ing more than a taxpayer-funded sub- sumer Financial Protection, the new I could not agree more. It is clear to sidy for risky behavior and this bill Office of Financial Research, and a new any rational observer that the housing does nothing to prevent it from hap- regulation for nonfinancial firms that market has been the catalyst of our pening all over again. use financial instruments to reduce current economic turmoil. And it is Again, I regret that I have to vote risks of interest-rate or exchange-rate impossible to ignore the significant against this bill. I assure my col- volatility. role played by Fannie Mae and Freddie leagues, and the American people, that In addition to the ‘‘false remedies,’’ if this were truly a bill that instituted the huge expansion of government, and Mac. The events of the past 2 years have made it clear that never again real, serious and effective reforms—I the outright power-grab by the Federal would be the first in line to cast a vote Government contained in this so-called can we allow the taxpayer to be respon- sible for poorly managed financial enti- in its favor. But it is not. It serves as reform measure—recent press reports evidence of a dereliction of our duty ties who gambled away billions of dol- note that this bill has also become the and a missed opportunity to provide lars. Fannie Mae and Freddie Mac are vehicle for imposing racial and gender the American people with the protec- synonymous with mismanagement and quotas on the financial industry. Sec- tions necessary to avert yet another fi- waste and have become the face of ‘‘too tion 342 of this bill establishes Offices nancial disaster. They deserve better big to fail.’’ of Minority and Women Inclusion in at from us. least 20 Federal financial services During the debate on this financial Mr. GRASSLEY. Mr. President, I agencies. These offices will be tasked ‘‘reform’’ bill, we heard much about have long worked for the continued vi- with implementing ‘‘standards and pro- how the U.S. Government will never ability of rural low-volume hospitals so cedures to ensure, to the maximum ex- again allow a financial institution to that Medicare beneficiaries living in tent possible, the fair inclusion and become ‘‘too big to fail.’’ We heard rural areas in Iowa and elsewhere in utilization of minorities, women, and countless calls for more regulation to the country will continue to have need- minority-owned and women-owned ensure that taxpayers are never again ed access to care. businesses in all business and activities placed at such tremendous risk. Sadly, Today, I want to discuss another con- of the agency at all levels, including in the conference report before us now cern, one regarding low-volume dialy- procurement, insurance, and all types completely ignores the elephant in the sis clinics in rural areas and the kidney of contracts.’’ room—because no other entity’s failure dialysis patients they serve. This ‘‘fair inclusion’’ policy will would be as disastrous to our economy Congress enacted a new end-stage apply to ‘‘financial institutions, invest- as Fannie Mae’s and Freddie Mac’s. renal dialysis, ESRD, bundled payment ment banking firms, mortgage banking As my colleagues know, during Sen- system in the Medicare Improvements firms, asset management firms, bro- ate consideration of this bill, I offered for Patients and Providers Act of 2008 kers, dealers, financial services enti- a good, common-sense amendment de- that takes effect next year. ties, underwriters, accountants, invest- signed to end the taxpayer-backed con- I support the establishment of a fully ment consultants and providers of legal servatorship of Fannie Mae and bundled payment system for renal di- services.’’ Freddie Mac by putting in place an or- alysis services. The provision goes on to assert that derly transition period and eventually It is intended to improve payments the government will terminate con- requiring them to operate—without for ESRD services and to ensure access

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00040 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.027 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5909 to critical renal dialysis services, in- MedPAC also found that rural dialy- There being no objection, the mate- cluding those in rural areas. sis providers have Medicare margins rial was ordered to be printed in the It will also improve the quality of that average -0.3 percent compared to RECORD, as follows: care for dialysis patients by requiring urban providers with positive margins WILL THE NEW ESRD BUNDLE CAUSE THE ESRD providers to meet certain stand- of 3.9 percent, and they expressed con- DEATH OF RURAL HOSPITAL-BASED DIALYSIS ards through a new quality incentive cern that the gap in rural and urban UNITS? program that is established for ESRD margins has widened. The new End Stage Renal Disease (ESRD) providers. They project that Medicare margins Bundled payment system scheduled to begin It establishes a permanent annual will fall from an aggregate 3.2 percent in January, 2011 is expected to create a fi- nancial loss for dialysis clinics across the update for ESRD providers. margin in 2008 to an aggregate 2.5 per- It also provides for payment adjust- United States. According to the CMS Office cent in 2010. of Public Affairs (2009) ‘‘MIPPA [Medicare ments in certain circumstances, such If corresponding declines are seen in Improvements for Patients and Providers as payments for low-volume facilities rural areas, negative margins for rural Act] specifically requires that the new sys- and for dialysis facilities and providers facilities will increase, and low-volume tem trim two percent of the estimated pay- in rural areas that need additional re- rural facilities will be hit even harder. ments that would have been made in 2011 sources. And this projection does not take under the previous payment system’’ (T3). Al- Last fall, the Centers for Medicare into account any of the additional re- though this is of concern to all dialysis clin- ics, it is particularly alarming to non-profit and Medicaid Services, CMS, issued a ductions that CMS has proposed as proposed rule to implement the new hospital based dialysis units which are al- part of the new bundled payment sys- ready operating at a loss. ESRD bundled payment system. That tem even though these reductions These small hospital-owned dialysis clinics rule will be finalized later this year. would have a significant adverse im- are simply trying to provide a service to an I am concerned that overall some of pact on small dialysis facilities. underserved rural area. Patients would have the proposed adjustments that reduce Should the proposed restrictions on no option but to let ESRD claim their lives payments for dialysis treatment may low-volume facilities be finalized, the because the resources are not available for be unduly low. them to drive the extended distances to continued viability of these small di- urban areas where dialysis services are more But today I want to focus on one alysis facilities will be questionable. issue in particular—the adjustment available. Pella Regional Health Center This will be especially true in rural (PRHC), a Critical Access Hospital (CAH) in that CMS has proposed for low-volume areas, and beneficiary access to these rural Iowa, offers outpatient dialysis serv- facilities. critical dialysis services will be se- ices. Robert Kroese, CEO of PRHC stated, The legislation that established this verely jeopardized. ‘‘We choose to keep this dialysis clinic open new bundled payment system specifi- Small rural dialysis clinics provide despite the financial liability to the hospital cally requires CMS to adopt a payment beneficiaries with end-stage-renal dis- for one reason only, people will have no adjustment of not less than 10 percent choice but to die without it. Our community ease access to critically-needed dialy- needs this service.’’ for low-volume facilities to ensure sis services in medically underserved their continued viability with other fa- Currently hospital-based dialysis units rep- areas. resent 13.6 percent of all dialysis facilities in cilities. In some rural areas, a single clinic the United States. Facilities classified as The Secretary was given the discre- may be the only facility that furnishes rural only make up 4.4 percent. The current tion to define low-volume facilities. CMS payment system defines a small facility Unfortunately, CMS has proposed a this life-sustaining care. Should the unduly restrictive treat- as <5000 treatments annually as well as other very restrictive definition and set of ment limit for low-volume facilities be control variables to include urban vs. rural criteria to qualify as a low-volume fa- and facility ownership. The proposed bundled finalized as proposed, small rural fa- cility so the payment adjustment payment system will decrease reimburse- cilities with slightly higher treatment would only apply to facilities that fur- ment further for these rural hospital-based volumes will lose these essential low- nish fewer than 3,000 treatments a units by decreasing the low-volume defini- volume payments. tion to <3000 treatments per year and elimi- year. nating rural facility payment adjustments According to CMS, ‘‘the low-volume Since rural dialysis facilities already face negative Medicare margins, many (Leavitt, 2008). Considering the lack of buy- adjustment should encourage small ing power these small facilities face com- ESRD facilities to continue to provide are likely to close, further limiting ac- cess to crucial dialysis services that pared to the large dialysis companies, the access to care to an ESRD patient pop- hope of continuing this service in these rural ulation where providing that care these kidney patients depend upon to areas is diminishing. would otherwise be problematic.’’ survive. At what point is the financial burden going CMS also notes that low-volume fa- New facilities would not be eligible to be too much for these small rural hos- cilities have substantially higher for low-volume payments until their pitals to carry? The result will be thousands fourth year of operation under the pro- of patients without the healthcare services treatment costs. needed to sustain their lives. Please consider Previously, CMS considered an ESRD posed rule, making it unlikely that other facilities would take the place of the effects on the unseen heroes in rural facility with less than 5,000 treatments America trying to provide the best care pos- a year to be small. those that had closed. sible to all Americans who need it. Help pro- But now CMS is proposing to limit The prospect of Medicare bene- tect the dialysis patients who live in the un- eligible ESRD facilities to those with ficiaries’ losing access to these life-sus- derserved areas of America by contacting less than 3,000 treatments a year and taining services is simply unaccept- your state representatives regarding the requiring this limit to be met for 3 able. preservation of Hospital-based rural dialysis years preceding the payment year, I, therefore, urge CMS to modify the units. along with certain ownership restric- proposed restrictions for low-volume Mr. FEINGOLD. Mr. President, I will tions. adjustments by raising the treatment oppose the conference version of the CMS has not proposed any geo- limit to the existing 5,000 treatment Dodd-Frank bill. While it includes graphic restriction that would limit definition for small rural dialysis fa- some positive provisions, it fails its the low-volume payment adjustment to cilities. most important mission, namely to en- dialysis facilities in rural areas. One of my constituents, Laura Beyer, sure that taxpayers, consumers, busi- Medicare reimbursement is already RN, BSN, is the manager of dialysis at nesses, and workers won’t be victims of problematic for small dialysis organi- Pella Regional Health Center, a crit- another financial crisis like the one zations because they operate on very ical access hospital in rural Iowa. She which a few years ago triggered the low Medicare margins. has written an editorial about this worst recession our Nation has experi- According to the March 2010 report of problem and the financial crises that enced since the Great Depression. the Medicare Payment Advisory Com- small outpatient dialysis facilities, The measure certainly contains mission, MedPAC, large dialysis orga- such as Pella Regional Health Center, many good things, but those positive nizations have Medicare margins of 4.0 are facing. Her editorial will be appear- provisions do not outweigh the bill’s percent compared to other dialysis fa- ing in Nephrology News in July. serious failings. Of the several signifi- cilities with Medicare margins of only I ask unanimous consent to have cant flaws in the bill, I will focus on 1.6 percent. printed in the RECORD this editorial. two—the failure to reinstate the well-

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00041 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.071 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5910 CONGRESSIONAL RECORD — SENATE July 15, 2010 proven protections first established by ades began to unravel when, in the During the Senate’s consideration of the Glass-Steagall Act of 1933 that 1980s, Wall Street lobbyists spurred the measure, several amendments were were repealed a decade ago, and the regulators to undermine financial reg- offered that sought to confront that failure to firmly and finally address ulations, including the very firewall problem. Two of them, one offered by the essential problem posed by too-big- between Main Street banking and Wall the Senator from North Dakota, Mr. to-fail financial institutions. Street investing that Glass-Steagall DORGAN, and one offered by the Sen- Earlier this year I was pleased to co- had established, and that had worked ators from Ohio, Mr. BROWN, and Dela- sponsor a bill introduced by the Sen- so well. That firewall was completely ware, Mr. KAUFMAN, took the problem ator from Washington, Ms. CANTWELL, torn down when Wall Street lobbyists on directly. Only one of those amend- to restore the safeguards that were en- convinced Congress to pass the ments even got a vote, and that pro- acted as part of the famous Glass- Gramm-Leach-Bliley Act of 1999. posal, from Senators BROWN and KAUF- Steagall Act of 1933. And I was also We have seen the disastrous results MAN, was strongly opposed, and ulti- pleased to cosponsor her amendment to of that ill-considered policy. It’s a mately defeated, by those who were the Financial Regulatory Reform bill, major part of the reason the financial shepherding the bill through the Sen- which was based on that legislation. It regulatory reform bill was considered ate. went to the very core of what the un- by this body. As I noted, the problem of too big to derlying bill we are considering seeks I voted against the Gramm-Leach- fail is the reason we are considering fi- to address. Bliley Act, which eliminated the Glass- nancial regulatory reform legislation. Unlike some other proposals we con- Steagall protections. The financial and It was the threat of the failure of the sidered, that amendment had a track economic record of that bill has been Nation’s largest financial institutions record we can review, because the eco- disastrous. If the financial regulatory that spurred the Wall Street bailout. I nomic history of this country can be reform bill before us did nothing else, opposed that measure as well, in part divided into three eras—the time be- it should have fixed the problems cre- because it was not tied to fundamental fore Glass-Steagall, the Glass-Steagall ated by that ill-advised act. reforms of our financial system that era, and the most recent post-Glass- Just a few weeks ago, at one of the would prevent a future crisis and the Steagall era. listening sessions I hold in each of Wis- need for another bailout. There can be In the first era—the time before the consin’s 72 counties every year, a com- no doubt that we could have had a enactment of the Glass-Steagall Act of munity banker from northwestern Wis- much tougher reform package if the 1933—financial panics were frequent consin urged me to support restoring bailout had been tied to such a meas- and devastating. Even before the mar- the Glass-Steagall protections. He ure. ket crash in 1929, the panics of 1857, rightly pointed out how the lack of Nor should there be any doubt about 1873, 1893, 1901, and 1907 wrecked our those protections led directly to the the role Congress has played in aggra- economy, putting thousands of firms Great Depression. And he argued that vating the problem of too big to fail. out of business, and leaving family the bill we are currently debating Fifteen years ago, the six largest U.S. breadwinners across the country with- doesn’t go far enough in this respect. banks had assets equal to 17 percent of out jobs. That community banker was abso- our GDP. Today, after the enactment In the wake of the 1929 crash—the lutely right. of the Riegle-Neal Interstate Banking last great panic of that first era—4,000 The bill before us tries to make up commercial banks and 1,700 savings and Branching bill and the Gramm- for the lack of a Glass-Steagall firewall and loans failed in this country, trig- Leach-Bliley bill, the six largest U.S. by establishing some new limitations gering the Great Depression that elimi- banks have assets equal to more than on the activities of banks, and gives nated jobs for a quarter of the work- 60 percent of our GDP. greater power and responsibility to Years ago, a former Senator from force. It was that last financial crisis that regulators. All of that is well inten- Wisconsin, William Proxmire, noted spurred enactment of the Glass- tioned, but we all know just how cre- that as banking assets become more Steagall Act of 1933, which marks the ative financial firms can be at eluding concentrated, the banking system beginning of the second of our financial these kinds of limits and regulatory itself becomes less stable, as there is history’s three eras. oversight when so much profit is at greater potential for system wide fail- The Glass-Steagall Act of 1933 put a stake. No amount of oversight is an ef- ures. Sadly, Senator Proxmire was ab- stop to financial panics. It stabilized fective substitute for the legal firewall solutely right, as recent events have our banking system by implementing established by Glass-Steagall. proved. Even beyond the issue of sys- two key reforms. First, it established The era in our financial history in temic stability, the trend toward fur- an insurance system for deposits, reas- which the Glass-Steagall protections ther concentration of economic power suring bank customers that their de- were in force was notable for the lack and economic decisionmaking, espe- posits were safe and thus forestalling of instability and turmoil that had cially in the financial sector, simply is bank runs. And second, it erected a been a regular feature of our financial not healthy for the Nation’s economy. firewall between securities under- markets prior to Glass-Steagall, and Historically, banks have had a very writing and commercial banking. Fi- that helped bring our economy to the special role in our free market system: nancial firms had to choose which busi- brink after Glass-Steagall safeguards They are rationers of capital. While in ness to be in; they couldn’t do both. were repealed. Congress should have re- recent decades we have seen changes in That wall between Main Street com- stored those time-tested protections, the capital markets that provide the mercial banking and Wall Street in- and reestablished the stability that largest corporations with other options vestment financing was a crucial part brought our Nation half a century of to access needed capital, small busi- of establishing the deposit insurance remarkable economic growth. nesses still remain dependent on the safety net because it prevented banks We could have achieved that by traditional banking system for the cap- that accepted FDIC-insured deposits adopting the Cantwell amendment. ital that is essential to them. So when from making speculative investment But, as we know, the Cantwell amend- fewer and fewer banks are making the bets with that insured money. ment was not even permitted a vote, critical decisions about where capital The Glass-Steagall Act was an enor- such was the opposition to that com- is allocated, there is an increased risk mous success. It helped prevent any monsense reform by those who were that many worthy enterprises will not major financial crisis in this country guiding this legislation. So our finan- receive the capital needed to grow and for most of the 20th century, and that cial markets will continue to remain flourish. financial market stability helped fos- adrift in the brief but ruinous post- For years, a strength of the Amer- ter the economic growth we enjoyed for Glass-Steagall era. ican banking system was the strong decades. The other flaw I will highlight is the community and local nature of that And that brings us to the last of the measure’s failure to directly address system. Locally made decisions made three eras—the post-Glass-Steagall era. what in many ways is the reason we by locally owned financial institu- All that wonderful financial market are here today, namely the problem of tions—institutions whose economic stability that we had enjoyed for dec- too big to fail. prospects were tied to the financial

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00042 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.019 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5911 health of the communities they the bill actually ‘‘enshrines the bailout The CFPB could have abolished that served—have long played a critical role architecture, and thus the ‘too-big-to- kind of financing, but keeping these in the economic development of our fail’ distortions in the economy.’’ And provisions in the bill will preserve a va- Nation and especially for our smaller those distortions are not limited to the riety of auto financing choices for con- communities and rural areas. But we kind of massive, systemic collapse of sumers, and we know that more have moved away from that system. the financial markets, which we just choices result in lower prices. And the Directly as a result of policy changes experienced. Too-big-to-fail distortions provisions of my amendment keep auto made by Congress and regulators, occur daily. They happen whenever a loans convenient and affordable while banking assets are controlled by fewer smaller community bank is competing retaining existing consumer protection and fewer institutions, and the dimin- with an enormous too-big-to-fail bank. laws and policies. ishment of that locally owned and con- Dean Baker calculated that the credit The end result is a balance between trolled capital has not benefited either advantage the very biggest banks have consumer protection and the avail- businesses or consumers. over smaller institutions because of ability of affordable and accessible Beyond the problems to our capital too-big-to-fail distortions is worth pos- credit for consumers to meet their markets created by this development, sibly $34 billion a year. Those who transportation needs. Except for sub- there is Senator Proxmire’s warning doubt such a distortion need only talk section (d), Section 1029 is the result of about the increased risk of system wide to a community banker for a few min- a lot of debate and discussion in both failure. Taxpayers across the country utes to understand just how real it is. houses of Congress dating back to last must now realize that Senator Prox- Some suggest we should pass this bill year. During the House Financial Serv- mire’s warning about the concentra- because, despite the failings I have just ices Committee’s markup of this legis- described, it contains some positive re- tion of banking assets proved to be all lation, Representative JOHN CAMPBELL too prescient when President Bush and forms and that we should enact those of California offered an amendment to Congress decided to bail out those improvements and then work to exclude auto dealers from the jurisdic- mammoth financial institutions rather achieve the critically needed reforms tion of the CFPB. The Campbell that remain. That analysis assumes than allowing them to fail. amendment passed on a bipartisan vote there will be some second great reform Some may argue that instead of im- of 47–21. A modified form of the Camp- effort which will build on the work posing clear limits on the size of these bell amendment was included during begun in this legislation, and that sim- financial behemoths, the bill before us floor consideration of H.R. 4173, which ply isn’t going to happen. This is the seeks to limit their risk of failing by passed by a vote of 223–202 on December bill. In the wake of the financial crisis tightening the rules that should govern 11, 2009. their behavior. And, they might add, and bailout, Congress essentially gets I offered an amendment during Sen- the measure also permits regulators to one shot to correct things and prevent ate consideration of H.R. 4173 to serve a future crisis and bailout. There will address these matters more directly as a companion to the Campbell be no financial regulatory reform, part than ever before. But we have seen how amendment. Although my amendment two. Nobody seriously thinks the Wall Street interests can maneuver did not receive a direct vote, on May White House is planning a second re- around inconvenient regulations. More- 24, the Senate voted to instruct its con- form package to go after too big to fail over, the track record of the regulators ferees to recede to the House on this and to reinstate Glass-Steagall protec- themselves has been troubling at best, matter, subject to the modifications of tions. Nor does anyone believe the Sen- and yet this bill relies on that same the Brownback amendment. This mo- ate Banking Committee or the House system to protect taxpayers and the tion passed on a bipartisan vote of 60– Banking Committee is drafting a fol- economy from another financial mar- 30. lowup bill to deal with those issues. The final conference committee ket meltdown. For that matter, I know of no advocacy Today, the 10 largest banks have agreement incorporates the groups that are seriously planning a more than $10 trillion in assets. That is Brownback-Campbell language with followup reform effort to go after too the equivalent of more than three- some modifications. I want to discuss big to fail or to reinstate the Glass- quarters of our Nation’s GDP. And no those provisions specifically and high- Steagall firewalls between commercial one believes that, if one or more of light some significant points. banking and Wall Street investment those financial institutions were to get First, section 1029(a) provides that firms. It is not happening, because this into trouble, they would be allowed to the CFPB ‘‘may not exercise any rule- is the moment and this is bill. To mini- making, supervisory, enforcement or simply fail. The risk to the financial mize the failings of this bill by sug- any other authority, including any au- markets and the economy is seen as gesting there will be another one com- thority to order assessments, over a too great. They are literally too big to ing down the pike is at best misleading motor vehicle dealer that is predomi- fail. And that is the problem. and at worst dishonest. As economist Dean Baker has noted, Mr. President, in this case, we have nately engaged in the sale and serv- too big to fail implies two things: to get it right—completely right, not icing of motor vehicle, the leasing and First, knowing the government will just make a good start. This bill fails servicing of motor vehicles, or both.’’ stand behind the debt-of-too-big to fail the key test of preventing another cri- This is a clear, unambiguous exclusion institutions, creditors will view those sis, and I will oppose it. from the authority of the CFPB for institutions as better credit risks and Mr. BROWNBACK. Mr. President, I motor vehicle dealers. lower the cost of credit to them; and rise to speak regarding the auto dealer Three exceptions to the exclusion for second, too-big-to-fail firms are able to exclusion in section 1029 of H.R. 4173, dealers are enumerated in section engage in riskier behavior than other the Restoring American Financial Sta- 1029(b). Subsection (b)(1) describes ac- firms because creditors know the gov- bility Act of 2010. tivity related to real estate trans- ernment will stand behind a too-big-to- I am pleased that my amendment ex- actions with consumers. Subsection fail firm if it gets in trouble, they will cluding auto dealers from the jurisdic- (b)(2) describes motor vehicle trans- keep the money flowing when they oth- tion of the Bureau of Consumer Finan- actions in which the dealer under- erwise might have closed it off. Baker cial Protection, CFPB, was included in writes, funds, and services motor vehi- is exactly right when he says that this the conference report to H.R. 4173. This cle retail installment sales contracts is a recipe for many more bailouts. proposal attracted bipartisan support and lease agreements without the in- Too big to fail has been a growing because the auto dealers should not volvement of an unaffiliated third problem for more than a decade. Yet have been regulated in this bill in the party finance or leasing source so- nothing in the Dodd-Frank bill re- first place. They are retailers. They called ‘‘buy-here-pay-here’’ trans- quires that those enormous financial should not be regulated as bankers. actions. Subsection (b)(3) describes the firms be whittled down to a size that They did not cause the Wall Street consumer financial products and serv- would permit them to fail without dis- meltdown. They didn’t bring down Leh- ices offered by motor vehicle dealers astrous consequences for financial mar- man Brothers or Bear Stearns. and limits the exclusion to those ac- kets or the economy. In fact, as Peter The purpose of my amendment was tivities or any related or ancillary Eavis noted in the Wall Street Journal, to protect third party auto financing. product or service. The combination of

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00043 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.019 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5912 CONGRESSIONAL RECORD — SENATE July 15, 2010 1029(a) and 1029(b) ensures that motor Under Secretary Stanley asking him to form. This is a great, unheralded vic- vehicle dealers providing financial further clarify and substantiate the tory for the American people and one products or services related to the ac- claims he made in his letter to ensure that should serve as an example again tivities described in subsection (b)(3) that the Senate would not take action and again. are completely excluded from the that would harm military members. The recent financial crisis clearly ex- CFPB. Under Secretary Stanley’s May 18 re- posed several flaws in our current regu- Section 1029(c) preserves the author- sponse to my letter offered a series of latory system. Many large Wall Street ity of the Federal Reserve Board, the anecdotes about finance practices that investment banks and insurance com- Federal Trade Commission and any were already illegal. In addition, Under panies hid their shaky finances from other Federal agency having authority Secretary Stanley’s letter related the stockholders and government regu- to regulate motor vehicle dealers. results of a survey of military members lators. Corporate executives saw their Section 1029(d) provides that the Fed- regarding auto financing. That survey, salaries rise to extreme heights, even eral Trade Commission, FTC, will have which was informal and unscientific, as their companies were failing and the authority to write rules to address unfortunately failed to specify the seeking government assistance. unfair or deceptive acts or practices by sources of the problems some service- Through it all, Federal regulatory motor vehicle dealers pursuant to the members encountered. It gave no indi- agencies failed to provide the nec- procedures set forth in the Administra- cation that auto dealers were respon- essary oversight to rein in these reck- tive Procedures Act instead of the sible for bad loans made to military less actions. If this crisis has taught us Magnuson-Moss Act. Motor vehicles members and made, and I think it is anything, it is that the look-the-other dealers are set to become the only busi- unfortunate that auto dealers were way, hands-off deregulatory policies nesses in America singled out for regu- blamed for problems they did not cause that were in vogue in recent times can lation in this manner. I want to em- on the basis of this survey. jeopardize not only private invest- phasize that this specific provision was In fact, I was surprised that Pen- ments but our entire economy. neither in the House or Senate bill and tagon officials cited this survey instead The conference report we are voting was not under consideration in either of relying on their comprehensive 2006 on today goes directly to the heart of chamber. It was added by House-Senate report on abusive lending practices. the Wall Street excesses that brought conferees. Section 1029(d) was included This study, entitled ‘‘Report on Preda- our economy to the brink. For far too without any evidence to justify its in- tory Lending Practices Directed at long Wall Street firms made risky bets clusion, or any debate for that matter. Members of the Armed Forces and in the dark and reaped enormous prof- I do not support this provision, as I be- Their Dependents’’ did not include its. Then, when their bets went sour, lieve it invites the FTC to again en- dealer-assisted financing among its list they turned to America’s taxpayers to gage in regulatory overreach. I am con- of predatory lending practices. In the bail them out. This bill is about chang- cerned that the removal of the well-es- end, in my view, the best information ing the culture of rampant Wall Street tablished ‘‘Magnuson-Moss’’ safeguards available indicates that servicemem- speculation and doing what needs to be gives the FTC free rein to conduct fish- bers will not be harmed by exempting done to get our economy back on ing expeditions into any area of auto- dealers from the jurisdiction of the track. We need more transparency and motive finance it perceives as ‘‘un- CFPB. I am glad that argument carried oversight of Wall Street. These im- fair.’’ the day. provements will increase transparency The present leadership of the FTC I am very concerned that the CFPB, in and oversight of the financial sector. has promised that if Magnuson-Moss which will not be overseen by the Of- These historic reforms will set clear were repealed, they would use their fice of Management and Budget and standards and real enforcement—in- new power prudently. I hope that this will not depend on Congress for its cluding jail time for executives—to fi- is the case, because we do not want to funding, will at some point in the fu- nally curb the fraud, manipulation, and repeat the kind of excessive FTC regu- ture engage in regulatory overreach riotous speculation that punctured lation that occurred in the 1970s. For that will hurt our economy. Excluding confidence in our markets and derailed that reason, Congress must monitor auto, boat and RV dealers from the our economy. the FTC very closely to ensure the vast CFPB jurisdiction will ensure that I commend Chairman BARNEY FRANK power Congress will now bestow on this these Main Street small businesses are and Chairman CHRIS DODD for their ex- agency is not once again abused. protected from such harmful regula- cellent leadership of the conference. As Section 1029(e) requires the Federal tion. For consumers, my amendment a conferee, I know full well the pres- Reserve Board and the Federal Trade guarantees that access to affordable sure that powerful Wall Street special Commission to coordinate with the Of- credit is preserved, and all consumer interests put on all Members to water fice of Service Member Affairs to en- protections laws are maintained. While down the bill, and I appreciate the dif- sure that any complaints raised by I am very concerned about the implica- ficulty the two chairmen have endured men and women in the armed services tions of H.R. 4173 overall, I am pleased corralling the votes needed for final are addressed effectively by the appro- that at least in this instance we have passage. Despite heavy and expensive priate enforcement agency. found a way to limit the threat of regu- lobbying from those who support the Section 1029(f) defines certain terms lations that hurt consumers and stran- status quo, the conference committee in the bill. My amendment expanded gle our economy. put together a strong and balanced bill the House language to also exclude Mr. LEAHY. Mr. President, I strong- that will clean up Wall Street abuses, similarly situated RV and boat dealers. ly support the Dodd-Frank Wall Street build confidence in our economy, and The concept of excluding auto dealers Reform and Consumer Protection Act continue our progress toward economic from the jurisdiction of the CFPB of 2010. recovery. gained bipartisan support, but there The American people often are cyn- This bill makes several significant was some debate about its effect on ical, with good reason, about the suc- improvements to our financial services members of the U.S. Armed Forces. Be- cess that powerful corporate interests regulations. Specifically, it will create cause we all share the utmost concern have in trumping the interests and a new systemic regulatory council to for our service men and women, I think rights of everyday Americans, on Wall watch for broad economic bubbles and it is appropriate to revisit that argu- Street, in Congress and even on our Su- red flags; end taxpayer bailouts of Wall ment briefly and to reiterate my preme Court. Backed by multimillions Street institutions by establishing a strong belief that this exclusion will of dollars that ordinary Americans new resolution authority to wind down not hurt members of the military. cannot match, the lobbying pressure failing megafirms outside of bank- On February 26, Under Secretary of that was sharply focused on trying to ruptcy; create a new Consumer Finan- Defense Clifford Stanley wrote a wide- shape this bill at every step, including cial Protection Bureau to oversee fi- ly distributed letter contending that the conference, was almost without nancial products on the market and excluding auto dealers from the CFPB parallel. Yet the bill that emerged rein in subprime lending; set new cap- would have a harmful effect on service- from conference truly reflects the Na- ital and leverage limits for financial members. On May 14, I sent a letter to tion’s interests in real Wall Street re- institutions; give the SEC and CFTC

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00044 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.072 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5913 new authorities and resources to pro- ing the grocer to ask for cash instead ness from the reckless and abusive tect investors; bring the massive de- of credit. practices of the financial sector, and it rivatives market under Federal regula- Another amendment I offered that is will provide a framework for economic tion for the first time; require hedge included in the final agreement is of growth without the peril of periodic fund and other private investment ad- particular importance to small States taxpayer bailouts of the financial sec- visers to register with the SEC; estab- such as Vermont. My amendment will tor. lish reasonable and fair swipe fees for guarantee that Vermont and other The Dodd-Frank Wall Street Reform debit and credit cards; and provide new small States each receive at least $5 and Consumer Protection Act of 2010 is resources for unemployed homeowners million of the $1 billion in new Neigh- a significant achievement. The legisla- who are having trouble making their borhood Stabilization Program funds tion before the Senate declares that big mortgage payments. in the bill. Originally created in 2008, banks cannot continue to take enor- As chairman of the Senate Judiciary this program is designed to stabilize mous risk, reaping billions in profits Committee, I am particularly pleased communities that have suffered from and rewarding their executives with that the conference report also in- foreclosures and abandonment. My hefty bonuses while counting on tax- cludes provisions I authored, working amendment overrode language pro- payers to bail them out when they get with Senator GRASSLEY, Senator SPEC- posed by the House that expressly pro- in trouble. Unregulated mortgage lend- TER, and Senator KAUFMAN, to ensure hibited a small-State-minimum from ers will no longer be able to make law enforcement and Federal agencies being used to allocate funds. loans they know will not be repaid; have the necessary tools to investigate The extractive industries trans- loans that cripple families and commu- and prosecute financial crimes and to parency disclosure provision that I nities. And, banks will no longer oper- protect whistleblowers who help un- sponsored is another major step for- ate in an unregulated, opaque, and dan- cover these crimes. I am pleased that ward for protecting U.S. taxpayers and gerous market for derivatives that the conference report preserves mean- shareholders and increasing the trans- helped lead us to the brink of financial ingful antitrust oversight in the finan- parency of major financial trans- catastrophe last year. cial industry. I also am heartened that actions. This provision is about good However, the events of the last dec- the conference agreement includes pro- governance and transparency so the ade and, particularly, the last several visions I put forward to introduce true American people and investors can years should caution all of us with re- transparency into the complex oper- know if they are investing in compa- spect to the efficacy of any single leg- ations of large financial institutions nies that are operating in dangerous or islative initiative. This bill must be and the Federal agencies that regulate unstable parts of the world, thereby thoughtfully and vigorously imple- them. It has seemed to me that pro- putting their investments at risk. This mented. Indeed, the regulators must be moting transparency should be a vital provision also will enable citizens of particularly vigilant to ensure that element of Wall Street reform. Trans- these resource-rich countries to know this legislative effort is not undone by parency is a cleansing agent for what their governments and govern- powerful interests who will be con- healthy markets. Open information mental officials are receiving from for- strained by its provisions. In the years helps investors make sound decisions. eign companies in exchange for mining ahead, regulators must have the re- When information is murky, market rights. This will begin to hold govern- sources and the will to enforce these decisions must be based on guesses or ments accountable for how those funds provisions to protect consumers and to rumors that corrode trust and that en- are used and help ensure that the sale protect the economy. The Congress courage fraud and deception. of their countries’ natural resources must be prepared to provide rigorous Another major step forward is the de- are used for the public good. oversight and move quickly to ensure rivatives section of the conference re- I am also pleased that the bill in- that regulatory supervision will keep port, crafted by the Agriculture Com- cludes a provision I cosponsored with pace with a dynamic global market- mittee on which I serve. I applaud our Senator BERNIE SANDERS to increase place. committee chair, Senator BLANCHE transparency on the bailout trans- More than a decade of excessive risk LINCOLN, who fought tirelessly for actions made by the Federal Reserve. taking and lax regulation culminated these reforms. These changes will fi- Under this bill, we will finally have an in financial collapse in the autumn of nally bring the $600 trillion derivatives audit of all of the emergency actions 2008. The ensuing economic chaos has market out of the dark and into the taken by the Federal Reserve since the left millions unemployed and under- light of day, ending the days of back- financial crisis began, to determine employed, precipitated a foreclosure room deals that put our entire econ- whether there were any conflicts of in- crisis that still haunts neighborhoods omy at risk. The narrow end-user ex- terest surrounding the Federal Re- throughout the country, and shattered emption in the bill will allow legiti- serve’s emergency activities. It is time the dreams of millions of American mate commercial interests, such as we know more about the closed-door families. electric cooperatives and heating oil decisions made by the Federal Reserve With this new legislation, we create dealers on Main Street, to continue throughout this financial crisis. for the first time a consumer watch- hedging their business risks, but it will Mr. President, the Senate has before dog—the Consumer Financial Protec- stop Wall Street traders from artifi- it today a conference report that will tion Bureau—that will solely focus on cially driving up prices of heating oil, rein in Wall Street abuses, end govern- protecting consumers from unscrupu- gasoline, diesel fuel, and other com- ment bailouts, and give everyday lous financial activities. The law gives modities through unchecked specula- Americans the consumer protection this agency independent rulemaking, tion. they deserve and expect. It will help re- examination, and enforcement respon- The conference report also includes a store faith in our markets, which are sibilities, and clear authority to pro- provision by Senator DICK DURBIN and part of the vital foundation of our eco- hibit unfair, deceptive, and abusive fi- Representative Peter Welch that I sup- nomic progress. Taking this broom to nancial activities against middle-class ported to protect our small businesses Wall Street abuses will help build con- families. And it consolidates the exist- from complicated predatory rules that fidence in our economy and continue ing responsibilities of many regulators big credit card companies could other- our progress toward economic recov- to ensure that there is a less frag- wise impose on Vermont grocers and ery. mented, more comprehensive, and a convenience stores. The Durbin-Welch Mr. REED. Mr. President, on June 29, fully accountable approach to pro- amendment will ensure that a small 2010, the House-Senate conference com- tecting consumers. business will be able to advertise a dis- mittee completed its deliberations on The new Bureau represents a funda- count for paying cash or for using one the most significant financial regu- mental shift in how we inform Ameri- card instead of another. I do not want latory legislation since the 1930s. And, cans about abuses by banks, credit card Vermonters to pay more for a gallon of now, this conference report is before companies, finance companies, payday milk just because the credit card com- the Senate for final enactment. It will lenders, and other financial institu- panies are demanding a high fee on fundamentally change how we protect tions. It will focus these companies on small transactions and are not allow- consumers, families, and small busi- doing their job of providing responsible

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00045 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.074 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5914 CONGRESSIONAL RECORD — SENATE July 15, 2010 and constructive financial products to lators, to identify and respond to emergency lending authority and debt help families and small businesses suc- emerging risks throughout the finan- guarantees will be substantially ceed, rather than destructive products cial system. This new council rep- changed to ensure that such tools can- that cause them to fail by draining resents another significant improve- not be used to bail out individual their income and savings. ment to protect families from dev- firms. This will send an important mes- I am also pleased that the Senate astating economic trends by, for the sage to Wall Street: operate at your voted 98 to 1 to approve the bipartisan first time, creating one single entity own risk since the taxpayers will no amendment I offered with Senator responsible for looking across the fi- longer be in the business of bailing you SCOTT BROWN to create an Office of nancial system to prevent and respond out. Service Member Affairs within the to problems. The Dodd-Frank Act also establishes Consumer Financial Protection Bu- This section of the conference report important new limits on banks engag- reau. This office will educate and em- also puts in place a new rigorous sys- ing in proprietary trading and in own- power members of the military and tem of capital and leverage standards ing and investing in hedge funds and their families, help monitor and re- that will discourage banks from get- private equity funds. These provisions spond to complaints, and help coordi- ting so large that they put our finan- are known as the Volcker rule or the nate consumer protection efforts cial system at risk again. The new Fi- Merkley-Levin amendment. These new among Federal and State agencies. nancial Stability Oversight Council rules will help ensure that banks are Although I would have preferred for will make recommendations to the not betting with consumer bank depos- the new Consumer Financial Protec- Federal Reserve to apply strict rules its on risky activities for the banks’ tion Bureau to have sole authority for capital, leverage, liquidity, and risk own profit. over consumer protection matters for management so that firms that grow Until the last few decades, commer- all banks and nonbank financial com- too big will face stricter rules that will cial banking and investment banking panies, the final bill represents a likely deter the bigger is better men- were largely conducted by separate in- strong regime for consumer protection, tality of too many banks. The council stitutions. However, in recent years, including rulewriting authority over will also make recommendations for banks have engaged in a multitude of all entities. It also provides the Bureau nonbank financial companies that have higher risk activities, such as short- with authority to examine and enforce grown so large or complex that their term trading for a bank’s own profit, regulations for banks and credit unions activities pose a threat to the financial and the sponsoring of hedge funds and with assets of over $10 billion; all mort- stability of the United Sates. No finan- private equity funds. The law changes gage-related businesses, such as lend- cial institution, bank or otherwise, will that and prohibits any bank, thrift, ers, servicers, and mortgage brokers; be able to take risks to multiply their holding company, or affiliate from en- payday lenders; student lenders; and gains without holding adequate cap- gaging in proprietary trading or spon- all large debt collectors and consumer ital. And, more importantly, such in- soring or investing in a hedge fund or reporting agencies. stitutions will be on notice that the private equity fund. It also prohibits One glaring exception is the carve- taxpayers will not bail them out. activities that involve material con- out for auto lenders. I opposed the The conference report includes a new flicts of interest between banks and Brownback amendment that created a Office of Financial Research, a pro- their clients, customers, and counter- special loophole for auto dealer-lend- posal that I developed to provide an en- parties. ers, and I also opposed the compromise tity capable of researching, modeling, The conference report also includes that is included in the conference re- and analyzing risks throughout the fi- two provisions in this area that I au- port. The original protections in the nancial system. For too long, those thored. One requires the chief execu- bill were not meant to vilify auto deal- charged with keeping the banking sys- tive officer at a banking entity to cer- ers. The vast majority of dealers in my tem stable have lacked the data and tify annually that it does not, directly State of Rhode Island and across the analytical power to keep up with com- or indirectly, guarantee, assume, or country are hard-working business plex financial activities. This office otherwise insure the obligations or per- owners who operate responsibly. Rath- ends that situation and takes a bold formance of the hedge fund or private er, this debate was about ensuring fair step forward to understand the factors fund. The other provision requires and consistent scrutiny of all lending that threaten to rip holes in our finan- banking entities to set aside more cap- institutions. We cannot ignore the cial system, provide early warnings, ital commensurate with the leverage of abuses that service members and oth- and allow regulators to act on that in- the hedge fund or private equity fund. ers have endured because of predatory formation. As we create this new of- Although the final provisions in- auto loans. We have learned from the fice, I will ensure that it retains its cluded in the bill represent a stronger debate that the abuse of service mem- independence and broad data collec- and more targeted approach to reduc- bers by some auto dealers is an epi- tion, budget, and hiring authority, so ing risk in our banking system, I be- demic. During the debate I received a we are sure to better identify and miti- lieve the change during the conference memo citing 15 recent examples of auto gate economic challenges in the future. to allow for a 3 percent de minimus ex- finance abuses just at Camp Lejeune The challenge presented by the task of clusion from the ban on sponsoring or alone. This problem will require close understanding the financial markets investing in hedge funds or private eq- scrutiny after the bill is implemented. and monitoring systemic risk will re- uity funds was unwise. The original I am also pleased that the legislation quire a sustained, integrated research Merkley-Levin proposal did not include includes provisions from the Durbin effort that brings together some of the such an exclusion. Congress and the amendment that will protect small top researchers and practitioners in regulators will need to monitor bank business from unreasonable credit card the country from a diverse range of rel- activities very closely in the coming company fees by requiring the Federal evant disciplines. The Office of Finan- years to ensure that this exclusion is Reserve to issue rules ensuring that cial Research must become a world not abused. fees charged to merchants by credit class institution that can go ‘‘toe to The bill also makes some changes to card companies for debit card trans- toe’’ with the top Wall Street banks. consolidate our country’s fragmented actions are both reasonable and propor- In addition, this law creates a safe and inefficient system for supervising tional to the cost of processing those way to liquidate large financial compa- banks and holding companies. It elimi- transactions. These provisions will nies, so that taxpayers will never again nates the Office of Thrift Supervision, allow small businesses to invest more have to prop up a failing firm to avoid a particularly lax supervisor, and redis- and pass on greater savings to their sending shockwaves through the finan- tributes responsibilities for bank over- customers rather than spend their cial system. Shareholders and unse- sight and supervision to bring greater earnings on unreasonable interchange cured creditors, not taxpayers, will consistency and more effective over- fees. bear losses, and culpable management sight to all firms. These changes are an The Dodd-Frank Act also creates a will be removed. Financial institutions important step forward, although addi- new Financial Stability Oversight will pay for their failures, not tax- tional consolidation and streamlining Council, comprised of existing regu- payers. Indeed, the existing rules on of our regulatory agencies could have

VerDate Mar 15 2010 05:37 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00046 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.036 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5915 further improved the effectiveness of marketplace fairer and more efficient gating taxpayer dollars during the fi- the system. by providing companies and investors nancial crisis, should also be subject to The Dodd-Frank bill also closes a sig- with complete information on the mar- the same public confirmation process. nificant gap in financial regulation by ket. Firms will also be required to put Wall Street should not have the ability requiring advisers to hedge funds and forward sufficient capital to engage in to choose who is in such a powerful po- private equity funds to register with these transactions, which should help sition. Although the final bill limits the Securities and Exchange Commis- rein in the excessive speculation we class A directors—who represent the sion. Based on legislation that I intro- saw in the past. stockholding member banks of the duced, we will for the first time bring I successfully offered several amend- Federal Reserve District—from partici- advisers to those funds within the um- ments during the conference to correct pating in the process, it still allows the brella of financial regulation. This will potential opportunities for regulatory other directors, who could be bankers allow regulators to obtain the basic in- arbitrage between the Securities and or represent other powerful interests, formation they need to prevent fraud Exchange Commission and the Com- to vote for the head of the New York and mitigate systemic risk, while at modity Futures Trading Commission. Reserve Bank. I believe that more still the same time providing investors with One of my improvements requires the needs to be done to make this position more information and greater trans- SEC and the CFTC to conduct joint truly accountable to the taxpayers. parency. rulemaking in certain key areas rather The Dodd-Frank Act also includes a Advisers to hedge funds and private than create potential gaps by con- number of strong investor protection equity funds—called ‘‘private funds’’ in ducting them separately. Other amend- provisions that represent a significant the legislation—will have to register ments clarify the definitions of mixed step forward in how we oversee our with either the SEC or a State, depend- swap, security-based swap agreements, capital markets and ensure that inves- ing on the size of the funds they man- and index—which are all important tors have the best information avail- age. Fund advisers with assets under terms that fall at the nexus of the two able for their decisionmaking. This management over $150 million must agencies’ oversight—to ensure that the title reflects strong proposals I have register with the SEC. Advisers to new swaps rules cannot be gamed and put forward as the chairman of the Se- other types of funds will continue to manipulated. curities, Insurance, and Investment have similar requirements, but the In a significant improvement to pub- Subcommittee, including robust ac- threshold for SEC registration will be lic transparency of swaps data, I suc- countability provisions for credit rat- $100 million. I also successfully in- cessfully included another amendment ing agencies, and provisions to cluded language in the conference re- that will ensure that regulators can re- strengthen the tools and authorities of port to ensure that State registration quire public reporting of trading and the Securities and Exchange Commis- is only available to eligible fund advis- pricing data for uncleared trans- sion. ers if the State has a registration and actions, not just aggregate data on The conference report includes examination program. transactions, just as they can for strong new rules I helped write to ad- From the beginning of this process I cleared transactions. dress problems we saw at credit rating fought against any carve-outs in this Also important are provisions to give agencies leading up to the financial title for private equity, venture cap- the Federal Reserve a role in setting crisis. It creates an Office of Credit ital, and family offices. While I suc- risk management standards for deriva- Ratings at the SEC to increase over- cessfully convinced the conferees to tives clearinghouses and other critical sight of nationally recognized statis- drop a carve-out for private equity ad- payment, clearing, and settlement tical rating organizations, and con- visers, the bill still contains problem- functions, which has been a priority of tains strong new rules regarding disclo- atic exemptions for venture capital mine given their importance to the fi- sure, conflicts of interest, and analyst firms and family offices. Through hear- nancial system and their potential vul- qualifications. Perhaps most signifi- ings and other means, I will continue nerability to both natural and man- cantly, it includes a strong new plead- to work to create a regulatory system made disruptions. ing standard I crafted that will make it in which none of the fraud and sys- The Dodd-Frank conference report easier for investors to take legal action temic risks that may lurk within pri- also makes important improvements to if a rating agency knowingly or reck- vate pools of capital remain out of view the Federal Reserve System to ensure lessly fails to review key information and reach of regulators. that as a financial regulator, it is ac- in developing a rating. On derivatives, the bill closes an- countable to the American public rath- I also worked with the chairman and other huge set of regulatory gaps by er than to Wall Street. Among other my colleagues in conference to incor- overturning a law that prevented regu- governance improvements, the bill in- porate more than a dozen improve- lators from overseeing the shadowy corporates my proposal to create a new ments to the securities laws that will over-the-counter derivatives market position of Vice Chairman for Super- protect investors by strengthening the and, as a result, bringing account- vision on the Federal Reserve Board of SEC’s ability to bring enforcement ac- ability and transparency to the mar- Governors, which should help ensure tions, addressing issues revealed by the ket. As we have learned from AIG and that supervision does not take a back Madoff fraud, and modernizing the Lehman Brothers, derivatives were at a seat to other priorities. The new Vice SEC’s ability to obtain critical infor- minimum the accelerant that com- Chairman will develop policy rec- mation. In particular, these provisions plicated and expanded the financial cri- ommendations for the board regarding would enhance the ability of the SEC sis. the supervision and regulation of de- to hire outside experts, strengthen A major problem with derivatives is pository institution holding companies oversight of fund custodians, mod- that they have not been regulated nor and other financial firms supervised by ernize the ability of the SEC to obtain well-understood by even those buying the board. He or she will also oversee information from the firms it oversees, and selling them. The legislation the supervision and regulation of such and clarify and enhance SEC penalties changes that and brings transparency firms. and other authorities. I am particu- and greater efficiency to the market- Although the Senate bill included my larly pleased that the conference re- place for swaps—derivatives in which proposal to require the head of the Fed- port contains extraterritoriality lan- two parties exchange certain benefits eral Reserve Bank of New York to be guage that clarifies that in actions based on the value of an underlying ref- Presidentially appointed and Senate brought by the SEC or the Department erence like an interest rate—by requir- confirmed, the provision was stripped of Justice, specified provisions in the ing the reporting of the terms of these out during conference. If the Governors securities laws apply if the conduct contracts to regulators and market of the Federal Reserve System in within the United States is significant, participants. It will move as many Washington are required to be con- or the external U.S. conduct has a fore- swaps as possible from being opaque, firmed by the Senate, then the Presi- seeable substantial effect within our bilateral transactions onto clearing- dent of the Federal Reserve Bank of country, whether or not the securities houses, exchanges, and other trading New York, who played a pivotal and are traded on a domestic exchange or platforms. This should help make the perhaps more powerful role in obli- the transactions occur in the United

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00047 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.037 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5916 CONGRESSIONAL RECORD — SENATE July 15, 2010 States. I also support the establish- among the highest rates of restate- those lenders who continue their preda- ment of a program to reward whistle- ments. Enacting this exemption in the tory ways will be held accountable by blowers when the SEC brings signifi- name of reducing paperwork, when ex- consumers for as high as 3 years of in- cant enforcement actions based upon tensive evidence indicates that the terest payments and damages plus at- original information provided by the costs of compliance are reasonable and torney’s fees. whistleblower, and I look forward to dropping, is unnecessary and unwise. I Additionally, the Consumer Finan- the SEC rules that will detail the think there will be a price in the future cial Protection Bureau will have the framework for this program. as fraud increases and investors suffer. authority to investigate and enforce Although I would have preferred the I am also disappointed that conferees rules against all mortgage lenders, proposal in the Senate bill by Senator included a provision that overturns a servicers, mortgage brokers, and fore- SCHUMER to provide the SEC with self- recent court case regarding equity in- closure scam operators so that hard- funding, I am pleased that the amend- dexed annuities. Equity indexed annu- working Americans have a strong fi- ment on SEC funding that I offered ities are financial products that com- nancial cop on the beat that has the in- with Senator SHELBY during conference bine aspects of insurance and securi- terests of consumers in mind. was included in the conference report. ties, but are sold primarily as invest- Finally, I am particularly pleased These provisions would keep the SEC ments. This language will preclude that the conference report includes budget within the annual appropria- State and Federal securities regulators several provisions, some of which come tions process, but change how the fund- from applying strong disclosure, suit- from legislation I first introduced last ing process would work for the Com- ability, and sales practice standards to Congress and revised this Congress, to provide much needed foreclosure relief mission. Our proposal includes budget these often risky and harmful prod- to those who have borne the brunt of bypass authority, under which the SEC ucts. I believe this is bad policy. would provide Congress with its assess- Clearly with the State securities reg- this crisis. First, it provides $1 billion for loans to help qualified unemployed ment of its budget needs at the same ulators on one side of this issue, and homeowners with reasonable prospects time it provides this information to the insurance regulators on the other— for reemployment to help cover mort- the Office of Management and Budget. this is not a matter which should have gage payments. Second, I worked with In addition, the President, as part of been resolved in a conference com- my colleagues to ensure that the addi- his annual budget request to the Con- mittee. The regulation of equity in- tional funding for HUD’s Neighborhood dexed annuities deserves more consid- gress, would be required to include the Stabilization Program would reach all SEC’s budget request in unaltered eration through hearings and the de- States, including Rhode Island. Third, I form. The language will also have the velopment of a legislative record that not only supported the inclusion of SEC deposit up to $50 million per year informs the Congress of what changes legal assistance for foreclosure-related of the registration fees into a new re- should happen in this area. issues, but I also fought to ensure that I am pleased that the conference re- serve fund, which can be used for Rhode Island, which has one of the port makes it clear that after con- longer range planning for technology highest rates of foreclosure and unem- ducting a study, the SEC has the au- and other agency tools. The SEC will ployment, would be in a better position have permanent authority to obligate thority to impose a fiduciary duty on to receive priority consideration for up to $100 million in any fiscal year out brokers who give investment advice, this assistance. Lastly, I worked to in- of the reserve fund. and that the advice must be in the best clude a national foreclosure database One important investor protection interest of their customers. It also in- to give regulators an important tool to that was also supported by Senators cludes language that gives share- monitor and anticipate issues stem- LEVIN, COBURN, and KAUFMAN but not holders a say on CEO pay with the ming from foreclosures and defaults in included in the final bill was language right to a nonbinding vote on salaries our housing markets and better pin- that would have corrected what we and and golden parachutes. This gives point assistance to struggling home- many others, including legal scholars, shareholders the ability to hold execu- owners. regard as the mistaken Supreme Court tives accountable, and to disapprove of Before I conclude I would like to take decision in Gustafson v. Alloyd. Before misguided incentive schemes. I am also a moment to thank Kara Stein of my the Supreme Court’s decision in this happy that after much dispute, the bill staff, who also serves as the staff direc- case, the rule was simple but clear: be makes it clear that the SEC has the tor of the Securities, Insurance, and In- careful not to mislead when selling se- authority to grant shareholders proxy vestment Subcommittee, which I chair, curities in both public and private of- access to nominate directors. These re- and Randy Fasnacht, a detailee to the ferings. After Gustafson, this simple quirements can help shift manage- subcommittee from the GAO. They did rule was needlessly complicated and ment’s focus from short-term profits to a remarkable job and worked tire- limited just to public offerings. long-term stability and productivity. lessly. I also want to recognize the con- Our amendment, which we will con- I am pleased that the conference re- tributions of James Ahn of my staff as tinue to work on a bipartisan basis to port includes several provisions to dis- well as the foundation that Didem add to another legislative vehicle in courage predatory lending and provide Nisanci, formerly of my staff, helped the future, would have put investors in much needed foreclosure relief. To re- lay for this process. I also want to ac- private offerings on the same level as duce risk, this legislation requires knowledge the contributions of many investors in public offerings, thereby those companies that sell products like others, including Chairman DODD and restoring congressional intent and a mortgage backed securities to hold his staff. standard that was in place for 60 years onto at least 5 percent of what they’re I urge my colleagues to support this before the Supreme Court decided Gus- selling so that these companies have critical legislation. But the Senate’s tafson. the incentive to sell only those prod- work does not end with the bill’s pas- One of the lessons learned from the ucts they would own themselves. In sage. It will have to monitor and over- Bush era financial collapse is that too other words, we make sure that there see the law’s implementation very often rules were ignored and informa- is some ‘‘skin in the game’’. closely. The Dodd-Frank Wall Street tion was hidden. That is why I am ex- The conference report also further Reform and Consumer Protection Act tremely disappointed that the con- levels the playing field by enacting will make significant improvements to ference report includes an exemption some commonsense proposals to pro- consumer protection that will benefit for companies with less than $75 mil- tect borrowers. Lenders will now have families and communities in my own lion in market capitalization from the to ensure that a borrower has the abil- State of Rhode Island and across the requirements of Sarbanes-Oxley sec- ity to repay a mortgage, and they can country. It will help create more trans- tion 404(b). This change will exempt no longer steer borrowers into a more parent, fair, and efficient capital mar- more than 5,000 public companies from expensive mortgage product when the kets in our country, which will help audits, despite the fact that small com- borrower qualifies for a more afford- create jobs and support American busi- panies have often been shown to be able one. The bill outlaws pre-payment nesses. And it will provide a more se- more prone to both accounting fraud penalties that trapped so many bor- cure and stable economic footing for and to accounting errors, including rowers into unaffordable loans, and the decades ahead.

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00048 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.039 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5917 Mr. AKAKA Mr. President, while I late equity-indexed annuities as securities strong standards afforded by our nation’s se- strongly support the Dodd-Frank con- (Rule 151A). The rule was later challenged, curities laws. ference report, I am concerned and dis- and the Court of Appeals for the District of To ensure that investors receive these pro- tections, the Securities and Exchange Com- appointed that the legislation includes Columbia Circuit upheld the legal founda- tion for the SEC’s action. mission (‘‘SEC’’) adopted Rule 151A, which a particular provision that would ex- Because seniors are a target audience for would subject indexed annuities to regula- empt indexed annuity products from these products, AARP submitted comments tion as securities. The United States Court securities regulation. I ask unanimous to the SEC supporting the rule, stating it of Appeals for the District of Columbia Cir- consent that the accompanying letters was important that Rule 151A supplement, cuit upheld the legal foundation for Rule 151 in opposition to this provision from not supplant, state insurance law. In fact, A. Although remanding with respect to cer- AARP, the North American Securities the rule applies specifically to annuities reg- tain procedural requirements, the court Administrators Association, the Con- ulated under state insurance law. AARP also upheld the rule on substantive legal grounds, finding it was reasonable for the SEC to con- sumer Federation of America, and the submitted a joint amicus brief, along with the North American Securities Administra- clude that indexed annuities should be sub- Financial Planning Association be tors Association and MetLife, supporting ject to federal securities regulation. printed in the RECORD immediately fol- Rule 151A. Attempts to disparage the SEC’s rule as a lowing my remarks. The Harkin amendment would overturn federal attack on state regulation are un- The PRESIDING OFFICER. Without the SEC rule, which is designed to provide founded. Critics who level that charge ignore objection, it is so ordered. disclosure, suitability, and sales practice the fact that the rule will NOT interfere (See exhibit 1.) protections afforded by state and federal se- with the authority of state insurance com- Mr. AKAKA. Indexed annuities com- curities laws. The amendment would pre- missioners to continue regulating indexed bine aspects of insurance and securities empt any further ability of the SEC to regu- annuities and the companies that issue late in this area. This not only deprives in- them. In fact, in order to be covered by the and are sold primarily as investment rule, a contract must be subject to regula- products. Consumers across the coun- vestors of needed protections against wide- spread abusive sales practices associated tion as an annuity under state insurance try, including some in Hawaii, have with these complex financial products, it law. been harmed by the deceptive manner also sets a dangerous precedent. If this Nor will the rule impose unreasonable bur- in which these products are being sold. amendment is adopted, the industry will be dens on industry. It will simply require com- For example, a seller in Hawaii pushed encouraged to develop hybrid products in the pliance with essentially the same regulatory equity indexed annuities to collect un- future specifically designed to evade a regu- standards that for 75 years have applied to all companies that issue securities. More- reasonably high commissions at the ex- latory regime designed to protect consumers. Regulating indexed annuities as securities over, the rule is strictly prospective, apply- pense of senior citizens. Those inves- ing only to indexed annuities issued after the tors were harmed by these financial is long overdue and vitally important for our nation’s investors saving for a secure retire- effective date, and it does not take effect for products. Exempting indexed annuities ment. two years, affording the industry ample time from securities regulation would estab- The SEC’s rule on indexed annuities ac- to prepare for compliance. In short, the rule lish a dangerous precedent that pro- complishes this goal in a thoughtful and rea- will provide much needed protections for in- motes the development of financial sonable fashion, and it should be allowed to vestors without unfairly burdening industry. take effect. AARP therefore opposes the Har- Indexed annuities are hybrid products that products not subject to regulation and supposedly offer investors the combined ad- investor protection standards. kin amendment. Sincerely, vantages of guaranteed minimum returns Opponents might argue that federal along with profits from stock market gains. regulation is unnecessary or distracts DAVID SLOANE, Senior Vice President, Although indexed annuities may be legiti- from state regulation. However, Fed- Government Relations and Advocacy. mate vehicles for some people, they have eral regulation is necessary to help many features, including high costs, signifi- cant risks, and long surrender periods, that protect investors by providing consist- NORTH AMERICAN SECURITIES make these products unsuitable for many in- ency and uniformity because securities ADMINISTRATORS ASSOCIATION, INC., laws can vary across states. Others are Washington, DC, June 14, 2010. vestors. Investors have a difficult time un- derstanding these hazards because indexed Hon. BARNEY FRANK, concerned that Federal regulation will annuities are hopelessly complex. limit access to indexed annuities. I Chairman, Committee on Financial Services, Washington, DC. Compounding the problem are the generous counter that these products should commissions that agents can earn from the only be sold when they are subject to Hon. SPENCER BACHUS, Chairman, Committee on Financial Services, sale of these products. The problems associated with the mar- the strong disclosure, suitability, and Washington, DC. keting of indexed annuities are a matter of sales practice standards provided with- Hon. CHRISTOPHER DODD, record in countless news articles, govern- in the context of our Nation’s securi- Chairman, Committee on Banking, Housing and ment warnings, regulatory enforcement ac- Urban Development, Washington, DC. ties laws. tions, and lawsuits filed by innumerable in- Hon. RICHARD SHELBY, I welcome further debate on and ex- vestors seeking damages for the unsuitable Ranking Member, Committee on Banking, Hous- amination of this matter, including and fraudulent sale of indexed annuities. In- ing and Urban Development, Washington, hearings to learn more about the con- deed, these products have become so infa- DC. sequences of this provision. mous that they were featured in a prime OPPOSE ATTEMPT TO NULLIFY SEC AARP, time Dateline NBC report entitled ‘‘Tricks of RULEMAKING ON EQUITY INDEXED ANNUITIES Washington, DC, May 19, 2010. the Trade.’’ Hon. CHRISTOPHER DODD, DEAR CHAIRMEN AND RANKING MEMBERS: On Without question, the single most effective U.S. Senate, Committee on Banking, Housing behalf of state securities regulators, I am way to address abuses in the sale of indexed and Urban Affairs, Dirksen Senate Office writing to oppose an attempt to deprive in- annuities is to regulate them as securities. Building, Washington, DC. vestors in indexed annuities of the strong This is legally appropriate because indexed DEAR SENATOR DODD: AARP writes to protections afforded by our nation’s securi- annuities shift a significant degree of invest- strongly oppose Harkin Amendment #3920, ties laws. A provision to nullify SEC Rule 151 ment risk to purchasers, and therefore pose which would deprive investors in equity-in- A was not included in either the House or the the very dangers that the federal securities dexed annuities of needed protections pro- Senate bill. I would argue that it is not ger- laws were intended to address. Licensing vided by state and federal securities laws. mane to the conference, and the provision standards under the securities laws will help These hybrid products combine elements of should not be accepted by the conferees. Fur- ensure that agents have the requisite knowl- insurance and securities, but they are sold thermore, efforts such as this one that will edge and character to sell these complex in- primarily as investments, not insurance, es- ultimately deprive investors of important vestment products. Under the securities pecially to people who are investing for their protections should not be allowed to succeed. laws, those agents will also be subject to own retirement. Growth in equity-indexed Indexed annuities are securities, and they strong supervision requirements. Mandatory annuity value is tied to one of several securi- are heavily marketed as such. All too often, registration of indexed annuities as securi- ties indexes (e.g. the S&P 500 or the Dow deceptive sales practices have been used to ties will vastly increase the amount of infor- Jones Industrial Average), and comparing promote these complicated investment prod- mation available to investors concerning the and choosing suitable products can be dif- ucts. As a result, investors—and senior citi- terms, risks, and costs of these offerings. ficult for investors. These products also zens in particular—can fall prey to sales Perhaps most important, the strong investor come with high fees and have long surrender pitches designed to make these investments protection standards that have been a part of periods, which may make them unsuitable as seem safe and straightforward when in fact securities regulation for decades will deter investments for most seniors. they may be neither. Accordingly, it is vi- abuses in the sale of indexed annuities and In the fall of 2008, the Securities and Ex- tally important that indexed annuities be provide more effective remedies for those change Commission adopted a rule to regu- regulated as securities and subjected to the who are victimized.

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00049 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.075 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5918 CONGRESSIONAL RECORD — SENATE July 15, 2010 The goal of financial reform is to strength- tions and limitations that it is unlikely ever clude that indexed annuities should be sub- en investor confidence in our markets and to be exercised. Before the SEC could even ject to federal securities regulation. regulating indexed annuities as securities adopt a rule it would have to complete the Attempts to disparage the SEC’s rule as a under federal law is vitally important to study required above and then, as part of the federal attack on state regulation are un- meeting this objective. The SEC’s Rule 151A rulemaking, show that no other approach founded. Critics who level that charge ignore on indexed annuities is a step in the right di- could address the findings of the study. the fact that the rule will NOT interfere rection and it should be allowed to take ef- These draconian conditions would make any with the authority of state insurance com- fect. Any attempt to reverse this important rule promulgated by the Commission subject missioners to continue regulating indexed regulatory initiative should not be adopted. to a legal challenge the agency would be un- annuities and the companies that issue Sincerely, likely to win. them. In fact, in order to be covered by the DENISE VOIGT CRAWFORD, The provisions requiring the SEC to har- rule, a contract must be subject to regula- Texas Securities Commissioner, monize enforcement of the standard, so that tion as an annuity under state insurance NASAA President. it is applied equally to brokers and advisers, law. have also been deleted. Nor will the rule impose unreasonable bur- NORTH AMERICAN SECURITIES Equity Indexed Annuities. The Senate con- dens on industry. It will simply require com- ADMINISTRATORS ASSOCIATION, INC., ferees also approved an amendment to pre- pliance with essentially the same regulatory Washington, DC, June 23, 2010. empt securities regulation of equity-indexed standards that for 75 years have applied to annuities and future hybrid products that all companies that issue securities. More- PROTECT INVESTORS: REJECT SENATE over, the rule is strictly prospective, apply- PROPOSALS INCLUDED IN TITLE IX have both securities and insurance features. State securities regulators have actively ing only to indexed annuities issued after the DEAR CONFEREE: State securities regu- pursued enforcement cases involving sales effective date, and it does not take effect for lators are profoundly disappointed that the practice abuses of agents selling equity in- two years, affording the industry ample time Senate conferees approved a Title IX dexed annuities. These state enforcement ac- to prepare for compliance. In short, the rule counteroffer that includes two provisions tions are in danger of being preempted by will provide much needed protections for in- that seriously weaken investor protections the Harkin amendment and investors, espe- vestors without unfairly burdening industry. in a bill purportedly written to strengthen cially seniors, would be left without the pro- Indexed annuities are hybrid products that them. I urge you to reject the Senate fidu- tection of vigorous securities enforcement supposedly offer investors the combined ad- ciary duty study/rulemaking language and activity. vantages of guaranteed minimum returns the amendment to exempt certain hybrid an- The problems associated with the mar- along with profits from stock market gains. nuity products from securities regulation. keting of indexed annuities are a matter of Although indexed annuities may be legiti- Fiduciary Duty. Instead of the strongest record in countless news articles, govern- mate vehicles for some people, they have possible fiduciary duty for every financial ment warnings, regulatory enforcement ac- many features, including high costs, signifi- intermediary providing investment advice, tions, and lawsuits filed by innumerable in- cant risks, and long surrender periods, that the ‘‘compromise’’ study in the Senate offer vestors seeking damages for the unsuitable make these products unsuitable for many in- has been modified to lessen the chances that and fraudulent sale of indexed annuities. It vestors. Investors have a difficult time un- investors will ever realize the benefits of a was these problems that led the SEC to derstanding these hazards because indexed fiduciary duty, the single most important in- adopt Rule 151A after a fair and open rule- annuities are hopelessly complex. vestor protection in the reform package. For making process. Compounding the problem are the generous the following reasons, NASAA must strongly The best way to ensure adequate investor commissions that agents can earn from the oppose it. protections in the sale of equity indexed an- sale of these products. The study is nothing more than a delay nuities is to allow the SEC to exercise its ap- The problems associated with the mar- tactic and should be rejected outright. propriate authority over these products. keting of indexed annuities are a matter of It is wasteful of the SEC’s resources in State securities regulators urge you to reject record in countless news articles, govern- that it requires the agency to review and this amendment as it has no place in a bill ment warnings, regulatory enforcement ac- study issues that have already been repeat- intended to strengthen investor protections. tions, and lawsuits filed by innumerable in- edly studied. In closing, we are extremely dissatisfied vestors seeking damages for the unsuitable If the study remains in place, it should be that the provisions in the Investor Protec- and fraudulent sale of indexed annuities. In- significantly streamlined so as to avoid tion title continue to be weakened. We urge deed, these products have become so infa- needless repetition of prior studies. Further, you to reverse this trend, reject the Senate mous that they were featured in a prime if there must be a study, it should be re- counteroffer and insist on strong protections time Dateline NBC report entitled ‘‘Tricks of quired to be conducted on a fully-cooperative for our nation’s investors. the Trade.’’ basis by both governmental regulators, the Without question, the single most effective Sincerely, SEC and the states, in order to maximize re- way to address abuses in the sale of indexed DENISE VOIGT CRAWFORD, sources and insure its completion within the annuities is to regulate them as securities. NASAA President, one-year time frame. This is legally appropriate because indexed Texas Securities Commissioner. To make matters worse, the rulemaking annuities shift a significant degree of invest- language proposed by the Senate fails to ment risk to purchasers, and therefore pose NASAA & CFA, achieve the original goal of both the Senate the very dangers that the federal securities May 14, 2010. Banking Committee and the House Financial laws were intended to address. Licensing Services Committee to impose the Invest- OPPOSITION TO HARKIN/JOHANNS/LEAHY standards under the securities laws will help ment Advisers Act fiduciary duty on broker- AMENDMENT NO. 3920 ensure that agents have the requisite knowl- dealers when providing personalized invest- DEAR SENATOR: We are writing to oppose edge and character to sell these complex in- ment advice to retail customers about secu- the Harkin/Johanns/Leahy amendment, vestment products. Under the securities rities. Our specific opposition to the Senate which deprives investors in indexed annu- laws, those agents will also be subject to rulemaking language includes the following: ities of the strong protections afforded by strong supervision requirements. Mandatory The two year rulemaking provision would our nation’s securities laws. Indexed annu- registration of indexed annuities as securi- mean that it could be three years before the ities are securities, and they are heavily ties will vastly increase the amount of infor- SEC even undertakes an attempt to imple- marketed as such. All too often, deceptive mation available to investors concerning the ment a rule to address the study findings. sales practices have been used to promote terms, risks, and costs of these offerings. Further, and as more fully discussed below, these complicated investment products. As a Perhaps most important, the strong anti- the conditions imposed by this amendment result, investors—and senior citizens in par- fraud provisions and suitability standards on any such rulemaking process are so ardu- ticular—can fall prey to unsuitable sales. Ac- that have been a part of securities regulation ous that it is highly doubtful that a rule of cordingly, it is vitally important that in- for decades will deter abuses in the sale of any kind would be promulgated. dexed annuities be regulated as securities indexed annuities and provide more effective The new rulemaking language would not and subjected to the strong disclosure, suit- remedies for those who are victimized. result in a fiduciary duty for broker-dealers ability, and sales practice standards afforded Regulating indexed annuities as securities providing investment advice. The House lan- by our nation’s securities laws. under federal law is long overdue and vitally guage authorizing the SEC to adopt rules im- To ensure that investors receive these pro- important for our nation’s investors. The posing the full Investment Advisers Act fidu- tections, the Securities and Exchange Com- SEC’s Rule 151A on indexed annuities accom- ciary duty on brokers when they give person- mission (‘‘SEC’’) adopted Rule 151A, which plishes this goal in a thoughtful and reason- alized advice about securities to retail inves- would subject indexed annuities to regula- able fashion, and it should be allowed to take tors has been removed. It has been replaced tion as securities. The United States Court effect. The Harkin/Johanns/Leahy amend- by language authorizing the SEC to adopt of Appeals for the District of Columbia Cir- ment would reverse this important regu- rules requiring brokers to act in their cus- cuit upheld the legal foundation for Rule latory initiative and should not be adopted. tomers’ ‘‘best interests’’ which is far short of 151A. Although remanding with respect to Respectfully submitted, the fiduciary duty. certain procedural requirements, the court DENISE VOIGT CRAWFORD, That weakened authority provided to the upheld the rule on substantive legal grounds, President, NASAA. SEC is subject to such burdensome condi- finding it was reasonable for the SEC to con- BARBARA ROPER,

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00050 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.041 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5919 Director of Investor process by preventing the equity-indexed an- and if the purchaser is bearing a certain in- Protection, CFA. nuities provision from being added to the vestment risk, applying standard investor conference report. protections is common sense. Any issues par- CONSUMER FEDERATION OF AMERICA, Respectfully submitted, ticular to indexed annuities can be addressed FUND DEMOCRACY, BARBARA ROPER, through the normal rulemaking and com- June 12, 2010. Director of Investor ment process. Hon. CHRISTOPHER DODD, Protection, Con- Consumer confidence and consumer protec- Chairman, Committee on Banking, Housing and sumer Federation of tion are two of the most important consider- Urban Development, U.S. Senate, Wash- America. ations as you deliberate over important ington, DC. MERCER BULLARD, changes to our financial regulatory system. I Hon. BARNEY FRANK, Executive Director, urge you to resist any attempts to handcuff Chairman, Financial Services Committee, House Fund Democracy. the SEC before it has even had an oppor- of Representatives, Washington, DC. tunity to bring its consumer protection re- Hon. RICHARD SHELBY, FINANCIAL PLANNING ASSOCIATION, sources to bear in this area. Ranking Member, Committee on Banking, Hous- Washington, DC, June 15, 2010. Thank you for your consideration. If you ing and Urban Development, U.S. Senate, Hon. BARNEY FRANK, Chairman, have any questions, or if FPA can provide Washington, DC. Hon. SPENCER BACHUS, additional information, please contact me. Hon. SPENCER BACHUS, Ranking Member, Committee on Financial Serv- Very truly yours, Ranking Member, Financial Services Committee, ices, House of Representatives, Washington, DANIEL J. BARRY, House of Representatives, Washington, DC. DC. Director of Government Relations. PROTECT INVESTORS AND THE LEGISLATIVE Hon. CHRISTOPHER J. DODD, Chairman, Mrs. LINCOLN. Mr. President, as I PROCESS: REJECT EQUITY-INDEXED ANNU- Hon. RICHARD C. SHELBY, have previously discussed, section 737 ITIES PREEMPTION AMENDMENT Ranking Member, Committee on Banking, Hous- of H.R. 4173 will grant broad authority ing and Urgan Affairs, U.S. Senate, Wash- DEAR CHAIRMAN DODD, RANKING MEMBER to the Commodity Futures Trading ington, DC. SHELBY, CHAIRMAN FRANK, AND RANKING DEAR CHAIRMAN FRANK, CHAIRMAN DODD, Commission to once and for all set ag- MEMBER BACHUS: We understand that mem- RANKING MEMBER BACHUS, AND RANKING gregate position limits across all mar- bers of the insurance industry continue to MEMBER SHELBY: I am writing to oppose ef- kets on non-commercial market par- press for inclusion in the conference report forts to strip the Securities and Exchange ticipants. During consideration of this of anti-consumer legislation to exempt eq- Commission (SEC) of authority to oversee uity-indexed annuities from securities regu- bill we all learned many valuable les- sales practices in connection with indexed sons about how the commodities mar- lation. We are writing to urge you to resist annuities that are marketed as investment any such efforts. products. At a time when Congress is seeking kets operate and the impact that high- Equity-indexed annuities are hybrid prod- ways to improve consumer protections in the ly leveraged, and heretofore unregu- ucts that combine elements of both insur- financial services sector, the Financial Plan- lated swaps, have on the price dis- ance and securities, but they are sold pri- ning Association (FPA) believes it would be covery function in the futures markets. marily as investments. Indeed, as docu- completely inappropriate to preempt the I believe the adoption of aggregate po- mented in a seven-part Dateline NBC hidden SEC from exercising its existing authority to camera expose, they are among the most sition limits, along with greater trans- protect consumers from well-documented parency, will help bring some normalcy abusively sold products on the market today. abuses. Responding to a rising level of complaints, Indexed annuities have a minimum guaran- back to our markets and reduce some the Securities and Exchange Commission teed return, but the actual return will vary of the volatility we have witnessed voted in late 2008 to adopt rules regulating based on the performance of a securities over the last few years. equity-indexed annuities as securities, a index, such as the S&P 500. FPA members I also recognize that in setting these move that was immediately challenged in are very familiar with indexed annuities, limits, regulators must balance the court by the insurance industry. In deciding with many financial planners specializing in needs of market participants, while at the case, a U.S. Court of Appeals sided with retirement planning and more than half of the same time ensuring that our mar- the agency on the basic issue of whether eq- our membership licensed to sell insurance kets remain liquid so as to afford end- uity-indexed annuities should be regulated and annuity products. They may recommend as securities while remanding the rule with annuities, including indexed annuities, as an users and producers of commodities the respect to procedural issues. important component of a client’s overall fi- ability to hedge their commercial risk. Having failed to prevail in court, the insur- nancial plan. As with other financial prod- Along these lines I do believe that ance industry has turned to Congress to pre- ucts, however, proper oversight is needed to there is a legitimate role to be played empt legitimate securities regulation of this help protect consumers from the few who by market participants that are willing product. We urge you to resist these efforts would take advantage of them. FPA urges to enter into futures positions opposite for the following reasons: you to reject any efforts to strip the SEC of a commercial end-user or producer. Equity-indexed annuities are complex authority to protect purchasers of indexed Through this process the markets gain products whose returns fluctuate with per- annuities in the same way they protect those formance of the securities markets. Absent who purchase variable annuities. additional liquidity and accurate price regulation under securities laws, they can be In 2008, the SEC promulgated rules that discovery can be found for end-users sold by salespeople with no more under- would have brought indexed annuities under and producers of commodities. standing of the markets than the customer. the same sales practice standards as variable However, I still hold some reserva- Although the National Association of In- annuities and other securities if they are tions about these financial market par- surance Commissioners has developed a marketed as investment products. Applying ticipants and the negative impact of model suitability rule for annuity sales, it a two part test in accordance with Supreme excessive speculation or long only posi- has not been adopted in all states. Regula- Court precedent, the SEC sought to exercise tions on the commodities markets. tion under securities laws would provide na- oversight based on the allocation of invest- tional uniformity, would bring to bear the ment risk between the insurance company While I have concerns about the role added regulatory resources of the SEC, state and the customer, and on how the annuity is these participants play in the markets, securities regulators, and FINRA, and would marketed. Notably, the SEC left regulation I do believe that important distinc- provide additional investor protections in of the product itself to state insurance regu- tions in setting position limits on the form of improved disclosures and limits lators and sought to merely oversee sales these participants are warranted. In on excessive compensation. practices when the insurer chooses to mar- implementing section 737, I would en- Exempting equity-indexed annuities from ket indexed annuities as an investment prod- courage the CFTC to give due consider- securities regulation would set a dangerous uct. ation to trading activity that is precedent and encourage the development of FPA supported the SEC rule, as a meas- additional hybrid products designed specifi- ured and appropriate move to address a very unleveraged or fully collateralized, cally to evade a more rigorous form of regu- real problem (See comment letter at solely exchange-traded, fully trans- lation. www.fpanet.org/GovernmentRelations/). Op- parent, clearinghouse guaranteed, and This highly controversial measure—which ponents challenged the rule in court arguing poses no systemic risk to the clearing is opposed by consumer advocates as well as that the SEC lacked authority, but the rule system. This type of trading activity is state and federal securities regulators—was was vacated on other, technical grounds. distinguishable from highly leveraged not included in either the House or the Sen- Now they are seeking to preempt the SEC swaps trading, which not only poses ate bill and is not germane to the underlying from overseeing the sales practices of these systemic risk absent the proper safe- legislation. To include it in the conference products, as it has effectively done so for report would be a gross violation of the in- variable annuities. guards that an exchange traded, tegrity of the legislative process. We urge But the calculus is simple: if a product is cleared system provides, but also may you to protect investors and the legislative marketed and sold as an investment product, distort price discovery. Further, I

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00051 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.032 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5920 CONGRESSIONAL RECORD — SENATE July 15, 2010 would encourage the CFTC to consider instance, the new definitions of ‘‘swap’’ and lators of participants in the foreign exchange whether it is appropriate to aggregate ‘‘security-based swap’’ are designed to main- market provide adequate supervision, includ- the positions of entities advised by the tain the existing Shad Johnson jurisdic- ing capital and margin requirements; (4) the same advisor where such entities have tional lines between the CFTC and the SEC extent of adequate payment and settlement which have been in place since 1982. Under systems; and (5) the use of a potential ex- different and systematically deter- the Shad Johnson accord, the CFTC has ju- emption of foreign exchange swaps and for- mined investment objectives. risdiction over commodity-based instru- eign exchange forwards to evade otherwise I wish to also point out that section ments as well as futures and options on applicable regulatory requirements. In mak- 719 of the conference report calls for a broad-based security indices (and now ing a written determination to exempt such study of position limits to be under- swaps), while the SEC has jurisdiction over swaps from regulation, the Secretary must taken by the CFTC. In conducting that security-based instruments—both single make certain findings. The Secretary’s writ- study, it is my expectation that the name and narrow-based security indices— ten determination is not effective until it is CFTC will address the soundness of and now security-based swaps. The Shad filed with the appropriate Congressional prudential investing by pension funds, Johnson jurisdictional lines were reaffirmed Committees and provides the following infor- index funds and other institutional in- in 2000 with the passage of the Commodity mation: (1) an explanation regarding why Futures Modernization Act, CFMA, as it re- foreign exchange swaps and foreign exchange vestors in unleveraged indices of com- lated to security futures products. Maintain- forwards are qualitatively different from modities that may also serve to pro- ing existing jurisdictional lines between the other classes of swaps in a way that would vide agricultural and other commodity two agencies was an important goal of the make the foreign exchange swaps and foreign contracts with the necessary liquidity Administration, as reflected in their draft exchange forwards ill-suited for regulation to assist in price discovery and hedging legislation. This priority was reflected in the as swaps; and (2) an identification of the ob- for the commercial users of such con- bills passed out of the Senate and House ag- jective differences of foreign exchange swaps tracts. ricultural committees and through our re- and foreign exchange forwards with respect Mr. President, as the Chairman of spective chambers and now reflected in the to standard swaps that warrant an exempted the Senate Committee on Agriculture, conference report. status. These provisions and this process re- As noted above, the conference report lated to exempting foreign exchange swaps Nutrition and Forestry, I am proud to maintains the Shad Johnson jurisdictional and foreign exchange forwards from swaps say that the bill coming out of our accord. We made it clear that the CFTC has regulation will be, and should be, difficult committee was the base text for the de- jurisdiction under Section 2(a)(1) of the Com- for the Secretary of the Treasury to meet. rivatives title in the Senate passed modity Exchange Act, ‘‘CEA’’, over both in- The foreign exchange swaps and foreign ex- bill. The Senate passed bill’s deriva- terest rate swaps and foreign exchange swaps change forward market is approximately $65 tives title was the base text used by and forwards. The definition of ‘‘swap’’ under trillion and the second largest part of the the conference committee. The con- the CEA specifically lists interest rate swaps swaps market. It is important that the for- as being a swap. This is CEA Section eign exchange swaps market be transparent ference committee made changes to 1a(47)(A)(iii)(I). This is appropriate as the as well as subject to comprehensive and vig- the derivatives title, adopting several CFTC has a long history of overseeing inter- orous market oversight so there are no ques- provisions from the House passed bill. est rate futures. The futures exchanges have tions about possible manipulation of cur- The additional materials that I am listed and traded interest rate contracts for rencies or exchange rates. submitting today are primarily focused nearly 40 years. The CME has listed for trad- I would also note that we have made it on the derivatives title of the con- ing quarterly settled interest rate swap fu- clear that even if foreign exchange swaps and ference report. They are intended to ture contracts. In the last 24 months, some forwards are exempted by the Secretary of provide clarifying legislative history designated contract markets have listed fu- the Treasury from the mandatory trading tures contracts which mirror interest rate and clearing requirements which are applica- regarding certain provisions of the de- swaps in design, function, maturity date and ble to standardized swaps, that all foreign rivatives title and how they are sup- all other material aspects. In addition, some exchange swaps and forwards transactions posed to work together. of the CFTC registered clearing houses have must be reported to a swap data repository I ask unanimous consent that this listed and started to clear both these inter- under the CFTC’s jurisdiction. In addition, material be printed in the RECORD. est rate swap futures contracts as well as in- we have made it clear that to the extent for- There being no objection, the mate- terest rate swap contracts. This is on top of eign exchange swaps and forwards are listed rial was ordered to be printed in the the nearly $200 trillion in interest rate swap for trading on a designated contract market RECORD, as follows: contracts which have been cleared at or cleared through a registered derivatives The major components of the derivatives LCH.Clearnet in London. clearing organization that such swap con- title include: 100 percent reporting of swaps Also, under this legislation, foreign ex- tracts are subject to the CFTC’s jurisdiction and security-based swaps, mandatory trading change swaps and forwards come under the under the CEA and that the CFTC retains its and clearing of standardized swaps and secu- CFTC’s jurisdiction under Section 2(a)(1) of jurisdiction over retail foreign exchange rity-based swaps, and real-time price report- the CEA. We listed in the definition of transactions. We have made some progress in this legis- ing for all swap transactions—those subject ‘‘swap’’ certain types of common swaps, in- lation with respect to clarifying CFTC juris- to mandatory trading and clearing as well as cluding ‘‘foreign exchange swaps’’ so it diction and preserving SEC enforcement ju- those subject to the end user clearing exemp- would be clear that they are regulated under tion and customized swaps. Swap dealers, se- the CEA. See CEA Section risdiction over instruments which are ‘‘secu- curity-based swap dealers, major swap par- 1a(47)(A)(iii)(VIII). In addition, the terms rity-based swap agreements.’’ Security-based ticipants and major security-based swap par- ‘‘foreign exchange forward’’ and ‘‘foreign ex- swap agreements are actually ‘‘swaps’’ and ticipants will all be required to register with change swap’’ are defined in the CEA itself. subject to both the CFTC and the SEC’s ju- either the Commodity Futures Trading Com- See CEA Section 1a(24) and (25). One should risdiction. One will notice that we have in- mission, CFTC, or the Securities and Ex- note that foreign exchange forwards are serted the definition of ‘‘security-based swap change Commission, SEC, and meet addi- treated as swaps under the CEA. agreements’’ in both the Commodity Ex- tional requirements including capital, mar- The CEA as amended permits the Sec- change Act and the Securities and Exchange gin, reporting, examination, and business retary of the Treasury to make a written de- Act—section 1a(47)(A)(v) of the CEA (7 U.S.C. conduct requirements. All swaps that are termination to exempt either or both foreign 1a(47)(A)(v)) and section 3(a)(78) of the SEA ‘‘traded’’ must be traded on either a des- exchange swaps and or foreign exchange for- of 1934 (15 U.S.C. 78c(a)(78)). The term ‘‘secu- ignated contract market or a swap execution wards from the mandatory trading and clear- rity-based swap agreement’’ is a hold-over facility. All security-based swaps must be ing requirements of the CEA, which applies term from the CFMA of 2000. In the CFMA, traded on either a national securities ex- to swaps generally. Under new Section 1b of Congress chose to exclude ‘‘swap agree- change or a security-based swap execution the CEA, the Secretary must consider cer- ments’’ from regulation by the CFTC and facility. It is a sea change for the $600 tril- tain factors in determining whether to ex- ‘‘security-based swap agreements’’ from reg- lion swaps market. Swaps and security-based empt either foreign exchange swaps or for- ulation by the SEC. While the CFMA exclu- swaps which are not subject to mandatory eign exchange forwards from being treated sions were broad, the SEC retained limited exchange trading or clearing will be required like all other swaps. These factors include: authority—anti fraud and anti manipulation to submit transaction data to swap data re- (1) whether the required trading and clearing enforcement authority—with respect to se- positories or security-based swap data re- of foreign exchange swaps and foreign ex- curity-based swap agreements. The Agri- positories. These new ‘‘data repositories’’ change forwards would create systemic risk, culture Committee and Congress chose to will be required to register with the CFTC lower transparency, or threaten the financial preserve that existing enforcement jurisdic- and SEC and be subject to statutory duties stability of the United States; (2) whether tion of the SEC related to those swaps which and core principals which will assist the foreign exchange swaps and foreign exchange qualify as security-based swap agreements. CFTC and SEC in their oversight and market forwards are already subject to a regulatory The swaps which will qualify as security- regulation responsibilities. scheme that is materially comparable to based swap agreements is quite limited. It There are several important definitional that established by this Act for other classes would appear that non narrow-based security and jurisdictional provisions in title VII. For of swaps; (3) the extent to which bank regu- index swaps and credit default swaps may be

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00052 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.076 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5921 the only swaps considered to be security- lators would also be required to be traded on the regulators. The conference report also based swap agreements. The rationale for a designated contract market, a national se- includes an anti-evasion provision which pro- providing the SEC with enforcement author- curities exchange, or new swap execution fa- vides the CFTC and SEC with authority to ity with respect to security-based swap cilities or security-based swap execution fa- review and take action against entities agreements in the CFMA was premised on cilities. To avoid any conflict of interests, which abuse the end user clearing exemp- the fact that the CFTC didn’t have as exten- the regulators—the CFTC and the SEC—will tion. sive an anti-fraud or anti-manipulation au- make a determination as to what swaps In addition to the mandatory clearing and thority as the SEC. This lack of CFTC au- must be cleared following certain statutory trading of swaps discussed above, the con- thority was remedied in the title VII so that factors. It is expected that the standardized, ference report retains and expands the Sen- the CFTC now has the same authority as the plain vanilla, high volume swaps contracts— ate Agriculture Committee’s real time swap SEC. It is good policy to have a second set of which according to the Treasury Department transaction and price reporting require- enforcement eyes in this area. The SEC can are about 90 percent of the $600 trillion swaps ments. The Agriculture Committee focused and should be able to back up the CFTC on market—will be subject to mandatory clear- on swap market transparency while it was enforcement issues without interceding in ing. Derivatives clearing organizations and constructing the derivatives title. As stated the main market and product regulation. In clearing agencies are required to submit all earlier, the conference report requires 100% the new legislation, we repeal the specific swaps and security-based swaps for review of all swaps transactions to be reported. It exclusions related to swap agreements and and mandatory clearing determination by was universally agreed that regulators security-based swap agreements in both the regulators. It will also be unlawful for any should have access to all swaps data in real CEA and the Securities Exchange Act of 1934, entity to enter into a swap without submit- time. On the other hand, there was some out- ‘‘SEA’’. One should note that the definition ting it for clearing if that swap has been de- standing questions regarding the capacity, of ‘‘security-based swap agreement’’ in the termined to be required to clear. It is our un- utility and benefits from public reporting of SEA specifically excludes any ‘‘security- derstanding that approximately 1,200 swaps swaps transaction and pricing data. I would based swap’’, which means that SBSAs are and security-based swaps contracts are cur- like to respond to those questions. Market really swaps. This point is made clear in the rently listed by CFTC-registered clearing participants—including exchanges, contract definition of ‘‘swap’’ under the CEA. Under houses and SEC-registered clearing agencies markets, brokers, clearing houses and clear- Section 1a(47)(A)(v) it states that ‘‘any secu- for clearing. Under the conference report, ing agencies—were consulted and affirmed rity-based swap agreement which meets the these 1,200 swaps and security-based swaps that the existing communications and data definition of ‘‘swap agreement’’ as defined in already listed for clearing are deemed ‘‘sub- infrastructure for the swaps markets could Section 206A of the Gramm-Leach-Bliley Act mitted’’ to the regulators for review upon accommodate real time swap transaction and price reporting. Speaking to the benefits of which a material term is based on the the date of enactment. It is my expectation of such a reporting requirement, the com- price, yield, value or volatility of any secu- that the regulators, who are already familiar mittee could not ignore the experience of the rity, or any group or index of securities, or with these 1,200 swap and security-based U.S. Securities and Futures markets. These any interest therein.’’ Regulators should swap contracts, will work within the 90 day markets have had public disclosure of real note that Congress chose to refer to secu- time frame they are provided to identify time transaction and pricing data for dec- rity-based swap agreements as swaps at sev- which of the current 1,200 swap and security- ades. We concluded that real time swap eral points in the CEA. Further, the CFTC based swap agreements should be subject to transaction and price reporting will narrow and the SEC, after consultation with the mandatory clearing requirements. The regu- swap bid/ask spreads, make for a more effi- Federal Reserve, are to undertake a joint lators may also identify and review swaps and security-based swaps which are not sub- cient swaps market and benefit consumers/ rulemaking related to security-based swap counterparties overall. For these reasons, agreements. The regulators should follow mitted for clearinghouse or clearing agency listing and determine that they are or should the Senate Agriculture Committee required Congressional intent in this area and pre- ‘‘real time’’ price reporting for: (1) All swap serve the SEC’s anti-fraud and anti-manipu- be subject to mandatory clearing require- ment. This provision is considered to be an transactions which are subject to mandatory lation enforcement authority for that lim- clearing requirement; (2) All swaps under the ited group of swaps which are considered to important provision by senior members of the Senate Agriculture Committee, as it re- end user clearing exemption which are not be security-based swap agreements. cleared but reported to a swap data reposi- We have introduced a new term in this leg- moves the ability for the clearinghouse or tory subject; and, (3) all swaps which aren’t islation, which is ‘‘mixed swap’’. The term is clearing agency to block a mandatory clear- subject to the mandatory clearing require- found in both the CEA and the SEA—CEA ing determination. ment but which are cleared at a clearing Section 1a(47)(D) and SEA Section The conference report also contains an end house or clearing agency—under permissive, 3(a)(68)(D). The term is subject to a joint user clearing exemption. Under the con- as opposed to mandatory, clearing. The con- rulemaking between the CFTC and the SEC. ference report, end users have the option, The term ‘‘mixed swap’’ refers to those but not the obligation, to clear or not clear ference report adopted this Senate approach swaps which have attributes of both secu- their swaps and security-based swaps that with one notable addition authored by Sen- rity-based swaps and regular swaps. A have been determined to be required to clear, ator Reed. The Reed amendment, which the ‘‘mixed swap’’ is somewhat similar to a ‘‘hy- as long as those swaps are being used to conference adopted, extended real time swap brid product’’ under the CEA which has at- hedge or mitigate commercial risk. This op- transaction and pricing data reporting to tributes of both securities and futures. CEA tion is solely the end users’ right. If the end ‘‘non-standardized’’ swaps which are re- Section 2(f). Hybrid products must be pre- user opts to clear a swap, the end user also ported to swap data repositories and secu- dominantly securities to be excluded from has the right to choose the clearing house rity-based swap data repositories. Regulators regulation as contracts of sale of a com- where the swap will be cleared. Further, the are to ensure that the public reporting of modity for future delivery under the CEA. end user has the right, but not the obliga- swap transactions and pricing data does not While there is no ‘‘predominance’’ or ‘‘pri- tion, to force clearing of any swap or secu- disclose the names or identities of the par- marily’’ test in the definition of ‘‘mixed rity-based swap which is listed for clearing ties to the transactions. swap’’ the regulators should ensure that by a clearing house or clearing agency but I would like to specifically note the treat- when deciding the jurisdictional allocation which is not subject to mandatory clearing ment of ‘‘block trades’’ or ‘‘large notional’’ of such mixed swaps in the joint rulemaking requirement. Again the end user has the swap transactions. Block trades, which are process, that mixed swaps should be allo- right to choose the clearing house or clear- transactions involving a very large number cated to either the CFTC or the SEC based ing agency where the swap or security-based of shares or dollar amount of a particular se- on clear and unambiguous criteria like a pri- swap will be cleared. The option to clear is curity or commodity and which transactions marily test. A de minimis amount of secu- meant to empower end users and address the could move the market price for the security rity-based swap attributes should not bring a disparity in market power between the end or contract, are very common in the securi- swap into the SEC’s jurisdiction just as a de users and the swap dealers. Under the con- ties and futures markets. Block trades, minimis amount of swap attributes should ference report, certain specified financial en- which are normally arranged privately, off not bring a security-based swap into the tities are prohibited from using the end user exchange, are subject to certain minimum CFTC’s jurisdiction. While there will be clearing exemption. While most large finan- size requirements and time delayed report- some difficult decisions to be made on indi- cial entities are not eligible to use the end ing. Under the conference report, the regu- vidual swap contracts, it will be fairly clear user clearing exemption for standardized lators are given authority to establish what most of the time whether a particular swap swaps entered into with third parties, it constitutes a ‘‘block trade’’ or ‘‘large no- is more security-based swap or swap. We ex- would appropriate for regulators to exempt tional’’ swap transaction for particular con- pect the regulators to be reasonable in their from mandatory clearing and trading inter tracts and commodities as well as an appro- joint rulemaking and interpretations. affiliate swap transactions which are be- priate time delay in reporting such trans- The mandatory clearing and trading of cer- tween for wholly-owned affiliates of a finan- action to the public. The committee expects tain swaps and security-based swaps, along cial entity. We would further note that small the regulators to distinguish between dif- with real-time price reporting, is at the financial entities, such as banks, credit ferent types of swaps based on the com- heart of swaps market reform. Under the unions and farm credit institutions below $10 modity involved, size of the market, term of conference report, swaps and security-based billion in assets—and possibly larger enti- the contract and liquidity in that contract swaps determined to be subject to the man- ties—will be permitted to utilize the end and related contracts, i.e; for instance the datory clearing requirement by the regu- user clearing exemption with approval from size/dollar amount of what constitutes a

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00053 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.053 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5922 CONGRESSIONAL RECORD — SENATE July 15, 2010 block trade in 10-year interest rate swap, 2- concern was addressed by adding language ing swaps to the financial instruments over year dollar/euro swap, 5-year CDS, 3-year clarifying that if the financial entity had a which the CFTC has jurisdiction. We note gold swap, or a 1-year unleaded gasoline capital requirement set by a federal banking that in addition to swaps, we added other fi- swap are all going to be different. While we regulator that it wouldn’t be included in the nancial instruments such as security futures expect the regulators to distinguish between definition under that prong. This particular products, leverage contracts, retail foreign particular contracts and markets, the guid- prong of the major swap participant provi- exchange contracts and retail commodity ing principal in setting appropriate block- sion was intended to catch entities like the transactions which the CFTC has jurisdic- trade levels should be that the vast majority hedge fund LTCM and AIG’s financial prod- tion over and which would require registra- of swap transactions should be exposed to ucts subsidiary, not community banks. We tion where appropriate. the public market through exchange trading. also clarified in Section 716 that banks which With respect to commodity trading advi- With respect to delays in public reporting of are major swap participants are not subject sors, CTAs, commodity pool operators, CPOs, block trades, we expect the regulators to to the federal assistance bans. These changes and commodity pools, we wanted to provide keep the reporting delays as short as pos- and clarifications should ensure that com- clarity regarding the activities and jurisdic- sible. munity banks, when acting as banks, are not tion over these entities. Under Section 749 I firmly believe that taking the Senate bill caught by the swap dealer or major swap we have provided additional clarity regard- language improved the final conference re- participant definitions. ing what it means to be ‘‘primarily engaged’’ port by strengthening the regulators en- Section 716 and the ban on federal assist- in the business of being a commodity trading forcement authority dramatically. The Sen- ance to swap entities is an incredibly impor- advisor and being a commodity pool. To the ate Agriculture Committee looked at exist- tant provision. It was agreed by the adminis- extent an entity is ‘‘primarily engaged’’ in ing enforcement authority and tried to give tration, and accepted by the conference, that advising on swaps, such as interest rate the CFTC the authority which it needs to po- under the revised Section 716, insured deposi- swaps, foreign exchange swaps or broad- lice both the futures and swaps markets. As tory institutions would be forced to ‘‘push based security index swaps, then it would be I mentioned above, we provided the CFTC out’’ the riskiest swap activities into a sepa- required to register as a commodity trading with anti-fraud and anti-manipulation au- rate affiliate. The swap dealer activities advisor with the CFTC. On the other hand, to thority equal to that of the SEC with respect which would have to be pushed out included: the extent an entity is primarily engaged in to non narrow-based security index futures swaps on equities, energy, agriculture, metal advising on security-based swaps it would be and swaps so as to equalize the SEC and other than silver and gold, non investment required register as an investment adviser CFTC enforcement authority in this area. grade debt, uncleared credit default swaps with the SEC or the states. We would note The CFTC requested, and received, enforce- and other swaps that are not bank permis- that under existing law the CEA and the In- ment authority with respect to insider trad- sible investments. We were assured by the vestment Advisers Act have mirror provi- ing, restitution authority, and disruptive administration that all of the types of swaps sions which exempts from dual registration trading practices. In addition, we added in enumerated above are not bank permissible and regulation SEC registered IAs and CFTC anti-manipulation authority from my good and will be subject to the push out. Further, registered CTAs as long as they only provide friend Senator Cantwell. Senator Cantwell it is our understanding that no regulatory very limited advice related to futures and se- and I were concerned with swaps partici- action, interpretation or guidance will be curities, respectively. This policy is contin- pants knowingly and intentionally avoiding issued or taken which might turn such swaps ued and expanded to the extent it now covers the mandatory clearing requirement. We into bank permissible investments or activi- advice related to swaps and security-based were able to reach an agreement with the ties. swaps. other committees of jurisdiction by pro- It should also be noted that a mini-Volcker With respect to commodity pools, the SEC viding additional enforcement authority rule was incorporated into Section 716 during has long recognized that commodity pools that I believe will address the root problem. the conference. Banks, their affiliates and are not investment companies which are sub- Further, I would be remiss in not mentioning their bank holding companies would be pro- ject to registration or regulation under the that we provided specific enforcement au- hibited from engaging in proprietary trading Investment Company Act of 1940. Alpha thority under Section 9 for the CFTC to in derivatives. This provision would prohibit Delta Fund No Action Letter (pub avail. May bring actions against persons who purposely banks and bank holding companies, or any 4, 1976); Peavey Commodity Futures Fund I, evade the mandatory clearing requirement. affiliate, from proprietary trading in swaps II and III No action letter (pub avail. June 2, This provision is supposed to work together as well as other derivatives. This was an im- 1983)); Managed Futures Association No Ac- with the anti-evasion provision in the clear- portant expansion and linking of the Lincoln tion Letter (Pub Avail. July 15, 1996). To be ing section. Another important provision is Rule in Section 716 with the Volcker Rule in an ‘‘investment company’’ under Section 3(a) one related to fraud and an episode earlier Section 619 of Dodd-Frank. of the Investment Company Act an entity this year involving Greece and the use of Section 716’s effective date is 2 years from has to be primarily engaged in the business cross currency swaps. We gave new authority the effective date of the title, with the possi- of investing, reinvesting, or trading securi- to the CFTC to go after persons who enter bility of a 1 year extension by the appro- ties. In the matter of the Tonopah Mining into a swap knowing that its counterparty priate Federal banking agency. It should be Company of Nevada, 26 S.E.C. 426 (July 22, intends to use the swap for purposes of de- noted that the appropriate federal banking 1947) and SEC v. National Presto Industries, frauding a third party. This authority, which agencies should be looking at the affected Inc., 486 F.3d 305 (7th Cir. 2007). Commodity is meant to expand the CFTC’s existing aid- banks and evaluating the appropriate length pools are primarily engaged in the business ing and abetting authority, should permit of time which a bank should receive in con- of investing, reinvesting or trading in com- the CFTC to bring actions against swap deal- nection with its ‘‘push out.’’ Under the re- modity interests, not securities. For this ers and others who assist their counterpar- vised Section 716, banks do not have a reason, commodity pools are not investment ties in perpetrating frauds on third parties. ‘‘right’’ to 24 month phase-in for the push companies and are not utilizing an exemp- All in all, the CFTC’s enforcement authority out of the impermissible swap activities. The tion under the Investment Company Act. A was expanded to meet known problems and appropriate federal banking agencies should recent and well know example of commodity fill existing holes. It should give them the be evaluating the particular banks and their pools which the SEC has recognized as not tools which are necessary to police this mar- circumstances under the statutory factors to being investment companies, and not being ket. determine the appropriate time frame for required to register under the Investment A significant issue which was fixed during the push out. Company Act, comes in the commodity conference was clarifying that in most situa- The Senate Agriculture Committee bill re- based exchange traded funds (ETF) world. tions community banks aren’t swap dealers vised and updated several of the CEA defini- While recent ETFs based on gold, silver, oil, or major swap participants. The definition of tions related to intermediaries such as floor natural gas and other commodities have reg- swap dealer was adjusted in a couple of re- trader, floor broker, introducing broker, fu- istered their securities under the 1933 and spects so that a community bank which is tures commission merchant, commodity 1934 Acts and listed them on national securi- hedging its interest rate risk on its loan trading advisor, and commodity pool oper- ties exchanges for trading, these funds, portfolio would not be viewed as a Swap ator as well as adding a statutory definition which are commodity pools which are oper- Dealer. In addition, we made it clear that a of the term commodity pool. We note that ated by CFTC registered commodity pool op- bank that originates a loan with a customer the definition of futures commission mer- erators, are not registered as investment and offers a swap in connection with that chant is amended to include persons that are companies under the Investment Company loan shouldn’t be viewed as a swap dealer. It registered as FCMs. This makes clear that Act of 1940. See the Investment Company In- was never the intention of the Senate Agri- such persons must comply with the regu- stitute 2010 Fact Book, Chapter 3. We have culture Committee to catch community latory standards, including the capital and clarified that commodity interests include banks in either situation. We worked very customer funds protections that apply to not only contracts of sale of a commodity for hard to make sure that this understanding FCMs. The Senate Agriculture Committee future delivery and options on such con- came through in revised statutory language wanted to ensure that all the intermediary tracts but would also include swaps, security which was worked out during conference. and other definitions were current and re- futures products, leverage contracts, retail There were some concerns expressed about flected the activities and financial instru- foreign exchange contracts, retail com- banks being caught up as being highly lever- ments which CFTC registered and regulated modity transactions, physical commodities aged financial entities under prong (iii) of entities would be advising on, trading or and any funds held in a margin account for the major swap participant definition. This holding, especially in light of Congress add- trading such instruments. I am pleased that

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00054 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.055 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5923 the Conference Report includes these new that such transactions and accounts are sub- cuted on either a designated contract mar- provisions which were in the bill passed out ject to ‘‘comparable requirements to the ex- ket or a swap execution facility. Section of the Senate Agriculture Committee. tent practicable for similar products.’’ The 2(h)(8)(B) provides an exception to the Trade I would also note the importance of Sec- term ‘‘comparable’’ in this provision does Execution Requirement if the swap is subject tion 769 and Section 770. These sections not mean ‘‘identical.’’ Rather, the term is in- to the commercial end-user exception to the amend the Investment Company Act of 1940 tended to recognize the legal and operational clearing requirement in CEA Section 2(h)(7), and the Investment Advisers Act of 1940 so differences of the regulatory regimes gov- or if no contract market or swap execution that certain terms in the CEA are now incor- erning futures and securities accounts. facility ‘‘makes the swap available to porated into both of the 1940 Acts, which are Title VII establishes a new process for the trade.’’ This provision was included in the administered by the SEC. We believed it was CFTC and SEC to resolve the status of novel bill as reported by the Senate Agriculture appropriate to incorporate these important derivative products. In the past, these types Committee and then in the bill that was definitions from the CEA into the two 1940 of novel and innovative products have gotten passed by the Senate. Acts as it relates to advice on futures and caught up in protracted jurisdictional dis- In interpreting the phrase ‘‘makes the swaps, such as interest rate swaps and for- putes between the agencies, resulting in swap available to trade,’’ it is intended that eign exchange swaps and forwards, as well as delays in bringing products to market and the CFTC should take a practical rather what constitutes being a commodity pool placing U.S. firms and exchanges at a com- than a formal or legalistic approach. Thus, and being primarily engaged in the business petitive disadvantage to their overseas coun- in determining whether a swap execution fa- of investing in commodity interests as dis- terparts. cility ‘‘makes the swap available to trade,’’ tinguished from being an investment com- In their Joint Harmonization Report from the CFTC should evaluate not just whether pany which is primarily engaged in the busi- October 2009, the two agencies recommended the swap execution facility permits the swap ness of investing, reinvesting, holding, trad- legislation to provide legal certainty with to be traded on the facility, or identifies the ing securities. I am pleased that the Con- respect to novel derivative product listings, swap as a candidate for trading on the facil- ference Report includes these new updated either by a legal determination about the na- ity, but also whether, as a practical matter, definitions as it should help clarify jurisdic- ture of a product or through the use of the it is in fact possible to trade the swap on the tional and registration requirements. agencies’ respective exemptive authorities. facility. The CFTC could consider, for exam- Another extremely important issue which Title VII includes provisions in Sections 717 ple, whether there is a minimum amount of originated in the Senate Agriculture Com- and 718 to implement these recommenda- liquidity such that the swap can actually be mittee was imposing a fiduciary duty on tions. traded on the facility. The mere ‘‘listing’’ of swap dealers when dealing with special enti- It does so by establishing a process that re- the swap by a swap execution facility, in and ties, such as municipalities, pension funds, quires public accountability by ensuring of itself, without a minimum amount of li- endowments, and retirement plans. The that jurisdictional disputes are resolved at quidity to make trading possible, should not problems in this area, especially with re- the Commission rather than staff level, and be sufficient to trigger the Trade Execution spect to municipalities and Jefferson Coun- within a firm timeframe. Specifically, either Requirement. ty, Alabama in particular are very well agency can request that the other one: 1) Both Section 723 and Section 729 establish known. I would like to note that Senators make a legal determination whether a par- requirements pertaining to the reporting of Harkin and Casey have been quite active in ticular product is a security under SEC juris- pre-enactment and post-enactment swaps to this area and worked closely with me on this diction or a futures contract or commodity swap data repositories or the CFTC. They do issue. While Senators Harkin, Casey and I option under CFTC jurisdiction; or 2) grant so in new Sections 2(h)(5) and 4r(a) of the did not get everything which we were look- an exemption with respect to the product. Commodity Exchange Act, respectively, ing for, we ended up with a very good prod- An agency receiving such a request from the which provide generally that swaps must be uct. First, there is a clear fiduciary duty other agency is to act on it within 120 days. reported pursuant to such rules or regula- which swap dealers and major swap partici- Title VII also provides for an expedited judi- tions as the CFTC prescribes. These provi- pants must meet when acting as advisors to cial review process for a legal determination sions should be interpreted as complemen- special entities. This is a dramatic improve- where the agency making the request dis- tary to one another and to assure consist- ment over the House passed bill and should agrees with the other’s determination. ency between them. This is particularly true help protect both tax payers and plan bene- Title VII also includes amendments to ex- with respect to issues such as the effective ficiaries. Further, we have expanded the isting law to ensure that if either agency dates of these reporting requirements, the business conduct standards which swap deal- grants an exemption, the product will be applicability of these provisions to cleared ers and major swap participants must follow subject to the other’s jurisdiction, so there and/or uncleared swaps, and their applica- even when they are not acting as advisors to will be no regulatory gaps. For example, the bility—or non-applicability—to swaps whose special entities. I’d make a very important Commodity Exchange Act is amended to terms have expired at the date of enactment. point, nothing in this provision prohibits a clarify that CFTC has jurisdiction over op- Section 724 creates a segregation and bank- swap dealer from entering into transactions tions on securities and security indexes that ruptcy regime for cleared swaps that is in- with special entities. Indeed, we believe it are exempted by the SEC. And Section 741 tended to parallel the regime that currently will be quite common that swap dealers will grants the CFTC insider trading enforcement exists for futures. Section 724 requires any both provide advice and offer to enter into or authority over futures, options on futures, person holding customer positions in cleared enter into a swap with a special entity. How- and swaps, on a group or index of securities. swaps at a derivatives clearing organization ever, unlike the status quo, in this case, the We strongly urge the agencies to work to- to be registered as an FCM with the CFTC. swap dealer would be subject to both the act- gether under these new provisions to allevi- Section 724 does not require, and there is no ing as advisor and business conduct require- ate the ills that they themselves have identi- intention to require, swap dealers, major ments under subsections (h)(4) and (h)(5). fied. The agencies should make liberal use of swap participants, or end users to register as These provisions will place tighter require- their exemptive authorities to avoid spend- FCMs with the CFTC to the extent that such ments on swap entities that we believe will ing taxpayer resources on legal fights over entities hold collateral or margin which has help to prevent many of the abuses we have whether these novel derivative products are been put up by a counterparty of theirs in seen over the last few years. Importantly, securities or futures, and to permit these im- connection with a swap transaction. In the CFTC and the SEC have the authority to portant new products to trade in either or amending both the Commodity Exchange add to the statutory business conduct stand- both a CFTC- or SEC-regulated environment. Act (CEA) and the Bankruptcy Code to clar- ards which swap dealers and major swap par- Section 721 includes a broad and expansive ify that cleared swaps are ‘‘commodity con- ticipants must follow. We expect the regu- definition of the term ‘‘swap’’ that is subject tracts,’’ Section 724 makes explicit what had lators to utilize this authority. Among other to the new regulatory regime established in been left implicit under the Commodity Fu- areas, regulators should consider whether to Title VII. It also provides the CFTC with the tures Modernization Act of 2000. Specifically, impose business conduct standards that authority to further define the term ‘‘swap’’ we have clarified that: 1) title 11, Chapter 7, would require swap dealers to further dis- (and various other new terms in Title VII) in Subchapter IV of the United States Bank- close fees and compensation, ensure that order to include transactions and entities ruptcy Code applies to cleared swaps to the swap dealers maintain the confidentiality of that have been structured to evade these im- same extent that it applies to futures; and 2) hedging and portfolio information provided portant new legal requirements. The CFTC the CFTC has the same authority under Sec- by special entities, and prohibit swap dealers must not allow market participants to tion 20 of the CEA to interpret such provi- from using information received from a spe- ‘‘game the system’’ by labeling or struc- sions of the Bankruptcy Code with respect to cial entity to engage in trades that would turing transactions that are swaps as an- cleared swaps as it has with respect to fu- take advantage of the special entity’s posi- other type of instrument and then claim the tures contracts. tions or strategies. These are very important instrument to be outside the scope of the Section 731 prohibits a swap dealer or issues and should be addressed. legislation that Congress has enacted. major swap participant from permitting any Section 713 clarifies the authority and Section 723 creates a ‘‘Trade Execution Re- associated person who is subject to a statu- means for the CFTC and SEC to facilitate quirement’’ in new section 2(h)(8) of the tory disqualification under the Commodity portfolio margining of futures positions and Commodity Exchange Act (CEA). Section Exchange Act (CEA) to effect or be involved securities positions together, subject to ac- 2(h)(8)(A) requires that swaps that are sub- in effecting swaps on its behalf, if it knew or count-specific programs. The agencies are re- ject to the mandatory clearing requirement reasonably should have known of the statu- quired to consult with each other to ensure under new CEA Section 2(h)(1) must be exe- tory disqualification. In order to implement

VerDate Mar 15 2010 03:51 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00055 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.057 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5924 CONGRESSIONAL RECORD — SENATE July 15, 2010 this statutory disqualification provision, the CFTC from applying any of the position be covered by the ‘‘Zelener fraud fix’’ en- CFTC may require such associated persons limit provisions in Section 737 in the same acted in the Farm Bill; further, cash or spot to register with the CFTC under such terms, manner with respect to DCM or SEF traded contracts, forward contracts, securities, and and subject to such exceptions, as the CFTC swaps as is explicitly provided for in CEA certain banking products are excluded from deems appropriate. Section 4a(a)(1). this provision in Section 742, just as they The term ‘‘associated person of a swap Finally, Section 737 amends CEA Section were excluded in the Farm Bill. dealer or major swap participant’’ is defined 4a(a)(4) to authorize the CFTC to establish Second, Section 742 addresses the risk of in Section 721 as a person who, among other position limits on swaps that perform a sig- regulatory arbitrage with respect to retail things, is involved in the ‘‘solicitation’’ or nificant price discovery function with re- foreign currency transactions. Under the ‘‘acceptance’’ of swaps. These terms would spect to regulated markets, including price CEA, several types of regulated entities can also include the negotiation of swaps. linkage situations where a swap relies on the provide retail foreign currency trading plat- Section 731 includes a new Section 4s(g) of daily or final settlement price of a contract forms—among them, broker-dealers, banks, the CEA to impose requirements regarding traded on a regulated market based upon the futures commission merchants, and the cat- the maintenance of daily trading records on same underlying commodity. Section 737 egory of ‘‘retail foreign exchange dealers’’ swap dealers and major swap participants. also amends CEA Section 4a(a)(5) to provide that was recognized by Congress in the Farm To reflect advances in technology, CEA Sec- that the CFTC shall establish position limits Bill in 2008. Section 742 requires that the tion 4s(g) expressly requires that these reg- on swaps that are ‘‘economically equivalent’’ agencies regulating these entities have com- istrants maintain ‘‘recorded communica- to futures or options traded on designated parable regulations in place before their reg- tions, including electronic mail, instant contract markets. It is intended that this ulated entities are allowed to offer retail for- messages, and recordings of telephone calls.’’ ‘‘economically equivalent’’ provision reaches eign currency trading. This will ensure that Under current law, Section 4g of the CEA swaps that link to a settlement price of a all domestic retail foreign currency trading governs the maintenance of daily trading contract on a designated contract market, is subject to similar protections. records by certain existing classes of CFTC without the CFTC having to first make a de- Finally, Section 742 also addresses a situa- registrants, and is worded more generally termination that the swaps perform a sig- tion where domestic retail foreign currency and without expressly mentioning the re- nificant price discovery function. firms were apparently moving their activi- corded communications enumerated in CEA Section 741, among other things, clarifies ties offshore in order to avoid regulations re- Section 4s(g). The enactment of this provi- that the CFTC’s enforcement authority ex- quired by the National Futures Association. sion should not be interpreted to mean or tends to accounts and pooled investment ve- It removes foreign financial institutions as imply that the specifically-identified types hicles that are offered for the purpose of an acceptable counterparty for off-exchange of recorded communications that must be trading, or that trade, off-exchange con- retail foreign currency transactions under maintained by swap dealers and major swap tracts in foreign currency involving retail section 2(c) of the CEA. Foreign financial in- participants under CEA Section 4s(g) would customers. Thus, the CFTC may bring an en- stitutions seeking to offer them to retail be beyond the authority of the CFTC to re- forcement action for fraud in the offer and customers within the United States will now quire of other registrants by rule under Sec- sale of such managed or pooled foreign cur- have to offer such contracts through one of tion 4g. rency investments or accounts. These provi- the other legal mechanisms available under Sections 733 and 735 establish a regime of sions overrule an adverse decision in the the CEA for accessing U.S. retail customers. core principles to govern the operations of CFTC enforcement case of CFTC v. White Section 745 provides that in connection swap execution facilities and designated con- Pine Trust Corporation, 574 F.3d 1219 (9th with the listing of a swap for clearing by a tract markets, respectively. Certain of these Cir. 2009), which erected an inappropriate derivatives clearing organization, the CFTC swap execution facility and designated con- limitation on the broad mandate that Con- shall determine, both the initial eligibility tract market core principles are identically gress has given the CFTC to protect this and the continuing qualification of the DCO worded. Given that swap execution facilities country’s retail customers from fraud. to clear the swap under criteria determined will trade swaps exclusively, whereas des- Section 742 includes several important pro- by the CFTC, including the financial integ- ignated contract markets will be able to visions to enhance the protections afforded rity of the DCO. Thus, the CFTC has the trade swaps or futures contracts, we expect to customers in retail commodity trans- flexibility to impose terns or conditions that that the CFTC may interpret identically- actions, and I would like to highlight three it determines to be appropriate with regard worded core principles differently where of them. First, Section 742 clarifies the pro- to swaps that a DCO plans to accept for they apply to different types of instruments hibition on off-exchange retail futures con- clearing. No DCO may clear a swap absent a or for different types of trading facilities or tracts that has been at the heart of the Com- determination by the CFTC that the DCO platforms. modity Exchange Act (CEA) throughout its has proper risk management processes in Section 737 amends Section 4a(a)(1) of the history. In recent years, there have been in- place and that the DCO’s clearing operation Commodity Exchange Act (CEA) to author- stances of fraudsters using what are known is in accordance with the Commodity Ex- ize the CFTC to establish position limits for as ‘‘rolling spot contracts’’ with retail cus- change Act and the CFTC’s regulations ‘‘swaps that perform or affect a significant tomers in order to evade the CFTC’s jurisdic- thereunder. price discovery function with respect to reg- tion over futures contracts. These contracts Section 753 adds a new anti-manipulation istered entities.’’ Subsequent descriptions of function just like futures, but the court of provision to the Commodity Exchange Act the significant price discovery function con- appeals in the Zelener case (CFTC v. Zelener, (CEA) addressing fraud-based manipulation, cept in Section 737, though, refer to an im- 373 F.3d 861 (7th Cir. 2004)), based on the including manipulation by false reporting. pact on ‘‘regulated markets’’ or ‘‘regulated wording of the contract documents, held Importantly, this new enforcement author- entities.’’ The term ‘‘registered entity’’ is them to be spot contracts outside of CFTC ity being provided to the CFTC supplements, specifically defined in the CEA, and clearly jurisdiction. The CFTC Reauthorization Act and does not supplant, its existing anti-ma- includes designated contract markets and of 2008, which was enacted as part of that nipulation authority for other types of ma- swap execution facilities. By contrast, the year’s Farm Bill, clarified that such trans- nipulative conduct. Nor does it negate or un- terms ‘‘regulated markets’’ and ‘‘regulated actions in foreign currency are subject to dermine any of the case law that has devel- entities’’ are not defined or used anywhere CFTC anti-fraud authority. It left open the oped construing the CEA’s existing anti-ma- else in the CEA. This different terminology possibility, however, that such Zelener-type nipulation provisions. is not intended to suggest a substantive dif- contracts could still escape CFTC jurisdic- The good faith mistake provision in Sec- ference, and it is expected that the CFTC tion if used for other commodities such as tion 753 is an affirmative defense. The burden may interpret the terms ‘‘regulated mar- energy and metals. of proof is on the person asserting the good kets’’ and ‘‘regulated entities’’ to mean ‘‘reg- Section 742 corrects this by extending the faith mistake defense to show that he or she istered entities’’ as defined in the statute for Farm Bill’s ‘‘Zelener fraud fix’’ to retail off- did not know or act in reckless disregard of purposes of position limits under Section 737. exchange transactions in all commodities. the fact that the report was false, mis- Section 737 also amends CEA Section Further, a transaction with a retail cus- leading, or inaccurate. 4a(a)(1) to authorize the CFTC to establish tomer that meets the leverage and other re- Section 753 also re-formats CEA Section position limits for ‘‘swaps traded on or sub- quirements set forth in Section 742 is subject 6(c), which is where the new anti-manipula- ject to the rules of a designated contract not only to the anti-fraud provisions of CEA tion authority is placed, to make it easier market or a swap execution facility, or Section 4b (which is the case for foreign cur- for courts and the public to use and under- swaps not traded on or subject to the rules of rency), but also to the on-exchange trading stand. Changes made to existing text as part a designated contract market or a swap exe- requirement of CEA Section 4(a), ‘‘as if’’ the of this re-formatting were made to stream- cution facility that performs a significant transaction was a futures contract. As a re- line or eliminate redundancies, not to effect price discovery function with respect to a sult, such transactions are unlawful, and substantive changes to these provisions. registered entity.’’ Later, Section 737 sets may not be intermediated by any person, un- Title VIII of the legislation provides en- out additional provisions authorizing CFTC less they are conducted on or subject to the hanced authorities and procedures for those position limits to reach swaps, but without rules of a designated contract market sub- clearing organizations and activities of fi- utilizing this same wording regarding swaps ject to the full array of regulatory require- nancial institutions that have been des- traded on or off designated contract markets ments applicable to on-exchange futures ignated as systemically important by a or swap execution facilities. The absence of under the CEA. Retail off-exchange trans- super-majority of the new Financial Sta- this wording is not intended to preclude the actions in foreign currency will continue to bility Oversight Council. Title VIII preserves

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00056 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.059 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5925 the authority of the CFTC and SEC as pri- tries. For example, a key component of sure that any adjustments to the fee mary regulators of clearinghouses and clear- the Senate-passed version of my shall be limited to reasonably nec- ing activities within their jurisdiction. Title amendment was a provision that would essary costs and shall take into ac- VIII further expands the CFTC’s and SEC’s prohibit payment card networks from count fraud-related reimbursements authorities in prescribing risk management standards and other regulations to govern blocking merchants from offering a that the issuer receives from con- designated clearing entities, and financial discount for customers who use a com- sumers, merchants, or networks. The institutions engaged in designated activities. peting card network. This provision standards shall also require issuers Similarly, Title VIII preserves and expands was unfortunately left out of the final that want an adjustment to their inter- the CFTC’s and SEC’s examination and en- conference report, but the need for this change fees to take effective steps to forcement authorities with respect to des- provision remains undiminished. It is reduce the occurrence of and costs ignated entities within their respective ju- blatantly anticompetitive for one com- from fraud in electronic debit trans- risdictions. Title VIII sets forth specific standards and pany to prohibit its customers from of- actions, including through the develop- procedures that permit the Council, upon a fering a discounted price for a competi- ment of cost-effective fraud prevention supermajority vote of the Council, and upon tor’s product, and I will continue to technology. a determination that additional risk man- pursue steps to end this practice. It should be noted that any fraud pre- agement standards are necessary to prevent Additionally, in no way should my vention adjustment to the fee amount significant risks to the stability of the finan- amendment be construed as pre- would occur after the base calculation cial system, to require the CFTC or SEC to empting or superseding scrutiny of the of the reasonable and proportional impose additional risk management stand- credit card and debit card industries interchange fee amount takes place, ards regarding designated financial market utilities or financial institutions engaged in under the antitrust laws. Section 6 of and fraud prevention costs would not designated activities. the Dodd-Frank act conference report be considered as part of the incre- Thus, the authorities granted in Title VIII contains an antitrust savings clause mental issuer costs upon which the are intended to be both additive and com- which provides that nothing in the act reasonable and proportional fee plementary to the authorities granted to the shall be construed to modify, impair, amount is based. Further, any fraud CFTC and SEC in Title VII and to those or supersede the operation of any of prevention cost adjustment would be agencies’ already existing legal authorities. the antitrust laws. I want to make The authority provided in Title VIII to the made on an issuer-specific basis, as CFTC and SEC with respect to designated clear that nothing in my amendment is each issuer must individually dem- clearing entities and financial institutions intended to modify, impair, or super- onstrate that it complies with the engaged in designated activities would not sede the operation of any of the anti- standards established by the Board, and is not intended to displace the CFTC’s trust laws, nor should my amendment and as the adjustment would be limited and SEC’s regulatory regime that would be construed as having that effect. Vig- to what is reasonably necessary to apply to these institutions or activities. orous antitrust scrutiny over the cred- make allowance for fraud prevention Whereas Title VIII is specifically addressed it and debit card industries will con- to payment, settlement, and clearing activi- costs incurred by that particular ties, Title I is addressed to consolidated enti- tinue to be needed after enactment of issuer. The fraud prevention adjust- ty supervision of complex financial institu- the Dodd-Frank act, particularly in ment provision in paragraph (a)(5) is tions. Accordingly, to prevent coverage light of the highly concentrated nature intended to apply to all electronic under two separate regulatory schemes, of those industries. debit transactions, whether authoriza- clearing agencies and derivatives clearing With respect to the new subsection tion is based on signature, PIN or other organizations are generally excepted from 920(a) of the Electronic Fund Transfer means. Title I. Also excepted from Title I are na- Act that would be created by my Paragraph (6) of subsection (a) ex- tional exchanges, designated contract mar- amendment, there are a few issues that empts debit card issuers with assets of kets, swap execution facilities and other enumerated entities. should be clarified. The core provisions less than $10 billion from interchange Title X of the legislation, which estab- of subsection (a) are its grant of regu- fee regulation. This paragraph makes lishes a new Bureau of Consumer Financial latory authority to the Federal Re- clear that for purposes of this exemp- Protection, maintains the supervisory, en- serve Board over debit interchange tion, the term ‘‘issuer’’ is limited to forcement, rulemaking and other authorities transaction fees, and its requirement the person holding the asset account of the CFTC over the persons it regulates. that an interchange transaction fee which is debited, and thus does not The legislation expressly prohibits the new amount charged or received with re- count the assets of any agents of the Bureau from exercising any powers with re- spect to an electronic debit transaction spect to any persons regulated by the CFTC, issuer. However, the affiliates of an to the extent that the actions of those per- be reasonable and proportional to the issuer are counted for purposes of the sons are subject to the jurisdiction of the cost incurred by the issuer with respect $10 billion exemption threshold, so if CFTC. It is not intended that Title X would to the transaction. Paragraph (a)(4) an issuer together with its affiliates lead to overlapping supervision of such per- makes clear that the cost to be consid- has assets of greater than $10 billion, sons by the Bureau. In this respect, the legis- ered by the Board in conducting its then the issuer does not fall within the lation is fully consistent with the Treasury reasonable and proportional analysis is exemption. Department’s White Paper on Financial Reg- the incremental cost incurred by the It should be noted that the intent of ulatory Reform, which proposed the creation issuer for its role in the authorization, my amendment is not to diminish com- of an agency ‘‘dedicated to protecting con- sumers in the financial products and services clearance, or settlement of a particular petition in the debit issuance market. I markets, except for investment products and electronic debit transaction, as op- will be watching closely to ensure that services already regulated by the SEC or posed to other costs incurred by an the giant payment card networks Visa CFTC.’’ (See Treasury White Paper at 55–56 issuer which are not specific to the au- and MasterCard do not collude with (June 17, 2009) (emphasis added)). thorization, clearance, or settlement of one another or with large financial in- Mr. DURBIN. Mr. President, I rise to a particular electronic debit trans- stitutions to take steps to purposefully speak about my interchange fee action. disadvantage small issuers in response amendment that was incorporated into Paragraph (5) of subsection (a) pro- to enactment of this amendment. the Dodd-Frank Wall Street Reform vides that the Federal Reserve Board Paragraph (7) of subsection (a) ex- and Consumer Protection Act. There may allow for an adjustment of an empts from interchange fee regulation are some important aspects of the interchange transaction fee amount re- electronic debit transactions involving amendment that I want to clarify for ceived by a particular issuer if the ad- debit cards or prepaid cards that are the record. justment is reasonably necessary to provided to persons as part of a federal, First, it is important to note that make allowance for the fraud preven- state or local government-adminis- while this amendment will bring much- tion costs incurred by the issuer seek- tered payment program in which the needed reform to the credit card and ing the adjustment in relation to its person uses the card to debit assets debit card industries, in no way should electronic debit transactions, provided provided under the program. The Fed- enactment of this amendment be con- that the issuer has demonstrated com- eral Reserve Board will issue regula- strued as preempting other crucial pliance with fraud-related standards tions to implement this provision, but steps that must be taken to bring com- established by the Board. The stand- it is important to note that this ex- petition and fairness to those indus- ards established by the Board will en- emption is only intended to apply to

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00057 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.062 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5926 CONGRESSIONAL RECORD — SENATE July 15, 2010 cards which can be used to transfer or payment—cash, checks, debit cards or the amendment are entities such as debit assets that are provided pursuant credit cards—provided that discounts Visa, MasterCard, Discover, and Amer- to the government-administered pro- for debit cards and credit cards do not ican Express that directly, or through gram. The exemption is not intended to differentiate on the basis of the issuer licensed members, processors or apply to multi-purpose cards that min- or the card network, and provided that agents, provide the proprietary serv- gle the assets provided pursuant to the the discount is offered in a way that ices, infrastructure and software that government-administered program complies with applicable Federal and route information to conduct credit with other assets, nor is it intended to State laws. This paragraph is in no way and debit card transaction authoriza- apply to cards that can be used to debit intended to preclude the use by mer- tion, clearance and settlement. The assets placed into an account by enti- chants of any other types of discounts. amendment does not intend, for exam- ties that are not participants in the It just makes clear that Federal law ple, to define ATM operators or acquir- government-administered program. prohibits payment card networks from ing banks as payment card networks The amendment would also create inhibiting the offering of discounts unless those entities also operate card subsection 920(b) of the Electronic which are for a form of payment—for networks as do Visa, MasterCard, Dis- Fund Transfer Act, which provides sev- example, a 1-percent discount for pay- cover and American Express. eral restrictions on payment card net- ment by debit card. This paragraph Overall, my amendment contains works. Paragraphs (1), (2) and (3) of also provides that a network may not much needed reforms that will help in- 920(b) are intended only to serve as re- penalize a person for the way that the crease fairness, transparency and com- strictions on payment card networks person offers or discloses a discount to petition in the debit card and credit to prohibit them from engaging in cer- customers, which will end the current card industries. More work remains to tain anticompetitive practices. These practice whereby payment card net- be done along these lines, but this provisions are not intended to preclude works have regularly sought to penal- amendment represents an important those who accept cards from engaging ize merchants for providing cash, check first step, and I thank my colleagues or debit discounts that are fully in in any discounting or other practices, who have supported this effort. nor should they be construed to pre- compliance with applicable Federal Mr. KOHL. Mr. President, I rise to clude contractual arrangements that and State laws. speak on the Wall Street Reform and Paragraph (b)(3) provides that a pay- deal with matters not covered by these Consumer Protection Act which the provisions. Further, nothing in these ment card network shall not inhibit the ability of any person to set a min- Senate will pass today. After 2 years of provisions should be construed to mean work, the reckless practices of Wall that merchants can only provide a dis- imum dollar value for acceptance of credit cards, provided that the min- Street firms that resulted in terrible count that is exactly specified in the imum does not differentiate between losses for people in Wisconsin and amendment. The provisions also should issuers or card networks, and provided across the nation will finally be ended. not be read to confer any congressional that the minimum does not exceed $10. These events showed us that main- blessing or approval of any other par- This paragraph authorizes the Board to taining the current regulatory system ticular contractual restrictions that increase this dollar amount by regula- is not an acceptable option. Wall payment card networks may place on tion. The paragraph also provides that Street needs accountability and trans- those who accept cards as payment. All card networks shall not inhibit the parency to avoid future financial melt- these provisions say is that Federal ability of a Federal agency or an insti- downs. Congress has the duty to ensure law now blocks payment card networks tution of higher education to set a that this kind of failure never happens from engaging in certain specific enu- maximum dollar value for acceptance again. The Wall Street Reform and merated anti-competitive practices, of credit cards, provided that the max- Consumer Protection Act takes vital and the provisions describe precisely imum does not differentiate between steps to end ‘‘too big to fail,’’ bring un- the boundaries over which payment issuers or card networks. As with the regulated shadow markets into the card networks cannot cross with re- discounts, this provision is not in- light, and make our financial system spect to these specific practices. tended to preclude merchants, agencies work better for everyone. Paragraph (b)(1) directs the Federal or higher education institutions from This bill has been thoroughly delib- Reserve Board to prescribe regulations setting other types of minimums or erated in both the House and the Sen- providing that issuers and card net- maximums by card or amount. It sim- ate. The Banking Committee held more works shall not restrict the number of ply makes clear that payment card than 80 hearings since 2008 on the fi- networks on which an electronic debit networks must at least allow for the nancial crisis, addressing its causes, transaction may be processed to just minimums and maximums described in grave impacts and potential remedies. one network, or to multiple networks the provision. These hearings explored all of the ele- that are all affiliated with each other. Paragraph (b)(4) contains a rule of ments of this legislation in detail, and It further directs the Board to issue construction providing that nothing in also looked at the specific regulatory regulations providing that issuers and this subsection shall be construed to failures that contributed to the crisis. card networks shall not restrict a per- authorize any person to discriminate The information gathered at these son who accepts debit cards from di- between debit cards within a card net- hearings laid down the foundation for recting the routing of electronic debit work or to discriminate between credit the current bill. The bill was carefully transactions for processing over any cards within a card network on the debated and deliberated while on the network that may process the trans- basis of the issuer that issued the card. Senate floor for 3 weeks—almost as actions. This paragraph is intended to The intent of this rule of construction long as the debate on health care re- enable each and every electronic debit is to make clear that nothing in this form. transaction—no matter whether that subsection should be cited by any per- After the bill passed in the House and transaction is authorized by a signa- son as justification for the violation of the Senate it was then negotiated by ture, PIN, or otherwise—to be run over contractual agreements not to engage the Conference Committee. I was at least two unaffiliated networks, and in the forms of discrimination cited in pleased with the Conference Commit- the Board’s regulations should ensure this paragraph. This provision does tee’s ability to address Members’ con- that networks or issuers do not try to not, however, prohibit such discrimina- cerns in both Chambers. The con- evade the intent of this amendment by tion as a matter of federal law, nor ference lasted 2 weeks and was tele- having cards that may run on only two does it make any statement regarding vised and open to the public for view- unaffiliated networks where one of the legality of such discrimination. In ing. This all brought welcome trans- those networks is limited and cannot addition, this provision makes no parency to the legislative process. be used for many types of transactions. statement as to whether a payment Throughout the consideration of fi- Paragraph (b)(2) provides that a pay- card network’s contractual rule pre- nancial reform, I met with people, ment card network shall not inhibit venting such discrimination would be banks and businesses in Wisconsin to the ability of any person to provide a legal under the antitrust laws. better understand their needs so that discount or in-kind incentive for pay- Finally, it should be noted that the our businesses and families can be pro- ment by the use of a particular form of payment card networks as defined in tected from future recklessness. I have

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00058 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.028 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5927 worked hard to make sure that this bill cally maintains the ability of the anti- or a direct or indirect subsidiary of an protects Main Street and its businesses trust agencies to perform a thorough insurance company, I believe that the by focusing on Wall Street—the source competition review of the transactions FDIC should exercise such authority of this crisis. between these firms. cautiously to avoid weakening the in- I am proud to say that we now have This robust merger review authority surance company and thereby under- a bill that will change our regulatory ensures that the Federal antitrust mining policyholder protection. In- system in a way that will prevent and agencies can continue to play their key deed, any lien taken on the assets of a mitigate future crises. The bill will en- role in protecting competition and en- covered subsidiary that is an insurance sure that a Federal bailout will never suring consumers have choices for fi- company or a direct or indirect sub- again be an option for irresponsible nancial services and products at com- sidiary of an insurance company must businesses. The bill creates a council of petitive rates and prices. Competition avoid weakening or undermining pol- regulators to monitor the economy for is the cornerstone of our Nation’s econ- icyholder protection. As a result, the systemic threats. It will institute new omy, and the antitrust laws ensure FDIC should normally not take a lien regulations on hedge funds and over- strong competitive markets that make on the assets of such a covered sub- the-counter derivatives and create a our economy strong and protect con- sidiary except where the FDIC sells the Bureau of Consumer Financial Protec- sumers. This bill will ensure that the covered subsidiary to a third party, tion that will oversee mortgage, credit antitrust laws retain their critical role provides financing in connection with cards and other credit products. in the financial services industry. the sale, and takes a lien on the assets Consumers will now have a single en- This bill is another step in a long of the covered subsidiary to secure the tity to report their concerns about process of financial overhaul. The Wall third party’s repayment obligation to abusive financial practices, allowing Street Reform and Consumer Protec- the FDIC. I understand that the FDIC regulators to address these issues in a tion Act provides regulators with flexi- intends to promulgate regulations con- timelier manner—before more con- bility to implement a number of new sistent with this view. sumers are harmed. The bill improves rules. They will have to make decisions Mr. President, I would also like to access to credit, increases protections on issues ranging from determining clarify the intent behind another of the provisions in the conference report to and expands financial education pro- fair charges on debit card swipe fees to accompany the financial reform bill, grams enabling consumers to make deciding when a risky firm should be H.R. 4173, the Dodd-Frank Wall Street smart financial decisions and reducing taken over. We need to make sure that Reform and Consumer Protection Act widespread predatory practices our regulators have the tools and re- In addition to providing consumers of 2010. Section 1075 of the bill amends sources they need to get the job done the Electronic Fund Transfer Act to with adequate protections against right. As a member of the Banking create a new section 920 regarding fraud and predatory practices, I also Committee, I am going to keep a interchange fees. This is a very com- believe that consumers need affordable watchful eye on the regulators to make plicated subject involving many dif- alternatives to predatory lending prod- sure they are given adequate resources ferent stakeholders, including payment ucts like pay day loans. Senator DAN- and oversight to do the job that they networks, issuing banks, acquiring IEL AKAKA shares this belief which is have been charged with. banks, merchants, and, of course, con- why we worked together to draft title Clearly we would not have this bill sumers. Section 1075 therefore is also XII of this bill. without the hard work and effort of complicated, and I would like to make Title XII will help to improve the Senator CHRIS DODD. It has been an a clarification with regard to that sec- lives of the millions of low- and mod- honor to work with him and I hope he tion. erate-income households in America is as proud of this great accomplish- Since interchange revenues are a that do not have access to mainstream ment as I am. major source of paying for the adminis- financial institutions by providing Finally I would like to take a mo- trative costs of prepaid cards used in grants to community development fi- ment to recognize the staff that connection with health care and em- nancial institutions so that they can worked so hard on this bill. I would ployee benefits programs such as FSAs, give small dollar loans at affordable like to acknowledge the staff of the HSAs, HRAs, and qualified transpor- terms to people who are currently lim- Banking Committee for all of their ex- tation accounts—programs which are ited to riskier choices like payday ceptional work: including Levon widely used by both public and private loans. This grant making program will Bagramian, Julie Chon, Brian sector employers and which are more dramatically help to increase the num- Filipowich, Amy Friend, Catherine Ga- expensive to operate given substan- ber of small dollar loan options to con- licia, Lynsey Graham Rea, Matthew tiation and other regulatory require- sumers that need quick access to Green, Marc Jarsulic, Mark Jickling, ments—we do not wish to interfere money so that they can pay for emer- Deborah Katz, Jonathan Miller, Misha with those arrangements in a way that gency medical costs, car repairs and Mintz-Roth, Dean Shahinian, Ed Sil- could lead to higher fees being imposed other items they need to maintain verman, and Charles Yi. by administrators to make up for lost their lives. This legislation is modeled I also express my appreciation for all revenue. That could directly raise in part after the FDIC’s Small Dollar of the work done by the Legislative As- health care costs, which would hurt Loan Pilot Program. sistants of the Banking Committee consumers and which, of course, is not As chairman of the Judiciary Sub- Members including Laura Swanson, at all what we wish to do. Hence, we in- committee on Antitrust, I am pleased Kara Stein, Jonah Crane, Linda Jeng, tend that prepaid cards associated with to see that this bill will preserve the Ellen Chube, Michael Passante, Lee these types of programs would be ex- ability of the Federal antitrust agen- Drutman, Graham Steele, Alison empted within the language of section cies to protect competition and Amer- O’Donnell, Hilary Swab, Harry Stein, 920(a)(7)(A)(ii)(II) as well as from the ican consumers in the financial serv- Karolina Arias, Nathan Steinwald, prohibition on use of exclusive net- ices industries. The legislation in- Andy Green, Brian Appel, and Matt works under section 920(b)(1)(A). cludes a broad antitrust savings clause Pippin. Mr. President, I want to clarify a that makes clear that nothing in the Mr. DODD. Mr. President, I would provision of the conference report of act will modify, impair or supersede like to clarify the intent behind one of the Dodd-Frank Wall Street Reform the operation of any of the antitrust the provisions in the conference report and Consumer Protection Act, H.R. laws. It also includes more specific to accompany the financial reform bill, 4173. Section 1012 sets forth the execu- antitrust savings clauses in key provi- H.R. 4173, the Dodd-Frank Wall Street tive and administrative powers of the sions, further ensuring the continued Reform and Consumer Protection Act Consumer Financial Protection Bu- ability of the antitrust agencies to of 2010. Section 204(d) contemplates reau, CFPB, and section 1012(c)(1)—Co- fully enforce the relevant laws in these that the FDIC, as receiver, may take a ordination with the Board of Gov- critical sectors in our economy.In addi- lien on assets of a covered financial ernors—provides that ‘‘Notwith- tion to strengthening the oversight of company or a covered subsidiary. With standing any other provision of law ap- mergers and acquisitions involving fi- respect to assets of a covered sub- plicable to the supervision or examina- nancial services firms, the bill specifi- sidiary that is an insurance company tion of persons with respect to Federal

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00059 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.077 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5928 CONGRESSIONAL RECORD — SENATE July 15, 2010 consumer financial laws, the Board of year 2014. In order to trigger this au- writing the borrower, subject to cer- Governors may delegate to the Bureau thorization, the CFPB Director would tain protections laid out in the legisla- the authorities to examine persons sub- have to report to the Appropriations tion, while still remaining qualified ject to the jurisdiction of the Board of Committees that the CFPB’s formula mortgages. Governors for compliance with the funding is not sufficient. It is the conferees’ intent that the Federal consumer financial laws.’’ This Section 1085 of the legislation adds Federal Reserve Board and the CFPB provision is not intended to override the Consumer Financial Protection Bu- use their rulemaking authority under section 1026, which will continue to de- reau, CFPB, to the list of agencies au- the enumerated consumer statutes and fine the Bureau’s examination and en- thorized to enforce the Equal Credit this legislation to extend this same forcement authority over insured de- Opportunity Act, ECOA—15 U.S.C. benefit for conventional streamlined pository institutions and insured credit § 1691c(a)(9). The legislation also refinance programs where the party unions with assets of less than $10 bil- amends section 706(g)—15 U.S.C. making the new loan already owns the lion. The conferees expect that the § 1691e(g)—to require the CFPB to refer credit risk. This will enable current board will not delegate to the Bureau a matter to the Attorney General homeowners to take advantage of cur- its authority to examine insured depos- whenever the CFPB has reason to be- rent low interest rates to refinance itory institutions with assets of less lieve that 1 or more creditors has en- their mortgages. than $10 billion. gaged in a ‘‘pattern or practice of dis- There are a number of provisions in Throughout the development of and couraging or denying applications for title XIV for which there is not a speci- debate on the Consumer Financial Pro- credit’’ in violation of section 701, 15 fied effective date other than what is tection Bureau, CFPB, I have insisted U.S.C. § 1691(a). The general grant of provided in section 1400(c). It is the in- that the legislation meet three require- civil litigation authority to the CFPB, tention of the conferees that provisions ments—independent rule writing, inde- in section 1054(a), should not be con- in title XIV that do not require regula- pendent examination and enforcement strued to override, in any way, the tions become effective no later than 18 authority, and independent funding for CFPB’s referral obligations under the months after the designated transfer the CFPB. The CFPB, as established by ECOA. date for the CFPB, as required by sec- the conference report, meets each of The requirement in section 706(g) of tion 1400(c). However, the conferees en- those requirements. I want to speak for the ECOA that the CFPB refer a mat- courage the Federal Reserve Board and a moment about section 1017, which es- ter involving a pattern-or-practice vio- the CFPB to act as expeditiously as tablishes the independent funding lation of section 701, rather than first possible to promulgate regulations so mechanism for the CFPB. filing its own pattern-or-practice ac- that the provisions of title XIV are put The conference report requires the tion, furthers the legislation’s purpose into effect sooner. Federal Reserve System to automati- of reducing fragmentation in consumer I would like to clarify that the con- cally fund the CFPB based on the total protection and fair lending enforce- ferees consider any program or initia- tive that was announced before June 25 operating expenses of the system, using ment under the ECOA. The Attorney to have been initiated for the purposes 2009 as the baseline. This will ensure General, who currently has authority of section 1302 of the conference report. that the CFPB has the resources it under section 706(g) to file those pat- I also want to make clear that the con- needs to perform its functions without tern-or-practice ECOA actions in court ferees do not intend for section 1302 to subjecting it to annual congressional on behalf of the government, receives prevent the Treasury Department from appropriations. The failure of the Con- such pattern-or-practice referrals from adjusting available resources that re- gress to provide the Office of Federal other agencies with ECOA enforcement main after the adoption of the con- Housing Enterprises Oversight, responsibilities and will continue to do ference report among such existing OFHEO, with a steady stream of inde- so under the legislation. By subjecting programs, based on effectiveness. pendent funding outside the appropria- the CFPB to the same referral require- Mr. President, I also wish to explain tions process led to repeated inter- ment, the legislation intends to avoid some of the securities-related changes ference with the operations of that reg- creating fragmentation in this enforce- that emerged from the conference com- ulator. Even when there was not ex- ment system under the ECOA where mittee in the conference report. plicit interference, the threat of con- none currently exists. The report amends section 408 to gressional interference could very well Title XIV creates a strong, new set of eliminate the blanket exemption for have served to circumscribe the actions underwriting requirements for residen- private equity funds and replace it OFHEO was willing to take. We did not tial mortgage loans. An important part with an exemption for private fund ad- want to repeat that mistake in this of this new regime is the creation of a visers with less than $150 million under legislation. safe harbor for certain loans made ac- management. The amendment also re- In addition, because many of the em- cording to the standards set out in the quires the SEC in its rulemaking to ployees of the CFPB will come from ex- bill, and which will be detailed further impose registration and examination isting financial regulators, the con- in forthcoming regulations. Loans that procedures for such funds that reflect ferees take the view that it is impor- meet this standard, called ‘‘qualified the level of systemic risk posed by tant that the new entity have the re- mortgages,’’ will have the benefit of a midsized private funds. sources to keep these high quality staff presumption that they are affordable Section 913 has been amended to and to attract new equally qualified to the borrowers. combine the principle of conducting a staff, and to provide them with the Section 1411 explains the basis on study on the standard of care to inves- support that they need to operate ef- which the regulator must establish the tors in the Senate bill with a grant of fectively. To that end, the conferees standards lenders will use to determine additional authority to the SEC to act, adopted the employment cost index for the ability of borrowers to repay their such as is contained in the House- total compensation of State and Fed- mortgages. Section 1412 provides that passed bill. The section requires the eral employees, ECI, as the index by lenders that make loans according to SEC to conduct a study prior to taking which the funding baseline will be ad- these standards would enjoy the rebut- action or conducting rulemaking in justed in the future. This index has table presumption of the safe harbor this area. The study will include a re- generally risen faster than the CPI, for qualified mortgages established by view of the effectiveness of existing which was the index used in the Senate this section. These standards include legal or regulatory standards of care bill. However, the ECI has typically the need to document a borrower’s in- and whether there are regulatory gaps, risen at a more gradual rate than the come, among others. However, certain shortcomings or overlaps in legal or average operating costs of the banking refinance loans, such as VA-guaranteed regulatory standards. Even if there is regulators, which was the index pro- mortgages refinanced under the VA In- an overlap or a gap, the Commission posed by the House conferees. terest Rate Reduction Loan Program should not act unless eliminating the In the end, the conferees agreed to or the FHA streamlined refinance pro- overlap or filling a gap would improve use the ECI and provide for a contin- gram, which are rate-term refinance investor protection and is in the public gent authorization of appropriations of loans and are not cash-out refinances, interest. The study would require a re- $200 million per year through fiscal may be made without fully reunder- view of the effectiveness, frequency,

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00060 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.078 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5929 and duration of the regulatory exami- to appeal the amount of an award. ing financial institutions such as nations of brokers, dealers, and invest- While the whistleblower cannot appeal banks, investment advisers, and ment advisers. In this review, the para- the SEC’s monetary award determina- broker-dealers to disclose the struc- mount issue is effectiveness. If regu- tion, this provision is intended to limit tures of their incentive-based com- latory examinations are frequent or the SEC’s administrative burden and pensation arrangements, to determine lengthy but fail to identify significant not to encourage making small awards. whether such structures provide exces- misconduct—for example, examina- The Congress intends that the SEC sive compensation or could lead to ma- tions of Bernard L. Madoff Investment make awards that are sufficiently ro- terial losses at the financial institu- Securities, LLC—they waste resources bust to motivate potential whistle- tion and prohibiting types of incentive- and create an illusion of effective regu- blowers to share their information and based payment arrangements that en- latory oversight that misleads the pub- to overcome the fear of risk of the loss courage inappropriate risks. lic. The SEC, in studying potential im- of their positions. Unless the whistle- In section 952, the report exempted pacts that would result from changes blowers come forward, the Federal controlled companies, limited partner- to the regulation or standard of care, Government will not know about the ships, and certain other entities from should seek to preserve consumer ac- frauds and misconduct. requirements for an independent com- cess to products and services, including In section 939B, the Report elimi- pensation committee. access for persons in rural locations. In nated an exception so that credit rat- Section 962 provides for triennial re- assessing the potential costs and bene- ing agencies will be subject to regula- ports on personnel management. One fits, the SEC should take into account tion FD. Under this change, issuers item to be studied involves Commis- the net costs or the difference between would be required to disclose financial sion actions regarding employees who additional costs and additional bene- information to the public when they have failed to perform their duties, an fits. For example, it should consider give it to rating agencies. issue that members raised during the not only higher transaction or advisory In section 939F, the report requires Banking Committee’s hearing entitled charges or fees but also the return on the SEC to study the credit rating ‘‘Oversight of the SEC’s Failure to investment if an investor receives bet- process for structured finance products Identify the Bernard L. Madoff Ponzi ter recommendations that result in and the conflicts of interest associated Scheme and How to Improve SEC Per- higher profits through paying higher with the issuer-pay and the subscriber- formance,’’ as well as circumstances fees. After reporting to Congress, the pay models; the feasibility of estab- under which the Commission has issued SEC is required to consider the find- lishing a system in which a public or to employees a notice of termination. ings, conclusions, and recommenda- private utility or a self-regulatory or- The GAO is directed to study how the tions of its study. ganization assigns nationally recog- Commission deals with employees who New section 914 requires the SEC to fail to perform their duties as well as study the need for enhanced examina- nized statistical rating organizations to determine the credit ratings of its fairness when they issue a notice of tion and enforcement ‘‘resources.’’ The termination. In the latter situation, study of resources should not be lim- structured finance products. The report directs the SEC to implement the sys- they should consider specific cases and ited to financial resources but should circumstances, while preserving em- consider human resources also. Human tem for assigning credit ratings that was in the base text unless it deter- ployee privacy. The SEC is expected to resources involves whether there is a cooperate in making data available to need for enhanced expertise, com- mines that an alternative system would better serve the public interest the GAO to perform its studies. petence, and motivation to conduct ex- In section 967, the report directs the and the protection of investors. aminations that satisfactorily identify SEC to hire an independent consultant The report limits the exemption from problems or misconduct in the regu- with expertise in organizational re- risk retention requirements for quali- lated entity. For example, if examina- structuring and the capital markets to fied residential mortgages, by speci- tions fail to identify misconduct due to examine the SEC’s internal operations, fying that the definition of ‘‘qualified insufficient staff expertise, com- structure, funding, relationship with residential mortgage’’ may be no petence, or motivation, the study self-regulatory organizations and other broader than the definition of ‘‘quali- should conclude that there is a need for entities and make recommendations. fied mortgage’’ contained in section more effective staff or better manage- During the conference, some conferees 1412 of the report, which amends sec- ment rather than merely more finan- expressed concern about objectivity of tion 129C of the Truth in Lending Act. cial resources devoted to hiring addi- a study undertaken by the SEC itself. tional staff of the same caliber. The report contains the following tech- We are confident that the SEC will New section 919D creates the SEC nical errors: the reference to ‘‘section allow the ‘‘independent consultant’’ to Ombudsman under the Office of the In- 129C(c)(2)’’ in subsection (e)(4)(C) of the work without censorship or inappro- vestor Advocate. The Ombudsman can new section 15G of the Securities and priate influence and the final product act as a liaison between the Commis- Exchange Act, created by section 941 of will be objective and accurate. sion and any retail investor in resolv- the report should read ‘‘section The report also added section 968 ing problems that retail investors may 129C(b)(2).’’ In addition, the references which directs the GAO to study the have with the Commission or with self- to ‘‘subsection’’ in paragraphs (e)(4)(A) ‘‘revolving door’’ at the SEC. The GAO regulatory organizations and to review and (e)(5) of the newly created section will review the number of employees and make recommendations regarding 15G should read ‘‘section.’’ We intend who leave the SEC to work for finan- policies and procedures to encourage to correct these in future legislation. cial institutions and conflicts related persons to present questions to the In- The report amended the say on pay to this situation. vestor Advocate regarding compliance provision in section 951 by adding a The report removed the Senate provi- with the securities laws. This list of shareholder vote on how frequently the sion on majority voting in subtitle G duties in subsection (8)(B) is not in- compare should give shareholders a which required a nominee for director tended to be an exhaustive list. For ex- ‘‘say on pay’’ vote. The shareholders who does not receive the majority of ample, if the Investor Advocate assigns will vote to have it every 1, 2, or 3 shareholder votes in uncontested elec- the Ombudsman duties to act as a liai- years, and the issuer must allow them tions to resign unless the remaining di- son with persons who have problems in to have this choice at least every 6 rectors unanimously voted that it was dealing with the Commission resulting years. Also in section 951, the report in the best interest of the company and from the regulatory activities of the required issuers to give shareholders an shareholders not to accept the resigna- Commission, this would not be prohib- advisory vote on any agreements, or tion. ited by this legislation. golden parachutes, that they make The report added the authority for Title IX, subtitle B creates many new with their executive officers regarding the SEC to exempt an issuer or class of powers for the SEC. The SEC is ex- compensation the executives would re- issuers from proxy access rules written pected to use these powers responsibly ceive upon completion of an acquisi- under section 971 after taking into ac- to better protect investors. tion, merger, or sale of the company. count the burden on small issuers. Section 922 has been amended to The report required Federal financial In section 975, the report added a re- eliminate the right of a whistleblower regulators to jointly write rules requir- quirement that the MSRB rules require

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00061 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.028 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5930 CONGRESSIONAL RECORD — SENATE July 15, 2010 municipal advisors to observe a fidu- I ask unanimous consent that even We all understand why this legisla- ciary duty to the municipal entities though time may be expired, at least 10 tion is trying to prevent this from ever they advise. minutes be reserved for the minority to happening again. I have shown this on In section 975, the report changed the be heard. the floor many times. This was from a requirement that a majority of the The PRESIDING OFFICER. Without credit company called Zoom adver- board ‘‘are not associated with any objection, it is so ordered. tising mortgages. We ran up to a near broker, dealer, municipal securities The Senator from North Dakota. collapse of the economy with compa- dealer, or municipal advisor’’ to a re- Mr. DORGAN. Mr. President, I will nies advertising this: Credit approval is quirement that the majority be ‘‘inde- vote for the conference report on finan- just seconds away. Get on the fast pendent of any municipal securities cial reform. Before I describe why I track at Zoom Credit. At the speed of broker, municipal securities dealer, or think it is essential to vote in favor, light, Zoom Credit will preapprove you municipal advisor.’’ let me compliment Senator DODD. We for a car loan, a home loan, a credit In section 978, the report authorized have had some differences on some card, even if your credit is in the tank. the SEC to set up a system to fund the issues, but that is not unusual. What is Then it says: Zoom Credit is like Government Accounting Standards unusual is when a piece of legislation money in the bank. We specialize in Board, the body which establishes this complicated, this consequential, credit repair and debt consolidation. standards of State and local govern- and this large gets to this point so we Bankruptcy, slow credit, no credit? ment accounting and financial report- will have a final vote and it will go to Who cares? ing. the President for signature. It is going We wonder how this country got in The report added section 989F, a GAO to make a difference. It is not all I trouble. Today on the Internet this ex- Study of Person to Person Lending, to would want. I would have written some ists. Nothing has changed. Speedy, bad recommend how this activity should be of it differently. But there are provi- credit loans. If you want to get a loan, regulated. sions in this legislation that will pre- you have bad credit, go to the Internet The report added section 989G to ex- vent that which happened that nearly to this site. I am not advertising for empt issuers with less than $75 million caused this country to have a complete them because clearly it is probably a market capitalization from section economic collapse. That was the pur- bunch of shylocks running this oper- 404(b) of the Sarbanes-Oxley Act of 2002 pose of writing the legislation. ation. Bad credit, no credit, bank- which regulates companies’ internal fi- This bill on financial reform estab- ruptcy, no problem, no downpayment, nancial controls. This section also adds lishes a new independent bureau, no delays. Come to us, if you want an SEC study to determine how the housed at the Federal Reserve Board money. Unbelievable. Commission could reduce the burden of but not reporting to it, dedicated to This is on the Internet today. It de- complying with section 404(b) of the protecting consumers from abusive fi- scribes why we have to pass this legis- Sarbanes-Oxle Act of 2002 for compa- nancial products and practices. It puts lation and what we are trying to do to nies whose market capitalization is be- in place systems to ensure taxpayer protect the American consumer and tween $75 million and $250 million for funds will not be used for Wall Street why regulations that come from this the relevant reporting period while bailouts in the future. It creates an ad- are so important. Easy loan for you. maintaining investor protections for vanced warning system, looking out for Instant approval. Regardless of your such companies. Section 989I adds a follow-up GAO troubled institutions to make sure we credit score or history, approval is study on the impact of the Sarbanes- understand who they are and where guaranteed. Oxley section 404(b) exemption in sec- they are, those whose failure would This sort of nonsense is not good tion 989G of this bill involving the fre- threaten financial markets and the business. It is not a sensible way to do quency of accounting restatements, economy. It imposes some curbs on things. It is what nearly bankrupted cost of capital, investor confidence in proprietary trading and hedge fund this country. the integrity of financial statements ownership by banks. There are a num- Wall Street Journal, July 14, let me and other matters, so we can under- ber of things that are salutatory and read the first sentence: Shirley Davis, stand its effect. important. 66 years old, retired phone company ad- The report added section 989J, which The vote this afternoon is a starting ministrator, lives in Brooklyn, NY, is provides that fixed-index annuities be point, not an ending point. I make the more than $33,000 dollars in debt, earns regulated as insurance products, not as point by showing the headlines that $2,400 a month, filed for bankruptcy securities. This provision clarifies a exist in the newspapers these days last month. Shortly before that, she disagreement on the legal status of about the fact that there will be sub- ripped open an envelope from Capitol these products. stantial amounts of work done to try One Financial Corporation which In section 991, the report changed the to curb activities even in the executive pitched her a credit card, even though method of funding for the SEC so that branch with respect to rules and regu- it sued her 4 years ago to recover $4,400 it remains under the congressional ap- lations which are now essential. she owed on a different credit card propriations process while giving the The PRESIDING OFFICER. The time from the same bank. SEC much more control over the under the control of the majority has She is quoting now from the letter amount of its funding. The report also expired. from Capital One: doubled the SEC authorization between Mr. DORGAN. I ask the Senator from At some point we lost you as a customer, 2010 and 2015, going from $1.1 billion to Connecticut, my understanding is Re- and we would like to get you back. $2.25 billion, which will provide tre- publicans have 10 minutes. I began the Mrs. Davis said she was stunned. mendous increase in SEC financial re- process because the Republican Sen- ‘‘Even I wouldn’t give me a credit card sources. These resources can be used to ator was not here to claim that. I will at this point.’’ improve technology and attract needed be happy to cease at this point, if he It is still going on. It is why passing securities and managerial expertise. wishes to take his 10 minutes, and then this conference report is so essential. However, the inspector general of the complete my statement, or I could Would I have written it differently? SEC and others have reported on situa- complete my statement with more Yes. I would have restored part of tions where SEC financial or human re- time. Glass-Steagall. Ten years ago that was sources have not been used effectively Mr. DODD. How much more time taken apart. Those protections were or with appropriate prior cost-benefit would my colleague require? put in place after the last Great De- analysis. While the SEC is receiving Mr. DORGAN. Probably 7 more min- pression, and they protected this coun- more resources, we expect that it will utes or so. try for 70 years or so. It should have use resources efficiently. Mr. DODD. I think it follows more been put back together. Mr. President, Senator DORGAN wish- naturally that way. I would ban the trading of naked es to be heard, which pretty much will The PRESIDING OFFICER. Without credit default swaps. That is betting, end the debate. I will take a minute or objection, it is so ordered. not investing. I would have done that. so to conclude, and then the votes will Mr. DORGAN. I appreciate the cour- I would have imposed more aggres- occur around 2 o’clock. tesy of the Senator from Nebraska. sive curbs on proprietary trading by

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00062 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.030 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5931 banks. If the taxpayer has to under- Mr. JOHANNS. Mr. President, I ask often containing junk they want to dis- write you as a commercial bank, you unanimous consent to speak for 10 min- pose of, and then make a bundle bet- ought not have a casino atmosphere in utes as in morning business. ting against those very same products. your lobby. The PRESIDING OFFICER. Without Those who claim this bill fails to rein Having said that, what was done in objection, it is so ordered. in Wall Street cannot explain the mas- this legislation is a very substantial (The remarks of Mr. JOHANNS per- sive amounts of effort and money Wall beginning. It is not an ending, No. 1. taining to the introduction of S. 3593 Street has spent to defeat this bill. If No. 2, the regulatory agencies now are located in today’s RECORD under Wall Street likes this bill, it sure has a have to do a lot of work to make this ‘‘Statements on Introduced Bills and funny way of showing it. bill work, to make this bill effective, Joint Resolutions.’’) The evidence from our investigation to stop what happened from ever hap- The PRESIDING OFFICER. The Sen- and from so many other sources is pening again. ator from Michigan is recognized. clear: We must put an officer back on Finally, I believe there will be an ad- Mr. LEVIN. Mr. President, if there is the beat on Wall Street so the jobs, ditional need to legislate in the future no one on the minority side waiting to homes, and futures of Americans are to address some of the things I men- speak, I ask unanimous consent that I not again destroyed by excessive greed. tioned. be allowed to speak for 4 minutes. I commend Senator DODD and his staff I believe the work done to get to this The PRESIDING OFFICER. Without and all those who have brought us to point in a Chamber in which it is very objection, it is so ordered. this historic moment. More than any- difficult for us to accomplish anything Mr. LEVIN. Mr. President, for too thing else, it is the power of Senator is a success. I commend my colleague, long, too many firms on Wall Street DODD’s arguments and the deep respect Senator DODD from Connecticut, and have had free rein to profit at the ex- for him among the Members of this others who worked on this legislation pense of their own clients, to engage in body that have brought us to the finish in a thoughtful way to try to decide the riskiest sorts of speculation, to line. how we can stop this sort of thing. We prosper from their risky bets when I yield the floor. all understood it. We heard these they pan out, and to have the tax- The PRESIDING OFFICER. The Sen- things on the radio and television. payers cover the losses when they do ator from Connecticut. Massive loans, they would securitize not pan out. For too long, there has Mr. DODD. Mr. President, let me them. They would trade the securities been no cop on the beat on Wall Street. again say to my great friend, we have back up in derivatives and credit de- That must end, and we can end it served here a long time together, Sen- fault swaps. Everybody was making today by passing the Dodd-Frank bill. ator CARL LEVIN of Michigan and I. He money on all sides, but they were The legislation before us will rebuild does a remarkable job as chairman of building a house of cards that came the firewall between the worst high- the Armed Services Committee and the down and nearly collapsed this entire risk excesses of Wall Street and the Governmental Oversight Committee, country’s economy. jobs and homes and futures of ordinary which he also handles as well. A lot of people, as I speak today, are Americans. I am not sure my colleague was here, still paying the price. They got up this The Permanent Subcommittee on In- but I pointed out yesterday that the morning without a job, millions and vestigations, which I chair, spent 18 hearings the Senator held just prior—I millions of them. They can’t find work. months and held four hearings inves- am sure people think we orchestrate They are the victims of this cesspool of tigating the causes of the financial cri- all these things; we look more orga- greed we have watched for far too long. sis. The bill Senator DODD and so many nized than we usually are around here, This legislation has great merit in ad- others have crafted will do much to but the fact is, the Senator from Michi- vancing solutions to these issues. That rein in the problems we identified in gan went off and had planned the hear- is why I will vote yes. Is it perfect? No. our four hearings and during our inves- ings for months. The amount of work Is it an end point? No. It is a starting tigation, and I greatly appreciate the he and his staff did for months in prep- point in a process that is very impor- recognition of the role of our work on aration for those hearings threw a tre- tant. the subcommittee in Senator DODD’s mendous amount of light and great I hope in the months ahead those remarks last night. clarity on the subject so that the aver- who are charged with creating the reg- This bill will prevent mortgage lend- age citizen in this country could actu- ulatory environment to fix this, to im- ers such as Washington Mutual, the ally see—not just read something but plement this legislation, will get it subject of our first hearing, from mak- see—a moment occurring during those right because they have the oppor- ing ‘‘liar loans’’ to borrowers who can- 2 days when the exposure of what had tunity the way this is written to get not repay, from paying their sales- occurred was so vivid and so clear. this right if they are smart and effec- people more for selling loans with Then, frankly, it was a matter of days tive and want to protect this country’s higher interest rates, and from unload- after that when we were on the floor economy. ing all the risk from their reckless considering the legislation. Thanks to those who put this to- loans on to the rest of the financial As I said, I would love to tell people gether. I intend to cast my vote as yes. system. that was a highly organized set of I yield the floor. This bill will dissolve the Office of events. It was purely coincidental the The PRESIDING OFFICER. The Sen- Thrift Supervision, which looked the way it occurred. Again, those hearings ator from Connecticut. other way despite abundant evidence of that occurred publicly involved weeks Mr. DODD. Briefly, I thank my col- Washington Mutual’s abuses, as our and months of preparation before they league from North Dakota. He has been second hearing showed. were actually conducted. an outspoken advocate on behalf of This bill will bring new oversight and So I say to my friend from Michigan, working families in the time we have accountability to credit rating agen- I thank him immensely for his work, served together. The concerns he has cies, which, as our third hearing for his contribution to this bill as well, expressed consistently in this process showed, issued inaccurate ratings that not for just the set of hearings but then are ones I appreciate very much. We misled investors. Those ratings were working to include the provisions that did have a couple of disagreements paid for by the very same companies are a part of this legislation. The Sen- over how to proceed, but that is the that produced the products being rated, ator has made a very valuable con- normal process of doing business. It which is a clear conflict of interest. tribution and has highlighted a very was done with civility during the de- The bill before us will rein in the important point. bate and consideration of the legisla- abusive practices of investment banks It was fascinating to me, by the way, tion. But I am deeply grateful to him such as Goldman Sachs, the subject of as to the number of former chief execu- for his contributions and those of his our fourth hearing. It will sharply tive officers from major financial firms staff. He made some good suggestions, limit their risky proprietary trading. in the country who strongly endorsed and I thank my friend. It will stop the egregious conflicts of what the Senator was doing. This was The PRESIDING OFFICER. The Sen- interest that result when these firms not merely a suggestion coming from ator from Nebraska. package and sell investment products, consumer groups or labor organizations

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00063 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.080 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5932 CONGRESSIONAL RECORD — SENATE July 15, 2010 or others that one might associate I see my colleague from the State of Mr. DODD. Mr. President, I thank with the Senator’s idea. But people Washington. I do not know if she cares the Senator from Washington. Again, I who literally had spent their careers in to be heard. I was sort of filling in time thank her for her contribution. the financial services sector were for the next few minutes. Mr. President, we have arrived at strongly recommending the contribu- Let me thank the Senator. She has that moment. Let me make a par- tions the Senator made to the bill. been an advocate with great passion on liamentary inquiry. There are two I do not think that was said often these issues. She brought a great deal votes, as I understand it. One is on the enough, that this was a significant con- of knowledge. She is someone who has waiver of the budget point of order, and tribution endorsed by those who under- spent a career herself in the area of fi- the second vote that will occur will be stood, had worked, had earned liveli- nancial services and understands this on adoption of the conference report. Is hoods in this industry, who had issue beyond just the intellectual and that correct? watched an industry change dramati- theoretical standpoint but has lived it. The PRESIDING OFFICER. The Sen- cally over the years which subjected She saw the successes of it and the fail- ator is correct. this country to the exposure that we ures of it. So she brings a great wealth Mr. DODD. Mr. President, have the are suffering from today. of information and ability to the issue. yeas and nays been ordered on the So I thank my friend from Michigan. I yield to my colleague. waiver of the budget point of order? The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. They ator from Washington. ator from Michigan. have. Mr. LEVIN. Mr. President, I thank Ms. CANTWELL. Mr. President, I thank the chairman for yielding time. Mr. DODD. Have the yeas and nays my dear friend from Connecticut. He been ordered on adoption of the con- has made such an extraordinary con- I thank the Senator for his diligence, particularly in the area of the deriva- ference report? tribution, not just to this bill but to tives market and the fact that this leg- The PRESIDING OFFICER. They this Senate over the years. I cannot islation will be the first time—the first have not. say enough about him, his extraor- time—the over-the-counter derivatives Mr. DODD. Mr. President, I ask for dinary integrity and passion that he market in this country will be regu- the yeas and nays on the adoption of brings to these subjects. lated. the conference report. Senator MERKLEY, on the proprietary The fact that Congress made a mis- The PRESIDING OFFICER? Is there trading language, of course, as the Sen- take and said hands off to derivatives a sufficient second? ator from Connecticut has already rec- in 2000, and then an $80 trillion market There is a sufficient second. ognized, is in the lead there and has exploded into what is today a $600 tril- The yeas and nays were ordered. been an absolutely great partner and lion dark market—the chairman has Mr. DODD. Mr. President, in conclu- leader on that. now made sure that for the first time sion, I express my thanks to all. I want But I want to especially thank the ever, over-the-counter derivatives will to thank the floor staff as well, both on Senator from Connecticut for his pas- be regulated. That means for the first the minority and majority side. We sion and for his—and I was very serious time over-the-counter derivatives will have spent a lot of time together over about the respect with which the Sen- have to be exchange-traded, which the last year, and I am deeply grateful ator is held in this body. Without it, means there will be transparency. It is to them for the orderly way in which without that feeling about the Senator, the first time over-the-counter deriva- they conduct their business and how as well as the cause the Senator es- tives will have to be cleared, which fair and disciplined they are about pouses with others, obviously, we means a third party will have to vali- making sure the floor of the Senate would not be where we are today. date whether there is real money be- runs so well. So I thank them im- The PRESIDING OFFICER. The Sen- hind these transactions. mensely for their work. ator from Connecticut. It is the first time the CFTC will be I urge my colleagues to waive the Mr. DODD. Mr. President, I thank my able to enforce aggregate position lim- point of order and to support this his- friend. its across all exchanges, which means toric landmark piece of legislation We are about to wrap up this long you cannot hide this dark market de- that we hope will set our country on a journey, now going back a long ways. rivative money on some exchange that course of financial stability and suc- Let me mention a couple things. is not properly regulated or try to cess in the generations to come. First of all, yesterday I included the make the market across all exchanges. I yield the floor. names of the Senate Banking Com- It is the first time things like the Lon- The PRESIDING OFFICER. The mittee staff who have made such a dif- don Loophole will be closed so we can- question is on agreeing to the motion. ference in the bill. I am not going to go not have markets and exchanges that The yeas and nays have been ordered. back over all their names. They are are not regulated. So the American arrayed in the Chamber. A couple of The clerk will call the roll. people will know something as dan- The bill clerk called the roll. them are sitting next to me on the gerous as credit default swaps—which floor. Others are in the back. They are The yeas and nays resulted—yeas 60, brought down our economy—that now nays 39, as follows: led by Eddie Silverman, who worked for the first time we will have regula- [Rollcall Vote No. 207 Leg.] with me 20 years ago, as I arrived in tion of these over-the-counter deriva- the Senate. He spent decades with me tives. YEAS—60 and then left Senate service and went I thank the chairman for his efforts Akaka Franken Murray off and did other things in his life. At Baucus Gillibrand Nelson (NE) in that area. Bayh Hagan Nelson (FL) my request, he came back for the last A $600 trillion market, which is Begich Harkin Pryor year or so to be a part of this effort. So greater than 10 times the size of world Bennet Inouye Reed I thank a great personal friend, Eddie GDP, is a danger to our economy if it Bingaman Johnson Reid Silverman, for the job he did. Boxer Kaufman Rockefeller is not regulated. Thank God we are Brown (MA) Kerry Sanders I thank Amy Friend, who was also going to be regulating it for the first Brown (OH) Klobuchar Schumer deeply involved in this legislation. If I time. I would encourage all my col- Burris Kohl Shaheen start down the list, I am going to miss leagues on the other side of the aisle, Cantwell Landrieu Snowe Cardin Lautenberg Specter somebody. That is always a danger. who at one point in time said these are Carper Leahy Stabenow But I thank all of the Members for the too complicated to understand—under- Casey Levin Tester tremendous work they have contrib- stand, they brought down our economy Collins Lieberman Udall (CO) uted to this legislation. Conrad Lincoln Udall (NM) and understand we are going to, for the Dodd McCaskill Warner I thank HARRY REID, the majority first time, regulate over-the-counter Dorgan Menendez Webb leader. Again, I know I have talked derivatives. Durbin Merkley Whitehouse about him on a couple of occasions. I thank the chairman for his leader- Feinstein Mikulski Wyden But if we do not have someone to help ship. NAYS—39 bring this all together, it does not hap- The PRESIDING OFFICER. The Sen- Alexander Bennett Brownback pen. ator from Connecticut. Barrasso Bond Bunning

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00064 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.082 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5933 Burr Graham McCain NAYS—39 firmation proceeding of Supreme Court Chambliss Grassley McConnell Alexander DeMint Coburn Gregg Murkowski LeMieux Justice Whittaker, saying that the Barrasso Ensign Cochran Hatch Risch Lugar Senate did not ask questions about the Bennett Enzi Corker Hutchison Roberts McCain Bond Feingold important substantive matters. During Cornyn Inhofe Sessions McConnell Brownback Graham the confirmation of Chief Justice Crapo Isakson Shelby Murkowski Bunning Grassley DeMint Johanns Thune Risch Rehnquist, I asked him a series of ques- Burr Gregg Ensign Kyl Vitter Roberts tions which he declined to answer; I Chambliss Hatch Enzi LeMieux Voinovich Sessions Coburn Hutchison cited his own words, and then he an- Feingold Lugar Wicker Shelby Cochran Inhofe Thune swered a few—not very many, just The PRESIDING OFFICER. On this Corker Isakson Vitter about enough to be confirmed. Which Cornyn Johanns Voinovich vote, the yeas are 60, the nays are 39. Crapo Kyl Wicker has been my conclusion, generally, Three-fifths of the Senators duly cho- having been a party now to 13 con- sen and sworn having voted in the af- The conference report was agreed to. firmation hearings. Nominees answer firmative, the motion is agreed to. Mr. DODD. Mr. President, I move to just about as many questions as they reconsider the vote by which the con- think they have to. Mr. REID. Mr. President, I have been ference report was agreed to and to lay conferring off and on throughout the When Justice Scalia came up for con- that motion on the table. firmation in 1986, he answered virtually day with the Republican leader. There The motion to lay on the table was will be no more votes today following nothing. When the question came up agreed to. about Marbury v. Madison, he said: final passage. That will be the last vote The PRESIDING OFFICER. The Sen- today. Well, I can’t answer that question. It ator from Pennsylvania is recognized might come before the Court. We are going to swear in the new for 30 minutes. May the RECORD show the look of Senator from West Virginia at 2:15 p.m. f amazement on the face of the distin- on Tuesday. Immediately after that, as NOMINATION OF ELENA KAGAN guished Senator from Minnesota who is soon as that is over, at 2:30, we will presiding. I was frankly amazed by it vote on extending unemployment bene- Mr. SPECTER. Mr. President, I have myself. fits. sought recognition to state my posi- But, with the tenor of the times, fol- The Republican leader and I are tion on the nomination of Solicitor lowing the very contentious nomina- working on a way to move forward on General Elena Kagan to be Associate tion proceeding of Chief Justice small business. I think we have a pret- Justice of the Supreme Court of the Rehnquist, and other factors, Justice ty good path figured out on that. United States and to comment about Scalia was confirmed handily, 98 to After that, it is my intention to the appropriate role of the Senate, nothing. move to the supplemental appropria- what is happening to the doctrine of I have seen him frequently at social tions bill. It appears that we are going separation of powers, and how institu- events. I saw him at one a couple of to have to have a cloture vote. I think tionally the Senate might assert itself weeks ago. I commented to a group we can work out the time on that and to stop the erosion of powers from this standing with him that prisoners of not spend too much time. body to the Court and from the Con- war give their name, rank, and serial gress to the executive branch. I have conferred with the Republican number, but in the Scalia nomination I am supporting Ms. Kagan because leader at the beginning of the work pe- proceeding he would only give his name of her intellect, her professional back- riod, on Monday. We have a list of and rank. It just about amounted to ground, her academic background, and things we need to accomplish before we that. because I think she will be an effective leave here. As everybody knows, we are Following the hearing on Justice balance in the ideological battle which going to be here either 4 or 5 weeks. Scalia, Senator DeConcini and I were is being waged in the conference room The leaders—Democrat and Repub- formulating a resolution which would of the Supreme Court—the ideological lican—are betting on 4 rather than 5 establish standards that Senators balance which is so sorely needed at weeks. But we need cooperation to get would insist on, or could insist on— the present time. that done. some guidance to try to get more The hesitancy I have had, as I have forthcoming answers. Then we had the The PRESIDING OFFICER. The expressed it in the hearings, has been confirmation hearing of Judge Robert question is on agreeing to the con- on the failure of Ms. Kagan to respond Bork, who answered questions. Judge ference report. with substantive answers so that Sen- Bork did so in a context of having very The yeas and nays having been or- ators would have a realistic idea as to extensive legal writings, an article in dered, the clerk will call the roll. where she stands philosophically on the Indiana Law Journal in 1971 on The legislative clerk called the roll. some of the very important questions original intent. In the context of that The PRESIDING OFFICER. Are there of the day—not how she would decide article, and books, many speeches, law any other Senators in the Chamber de- cases but what standards she would review articles, I think it is realistic to siring to vote? apply if confirmed, and I will be very say that Judge Bork had no alternative specific about that. The result was announced—yeas 60, but to answer questions. It has been especially troublesome Since the Bork hearings, the pattern nays 39, as follows: because Ms. Kagan has been outspoken has evolved where nominees do not [Rollcall Vote No. 208 Leg.] in the past about the importance of give substantive answers. It is a well- YEAS—60 having substantive answers in nomina- known fact of confirmation life that Akaka Franken Murray tion proceedings. She wrote a now-fa- there are murder boards. That is what Baucus Gillibrand Nelson (NE) mous article for the University of Chi- they call them, when the nominee goes Bayh Hagan Nelson (FL) cago Law Review criticizing Supreme down to the White House and they have Begich Harkin Pryor Bennet Inouye Reed Court proceedings on nominations by practice sessions. Since that time it Bingaman Johnson Reid saying that they were vacuous and a has been pure prepared pablum. That is Boxer Kaufman Rockefeller farce and by name criticized Justice what we get in these hearings. Brown (MA) Kerry Sanders Ruth Bader Ginsburg and Justice Ste- So there had been reason to expect Brown (OH) Klobuchar Schumer Burris Kohl Shaheen phen Breyer for not answering ques- more from Ms. Kagan. We didn’t get it. Cantwell Landrieu Snowe tions and, in effect, criticized the Sen- I had expressed at the hearings the Cardin Lautenberg Specter ate and Senators for not asking and concern as to how we could get answers Carper Leahy Stabenow Casey Levin Tester pressing questions to find out where on substantive issues and was there Collins Lieberman Udall (CO) nominees stood. There was a similar any way to find that out short of vot- Conrad Lincoln Udall (NM) article written by a young lawyer in ing ‘‘no,’’ and rejecting a nominee? I Dodd McCaskill Warner Phoenix, AZ, named Bill Rehnquist, decided it would not be sensible to vote Dorgan Menendez Webb Durbin Merkley Whitehouse back in 1958, for the Harvard Law no to issue a protest vote in the con- Feinstein Mikulski Wyden Record, where he criticized the con- text of what has regrettably become

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00065 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.026 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5934 CONGRESSIONAL RECORD — SENATE July 15, 2010 the standard. Ms. Kagan was following Court, No. III. I think if the Constitu- But first an analysis of a decisive the accepted practice. Why not, in the tion were to be rewritten today the shift from the power of the Congress of face of that strong advice from the numbers would be changed. The Court the United States to the executive White House and the success of all of would be No. I, and the other branches branch, to the President. Here again I the nominees who have stonewalled would be a distant second and third, will be specific. Arguably the most dra- and been confirmed? but again the executive would be ahead matic historic confrontation between I have since discussed with a number of the legislative branch because of the Congress and the President is the For- of my colleagues the prospect of re- way the Court has interpreted the law. eign Intelligence Surveillance Act, verting to what Senator DeConcini and Coming to the first line of legislative which establishes the exclusive way to I had thought about in early 1987, to responsibility, it is fact finding on invade privacy and get a wiretap con- try to establish some standards. Not which we make a determination of trasted with the Terrorist Surveillance that Senators would be bound to follow what ought to be enacted by way of Program, initiated by President Bush, them. We have our stature under the public policy. The Supreme Court of for warrantless wiretapping. Constitution to ask questions as we the United States has changed the It was a Friday in December of 2005. choose. We cannot compel answers. rules of the game. For a long time it I chaired the Judiciary Committee. We Perhaps they would not be followed. was a ‘‘rational basis’’ test, to decide were in the final day on the reauthor- But it could obviate one line of excuse whether the record was sufficient for ization of the PATRIOT Act, and that that nominees have given: They better the legislation which was enacted. morning the New York Times broke not be too specific or they may breach Then, in 1997, in a case captioned the information about this secret pro- the standard of ethics. If the Senate City of Boerne, the Supreme Court of gram of warrantless wiretapping. were to establish standards as to what the United States adopted a new stand- As it was expressed on the floor that we were looking for, for confirmation— ard: Was the evidence proportionate day, Senators who had been prepared it is our constitutional role—there and congruent; the test of propor- to vote to reauthorize the PATRIOT might be some benefit. tionate and congruent. That test, with Act declined to do so. There was an ex- In looking further, to try to make a its fluidity, has been the basis for the tended proceeding—which is not rel- determination on the Kagan nomina- Supreme Court legislating, taking over evant to the specific point I am making tion, there were two of her responses from the Congress. Now it is the Su- now. But back to the point, a Federal which I found impressive. One was her preme Court which decides the suffi- judge in Detroit declared the Terrorist comments about Justice Thurgood ciency of the record on a test which is Surveillance Program unconstitu- Marshall, for whom she had clerked, not discernible with any specificity. tional. The case went on appeal to the who was a role model. There was exten- Justice Scalia has called the test a Court of Appeals for the Sixth Circuit, sive testimony about her admiration ‘‘flabby test,’’ which is used for judicial which declined to hear the merits in a for the way he decided cases. I inferred legislation. That was the fact in the 2-to-1 decision on standing grounds. from that, that looking as best I could case of United States v. Morrison, The petition for cert. to the Supreme to find her philosophy, ideology, where which tested at the time constitu- Court to take the case was denied, no she would stand, that she would be pro- tionality of legislation to protect reason given. The doctrine of standing tective of civil rights, protective of women against violence and there was, is a very flexible doctrine, which I constitutional rights, of individual in the hearings leading to that impor- think, in a practical sense, although rights, and respectful of rights of the tant legislation, a mountain of evi- inelegantly stated, accurately stated, Congress. dence as described by Justice Souter in it is the way the Court ducks a case if The second line of answers which she dissent. Yet the Court overturned that they don’t want to hear the case. It gave which I thought—and I do think— important statute to protect women avoids a judicial decision. But any fair- is very important is her very positive against violence, citing the Congress’s minded reading of the dissenting opin- attitude about televising the Supreme ‘‘method of reasoning.’’ It is a little ion in the Sixth Circuit would say Court. I will come to that in a few min- hard to understand what that means. there was plenty of room for a judicial utes, because there is an urgent need to We are not perfect around here. There decision, adequate basis for standing in find some line to have some influence are a lot of failures in this body, espe- that case. on the Court as to their following cially now—even some failures across We currently have before the Judici- precedent on stare decisis, as to their the Rotunda in the House of Represent- ary Committee legislation on another respecting the constitutional role of atives. But who can challenge the issue which illustrates the shift of the Congress in fact finding. They have method of reasoning and what miracu- power from the Congress to the execu- judicial independence and are the bul- lous occurrence is there, when some- tive branch because of the failure of wark of the Republic. The rule of law is body leaves the hearing room of the the Supreme Court to decide a case, what makes the United States famous Judiciary Committee, walks across and that involves the litigation for the stability of our government and Constitution Avenue, across the green brought by survivors of people killed that is very highly prized. In the long from this Chamber, and suddenly is in on 9/11 against, among others, the Gov- history of this country, it has been the a position to have some superior rea- ernment of Saudi Arabia, Saudi courts which have protected civil soning? But that legislation went princes, and Saudi charities, litigation rights. It was the Supreme Court, as we down, as has so much legislation. where there is an enormous factual all know, in Brown v. Board of Edu- Another illustration is in Citizens record showing the connection between cation, where the Court did what the United, where a 100,000-page report was financing of al-Qaida and the Saudi Congress did not have the political amassed, detailing the problems with charities, which are really instrumen- courage to do, nor did the President what goes on with money in politics talities of the Saudi Government, and have the political courage to do, to in- and what the corrupting influence is. showing the financing from Saudi tegrate schools in America—the best As a result, the McCain-Feingold law princes and from the government itself. example but only one example of where was passed, and, in Citizens United, the The Second Circuit denied the claim the courts have stood up as a bulwark critical section was declared unconsti- on what I think is a spurious ground, to do what the elective branches have tutional. So there you have a tremen- saying that Saudi Arabia is not on the not had the political courage to do. dous shift in power from the Congress list of countries declared by the State Now on to the specifics, as to the of the United States to the courts, to Department to be terrorist states. concerns on the substantive questions the Supreme Court. What we legislate Well, there is an alternative under the to which Ms. Kagan did not give sub- on our traditional standards—we have immunity statute, and that is for stantive answers. I pressed her hard on the institutional expertise, and I am tortious conduct, that is wrongful ac- the separation of powers. We all know going to come to that in some greater tions. Certainly that would encompass of the three branches of government. detail in a few moments, analyzing the flying a plane into a building. And Sen- Congress was article I, thought by the positions which have been taken by ator SCHUMER, Senator LINDSEY Framers to be the most important; the Chief Justice Roberts and Justice GRAHAM, and I have introduced legisla- executive, President, No. II; and the Alito. tion to clarify this issue.

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00066 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.088 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5935 When an application was made for tice Roberts testified to on the ques- opinions that he aspires to remake signifi- certiorari to the Supreme Court, the tion of factfinding: cant areas of constitutional law. The tension between what he said at his confirmation administration opposed having the Su- The reason that Congressional factfinding hearing and what he is doing as a justice is preme Court hear the case on the and determination is important is because a blow to Roberts’s reputation for candor the courts recognize they can’t do that. The ground that the acts by the Saudis in and further debasement of the already de- Supreme Court cannot sit and hear witness financing the terrorists occurred out- based currency of the testimony of nominees after witness in a particular area and de- side of the United States. That hardly at judicial confirmation hearings. is a rational basis when you plot in velop that kind of a record. Courts can’t make the policy judgments about what type In going into these issues, as to the Saudi Arabia and pay money to bring of legislation is necessary in light of the contrast between what Chief Justice terrorists to the United States, to findings that are made. The courts don’t Roberts and Justice Alito testified to board airplanes, to hijack the planes to have it, Congress does. It is constitutional and what they have done once on the fly into American buildings, to fly and authority. It is not our job. Court, I do not challenge their good crash in Pennsylvania, fly and crash He goes on to say: faith. I understand the difference be- into the Pentagon. That certainly hap- When the courts engage in factfinding, tween what happens in a judicial con- pened in the United States. It is argu- they are really, in effect, legislating. firmation hearing and what happens in ably the most barbaric conduct in the These are his exact words in the con- court when there is a case in con- history of mankind, certainly among firmation hearing: troversy to be decided by the Justices the terrorists. of the Supreme Court. But these vari- Now I mention these cases because As a judge, you may be beginning to trans- gress into the area of making a law. That is ations are so stark that had there been when I pressed Ms. Kagan—and others when you are in a position of reevaluating an understanding by Senators on these did—what standard would you apply? legislative findings because that doesn’t look confirmation hearings as to the judi- Going back to the factfinding, the two like a judicial function. cial philosophy and how factfinding standards are proportionate and con- This is what Justice Alito had to say would be handled in court and how gruent, contrasted with rational basis. in his confirmation hearing: precedents and stare decisis would be Now, that is not asking a nominee to The Judiciary is not equipped at all to handled in court, to take the opinion decide a case; that is asking a nominee make findings about what is going on in the by Chief Justice Roberts, his concur- to decide a standard—certainly well real world, not this sort of legislative find- ring opinion in Citizens United where within the ambit of Ms. Kagan’s fa- ings. And Congress, of course, is in the best they disregarded the Austin case as an mous law review article in 1995. But position to do that. Congress can have hear- ‘‘aberration’’—there is your license to she simply stated she would not an- ings and examine complex social issues, re- eliminate stare decisis: the case is an swer. ceive statistical data, hear testimony from On the cases involving the terrorist experts, analyze that and synthesize that aberration, down the drain. So what surveillance program and on the 9/11 and reduce that to the findings. happened to precedent? Is Roe v. Wade litigation, would she grant to hear the These two Justices were in the five- safe based on that standard? I ques- case—not how she would decide the person majority which disregarded tioned Chief Justice Roberts at length case but would she take the case? 100,000 pages of congressional findings about Roe v. Wade and the successor Again, a refusal to answer the ques- to make a declaration that McCain- case, Casey, and how the case stood. tion. Feingold was unconstitutional. Austin was not reversed when the Su- So in this context, we are really Then you had the similar issue of preme Court had an opportunity to do searching for ways to find out more stare decisis. so. Chief Justice Roberts says in his about the nominees, and Ms. Kagan has The best way to limit judicial activ- opinion: Well, nobody asked the Su- said just enough to get my vote be- ism is by respecting what the Congress preme Court to reverse the Austin cause of voting my hopes, rather than has done on factfinding, and when the case. Well, the way the Court reached my fears, that she will be in the mold, Court disregards congressional fact- for the Hillary movie in Citizens as a general sense, of Justice Thurgood finding and substitutes its own judg- United, the way they reconstructed the Marshall and also because of her posi- ment on policy, they are making the issue, you do not have to—it is a thin tion on television, which I think has law. That is conceded by the citations veneer to say that the Court is guided the potential for being a very amelio- I have read. and that it is determinant who raises rating factor in what goes on in the Su- Then there was extensive questioning an issue and who asked the Court for a preme Court, and that is the business of both Chief Justice Roberts and Jus- decision. of publicity. tice Alito on the issue of stare decisis. What can be done to have Justices The famous article ‘‘What Publicity This is what Chief Justice Roberts adhere to standards agreed to at their Can Do’’ by lawyer Louis D. Brandeis had to say, in part, about stare decisis: hearings? I spoke earlier about the back in 1913 provides insights as to I do think that it is a jolt to the legal sys- sanctity of judicial independence and where we might go in the modern world tem when you overrule a precedent. Prece- how the Court is the bulwark of our with television. In that article, Bran- dent plays an important role in promoting Republic and the rule of law. The most deis made the famous statement that, stability and evenhandedness. It is not promising idea that I have found is to ‘‘Sunlight is said to be the best of dis- enough that you may think the prior deci- demonstrate to the public what the sion was wrongly decided. infectants.’’ Well, that may be a little Court does, how powerful the Court is, strong for these circumstances. We are Justice Alito said about the same and how it makes decisions on the cut- not exactly looking at it as a disinfect- thing, in part: ting edge of all of the judgments in so- ant, but neither was Brandeis, and he It is important— ciety. It decides who lives and who was really talking about publicity as That is, stare decisis is important— dies, a woman’s right to choose. It de- the way to deal with problems in our because it limits the power of the judiciary. cides on late-term abortion. It decides society. I believe that if we had pub- It is important because it protects reliance on the death penalty. It decides wheth- licity and people understood what was interests. er juveniles may be executed for crimes going on, there would be a realistic These are two of a five-person major- committed below the age of 18. It de- chance to have the Court respect the ity which decided in Citizens United cides affirmative action, who goes to powers of Congress and have the Court that McCain-Feingold was unconstitu- school, who gets into the best colleges, respect the separation of power be- tional. who gets a job. It decides assisted sui- tween the President and the Congress. This is what Seventh Circuit Judge cide. It decides cases of international I now turn to the confirmation pro- Richard Posner, a distinguished jurist law. It is the ultimate arbiter on all ceedings as to Chief Justice Roberts and a commentator on the Court, had the cutting-edge issues. and Justice Alito, which bear very to say about the role of Chief Justice America is cited as being the most li- heavily on this subject. Both of the Roberts in these decisions, coming tigious country on the face of the nominees were questioned at length from his book ‘‘How Judges Think’’: Earth, but there is not an under- during the course of the nomination Less than two years after his confirmation, standing among the public as to how proceeding, and this is what Chief Jus- he demonstrated by his judicial votes and far the power of the Supreme Court is,

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00067 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.089 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5936 CONGRESSIONAL RECORD — SENATE July 15, 2010 how they have taken it from the Con- Rehnquist asking that television cam- On recent nominations I have asked gress, how they have let the executive eras be permitted inside the court- every nominee: What is your attitude branch take it from the Congress. room. To get inside the courtroom that on television? I was pleased. Both in In an article published yesterday in day, one practically had to be on the the informal meeting with Ms. Kagan the Washington Post, Stuart Taylor, Judiciary Committee. It was packed. and in her testimony before the Judici- Jr., a noted commentator on the Su- Americans should have been able to see ary Committee, she said she was in preme Court, had some interesting ob- it. favor of television; that the more infor- servations on this precise subject. This Surrounding the building on all sides mation the public has, the better off is what he wrote in part: were mobile television units. I am not our society is. It is a pretty obvious The key is for the Justices to prevent judi- sure exactly what they were doing. The conclusion, but she would press the cial review from denigrating into judicial most they could have would be stand- issue if seated. usurpation. ups outside the chamber because they Another key factor in my affirmative This goes right to the point of sepa- couldn’t get inside the chamber. That vote for Ms. Kagan is her sense of ration of powers, to defer far more day the Supreme Court did release an humor, her quick wit, which she dis- often to the elected branches. Well, audio of the proceedings, which was a played. She was even almost a match that is the Congress. That is the hue novelty at that time. They have done for the distinguished junior Senator and cry. That is the question asked that occasionally since, but relatively from Minnesota, who has had some ex- every time we have a confirmation rarely. pert experience in that line. I think hearing in the Judiciary Committee: Mr. President, in the face of these that will stand her in good stead in the Will you interpret the law rather than factors, I have been pressing for more ideological battle in that small con- make the law? But these are matters than a decade for legislation to televise ference room where these big decisions where demonstrably they make the the Supreme Court. It has come out of are made. law. the Judiciary Committee, once 12 to 6, Chief Justice Roberts said he would Then Taylor goes on to write: and, most recently this year, 13 to 6, be open to the idea. Justice Alito testi- . . . the justices know that as long as they first, a legislative proposal which fied he voted for it on the Third Circuit stop short of infuriating the public, they can would call for the Supreme Court to be but would want to confer with his col- continue to enjoy better approval ratings televised and, second, a sense-of-the- leagues. I believe Justice Breyer said than Congress and the President, even as Senate resolution urging the Supreme in a hearing on the budget in the House they usurp those branches’ powers. Court on its own to be televised. of Representatives a few months ago This is an interesting test, the first I believe as a legal matter that the that television was inevitable. Justice time I have seen it articulated this Congress has the authority to require Ginsburg was quoted at one point as way. It is the ‘‘infuriating the public the Supreme Court to be televised. I saying that if it were gavel to gavel, it test.’’ Whatever you may say in a de- say that because it is an administra- would be satisfactory. Justice Scalia mocracy, in our society, the public has tive function. Congress has the author- has been negative about it most of the the ultimate power, and it is felt in ity to decide, for example, how many time because there would only be many ways, perhaps even by osmosis. Justices there will be on the Court, il- snippets, but if some way could be But wherever you go, when the public lustrated by the famous Roosevelt found to have gavel to gavel so that it attitude changes on segregation, the Court packing plan where the effort was not just a snippet, there may be Supreme Court changes the decision. was made to raise the number from 9 to some flexibility on his part. When the public attitude changes on 15 new faces to control the decision. It is an item whose time has come be- sexual orientation, the Supreme The Congress by law establishes the cause, institutionally, we ought to be Court’s position changes on sodomy number of Justices—six—for a quorum. doing something about it in the Sen- cases. When we find so many States The Congress decides that the Court ate. Institutionally, we have the re- recognize same-sex marriage, it is a will begin its session on the first Mon- sponsibility to confirm. We aren’t change recognized by the courts, as the day in October. The Congress has set doing a very good job of finding out Massachusetts court recently did in de- the time limits on habeas corpus mat- what a reasonable understanding is of claring the Defense of Marriage Act un- ters in the appellate system under the where these nominees are heading. constitutional. It wouldn’t have hap- Speedy Trial Act. I think a strong While we are fiddling, our institutional pened when it was passed 86 to 14 in the case—in fact, the appropriate conclu- power is burning. If we lose much more Senate of the United States in 1996. So sion—is that Congress has the author- of it, what we legislate to will not how do we activate the doctrine of ‘‘in- ity to act in this field. amount to a tinker’s dam when the Su- furiating the public’’? There are now cameras in the United preme Court disagrees with our factual The best way, to my knowledge, is to Kingdom’s Supreme Court. They are findings no matter how voluminous televise the Court. In that magnificent now televised in Canada. They are now and solid they may be. What power is chamber across the green from where I televised in many State supreme left is going to gravitate down Penn- stand, we have a room which seats courts. They are now televised in two sylvania Avenue to the White House. about 300 people fighting to get in Federal appellate courts. So it is time to sit up and take notice. there for about 3 minutes. That is A recent poll was conducted and re- Ms. Kagan quoted me in her 1995 Law where the most important business of leased on the day of the start of hear- Review article, saying that I said one the country is being conducted. Years ings on Solicitor General Kagan. That day the Senate is going to have to ago the Supreme Court decided that poll, conducted by C–SPAN, showed stand up on its rear legs and reject a when it came to judicial proceedings that 63 percent of the American people nominee. Well, now is not the right newspapers had a right to be in the think the Court ought to be televised. day, in my opinion, for the reasons I courtroom. That same logic would give Among the 37 percent who said no, have said. television cameras and electronic radio when they were told that the pro- One other point I want to make. I similar rights to inform the public. ceedings are open to the public but peo- would ask how much time I have re- That was a case in 1940. Today the in- ple have to come to Washington to see maining, but I think a more appro- formation is gleaned largely from tele- them and can only stay for 3 minutes, priate question would be how much vision and, to a lesser extent, by radio. most of those folks decided they ought time have I gone over? So if the public knew what was going to have television. The PRESIDING OFFICER (Mr. on in the Supreme Court, if they under- So the number went from 63 to 85 per- FRANKEN). The Senator has consumed stood it, there would be a chance that cent of the American people who think his time. they would be a little more respectful the Supreme Court ought to be tele- Mr. SPECTER. What is the answer to of the constitutional doctrine of sepa- vised. That is a pretty good indication my question? ration of powers. that the Congress ought to act; that if The PRESIDING OFFICER. Seven- When the case of Bush v. Gore was the Supreme Court will not open its teen minutes extra. scheduled for argument, then-Senator doors on a voluntary basis, the Con- Mr. SPECTER. Extra? BIDEN and I wrote to Chief Justice gress ought to respond. The PRESIDING OFFICER. Yes.

VerDate Mar 15 2010 04:07 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00068 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.090 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5937 Mr. SPECTER. Mr. President, I ask McCain-Feingold, and many other onstrates that she’s fast on her feet and I unanimous consent for 4 more minutes. cases. suspect it will serve her well as she sits with The PRESIDING OFFICER. Without So it is my hope that when we con- her colleagues at that intimate conference objection, it is so ordered. firm Ms. Kagan—and it looks like we table and casts her votes on cases of monu- mental import. Mr. SPECTER. Only one colleague is will confirm her—we will pause on the In addition to her impressive resume and present. He is the congenial junior Sen- nomination proceedings and focus on quick wit, General Kagan brings with her a ator from Florida. I thank my col- their utility, if not to get substantive striking show of support from lawyers rep- league. answers to see what intellectual dex- resenting all points on the ideological spec- I want to make one more point. That terity the nominee has, but providing trum. The outpouring of accolades from con- is on the issue of the Supreme Court an opportunity to review what the servatives includes the testimony of Pro- taking more cases. Here again, if there Court is doing. We have to bone up on fessor Jack Goldsmith of Harvard Law was transparency, America would be what happened since the last nomina- School, a respected scholar whose own views outraged at the workload on the Su- are much closer to those of Justice Scalia tion proceeding. I think the record is than to those of General Kagan. Professor preme Court, as the Court has moved open to substantial question. I think Goldsmith, who served in the Bush Depart- from one clerk, to two clerks, to three those questions could be answered for ment of Justice and Department of Defense, clerks, to four clerks. And I do not be- the reasons I have given, if we move had this to say about Elena Kagan: grudge them the time between the ses- ahead with television. Based on my experiences with Kagan, my sion ending in late June and the first Mr. President, in conclusion, I ask reading of her scholarly work, and my as- Monday in October, where they travel unanimous consent that a full copy of sessment of her very successful legal career, and lecture and write books. But I am the text of my prepared statement be I believe that she will be a truly outstanding Supreme Court Justice. I urge this Com- much concerned about the circuit printed in the RECORD with these exact mittee to approve her nomination and the splits. words so people will understand what I entire Senate to confirm her. For anyone who may be watching on have said up until now is repeated to Professor Goldsmith also testified to Gen- C–SPAN2—and I know my aunt and sis- some extent in the formal written eral Kagan’s deep knowledge of the areas of ter are watching—these cases are very statement. Mr. President, I refer my law which arise often before the Court. ‘‘As important because if the Third Circuit, colleagues to the two letters which I an academic,’’ he explained, ‘‘Kagan taught having Pennsylvania, New Jersey, and wrote to Chief Justice Roberts in an- and was expert in constitutional law, admin- istrative law, First Amendment law, civil Delaware, decides a case one way and ticipation of his nominating pro- procedure, and labor law. These subjects con- the Ninth Circuit, governing the West- ceeding, three letters I wrote to Jus- stitute a large chunk of the Supreme Court’s ern States, decides it another way, and tice Alito, three letters I wrote to Jus- docket . . . Elena Kagan is immensely quali- the case arises in Wichita, KS, nobody tice Sotomayor, and three letters I fied to serve on the Supreme Court. She knows which precedent to follow be- wrote to Ms. Kagan. All have pre- should be easily confirmed.’’ cause the circuits are autonomous. viously been printed in the RECORD. Professor Goldsmith is not alone in his ef- There are many important cases There being no objection, the mate- fusive praise for General Kagan; many other which the Supreme Court does not de- rial was ordered to be printed in the conservatives have expressed strong support for her confirmation. Miguel Estrada, a con- cide when there are circuit splits and RECORD, as follows: servative lawyer nominated to the D.C. Cir- they have time to decide them. They Mr. President, I have sought recognition to cuit by President Bush, wrote in his letter of have time to decide the conflict be- speak on the nomination of Solicitor General support that ‘‘Elena possesses a formidable tween the Foreign Intelligence Surveil- Elena Kagan to be an Associate Justice of intellect, an exemplary temperament and a lance Act and the Terrorist Surveil- the Supreme Court of the United States. rare ability to disagree with others without lance Program. They have time to hear General Kagan comes before us with an im- being disagreeable . . . Elena is an impec- pressive background. She received her bach- the case involving the 9/11 terrorist at- cably qualified nominee.’’ elor’s degree summa cum laude from Prince- Professor Michael McConnell, a constitu- tacks and sovereign immunity. ton University, her master’s degree through tional law expert at Stanford and a former But these are the statistics which are a prestigious fellowship at Oxford Univer- Bush-appointed federal appellate court very informative: In 1886, the Supreme sity, and her law degree magna cum laude judge, also speaks highly of General Kagan. Court decided 451 cases. In 1987, the Su- from Harvard Law School. She was a clerk He writes, preme Court wrote 146 opinions. That for Judge Abner Mikva of the DC Circuit and On a significant number of important and was cut by less than half in 2006 to 68, for Supreme Court Justice Thurgood Mar- controversial matters, Elena Kagan has in 2007 to 67, in 2008 to 75, 2009 to 73; shall. She practiced law at a top private taken positions associated with the conserv- firm, Williams & Connolly, and served as spe- this in the face of Chief Justice Rob- ative side of the legal academy. This dem- cial counsel on the Senate Judiciary Com- onstrates an openness to a diversity of ideas, erts’s testimony at his confirmation mittee. General Kagan was an associate as well as a lack of partisanship, that bodes hearing that the Supreme Court ought White House counsel to President Bill Clin- well for service on the Court . . . Publicly to hear more cases. Ms. Kagan said ton and Deputy Assistant to the President and privately, in her scholarly work and her about the same thing. My recollection for Domestic Policy and Deputy Director of arguments on behalf of the United States, is that Justice Sotomayor said about the Domestic Policy Council. General Kagan Elena Kagan has demonstrated a fidelity to the same thing. has taught constitutional and administra- legal principle even when it means crossing So here, again, it is a matter of the tive law as a tenured professor at two of the her political and ideological allies. public understanding it. We are very country’s best law schools, Harvard and the This perspective is shared by conservative University of Chicago. A breaker of glass legal scholar and former Judiciary Com- conscious in this body about not miss- ceilings, General Kagan became the first fe- mittee aide to Senator John Cornyn, Pro- ing votes. When I miss votes, it appears male Dean of Harvard Law School and the fessor Brian Fitzpatrick of Vanderbilt Law in the Philadelphia Inquirer or the first female Solicitor General of the United School. Professor Fitzpatrick, who was Gen- Pittsburgh Post-Gazette. The public States, in which capacity she argued six eral Kagan’s student in administrative law does not like to see ARLEN SPECTER cases before the Supreme Court. Given these at Harvard, wrote: ‘‘The best those of us on missing votes. I am paid to vote. extraordinary credentials, it is little surprise my side of the aisle can hope for at this time Well, you cannot vote on a case if that the American Bar Association’s Stand- are Supreme Court nominees who are you do not take a case. But having the ing Committee on the Federal Judiciary thoughtful and open minded, with views gave General Kagan a unanimous ‘‘well- nearer the center than the poles. There is lit- discretion not to take the case just qualified’’ rating. tle doubt that Elena fits this bill. In my ex- leaves this level of workload with cir- One characteristic of General Kagan perience, her ideas have been more than rea- cuit splits undecided, and this is some- which, I think, is a subtle but important sonable, and she has always treated those thing which ought to be handled. trait is her sense of humor. She is a real in- who may disagree with her with respect and I have legislation pending to compel tellectual beyond any question. And I think understanding.’’ the Supreme Court to take, for exam- that since the Court is an ideological battle- General Kagan has also received strong ple, the Terrorist Surveillance Pro- ground, it is good to have somebody there to support from legal scholars and practitioners gram litigation. Most people do not go against the ideologues, like Justice Scalia with moderate or progressive views. The in particular. A sense of humor is, in my depth of her bipartisan support is clear from know, but Congress cannot decide cases opinion, a high level intellectual char- a letter written by eight former Solicitors for the Court. The Congress can man- acteristic. General Kagan is very good at General—five Republicans, three Democrats. date what cases they take, as we did humor. As I said in the hearing, that trait is According to their letter, Elena Kagan the flag burning case, as we did very much to her credit because it dem- ‘‘would bring to the Supreme Court a

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00069 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.091 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5938 CONGRESSIONAL RECORD — SENATE July 15, 2010 breadth of experience and a history of great on whether Congress can abrogate the states’ FMLA in Hibbs but not, say, the ADA in accomplishment in the law.’’ Additionally, Eleventh Amendment immunity from suits Garrett. The Court’s post-Boerne cases illus- the former Chief Judge of the D.C. Circuit by private parties. The Supreme Court has trate, as Justice Scalia has noted, that the and Carter appointee Patricia M. Wald wrote held that Congress cannot abrogate Eleventh congruence-and-proportionality test often of General Kagan, Amendment immunity under its Article I allows the Supreme Court to go any which She is an extraordinarily smart lawyer powers (including its Commerce Clause pow- way and the Justices to indulge their own with a practical bent of mind. Her signifi- ers). Only through its remedial powers under personal policy preferences. cant exposure as a law clerk and Solicitor the Fourteenth and Fifteenth Amendments Most significantly, in applying the congru- General to the way in which courts of appeal can Congress do so. ence and proportionality test (and, in Morri- as well as the Supreme Court operate, to the Until 1997, the Court required no more of son, in evaluating the challenge statute’s thrust and parry of dueling theories in the federal legislation passed under the Four- constitutionality under the Commerce academy and finally to the competing de- teenth and Fifteenth Amendments than that Clause), the Court has cast aside legislative mands at the highest level of government it satisfy a ‘‘rational basis’’ test. That is findings justifying remedial legislation as it policymaking provide a broad spectrum of same test that governs legislation enacted has never before done. Each of the cases experience on which she can draw in the im- under Congress’s Article I powers, including striking down federal civil rights legisla- portant post of Justice. its power to regulate interstate commerce, tion—including Kimel, Garrett, and Morri- The praises of Judge Wald, who served on as I noted during the hearing when I cited son—involved extensive Congressional fac- the D.C. Circuit while General Kagan worked Justice Harlan’s 1968 Commerce-Clause deci- tual findings justifying the legislation. The there as a law clerk for Judge Abner Mikva, sion in Maryland v. Wirtz. As the Supreme Court even went out of its way in Morrison are echoed by Kagan’s colleagues from the Court explained in South Carolina v. Katzen- to disparage the ‘‘method of reasoning’’ that world of academia. The former Dean of Notre bach (1966), Congress could ‘‘use any rational underlay Congress’s unassailable finding Dame Law School, Professor Patricia A. means to effectuate the constitutional that gender-based crimes have a substantial O’Hara, wrote in her letter of support that prohibition[s]’’ of the Fourteenth and Fif- effect on interstate commerce. This prompt- General Kagan ‘‘possesses a powerful intel- teenth Amendments. A strong presumption ed Justice Souter, in a dissent joined by lect . . . She listens to the views of others, of constitutionality attended the rational three other justices, to decry the Court’s adds her own, exhibits respect for differences basis standard. With one anomalous excep- long-standing practice of assessing no more of opinion, and cogently makes her case.’’ In tion, every civil rights statute of the twen- than the ‘‘rationality of Congressional con- addition, the deans of 56 law schools, includ- tieth century tested in the Court under this clusions.’’ Justice Souter’s criticism reflects ing the top schools in the nation, expounded rational basis standard was upheld as a per- the once-dominant view that, in Laurence on General Kagan’s personal attributes, in- missible exercise of Congress’s remedial au- Tribe’s words, only ‘‘Congress has the insti- tellectual prowess, and legal experience, ar- thority. tutional competence,’’ including the fact- guing for swift confirmation. They wrote, That all changed in 1997 with the Court’s finding capabilities, to evaluate what prac- Elena Kagan excels along all relevant di- decision in City of Boerne v. Flores. The tices threaten the Fourteenth Amendment’s mensions desired in a Supreme Court Jus- Court there abandoned the rational-basis guarantees. tice. Her knowledge of law and skills in legal test and, citing no precedent, held that General Kagan, it seems to me, acknowl- analysis are first rate. Her writings in con- ‘‘there must be congruence and proportion- edged the crazy quilt of decisions in cases stitutional and administrative law are high- ality between the injury to be prevented or where the Court was reviewing statutes en- ly respected and widely cited. She is an inci- remedied and the means adopted to that acted through Congress’s remedial authority sive and astute analyst of law, with a deep end.’’ This worked a sea change in the rela- under Section 5 of the Fourteenth Amend- understanding of both doctrine and policy. In tionship between Congress and the Court. As ment. Though she did not prejudge the con- terms of intelligence as intellectual ability, Justice Scalia observed in Tennessee v. Lane gruence-and-proportionality test by affirma- she is superbly qualified to sit on the United (2004), the ‘‘congruence and proportionality tively labeling it ‘‘unworkable,’’ she did go States Supreme Court . . . She was a superb standard, like all flabby legal tests, is a pretty far in repeating criticisms of the test and successful dean, among other reasons, standing invitation to judicial arbitrariness and in acknowledging that its application is because of her willingness to listen to di- and policy-driven decisionmaking.... [I]t unfair to Congress. verse viewpoints and give them all serious casts . . . [the Supreme] Court in the role of While General Kagan was not as forth- consideration. Congress’s taskmaster. Under it, the courts coming as she ought to have been, or as Prominent legal organizations also spoke . . . must regularly check Congress’s home- forthcoming as her law review article stated out in favor of General Kagan’s nomination, work to make sure that it has identified suf- nominees should be, she did do a better job of including the American Bar Association, the ficient constitutional violations to make its answering questions than most nominees National District Attorneys Association, and remedy congruent and proportional.’’ have done. the National Association of Women Judges. Wielding the congruence-and proportion- When I criticized Chief Justice Rehnquist’s The consensus among these groups is that ality test, the Court has, again in Justice denigration of Congress’s ‘‘method of rea- General Kagan is well-qualified for the posi- Scalia’s words, come into ‘‘constant con- soning’’ in Morrison and asked ‘‘do you tion of Supreme Court Justice. It should also flict’’ with Congress. It has, among other think there is some unique endowment when be mentioned that noted attorney and past things, struck down the provision of the Age nominees leave this room and walk across President of the American Bar Association Discrimination in Employment Act that pro- the street to have a method of reasoning Jerome Shestack wrote in favor of General hibits age discrimination in employment by which is superior to [the] congressional Kagan, saying that ‘‘Our Court and nation states (Kimel v. Florida Board of Regents method of reasoning so that a court can dis- will be well served if Elena Kagan becomes a (2000)), the provision of the Americans with regard voluminous records because of our Justice of the Supreme Court.’’ Disabilities Act prohibiting states from dis- method of reasoning?’’ General Kagan re- General Kagan’s diversity of experience— criminating against disabled persons in em- plied, ‘‘Well, to the contrary . . . I think it’s in private practice, in academia, in the exec- ployment (Board of Trustees of the Univer- extremely important for judges to realize utive branch, and in Congress as an aide to sity of Alabama v. Garrett (2001)), and the that there is a kind of reasoning and a kind the Judiciary Committee—has clearly cul- provisions of the Violence Against Women of development of factual material more par- tivated in General Kagan a deep and pene- Act that created a federal civil remedy for ticularly that goes on in Congress.’’ She con- trating understanding of the impact of law the victims of gender-based crimes against tinued, ‘‘I think it is very important for the on people’s lives. By practicing, teaching, private parties (United States v. Morrison courts to defer to congressional fact finding, and studying the law from a broad array of (2000)). In Morrison, the Court refused even understanding that the courts have no abil- perspectives, Elena Kagan has prepared her- to sustain the challenged provisions on the ity to do fact finding, are not, would not le- self well for the work of an Associate Justice alternative ground that Congress could pro- gitimately, could not legitimately do fact of the Supreme Court. hibit gender-based crimes under its Article I finding.’’ Furthermore, General Kagan said, The Fourteenth Amendment (which pro- authority—long considered to admit of few, ‘‘I have enormous respect for the legislative hibits states from denying any person within if any, justiciable limitations—to regulate process. Part of that respect comes from their borders the equal protection of the interstate commerce. This was just the sec- working in the White House and working laws or depriving them of life, liberty, or ond time since the New-Deal era that the with Congress on a great many pieces of leg- property with due process of law) and the Court struck down a federal statute on the islation.’’ Fifteenth Amendment (which prohibits both ground that Congress exceeded its Article I After contrasting Justice Harlan’s test in the federal government and the states from power to regulate commerce. Wirtz with the congruence-and-proportion- denying any citizen the right to vote ‘‘on ac- Of the few federal statutes that survived ality test that Justice Scalia criticized in count of race’’) give Congress strong reme- Constitutional muster under the congruence- Lane, I asked General Kagan, ‘‘would you dial power to enforce their commands. It is and-proportionality test, most survived by take Harlan’s test as opposed to the congru- critical that the Court not stand in the way only slim margins. Chief among them were ence and proportionality test’’ and she re- of its exercise. The enforcement of the the provisions of the Family and Medical plied, ‘‘Justice Scalia is not the only person amendments’ substantive provisions depends Leave Act (FMLA) governing state employ- who has been critical of the test. A number on whether private citizens can enforce their ment practices challenged in Nevada Depart- of people have noted that the test which is of rights against states in federal and state ment of Human Resources v. Hibbs (2003). course a test relating to Congress’ power to courts. Whether they can depends, in turn, There was no principled basis to uphold the legislate under Section 5 of the Fourteenth

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00070 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.064 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5939 Amendment, that the test has led to some Court Jurisdiction. One of the two cases in- shortly after September 11, 2001, until De- apparently inconsistent results in different volving the jurisdiction of the federal courts cember 2005, when The New York Times ex- cases.’’ I followed up stating, ‘‘What I want was Weiss v. Assicurazioni Generali, S.P.A., posed the existence of the program. In Au- to know from you is whether you think that 529 F.3d 113 (2d Cir. 2010). It was brought by gust 2006, the United States District Court is an appropriate standard to replace the ra- victims of the Holocaust and their heirs to for the Eastern District of Michigan found tional basis test of Wirtz?’’ General Kagan recover on unpaid World War II-era insur- the program to be unconstitutional. In July responded, ‘‘Now . . . there are times when ance policies issued by an Italian insurance 2007, the Sixth Circuit reversed on the the Court decides that a precedent is un- company. Just a few months ago, the United ground that the plaintiffs lacked standing to workable. It just, it produces a set of chaotic States Court of Appeals for the Second Cir- sue. One judge on the three-judge panel , results.’’ When I asked whether the congru- cuit affirmed the dismissal of the plaintiffs’ Judge Gilman, dissented. Judge Gilman ence-and-proportionality test was unwork- claims on the ground that they were pre- noted that ‘‘the attorney-plaintiffs in the able General Kagan testified, ‘‘I think that empted by an Executive-branch foreign pol- present case allege that the government is the question going forward, and it is a ques- icy favoring the resolution of such claims listening in on private person-to-person com- tion, I’m not stating any conclusion on it, through an international commission. The munications that are not open to the pub- but I think that something that Justice Second Circuit did so in reliance on the Su- lic.... [T]he attorney-plaintiffs have thus Scalia and others are thinking about is preme Court’s 2003 decision in American In- identified concrete harms to themselves whether the congruent and proportionality surance Association v. Garamendi. There the flowing from their reasonable fear that the test is workable or whether it produces such Court held that this policy, though not for- TSP will intercept privileged communica- chaotic results . . . .’’ General Kagan further malized in an executive agreement (let alone tions between themselves and their clients.’’ testified that she knew ‘‘that Congress needs a Senate-ratified treaty), preempted a state The Supreme Court denied certiorari with- very clear guidance in this area. It is not fair law requiring insurers to disclose informa- out explanation. I asked her about the to Congress to keep moving the goal posts. It tion about certain Holocaust-era insurance Court’s reticence to take up the Sixth Cir- is not fair to say oh well, you know, if you policies. Among the important questions pre- cuit’s decision in the Terrorist Surveillance do this this time it will be okay but if you sented by Generali is whether the executive Program (TSP) case and General Kagan tes- do that the next time it won’t.’’ branch can shut the courthouse doors on liti- tified, in part, ‘‘In a case where the executive While General Kagan refused to say wheth- gants in the absence of Congressional au- branch is determined or is alleged, excuse er, if confirmed, she would apply the congru- thorization. I asked General Kagan whether, me, is alleged to be violating some congres- ence-and-proportionality standard to test if confirmed, she would vote to grant cert. in sional command, it is I think one of the the constitutionality of remedial legislation the Holocaust case and she replied, ‘‘this is kinds of cases that the [C]ourt typically enacted under the Fourteenth Amendment, difficult for me because, as I understand this, should take.’’ She called this a third specie she did at least express serious reservations this is a live case and I continue to represent of case, aside from circuit splits and those about that standard. She noted that the one of the parties in this case. In other that strike down statutes on constitutional standard had been subject to ‘‘significant words, there may very well be a petition for grounds, where there ‘‘is an issue of some criticism’’ and, more importantly, that ‘‘it’s certiorari in this case, but I continue to be vital national importance.’’ produced some extremely erratic results.’’ Solicitor General and—and would head the I later asked her ‘‘would you vote to take She added: ‘‘There seems to me real force in office that would have to respond to a peti- that kind of case?’’ General Kagan re- the notion that a test in this area dealing tion.’’ sponded, in pertinent part, ‘‘Well . . . I do with Congress’ section 5 powers [under the The other case involving the jurisdiction of think that this is a case that, as I under- Fourteenth Amendment] really needs to pro- the federal court was In re Terrorist Attacks stand it, generally falls within the third cat- vide clear guideposts to Congress so that on September 11, 2001, 538 F.3d 113 (2d Cir. egory of case, a case which presents an ex- Congress knows what it can do and know 2009). This litigation was brought by over tremely important Federal issue as to what it can’t do. And so the goal posts don’t 6,000 victims of the September 11 terrorist whether the executive has overstepped its keep changing and so . . . Congress can . . . attacks against, among other defendants, appropriate authority and has essentially pass legislation confident in the knowledge the Kingdom of Saudi Arabia and five Saudi flouted legislation in the area.’’ that legislation will be valid. And I think princes. The plaintiffs asserted various When I referenced the Court’s declining those concerns are of very significant claims arising from their allegation that docket and the need to resolve more circuit weight.’’ None of General Kagan’s prede- Saudi Arabia financed the attacks. The splits of authority, General Kagan re- cessors (Justice Sotomayor, Justice Alito, United States Court of Appeals for the Sec- sponded, ‘‘I do generally agree with that. I and Chief Justice Roberts)—all of whom I ond Circuit ruled that Saudi Arabia was im- clerked on the [C]ourt in 1987 which was questioned about Congress’s Fourteenth- mune from suit under the Foreign Sovereign pretty much at the high point of what the Amendment powers—was as forthcoming. Immunities Act (FSIA). In a brief filed on [C]ourt was doing, about 140 cases a year.’’ General Kagan also said that Congressional behalf of the United States, Solicitor Gen- She went on to testify, ‘‘I do agree with you fact findings are entitled to ‘‘great def- eral Kagan urged the Court not to hear the that there do seem to be many circuit con- erence.’’ case even though she conceded that the Sec- flicts and other matters of vital national sig- When I later returned to the question of ond Circuit had effectively nullified the key nificance.’’ whether Justice Kagan would apply a ration- statutory exception to sovereign immunity Although General Kagan failed, in many al basis test or a congruence-and-proportion- on which the plaintiffs had relied. I raised instances, to adhere to her own standard of ality test when reviewing congressional facts the case at Solicitor General Kagan’s con- providing forthcoming and detailed answers General Kagan replied, ‘‘as I understand it, firmation hearing because of the key objec- during her confirmation hearing, there is the congruence and proportionality test is tive underlying the FSIA: to take sovereign much that we can glean from her record currently the law of the [C]ourt, and not- immunity determinations away from the ex- prior to her nomination. Since nominees withstanding that, its been subjected to sig- ecutive branch (which until enactment of the have a vested interest in saying whatever nificant criticism and notwithstanding that FSIA had made discretionary immunity de- will get them confirmed, and since past its produced some extremely erratic results. terminations on case-by-case basis) and vest nominees have not always decided cases in And I can’t . . . sit at this table without them the courts (which would make immu- line with their testimony at nomination briefing, without argument, without discus- nity determinations according to the FSIA’s hearings, in many ways a nominee’s pre- sion with my colleagues and say, well, I just objective, non-discretionary statutory cri- hearing record is more reliable than her con- don’t approve of that test, I would reverse teria). I asked General Kagan, ‘‘As a justice, firmation hearing testimony. it.’’ would you vote to take that kind of case?’’ While General Kagan refused to say wheth- When I cited Justice Stevens’ dissent in General Kagan responded, ‘‘the government er, if confirmed, she would apply the congru- Citizens United and asked General Kagan did argue, based on very extensive consulta- ence-and-proportionality standard to test ‘‘what deference [she] would show to con- tions, that the Supreme Court ought not to the constitutionality of remedial legislation gressional fact finding’’ she replied, ‘‘the an- take that case, and that continues to be the enacted under the Fourteenth Amendment swer to that is great deference to congres- government’s position. You know, I don’t her pre-hearing record on the issue, though sional fact finding.’’ When I asked General think it would be right for me to undermine limited, strongly suggests that she shares Kagan if there was ‘‘any way you could look the position that we took in that way by my concerns about the denigration of Con- at Citizens United other than it being a tre- suggesting it was wrong.’’ gressional power. I refer to her notes of two mendous jolt to the system’’ she replied, Another case I raised with Solicitor Gen- (un-transcribed) speeches she gave in 2003 ‘‘this is one that as an advocate, I have eral Kagan concerned the constitutionality (one to Princeton alumni) the other to an taken a strong view on which is that it was of the Bush Administration’s secretive Ter- audience at the University of Minnesota Law a jolt to the system. There was a great deal rorist Surveillance Program (TSP). The TSP School). The notes suggest that, contrary to of [reliance] interests involved and many brought into sharp conflict Congress’s au- the position taken by Justices Kennedy, states had passed pieces of legislation in reli- thority under Article I to establish the ‘ex- Scalia, and Thomas, as well as former Chief ance upon Austin that Congress had passed clusive means’ for wiretaps under the For- Justice Rehnquist and Justice O’Connor, legislation after accumulating a voluminous eign Intelligence Surveillance Act with the General Kagan believes that the Court record.’’ President’s authority under Article II as should give Congress substantial deference, I also asked General Kagan about cases re- Commander-in-Chief to order warrantless especially when legislating under its Four- garding Sovereign Immunity and Federal wiretaps. The TSP operated secretly from teenth Amendment authority. In a May 21,

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00071 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.066 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5940 CONGRESSIONAL RECORD — SENATE July 15, 2010 2010, article, The Wall Street Journal charac- on the basis of the compelling government one that the American citizenry has every terized General Kagan’s views as expressed interest in preventing corruption or the ap- right to know about and understand. I also in one of the speeches as follows: ‘‘The piece, pearance of corruption, she also argued that think that it would be a good thing for the in short, seems to suggest that in at least the Court should reexamine the basis for its [C]ourt itself that that greater under- one key area, she would be an arbiter of judi- rejection of expenditure regulations begin- standing of the [C]ourt I think would go cial restraint, prone to giving considerable ning with Buckley v. Valeo in 1976. Although down to its own advantage. So I think from deference to Congress. . . . [S]he says [that] she may have made some of these arguments all perspectives, televising would be a good courts should defer to Congress when the in her capacity as a policy advisor and advo- idea.’’ framer of the Constitution clearly author- cate for the President’s agenda, these memos I have introduced both a resolution ex- ized legislators to exercise power. Such a provide insight into General Kagan’s views pressing the sense of the Senate that Su- clear authorization, she says, can be found in of campaign finance reform—views which ap- preme Court proceedings should be televised, section 5 of the 14th Amendment. . . . So, pear to be positive in terms of both personal as well as a bill to require the Court to allow Kagan concludes, courts should defer to Con- preference and legal analysis. the television broadcast of its open pro- gress when it takes actions to effectuate 14th General Kagan’s time as a senior aide to ceedings, except in some special cir- Amendment rights.’’ As I said during my President Clinton also shows that she has re- cumstances. The Judiciary Committee June 7, 2010, floor statement on the con- spect for Congress, respect born of personal passed both the resolution and the bill on firmation process, the Senate should put experience and legal reasoning. Although April 29, 2010, by an overwhelming vote of 13 considerable weight on such pre-hearing some from my party have expressed concern to 6. With the retirement, last year, of Jus- statements reflecting a nominee’s legal ide- that General Kagan has too broad a view of tice Souter, the strongest opponent of tele- ology. executive power, her writings indicate other- vising the Court’s proceedings, and the po- It is also clear that General Kagan is a wise. She has clearly and unequivocally re- tential addition of General Kagan, there is a strong and principled supporter of civil jected the Unitary Executive theory, which good chance that the Court will finally be rights. As Harvard Professor Ronald Sullivan posits the President possesses plenary au- accessible to all Americans, as it should be. pointed out in his testimony before the Com- thority over all federal agencies involved in If the Court does not allow cameras in of its mittee, a telling story about General Kagan administering federal law and that Congress own volition, I will continue to press for pas- is that she turned down the Royall Profes- had been granted too much power relative to sage of my legislation before the end of the sorship of Law, Harvard Law School’s first the executive. In her famous 2001 Harvard year. endowed chair, because the fortune that en- Law Review article, Presidential Adminis- Regardless of personal political persuasion, dowed the chair was derived from the slave tration, she wrote, ‘‘I do not espouse the Uni- there is near consensus among Senators that trade. Instead, then-Dean Kagan decided to tarian position . . . the constitutional values a nominee should be able to unmoor herself become the first Charles Hamilton Houston sometimes offered in defense of this claim from political and policy views when decid- Professor of Law, a chair named in honor of are too diffuse, too diverse, and for these rea- ing a case in our nation’s highest court. In one of Harvard Law’s most accomplished Af- sons, too easily manipulable’’ to support ex- her 25 years of experience in the law, General rican-American graduates and, as an archi- clusive presidential control over the admin- Kagan has consistently demonstrated fair- tect of the civil rights movement’s legal istration of federal law through agencies. ness, humility, moderation, and adherence to strategy, an historic figure in his own right. Additionally, then-Dean Kagan criticized the duty—the exact attributes we all seek in a Elena Kagan’s support for civil rights ex- expansive views of executive authority in the Justice of the Supreme Court of the United tends far beyond symbolism, however. In an so-called torture memos of the Bush admin- States. In my first autobiography, Passion for email from her time at the Clinton White istration, which she described in a 2007 com- Truth, I wrote: House, General Kagan wrote that she mencement address as ‘‘expedient and unsup- ‘‘care[s] about [affirmative action] a lot,’’ Chief Justice William Rehnquist, at his ported.’’ General Kagan also criticized ex- 1986 confirmation hearing, would not answer which she demonstrated through her work on panding executive power to the detriment of the issue. For example, in a brief to then-So- basic constitutional questions. Rehnquist, an Congressional prerogative when she wrote in associate justice since 1971, didn’t believe he licitor General Walter Dellinger strategizing a 1996 White House memo on a pending deci- should have to go before the Senate a second how to ‘‘avoid a broad and harmful ruling in- sion on whether or not the Solicitor General time for promotion to chief, according to validating non-remedial affirmative action would defend two particular statutes. She Tom Korologos, a premier Washington lob- in employment,’’ General Kagan argued in wrote: byist. . . . Rehnquist cited Korologos the favor of pursuing a narrow judgment which What difference does it really make wheth- case of former Senator Sherman Minton, would preserve affirmative action policies. er Congress explicitly directs the executive whom President Truman nominated to the She wrote, ‘‘I think this is exactly the right branch to take action against private per- Supreme Court and who refused to go before position—as a legal matter, as a policy mat- sons (via separation) or implicitly directs the Senate for a hearing. Minton argued that ter, and as a political matter.’’ This echoes the executive branch to take such action (via the legislative branch had no right to ques- her comments to Justice Thurgood Marshall prosecution)? In either case, refusal to com- tion a nominee. The Senate confirmed in a memo urging denial of certiorari on a ply with the directive violates congressional Minton without a hearing. ‘‘What do you case involving a school desegregation plan will. think of that?’’ Rehnquist asked Korologos. which had been upheld at the circuit court In light of these writings, it seems not ‘‘Why do I have to testify?’’ he demanded. level. In her memo, Kagan described the plan only General Kagan’s personal opinion but Rehnquist’s record was there; his opinions as ‘‘amazingly sensible,’’ even though it was also her legal opinion that Congress has a were public. He would not expand on them or ` not implemented in response to historic powerful role to play vis-a-vis the executive defend them. Rehnquist insisted Korologos state-sponsored school segregation in that and the courts. Finally, General Kagan’s ex- try to get him through without a hearing. ‘‘I particular district. It is clear to me from perience working with Congress and on the said, ‘Fine, Bill,’ and dismissed it out of these memos and from her comments that Senate Judiciary Committee also increases hand,’’ Korologos recalled. . . . ‘‘What am I when it comes to civil rights, General Kagan my confidence in her understanding and re- going to do, tell the leadership we’re not supports strong protections for racial mi- spect for this institution as the first branch going to have a hearing on Rehnquist? Any- norities and believes in expanding opportuni- of American government. way, it died before it got off the ground.’’ ties for historically disadvantaged groups. If General Kagan has been clear and straight- [Korologos continued]. Rehnquist relented General Kagan were seated on the Court, forward on the issue of making the Supreme and agreed to go before the Senate. cases like Parents Involved in Community Court more accessible and more accountable I further observed that ‘‘Chief Justice Schools v. Seattle School District No. 1 may by televising its proceedings for the public. Rehnquist answered barely enough questions have been decided differently. In her 2009 speech before the Ninth Circuit to get my vote. In all, sixty-five senators Additionally, General Kagan’s record re- Judicial Conference, she expressed support supported him, but thirty-three others voted veals strong support for ensuring fair and for televising the Court. When I met with against his nomination.’’ Turning to Judge clean elections through campaign finance General Kagan in my office, she continued to Robert Bork’s nomination in July 1987, I regulation. Long before she urged the Court be forthcoming about her support for broad- noted that Democrats controlled the Senate in Citizens United v. FEC to uphold the fed- casting the Court’s proceedings, which I ap- and Senator Kennedy was a strong opponent eral ban on independent campaign expendi- preciated. I asked General Kagan ‘‘Wouldn’t of the nomination. ‘‘Considering the context tures by corporations, Elena Kagan assisted televising the [C]ourt and information as to and controversy, Bork concluded—correctly, the development of the McCain-Feingold Act what the [C]ourt does have an impact on the I think—that he would have to answer ques- during her time in the White House. In one values which are reflected in the American tions on judicial philosophy to have a chance of her memos from that time, she argued vig- people’’ and she replied, ‘‘I do think . . . it at confirmation.’’ Perhaps General Kagan orously for President Clinton to support would be a good thing from many perspec- concluded—again correctly—that with a campaign finance reform and criticized the tives and I would hope to if I am fortunate Democratic Senate and little controversial Court for its ‘‘mistaken’’ conclusion ‘‘that enough to be confirmed to engage with the published work of her own, she would be con- money is speech and that attempts to limit other Supreme Court Justices about that firmed without betraying many of her sub- the influence of money on our political sys- question. I think it is always a good thing stantive views. I regret that she chose that tem therefore raise First Amendment prob- when people understand more about govern- course but it is a course many before her lems.’’ She argued not only that the Court ment rather than less and certainly the Su- have chosen and it is a course that the Sen- should uphold campaign finance regulation preme Court is an important institution and ate has permitted.

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00072 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.068 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5941 When I was questioning Rehnquist he re- precedents, which the lawyers call stare de- mony cited at length above, from both Chief fused to answer my question about stripping cisis, or ‘let the decision stand.’ ’’ (‘‘In Justice Roberts and Justice Alito, with their the federal courts’ jurisdiction. He deflected Search of John Roberts,’’ The New York concurring opinion in Citizens United. That my question, stating ‘‘I feel I cannot go to Times, July 21, 2005.) concurrence, authored by Roberts and joined any further than that, for fear that that sort That is why when I questioned Roberts and by Alito, says, ‘‘The Court’s unwillingness to of issue will come before the Court.’’ When I Alito in 2005 and 2006, respectively, I focused overturn Austin in [subsequent] cases cannot pressed him, Rehnquist insisted, ‘‘I honestly heavily on the issue of stare decisis. Several be understood as a reaffirmation of that deci- feel I must adhere to my view that it would other Senators did as well. Both Chief Jus- sion.’’ (emphasis in original). It seems to me be improper for a sitting justice to try to ad- tice Roberts and Justice Alito provided ex- that Chief Justice Roberts’s concurrence vance an answer to that question.’’ tensive testimony on the subject. Their tes- flies in the face of what he said about Casey I describe in my book that during an over- timony warrants extensive quotation. reaffirming the central holding in Roe. Con- night recess, when the hearing continued, a Chief Justice Roberts testified: trary to his testimony that ‘‘It is not enough staffer brought me an article from the Har- ‘‘Judges are like umpires. Umpires don’t that you may think the prior decision was vard Law Record that Rehnquist had written make the rules, they apply them. The role of wrongly decided[,]’’ Roberts went on to write in 1959, when he was a practicing lawyer. The an umpire and a judge is critical. They make in Citizens United, ‘‘[w]hen considering article criticized Charles Whittaker’s nomi- sure everybody plays by the rules, but it is a whether to reexamine a prior erroneous hold- nation to the Supreme Court because Whit- limited role. Nobody ever went to a ball ing, we must balance the importance of hav- taker had essentially told the Senate only game to see the umpire. Judges have to have ing constitutional questions decided against that he was the son of two states, that he the humility to recognize that they operate the importance of having them decided had been born in Missouri and practiced law within a system of precedent shaped by other right.’’ (emphasis in original). That is an in Kansas. Much like General Kagan in her judges equally striving to live up to the judi- about face. 1995 law review article, Rehnquist, in his cial oath . . . .’’ In announcing my ‘‘aye’’ vote for General Harvard article, expressed outrage that the ‘‘[T]he importance of settled expectations Kagan’s nomination to the Supreme Court, I Senate had endorsed Whittaker without ask- in the application of stare decisis is a very have attempted to sound a cautionary note. ing him any substantive questions, writing important consideration.’’ The point is to remind Senators, in the first that ‘‘Until the Senate restores its practice ‘‘I do think that it is a jolt to the legal sys- instance, of the need to jealously guard of thoroughly informing itself on the judicial tem when you overrule a precedent. Prece- against incursions from the other branches. philosophy of a Supreme Court nominee be- dent plays an important role in promoting It is also, I submit, to remind the nominee fore voting to confirm him, it will have a stability and evenhandedness. It is not and the sitting Justices of the Supreme hard time convincing doubters that it could enough—and the Court has emphasized this Court that Congress is a coequal branch of make effective use of any additional part in on several occasions. It is not enough that Government deserving of a modicum of re- the selection process.’’ The next day I con- you may think the prior decision was wrong- spect. It takes at least fifty-one votes in the fronted Justice Rehnquist with his article ly decided.’’ Senate (some would say sixty) and at least and his own words twenty-seven years later. ‘‘Well, I think people’s personal views on two-hundred and eighteen votes in the House Rehnquist responded ‘‘I don’t think I appre- this issue derive from a number of sources, to present legislation to the President for his ciated, at the time I wrote that, the difficult and there’s nothing in my personal views signature. Getting from the introduction of position the nominee is in.’’ based on faith or other sources that would any legislative measure to enacting a new Following that admission, I pressed prevent me from applying the precedents of law is a Herculean task. When that task is Rehnquist on jurisdiction and he finally an- the Court faithfully under principles of stare augmented by a lengthy congressional record swered that Congress cannot take away ju- decisis.’’ supported by hearings and reasoned testi- risdiction from the Supreme Court on the ‘‘I think one way to look at it is that the mony it should not be cast aside. So it has First Amendment. He refused, however, to Casey decision [Casey v. Planned Parenthood been important for this Senator to under- answer questions regarding the Fourth of Southeastern Pennsylvania (1992)] itself, score a healthy respect for Congress in the Amendment (search and seizure), the Fifth which applied the principles of stare decisis course of Supreme Court confirmation pro- Amendment (privilege against self-incrimi- to Roe v. Wade [1973], is itself a precedent of ceedings. nation), the Sixth Amendment, the Eighth the Court, entitled to respect under prin- Of the 13 nominees to have come before the Amendment (cruel and unusual punishment), ciples of stare decisis. And that would be the Judiciary Committee for a hearing during or even his reasoning for answering a ques- body of law that any judge confronting an my tenure in the Senate, none was less tion regarding the first amendment but not issue in his care would begin with, not sim- forthcoming than Justice Scalia. He an- the others. ply the decision in Roe v. Wade but its reaf- swered no substantive questions at all. He While I do not condone General Kagan’s firmation in the Casey decision. That is would not even say whether Marbury v. change of view on how much a nominee itself a precedent. It’s a precedent on wheth- Madison, which established the principle of should answer, she is not the first nominee er or not to revisit the Roe v. Wade prece- judicial review, was correctly decided. to criticize the Senate for not insisting on dent. And under principles of stare decisis, In my first autobiography, Passion for substantive answers and then later change that would be where any judge considering Truth, I wrote that ‘‘From my experience her mind when she is a Supreme Court nomi- the issue in this area would begin.’’ participating in Supreme Court nomination nee. We confirmed Chief Justice Rehnquist Testifying a year later, Justice Alito was hearings, I have found that the better the after he disclaimed his statements in the no less emphatic. He testified: nominee thinks his chances are, the less he Harvard article, so there is no reason, at this ‘‘I think the doctrine of stare decisis is a will say at the hearing to minimize his point, not to do the same for General Kagan. very important doctrine. It’s a fundamental risk.’’ In short, Justice Scalia was confident I have never asked that a nominee satisfy part of our legal system, and it’s the prin- he would be confirmed and, therefore, less an ideological litmus test—whether liberal ciple that courts in general should follow forthcoming on substantive inquiries. Jus- or conservative—much less that a nominee their past precedents, and it’s important for tice Scalia’s testimony prompted Senator commit to reaching a particular certain out- a variety of reasons. It’s important because DeConcini to remark: ‘‘It is apparent to me come in any given case. What I have asked is it limits the power of the judiciary. It’s im- that nominees are advised by the adminis- that a nominee, first, affirm his or her com- portant because it protects reliance inter- tration to be as evasive and passive as they mitment to the doctrine of stare decisis; and, ests, and it’s important because it reflects can be.’’ second, to honor the legislative powers the the view of the courts should respect the Since General Kagan has only followed the Constitution assigns to the Congress, espe- judgments and the wisdom that are em- precedent set by previous nominees and by cially its remedial powers to enforce the bodied in prior judicial decisions. It’s not an the Senate, I believe that she should be con- Fourteenth and Fifteenth Amendments. inexorable command, but it’s a general pre- firmed based on her record. In evaluating Ms. Nominees committed to stare decisis and sumption that courts are going to follow Kagan’s overall record and performance be- respectful of Congress’s lawmaking powers prior precedents.’’ fore the committee, I have concluded that are much less likely to indulge their ideolog- ‘‘I agree that in every case in which there her intellect, academic accomplishments, ical preferences—whether left or right—in is a prior precedent, the first issue is the professional qualifications and earlier state- interpreting the open-ended provisions of the issue of stare decisis, and the presumption is ments expressing great respect for Congress Constitution and federal statutes to which that the Court will follow its prior prece- outweigh her failure to give substantive an- very different meanings could be ascribed. dents. There needs to be a special justifica- swers. But it is worth preserving for the They are, in short, less likely to become ac- tion for overruling a prior precedent.’’ record my views as to what she failed to tes- tivists. Noted Court commentator Jeffrey ‘‘I don’t want to leave the impression that tify to during the course of the hearing. Sev- Rosen made just that point soon before the stare decisis is an inexorable command be- eral Senators tried in vain to elicit meaning- Roberts confirmation hearing. He said that cause the Supreme Court has said that it is ful answers from General Kagan. Senator the ‘‘best way’’ to find out whether Chief not, but it is a judgment that has to be Kohl asked straightforward questions. When Justice Roberts was a conservative activist based, taking into account all of the factors Senator Kohl asked her about her passions, (in the mold of Justice Scalia and Thomas) that are relevant and that are set out in the she demurred, discussing ‘‘the rule of law’’ or a moderate, cautious, and restrained con- Supreme Court’s cases.’’ instead. He asked again, ‘‘What are your pas- servative (in the mold of Justice O’Connor) Again, without challenging their good sions?’’ but General Kagan did not answer. would be ‘‘to explore Judge Roberts’s view of faith, I note the contrast between the testi- Senator Kohl asked how she would impact

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00073 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.070 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5942 CONGRESSIONAL RECORD — SENATE July 15, 2010 the everyday lives of Americans. Again, Gen- question the way I would want to as a [From USA Today, July 15, 2010] eral Kagan did not answer. She referred back judge,’’ citing the fact that she hadn’t read SPECTER: ‘‘KAGAN DID JUST ENOUGH TO WIN to her previous three responses, where she any briefs as she would in a case in con- MY VOTE’’ discussed just taking ‘‘one case at a time,’’ troversy. (By Arlen Specter) and nothing more. Senator Kohl tried asking The Ginsburg-Kagan pincer movement cre- Supreme Court nominee Elena Kagan did ‘‘Which cases will motivate you?’’ and again ates a Catch-22 for Senators, who must avoid little to undo the impression that nomi- General Kagan refused to answer, and in- asking about a concrete case that could nating hearings are little more than a cha- stead simply recited facts we already knew come before the Court, but then cannot re- rade in which cautious non-answers take the about the certiorari process. When asked by ceive any answer from a nominee on a more place of substantive exchanges. Senator Kohl about her views on the Bush v. abstract question because the nominee sim- In this, she was following the practice of Gore case, a case that the Court specifically ply shrugs and says, ‘‘I haven’t read the high court nominees since Judge Robert said was unique and would not hold prece- briefs.’’ Bork. But her non-answers were all the more dential value, General Kagan refused to an- frustrating, given her past writings that the swer, stating that she could not answer be- In her article, General Kagan went so far as to say she understood why nominees re- hearings were vacuous and lacked substance. cause the ‘‘question of when the court should She accused Justice Ruth Bader Ginsburg get involved in election contests . . . might fused to answer questions, calling it a ‘‘game’’ in which the ‘‘safest and surest and Stephen Breyer of stonewalling, but well come before the court again.’’ then she did the same, leaving senators to Similarly, when asked by Senator Coburn route to the prize’’ involves avoiding sub- stantive answers. She wrote ‘‘Neither do I search for clues on her judicial philosophy. if a law requiring Americans to eat three Her hearings showed an impressive legal mean to deride Justices Ginsburg and Breyer vegetables and three fruits every day would mind, a ready humor and a collegial tem- for the approach each took to testifying. I be unconstitutional, certainly not a case perament suitable to the court. But they am sure each believed . . . that disclosing his likely to come before the Court, she refused shed no light on how she feels about the or her views on legal issues threatened the to answer even that question in a sub- court’s contemptuous dismissal of Congress’ independence of the judiciary. (It is a view, I stantive manner. ‘‘fact-finding’’ role, its overturning of prece- suspect, which for obvious reasons is highly After pressing General Kagan on her views dent in allowing corporate political adver- of the Second Amendment several times correlated with membership in the third tising, and the expansion of executive au- without making any progress, Senator branch of government.) More, I am sure both thority at the expense of congressional Grassley resigned himself to the fact that, in judges knew that they were playing the power. his words, she ‘‘[didn’t] want to tell us what game in full accordance with a set of rules She offered no meaningful observations on [her] own personal belief is.’’ that others had established before them. If U.S. vs. Morrison, in which the court over- Senator Coburn criticized General Kagan most prior nominees have avoided disclosing turned the Violence Against Women Act, for ‘‘dancing’’ around instead of answering their views on legal issues, it is hard to fault blaming Congress’ ‘‘method of reasoning,’’ questions and suggested that ‘‘Maybe [she] Justice Ginsburg or Justice Breyer for de- notwithstanding a ‘‘mountain of data assem- should be on ‘Dancing with the Stars’.’’ clining to proffer this information. And fi- bled by Congress’’ demonstrating ‘‘the ef- When General Kagan refused to discuss in- nally, I suspect that both appreciated that, fects of violence against women on inter- ternal Justice Department deliberations for them (as for most), the safest and surest state commerce’’ noted in Justice David with White House staff regarding upcoming route to the prize lay in alternating plati- Souter’s dissent. cases, Senator Kyl pointed out that ‘‘simply tudinous statement and judicious silence. She offered no substantive comment on noting whether or not there were such con- Who would have done anything different, in Citizens United, in which the court reversed tacts would not be an inappropriate thing for the absence of pressure from members of a century-old precedent by allowing corpora- you to provide the Committee.’’ Congress?’’ tions to engage in political advertising. Jus- General Kagan consistently declined to an- General Kagan certainly did the same. . . . tice John Paul Stevens said in dissent that swer questions on whether she would vote to Even with pressure from members of Con- the court showed disrespect by ‘‘pulling out take two critical cases as Justice. gress, such as Senators Kohl, Grassley, the rug beneath Congress,’’ which had struc- Toward the conclusion of my second round Coburn, and myself, she still refused to an- tured the campaign-finance reform bill, of questions, I told General Kagan: swer to questions. McCain-Feingold, on a 100,000-page factual I think the commentaries in the media are record based on standards cited in a recent accurate. We started off with the standard In her article, General Kagan took issue with the Senators for not insisting that Supreme Court decision. you articulated at the University of Chicago Likewise, she avoided taking sides in the nominees answer questions. She stated that Law School about substantive discussions. court’s expansion of executive authority, de- ‘‘Senators today do not insist that any nomi- And they say we haven’t had them here, and clining comment on the historic clash posed nee reveal what kind of Justice she would I’m inclined to agree with them . . . It would by the Foreign Intelligence Surveillance Act make, by disclosing her views on important be my hope that we could find some place be- and the president’s warrantless wiretapping legal issues. Senators have not done so since tween voting ‘‘no’’ and having some sort of authorized under the Terrorist Surveillance the hearings on the nomination of Judge substantive answers.... I think we are Program. searching for a way how senators can suc- Bork. They instead engage in a peculiar rit- Despite repeated questioning, Kagan re- ceed in getting substantive answers, as you ual dance, in which they propound their own fused to comment on the court’s refusal to advocated in the Chicago Law Review, short views on constitutional law, but neither resolve a contentious dispute involving the of voting ‘‘no.’’ hope nor expect the nominee to respond in Sovereign Immunity Act and the Obama ad- In her 1995 article, General Kagan criti- like manner.’’ ministration’s foreign policy. Survivors of 9/ cized Justice Ginsburg’s handling of her Again, I asked General Kagan several spe- 11 victims sued Saudi Arabia, Saudi princes nomination hearing, stating that ‘‘Justice cific questions that she refused to answer. and a Saudi-controlled charity with substan- Ginsburg’s favored technique took the form When I asked a direct question as to whether tial evidence that they had financed the 9/11 of a pincer movement. When asked a specific she would apply to the congruence-and-pro- terrorists. The Obama administration per- question on a constitutional issue, Ginsburg portionality test in evaluating the constitu- suaded the court not to hear the case, argu- replied . . . that an answer might forecast a tionality of laws passed under Congress’s ing that the Saudi Arabian conduct occurred vote and thus contravene the norm of judi- Fourteenth Amendment remedial authority, outside the U.S. cial impartiality. Said Ginsburg: ‘I think she refused to answer. When Senator Kyl On one controversial issue—the question of when you ask me about specific cases, I have asked her if detainees had habeas rights, she whether to televise open Supreme Court pro- to say that I am not going to give an advi- refused to answer. Senator Grassley asked ceedings—Kagan was candid, stating that sory opinion on any specific scenario, be- her if Heller was correctly decided and she she welcomed TV in the court and, if con- cause . . . that scenario might come before refused to answer. So I would hope that Gen- firmed, would seek to convince her col- me.’ But when asked a more general ques- eral Kagan will not claim that all Senators leagues on the bench. ‘‘It’s always a good tion, Ginsburg replied that a judge could participating in her confirmation hearing thing,’’ she said, ‘‘when people understand deal in specifics only; abstractions, even did not hope for, or expect, substantive an- more about government, rather than less. hypotheticals, took the good judge beyond swers. We tried our best to get her to answer And certainly, the Supreme Court is an im- her calling. Again said Ginsburg: ‘I prefer questions, but it was General Kagan who in- portant institution and one that the Amer- not to . . . talk in grand terms about prin- sisted on avoiding substantive answers. ican citizenry has every right to know about ciples that have to be applied in concrete and understand.’’ cases. I like to reason from the specific Mr. SPECTER. Finally, Mr. Presi- Her testimony recognized that the court is case.’’’ dent, I ask unanimous consent that a a public institution that should be available However, General Kagan failed to take her copy of an op-ed which I wrote which to all Americans, not just the select few who own advice. She frequently refused to answer appeared in USA Today be printed in can travel to Washington. A recent C–SPAN questions without having a concrete case or the RECORD. poll found that 63% of Americans support briefs to read. In my attempt to find her televising the Supreme Court’s oral argu- views on the ‘‘congruence and proportion- There being no objection, the mate- ments. ality’’ standard, she repeatedly avoided an- rial was ordered to be printed in the Given the fact that the court decides all of swering, saying ‘‘I’ve not delved into the RECORD, as follows: the cutting-edge questions—a woman’s right

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00074 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.072 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5943 to choose, death penalty cases for juveniles, this will not stop any future reces- something about the rating agencies, affirmative action, freedom of speech and re- sions. He is right. He is right because and we did do something. I was pleased ligion—public demand for greater trans- we did not do what we needed to do in to work with Senator CANTWELL, and I parency should come as no surprise. When order to truly fix the problems that was appreciative of the efforts of Sen- 85% of those polled think the Citizens United case expanding corporate spending in poli- happened back in the 2007–2008 era ator FRANKEN, to try to do something tics was a bad decision, one can conclude when we had this tremendous financial about these rating agencies. And we they want to know why the court decided as meltdown—this meltdown which has did. it did. depleted trillions of dollars of the net That is one good thing about this On balance, Kagan did little to move the worth of Americans; this meltdown bill. They are written out of law. These nomination hearings from the stylized that has led to one of the greatest, if rating agencies compounded the prob- ‘‘farce’’ (her own word) they have become not the greatest, recession since the lem because when these mortgages, into a discussion of substantive issues that packed together—mortgages that were reveal something of the nominee’s judicial Great Depression. philosophy and predilections. In my home State of Florida, people not any good, that were not going to It may be understandable that she said lit- are suffering mightily. We have nearly get paid, that then got turned into a tle after White House coaching and the con- 12 percent unemployment. We are ei- trading vehicle—when they went up to tinuing success of stonewalling nominees. ther No. 1 or No. 2—depending upon the Wall Street, these rating agencies that But it is regrettable. Some indication of her month—in mortgage foreclosures, and are paid for by the investment banks judicial philosophy may be gleaned by her our people are behind on their mort- stamped them with AAA ratings, gave self-classification as a ‘‘progressive’’ and her gage payments more than any other them the ‘‘good housing seal of ap- acknowledged admiration for Justice State in the Union. proval’’ and let the world believe they Thurgood Marshall. That suggests she would uphold congressional fact-finding resulting We are a State that has been based, were sound investments. They failed. in remedial legislation and protect indi- perhaps too much, on growth. So when And lo and behold, we find that the vidual rights in the congressional-executive folks are not coming to build a new government has given a sanction in law battles. home, the contractor does not have a to these rating agencies to be the de- The best protection of those values may job. When folks are not coming to visit terminers of creditworthiness—a mo- come from the public’s understanding our beaches or our tourist attractions, nopoly, if you will. through television of the court’s tremendous the restaurateur, the hotelier—they Well, one good thing this bill does is power in deciding the nation’s critical ques- lose their work. So things are very dif- to strip that out. No longer will they tions. In addition to her intellect, academic and professional qualifications, Kagan did ficult in Florida. be given that state-sponsored monop- just enough to win my vote by her answers This financial crisis stemmed in part oly. Now the marketplace will have to that television would be good for the country from some of the problems we saw in work. Now we will not be so relying and the court, and by identifying Justice lending, in real estate, and there was upon people who are paid by the invest- Marshall as her role model. no place that was any worse than what ment banks that did not do their home- Mr. SPECTER. I thank the Presiding happened in Florida. What this bill work and in part caused this crisis. Officer, and I thank my distinguished fails to address: the underwriting If we would have tackled the GSEs, colleague from Florida. standards that should have been in Fannie and Freddie, and if we would The PRESIDING OFFICER. The Sen- place to stop these so-called ninja have tackled underwriting standards, I ator from Florida. loans—‘‘no income, no job.’’ They would be here giving a speech today Mr. LEMIEUX. Mr. President, it is al- called them ninja loans. Anybody could talking about why I voted for the bill. ways good to follow my distinguished get one, and people were put into But we only did one of the four things colleague from Pennsylvania and to homes they could not afford. and, unfortunately, now, we have a bill hear his comments. Why was that able to happen? It was that Wall Street loves. Citigroup loves f because there were no underwriting it. Goldman Sachs loves it. But Main standards. There was no skin in the Street is very concerned about it. We FINANCIAL REGULATORY REFORM game for those getting the mortgage. are going to make sure that ortho- Mr. LEMIEUX. Mr. President, I am There was no skin in the game for the dontists are regulated because they, here today to talk about the bill the mortgage broker, who was able to sell every once in a while, extend credit to Senate just voted on and passed, the fi- off this mortgage to Wall Street, where their patients. But the folks on Wall nancial regulation overhaul bill. It is, there was this vast and great demand Street, who caused these problems, and in my mind, a missed opportunity. We to bundle these products into mort- the underlying cause of the debacle, had the opportunity to truly address gage-backed securities, and, for the the mortgage problem, the under- the causes of the financial meltdown first time ever, tie our real estate mar- writing problem, and the Fannie and and put into place measures that would ket, our homes—our most important Freddie problem do not get addressed. stop the meltdown from happening the investments—with the financial mar- According to the study by the U.S. next time. But, unfortunately—as I kets. Chamber of Commerce, this bill will have seen in about the year’s time I As soon as that was done, the specu- create a huge new governmental bu- have had the privilege to serve in the lation and the speculators ran wild. reaucracy: 70 new Federal regulations Senate—it seems it is the predilection This bill does not do enough to prevent through the Bureau of Consumer Fi- of this Congress to take a crisis and that in the future, to provide the real nancial Protection, 54 new Federal reg- then come forward not with a narrowly skin in the game that should be needed ulations through the U.S. Commodity focused and tailored solution but, in- to trade those mortgage-backed securi- Futures Trading Commission, 11 new stead, a large-ranging, comprehensive ties. We failed to address those two fac- Federal regulations through the Fed- bill that creates more government, tors. Perhaps even worse, we failed to eral Deposit Insurance Corporation, 30 that creates more bureaucracy, that address Fannie and Freddie, the gov- through the Federal Reserve, 205 puts more debt on our system of gov- ernment-sponsored entities that stood through the SEC. ernment, and still fails to address the as silent guarantors to all these mort- You may say: Well, that sounds good. very problem we should be trying to gages, that let the market have faith We need more regulations, right? There focus upon. and confidence that the government was a problem. But if the regulation We were supposed to rein in the wild was the backstop to these mortgages does not go after the problem that and risky speculative tools and em- that should have never been let. This caused the debacle, what do the regula- power our regulators to prevent an- bill fails to address that. Two of the tions do? We are in a situation right other crisis. But we did not. I heard leading causes of the financial debacle now where business in this country is Senator DODD, who I have enormous re- we failed to addressed. frozen. It is frozen solid because of the spect for—and I think he put a tremen- Finally, a point we needed to address, actions of the Congress and this admin- dous amount of time into this bill, but and we did: My colleague and friend, istration who are doing so much to this I heard him on the floor the other day, who presides over the Senate this economy that big business and small in giving his sort of summation as to afternoon, was the person who was the business alike do not believe they can why this bill should be passed, saying leading proponent on trying to do hire new workers.

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00075 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.043 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5944 CONGRESSIONAL RECORD — SENATE July 15, 2010 There is so much uncertainty in the this country and in the boardrooms of most other financial crises in the past marketplace. I hear this from small the businesses of America’s companies. is flawed Federal Reserve monetary businesspeople in Florida where we That is how Washington solves a prob- policy. Starting in the late 1990s, have 1.9 million small businesses, to lem these days. We don’t fix the SEC former Fed Chairman Alan Greenspan workforce centers which are trying to which is the agency that is supposed to used easy money to prop up the finan- get people back to work, to incubators be doing the job. We don’t go in and cial firms, manipulate the stock mar- which are trying to grow new jobs, to fire all the people at the Securities and ket, and micromanage the economy. presidents of chambers of commerce, Exchange Commission who should have That easy money inflated the tech and other folks I talk to regularly. been on top of this. We create a whole stocks and the dot.com bubble. After They tell me business is frozen. Wash- new governmental level of bureauc- that bubble burst, as well as following ington is doing so much to the econ- racy. We layer governmental agency on the September 11 terrorist attacks, he omy they do not know where to turn top of governmental agency, create again loosened monetary policy which next. Because they do not know what more power, create bigger government, began to inflate the largest asset bub- the future looks like, and because this spend more of your money, and run ble in history. While the bubble was government is pulling these huge le- this country into further debt. the most visible in housing, it was a vers on the economy, they believe they We need a change. We need to do debt bubble that spread across all cannot make any moves. things differently. I wish I could have households, corporate, and government Because of the health care bill, busi- voted for this. I wish it would have fo- borrowing. nesses in Florida, small businesses are cused on the issues it needed to, but, In about 2004, the housing bubble telling me they are not going to hire unfortunately, I can’t because it does started to become unstable, but lend- new people because they cannot afford more harm than good. I am appre- ing standards were relaxed and the rise the new regulation. In fact, some of ciative of my colleagues for supporting of subprime and other nontraditional these businesses are not only going to the amendment I did with Senator mortgages enabled the bubble to keep not hire new people, they are going to CANTWELL on the rating agencies, but growing for another couple of years. let people go. only in that regard and in a few other Eventually, the housing bubble became This financial regulatory reform regards did we do something that actu- unsustainable and popped. The cor- bill—a business in Florida has told me ally helped. Most of what we did didn’t porate debt bubble largely did the its trading desk is going to the Baha- fix the problem and it caused more same, and we are now seeing govern- mas. Those folks are now going to harm than good. ment debt become unsustainable move and no longer add to our tax base With that, I yield the floor. around the world, including here in the and the wealth and diversity of our The PRESIDING OFFICER (Mrs. United States of America. community because this regulation is SHAHEEN). The Senator from Kentucky. Despite the Fed’s history of causing going to put them in a situation where Mr. BUNNING. Madam President, I financial crises and its clear role in the business says it is more beneficial to have come to the floor to speak about current crisis, this bill does nothing to the conference report on the financial move them out of the State, out of the rein in the Fed. Chairman DODD’s origi- country. There are always unintended regulation bill the Senate has just nal draft bill presented to the Banking passed. I think it was a huge mistake. consequences. When we pull these huge Committee last year took some posi- I voted against the bill, and now I wish levers on the economy, we create tre- tive steps to get the Fed back on track to take some time to explain why. mendous uncertainty, and business The short explanation is the bill does by removing the Fed as a regulator. does what business needs to do to keep not address the causes of the financial But unfortunately, that did not make its people working and to make profits. crisis and instead it sows the seed of it into the final bill. Nothing in this That is what business is focused on. the next financial crisis while adding bill will stop the next bubble or col- Those are the jobs that allow all of us unnecessary strains on our already lapse if the Fed continues with its easy to work, to provide for our families. struggling economy. I am going to money policies. Cheap money will al- Right now, those jobs are under siege. spend the next little while giving the ways distort prices and lead to dan- In a State such as mine where we have longer explanation. gerous behavior. No amount of regula- nearly 12 percent unemployment, As I have said many times in the tion can contain it. where times are especially difficult, Banking Committee and on the floor of In addition to its flawed monetary the last thing in the world we need is the Senate, I want to pass a strong fi- policy, the Federal Reserve failed as a for the Federal Government to be mon- nancial reform bill that reins in the ex- regulator leading up to the crisis. The keying with the economy to the extent cesses of our large financial companies Fed was responsible for regulating that businesses can’t feel as though and the Federal Reserve. No one has most of the large financial holding they can hire new workers. been a stronger voice against the finan- companies, but instead of regulating This financial regulatory reform bill cial industry enablers at the Fed than them, it was a cheerleader for them. does more of what the health care bill I have. I have fought every bailout The Fed, along with other regulators, did, and it seems to be the penchant of brought to the Congress as well as the allowed those firms to grow even larger this Congress. We should be focused on bailouts that the Federal Reserve and and take unwise risks. And in what jobs. We should be here day and night both the Bush and Obama administra- may be the Fed’s greatest regulatory trying to find ways to make sure busi- tion put in place without the approval failure, Chairman Greenspan refused to ness has the incentives it needs to cre- of Congress. I very much wanted to do the job Congress gave him and the ate new jobs and retain jobs, because pass a bill that ends bailouts and reins Fed in 1994—1994—the job to regulate we need to get people back to work. in the reckless activities of our finan- mortgages. Instead of taking action This financial regulatory reform bill cial system. Unfortunately, like the that could have prevented at least part was a bill we should have had 80 or 90 bill passed by the Senate earlier this of the housing bubble inflated by votes on. It should have been narrowly year, the conference report before the subprime and nontraditional mort- focused and tailored on the problems Senate today did not end bailouts. In gages, Chairman Greenspan encouraged that caused the financial debacle of fact, it does the opposite and makes homebuyers to get those kinds of mort- 2008 that we still suffer through. This them permanent. gages. He and Chairman Bernanke, Chamber needs to get in the business of This bill will also lead to future fi- along with many others at the Fed, focusing on what should be done to ad- nancial disasters because it ignores the sang the praises of those mortgages as dress the problem and not using every root causes of the crisis. It fails to put financial innovation that reduced risk. crisis as an excuse to grow govern- the necessary handcuffs on the key How well did the Fed approach to ment. This new consumer agency we parts of the financial system and will regulation work, I ask my colleagues? created will cost billions of dollars and result in even greater concentration of Well, in 2008, most, if not all, of the will empower a new Federal Govern- the financial system in a very few large largest firms regulated by the Fed ment executive, who reports to no firms. would have failed had they not been board, to be able to make broad and The largest single contributing fac- bailed out through TARP or by the Fed wide-ranging policy decisions across tor in the current financial crisis and on its own. That seems like a pretty

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00076 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.094 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5945 open-and-shut case for me for removing The bill does not shut off the Federal borrower’s. Second, the bill ignores the all regulatory responsibility from the Reserve’s bailout powers. While some role of government housing policy and Fed and giving it to someone who will limits are placed on the Fed, the bill Fannie Mae and Freddie Mac, which use it. But that is not what this bill still lets it create bailout programs to have received more bailout money than does. Instead of real regulatory reform, buy up assets and pump money into anyone else. The bill does not put an the bill concentrates regulation of the struggling firms through ‘‘broad- end to the government-sponsored en- largest financial firms at the Federal based’’ programs. That will put tax- terprises’ taxpayer guarantees and sub- Reserve, despite the Fed’s long history payers directly at risk and make Fed sidies or stop the taxpayers from hav- of failed regulation. bailouts a permanent part of the finan- ing to foot the bill for their irrespon- As I mentioned earlier, the original cial system. sible actions over the past decade. Over draft of this bill removed bank and Instead of putting all these bailout 96 percent of all mortgages written in consumer protection regulations from powers into law, we should be putting the first quarter were backed by some the Fed and all the other regulators failing companies into bankruptcy. type of government guarantee. Until and created a single new banking regu- Bankruptcy provides certainty and we resolve the future of the these enti- lator. That is a better approach. But it fairness, and protects taxpayers. Under ties, the private mortgage market will was dropped before the bill ever got out bankruptcy, similar creditors are not return and the risk to the tax- of the Banking Committee, and now treated the same, which prevents the payers will continue to increase. the Fed gets more power for both jobs. government from picking winners and As I mentioned at the beginning of my statement, this bill is going to have Except for possibly Chairman DODD, no losers in bailouts. Shareholders and one has criticized the Fed more than creditors also know up front what real consequences for the economy at a me for its failure to use its consumer losses they are facing and will exercise time when the recovery is looking protection powers to regulate mort- caution when dealing with financial more like a second dip of the recession. gages. Chairman Greenspan did noth- companies. Some of us tried to replace Combined with the tax increases that ing for 12 years after Congress gave the bailout provisions with a revised will take effect at the end of this year, I am afraid we may not see real recov- him the power. Chairman Bernanke bankruptcy section for financial com- ery until 2012 or later. One way this took another 2 years to act after he re- panies, but, unfortunately, we were not bill is going to affect the economy is by placed Chairman Greenspan. Clearly, successful. the increased consumer protection reg- the Fed did not take consumer protec- Since the bill does not take away ulation that will reduce the avail- tion seriously and it deserves to lose government protection for financial ability of credit from banks and other that job. companies and send those that fail I support strengthening consumer through bankruptcy, it should at least firms that had nothing to do with the protection in the financial system, but make them small enough to fail. Dec- financial crisis. Another way was highlighted in a I cannot understand keeping that job ades of combination have allowed a front-page article in the Wall Street inside the same Fed that ignored it for handful of banks to dominate the fi- nancial landscape. The four largest fi- Journal yesterday on the impact of the decades. Next to reining in the Fed, the derivatives regulation in the bill on most important goal of this bill should nancial companies have assets totaling over 50 percent of our annual gross do- farmers. I have been as critical as any- be to end bailouts and the idea of too one of the lack of regulation of deriva- big to fail. Instead, the bill makes too mestic product, and the six largest have assets of more than 60 percent. tives—which was again largely thanks big to fail a permanent feature of our to Alan Greenspan—and I think we financial system and will increase the The four largest banks control approxi- mately one-third of all deposits in the need more transparency and oversight size of the largest financial firms. As I in that market, especially for credit country. This concentration has come said earlier, the bill concentrates regu- default swaps and related products. But about because creditors would rather lation of the largest financial institu- the bill goes too far in its impact on or- deal with firms seen as too big to fail, tions at the Federal Reserve. The Fed dinary end users who are using deriva- knowing that the government will pro- failed as a regulator leading up to the tives to hedge commodity costs or in- tect them from losses. I would rather crisis and should not be the regulator terest rate and currency risks. The take away the taxpayer protection for of any banks. But now Fed regulation Wall Street casino needs to be shut creditors of large firms and let the will be a sign that a firm is too big to down, but the bill should not prevent market determine their size. But if fail. legitimate derivative customers from that is not going to happen we should On top of the new Fed’s seal of ap- buying responsible protection. proval for the largest banks, this bill place hard limits on the size of finan- I have many other concerns about creates a new stability council that cial companies and limit the activities this bill that I have discussed in the will designate other nonbank firms for of banks with insured deposits. Any fi- past on the floor and in the Banking Federal regulation and, thus, too big to nancial companies that are over those Committee. The bill returned by the fail. Fed regulation of the largest size limits must be forced to shrink. conference committee will not solve banks is not the only way this bill This will lead to a more competitive the problems in our financial system. makes too big to fail and bailouts per- banking sector, reduce the influence of It is regulation without reform. I had manent. The largest bank holding com- the largest firms, and prevent a hand- hoped we could work together in a bi- panies and other financial firms will ful of them from holding our economy partisan way to craft a bill that ends now be subject to a new resolution and government hostage ever again. too big to fail forever, but this is a process. Any resolution process is by Like most of the other real reform highly partisan bill that will accom- definition a bailout because the whole ideas that were proposed while pre- plish little. And one of the chief au- point is to allow some creditors to get vious versions of this bill were in the thors of the bill, Chairman DODD, ad- paid more than they would in a bank- Banking Committee or on the Senate mits that even he does not know how ruptcy court. The regulator will have floor, meaningful limits on the size of the bill will work and won’t until after the power to pick winners and losers by banks were left out. it is in place. paying some creditors off on better Along with not solving too big to In the end, the bill gives so much dis- terms than other creditors. fail, this bill does not address the hous- cretion to the Fed that the best de- Even if the financial company is ing finance problems that were at the scription of the new regulations is they closed down at the end of the process, center of the crisis—and still with us are whatever the Fed says they are. Or the fact that the creditors are pro- today. First, there is nothing in this to borrow the title of David Wessel’s tected against the losses they would bill that will stop unsafe mortgage un- recent book, it can be described as ‘‘in normally take will undermine market derwriting practices such as zero down- Fed we trust’’. We saw how well that discipline and encourage more risky payment and interest-only mortgages. worked out the last time. I cannot un- behavior. That will lead to more Bear There is a lot of talk of making finan- derstand why anyone expects it will Stearns, Lehmans, and AIGs, not less. cial companies have skin in the game, work out better this time. The resolution process is not the but when it comes to mortgages, the I yield the floor and suggest the ab- only way this bill keeps bailouts alive. skin in the game that matters is the sence of a quorum.

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00077 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.085 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5946 CONGRESSIONAL RECORD — SENATE July 15, 2010 The PRESIDING OFFICER. The debt and the ultimate sacrifice this The PRESIDING OFFICER. Without clerk will call the roll. young man has made, but this will en- objection, it is so ordered. The assistant bill clerk proceeded to sure his name lives on, not just in his f call the roll. friends’ and families’ hearts but in the REMEMBERING MAURICE ‘‘MO’’ Mr. CHAMBLISS. Madam President, heart of his hometown. I ask unanimous consent that the order I yield the floor. BAILEY for the quorum call be rescinded. Mr. ISAKSON. Madam President, I Ms. MURKOWSKI. Madam President, The PRESIDING OFFICER. Without am pleased to join the senior Senator as I mentioned, this has been a very objection, it is so ordered. from Georgia, my friend SAXBY difficult week for our military and our Mr. CHAMBLISS. Madam President, CHAMBLISS, to pay tribute today to veterans communities in the State of I ask unanimous consent that Senator Robert Collins. Alaska. On Tuesday of this week we ISAKSON and I be allowed to speak as in This naming of a post office is most came together in Sitka, at Sitka Air morning business. appropriate in Tyrone, GA, and it is Station, the Coast Guard air station The PRESIDING OFFICER. Without most appropriate because of the great there, to honor the memory of three objection, it is so ordered. sacrifice of this young man, whose members of the U.S. Coast Guard who f story, as Senator CHAMBLISS says, is gave their lives in a very tragic acci- compelling. dent, the crash of an H–60 Jayhawk hel- HONORING OUR ARMED FORCES One interesting point I wish to make icopter. This was off the coast of Wash- LIEUTENANT ROBERT WILSON COLLINS is that he was the son of two lieutenant ington on July 7. It was a real tragedy Mr. CHAMBLISS. Madam President, colonels retired from the U.S. military. for the Coast Guard families as a I rise today to urge my colleagues to His mother, LTC Sharon L.G. Collins, whole. The community of Sitka is one join me and my colleague, Senator and his father, LTC Burkitt ‘‘Deacon’’ that truly embraces the men and the ISAKSON, in honoring the life and com- Collins, spent more than 20 years in the women of the Coast Guard. In addition mitment of 1LT Robert Collins of Ty- U.S. military. to being the ones who pluck the fisher- rone, GA. His mother said: We never asked him men out of the sea when they are in Lieutenant Collins grew up in the to follow us into the family business— jeopardy or at risk, these are the men small town of Tyrone in Fayette Coun- being the military—but he did follow and women who are helping in the local ty, where he attended Sandy Creek us into the family business in large churches, helping with Boy and Girl High School, played football on Friday measure because of what happened on Scouts, coaching the kids. They are nights, where he became a standout 9/11/2001. truly members of our community. The student that would take him to the Following that tragic day in Amer- loss of these three men is very painful halls of West Point, and where he at- ican history when he watched the ter- for us all. tended Hopewell United Methodist rorist attacks on the Twin Towers, he I attended that ceremony on Tuesday Church with his family every Sunday expressed to his parents a desire to join in the hangar in Sitka. After I left, I morning. the U.S. military. His mother re- took the flight back to Washington, On the 7th of April 2010, Lieutenant sponded, along with his father, by mak- DC. I took the redeye. When I arrived Collins made the ultimate sacrifice ing an appointment for him to visit on Wednesday morning I was informed when an improvised explosive device West Point. They dressed him up in his of the passing of a very dear friend of detonated near his vehicle on the very best outfit and took him to West mine, a gentleman who made a pro- streets of Mosul, Iraq. He was 24 years Point. found contribution to the lives of so old. Upon leaving Tyrone, one of his many of Alaska’s veterans. I am speak- To me, it is a particularly difficult friends stopped him before he got in ing today of an individual by the name situation because Lieutenant Collins the car to go to West Point and said: of Maurice Bailey. We called him Mo. was one of my appointees to West Why are you dressed up so well? Mo was from Wasilla, AK, and he was a Point. He graduated from West Point He said: Because my mom and dad disabled Vietnam era veteran who in 2008 and became an officer in B Com- are colonels. fought the VA bureaucracy to obtain pany, 1st Battalion, 64th Regiment of That is the kind of young man he his earned benefits. the Armor Unit, 3rd Infantry Division, was—respect for his parents, the U.S. He fought for himself and he was suc- based at Fort Stewart, GA. He de- military, and the greatness of our cessful in that, but he went beyond ployed to Iraq in the autumn of 2009. country. that. He devoted the rest of his life to Lieutenant Collins served as his pla- He applied to West Point. Senator ensuring that the challenges of Alas- toon’s commander. While in Iraq, his CHAMBLISS appointed him to West ka’s veterans were not forgotten. He unit was charged with improving secu- Point, and he was there with distinc- focused his efforts on those veterans rity and the quality of life for the Iraqi tion. And later in 2009, he went off to who live in more than 200 rural com- people. He and his men also provided serve the U.S. military. Unfortunately, munities that are not connected by security for the recent successful Iraqi on April 7, he made the ultimate sac- road to the rest of Alaska or certainly elections. They were dedicated to the rifice for the people of this country. to the continental United States. goal of a democratic Iraq and sought to It is only appropriate in every way These are the communities of bush help its people lead normal, safe lives. possible that we pay tribute to the Alaska. Robert’s friends have described him young men and young women who sac- In 2003, Mo founded Veterans Avia- as a man of great compassion. He was rifice for us so all of us can enjoy the tion Outreach. This is an organization a natural leader who truly found a call- freedom of our country. of volunteer pilots who travel to rural ing in the honor and patriotism of serv- I am pleased, I am honored, and I am Alaska, to the communities that are ice in the U.S. Army. He has been de- proud to join Senator CHAMBLISS in hundreds and hundreds of miles from scribed by his superiors as a young naming this post office in Tyrone, GA, the nearest VA facility. He and his man who performed his duties coura- after First Lieutenant Collins, who was other volunteers did what the VA sim- geously, without hesitation, and with- a member of B Company, 1st Battalion, ply was not doing. They sought out out reservations because, after all, he 64th Armor Regiment, 3rd Infantry Di- those forgotten veterans and helped was a soldier in the U.S. Army. vision, Fort Stewart, GA. them in every way they possibly could. As a small token of gratitude and re- I yield the floor and suggest the ab- When you listen to the stories about membrance for the ultimate sacrifice sence of a quorum. what Mo did and what the Veterans paid by Lieutenant Collins, I am The PRESIDING OFFICER. The Aviation Outreach group did, it was a pleased to join Senator ISAKSON in urg- clerk will call the roll. little bit of everything. They helped ing our colleagues to rename the post The assistant bill clerk proceeded to the veterans fill out applications for office in Tyrone, GA, as the ‘‘1st Lt. call the roll. their benefits. Oftentimes it meant vol- Robert Wilson Collins Post Office Ms. MURKOWSKI. Madam President, unteering to fly a veteran to Anchor- Building’’ in Lieutenant Collins’ honor. I ask unanimous consent the order for age for a medical appointment or per- Nothing we can do can ever repay the the quorum call be rescinded. haps raising the money for an airplane

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00078 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.086 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5947 ticket. In so many of our very rural, It was not too long ago that Mo dis- I could go on for a while about Mo’s very remote communities, there is no covered he had leukemia, but he said it work in service to the Alaska veterans road. You don’t get in your car and was not going to slow him down. In an community, but I would suggest it is drive. So for the veteran to go for care, interview in the Frontiersman news- probably a more powerful statement, a they may be traveling hundreds of paper Mo said: more powerful story, if it is done in miles. They don’t have the money to do I feel as though I’m probably on somebody Mo’s own words. I ask unanimous con- so. So Mo would bring his guys to- else’s time. But that’s OK. There is no quit. sent that two articles, one from the gether or he would get in his plane and No way, no how. I’m never going to prepare Vietnam Veterans of America maga- he would fly out there and pick them myself to die. Never. zine and the other from the Anchorage up. Mo really did live his life and live it Daily News, be printed in the RECORD Sometimes the help meant delivering large. at the conclusion of my remarks. moose meat, clearly a very desired food I got a call in early January. I was The PRESIDING OFFICER. Without staple in rural Alaska. Sometimes it traveling and I got a call from my staff objection, it is so ordered. meant building a wheelchair ramp in a person out in the Mat-Su Valley and he (See exhibit 1.) veteran’s home. This was an all-volun- said: Mo has leukemia. He is not doing Ms. MURKOWSKI. I place these arti- teer operation. It functioned on raffles well. He is in the hospital and this may cles in the RECORD not only because and bake sales. All too often the money be it. Mo’s legacy needs to be preserved in came straight from the pockets of its I called the hospital. A man an- history, not only to do justice to the own volunteers. swered. I asked to speak to Mo. The tremendous contribution of Mo Bailey, We are a State that reveres all of our guy on the other end said, ‘‘Well, this I am really hoping these articles will veterans. In Alaska we are home to is Mo.’’ catch the attention of some of the sen- more veterans per capita than any I said: Mo, you sound pretty healthy. ior officials within the VA. Reading other State in the Union. We are also He said: Yes, they tell me I am not about the gaps in service Mo Bailey known as a very strong State for vol- going to make it. They tell me I am sought to fill might challenge the VA untarism. Support for veterans is done. I am in the hospital. But I just to think a little bit harder about how clearly the rule. In many of the com- don’t feel like dying. I don’t feel like I it can improve its service to other munities it is difficult to provide for am ready. rural veterans. At the very least, it that level of support, but we figure out I said: Mo, you don’t sound like you might cause the VA to acknowledge a way to do it anyway. are going anywhere. You sound like the debt it owes to people like Mo Bai- It is universally acknowledged that you have got a lot of fight left in you. ley and so many others in our veterans there was something exceptional about Mo said: You know, there are some service organizations who are giving of Mo Bailey. His was a life of selfless things I want to do. I have been work- their own time, their own energy, their service, sacrifice, and humility. He was ing on this veterans gathering. It is a own money, to fill these gaps. So truly a cut above the rest, and that is big gathering in the valley with so maybe, just maybe, Mo’s story, which a pretty strong statement when you many of our Alaskan veterans. I have has been an inspiration to so many of consider the many veterans who call got a lot of things to do. I have got us in Alaska, will also inspire the VA Alaska home. But Mo never sought rec- some things I want to give you. You to do more and to do better. ognition for himself. He was so humble. know, I am focusing on that. On behalf of all of my Senate col- But this did not stop his friends from I said: Mo, I will see you in May at leagues, I express my deepest condo- ensuring that he received the recogni- the gathering. lences to Mo’s wife Ann and all of those tion he had so honorably earned. In This was January and he had been who have been touched by Mo Bailey’s 2007, Mo was awarded with the pres- told this was pretty much the end. But generosity and kindness. in May Mo hosted the gathering in tigious Alaska Governor’s Veterans EXHIBIT 1 Advocacy Award. I do not believe I am Palmer, his annual day-long event that provides Alaska vets across the genera- REACHING THE UNREACHED IN ALASKA overstating when I say today that we VETERANS AVIATION OUTREACH tions an opportunity to spend time mourn the loss of one of our State’s (By Jim Belshaw) most significant veteran leaders. with one another. They listen to music. In the course of his 20-year Army career, Mo Bailey was born in 1939 and grew They donate something to the Vet- erans Aviation Outreach, and they Maurice Bailey, president of VVA Chapter up in Memphis, TN, during the Jim 903 in Mat-Su, Alaska, pulled two tours in Crow era. The story goes he was look- have a lot of fun. Vietnam and one in Alaska. He thought ing up at the B–17s flying overhead and There are some speeches, too. You Alaska was a ‘‘cool place’’ and went back he told himself: Someday I am going to can’t go to any veterans gathering there to live. It was different from anything be flying those. Mo recounted, in a 2009 without a speech or so. But at that he’d known, and he liked things that were interview published in the Frontiers- May gathering, Mo honored me with a different. Since 1980, the mechanic-turned- man newspaper: Veterans Aviation Outreach jacket. It pilot has flown small fixed wing aircraft around the state. With a handful of other Black people there said they didn’t think has my name on it and I am an hon- orary member of the Veterans Aviation veteran-pilots, he’s hoping to turn those long this would ever happen. But at 7 years old I years of experience in the air into something knew this is the United States of America Outreach. that will help Alaska’s aging veteran popu- and you can do anything you want to do. Mo stood with me there and we both lation. That was my heart’s desire. talked about the fact that, back in As Bailey himself got a little older, he said Those were Mo’s words. January, May looked like it was a long he decided to put in for ‘‘some VA disability Mo enlisted in the Army at the age of way away. But Mo is a fighter. Mo was stuff Agent Orange-related and PTSD. Just a 17. I say to the pages down here, he not one who was going to go out easy. whole gamut of stuff.’’ He said the VA expe- joined the Army at 17. He forged his fa- At those many speeches I told those rience ‘‘wasn’t a cakewalk,’’ but when it was ther’s signature on the consent form. at the gathering that as much as I can done the VA found him to be 90 percent dis- Then he served 20 years. He pulled two do, as much as I want to do for our vet- abled. That got him to thinking about other veterans. 74,000 of whom live in Alaska, some tours in Vietnam and one in Alaska. He erans, I am here in the Senate to help in remote villages far from any kind of serv- was a helicopter crew chief and a gun- Alaska’s and all veterans. I said: Mo, I ice, Alaska being a good place to be alone if ner. will never hold a candle to you, but I that’s your desire. There are 234 villages in Then, upon retirement from the sure promise to try. And I promised to Alaska. They range in population from 50 to Army, he decided to stay in Alaska and try to do more, and today I renew that 500. A big town might have as many as 2000. get involved in our community. He be- commitment in Mo’s loving memory. ‘‘A lot of people are hiding,’’ Bailey said. came a private pilot and a flight in- Many of us who were gathered there ‘‘They just wanted to run away. They just structor. He was a trained Veterans thought that event was going to be don’t want to be bothered.’’ He’d spent many year flying to such Service Officer and he served as presi- Mo’s ‘‘last hurrah,’’ and indeed that is places. While he noticed the large number of dent of the Vietnam Veterans of Amer- the way it turned out. But Mo contin- veterans, he didn’t give it much thought ica Chapter 903 in the Matanuska- ued to fight right up until the very end until he went through his own VA experi- Susitna Valley. on Tuesday evening. ence. He wondered how many of Alaska’s

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00079 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.095 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5948 CONGRESSIONAL RECORD — SENATE July 15, 2010 veterans might be so far removed that they said, and he’d ‘‘given up on life.’’ So they do combat pilots—the rest of the guys are. I’m didn’t know they had benefits coming, let small things that will enhance that life. not. We were all in Vietnam together. All of alone how to get them. They put in a claim for a veteran suffering us are retired from the military, looking at He became a veterans service officer. It from diabetes. It took eight months to set- our brothers and sisters and saying, ‘‘Well, seemed the natural for him. He met men he tle, but the veteran received $4,000 in back what can we do?’’ We didn’t set out to do hadn’t expected to meet. pay and now gets $200 a month for the rest of this, trust me. We were enjoying our retire- ‘‘I met World War II guys,’’ he said. ‘‘One his life. ment, our grandchildren. guy in particular, a tough old guy 84 years ‘‘He’s real happy because now he can buy Q. Can you give me some specifics of the old. He was gut shot twice, medically dis- fuel oil,’’ Bailey said. kind of outreach you do? charged, and given a 30 percent disability. He Bailey is direct when dealing with vet- A. We’ve been to all villages up and down quietly disappeared into the wilds of Alaska. erans, ‘‘I try to explain to them, ‘‘Look guys, the Kvichak River and Lake Iliamna. We When I met him, he was still flying air- you’re old and you’re sick now,’’ he said. found out veterans had been buried without planes. The oldest guy I saw was 90 years old. Tom Baird said decisions between quantity flags. We decided that was totally unaccept- He says he doesn’t mean to criticize the and quality is always difficult. able. VA when he says it needs to do outreach. He ‘‘We’ve run into difficulty making deci- Q. Where was that? thinks that if the VA did a credible job of sions about reaching as many people as we A. It was in Newhalen on Lake Iliamna. We outreach, it would be overwhelmed by the can or making sure those we have contacted came back and went around to organizations needs of veterans. He thought perhaps a are taken care of before we move on,’’ he such as the VFW. We got flags at the Wasilla smaller number of people working on a mod- said. ‘‘Because of the difficulties of proc- Vet Center. We took flags out to make sure est scale might be a good place to begin. essing and getting things done, it’s looking that people who had died recently, they re- Maurice Bailey got together with other like we’re going to go for quality first. These ceived flags they hadn’t gotten before and we veteran pilots—Tom Baird and Joe guys already had been promised the world left flags there so they could have them to Stanistreet (no longer with VAO) and Chuck and gotten nothing, so it makes no sense to take to six surrounding villages. That was Moore—to talk about the possibility of doing go out there if we’re not going to be able to last year. outreach themselves. Bailey had been doing do it right.’’ Q. What about more recently? it on his own for a year and asked his friends Maurice Bailey counts his blessings and A. We help veterans, no matter where. Last if they’d like to join him. A fourth later speaks of a duty to share them. month, a guy was on dialysis. He had to joined the group—Jim Kendall, a photog- ‘‘Life has been pretty good to me,’’ he said. come into Wasilla three times a week. He rapher and navigator. ‘‘I live pretty good. But we’re here for more From these conversations grew Veterans lived in Sutton. His house was not sanitized, than to just live pretty good. We’re here to Aviation Outreach, Inc., three veteran pilots broken pipes. We took a couple ladies out, flying their own airplanes to reach people help people when they need it.’’ cleaned the house, took a plumber out to fix who live ‘‘off the road’’ in a place not known [From the Anchorage Daily News, Nov. 18, pipes for water, built a handicapped ramp. to have many roads. Many of those veterans 2008] Now he’s able to do his dialysis at home. Q. Where does the money come from? live in what is described as ‘‘survival mode’’, PILOTS BRING HOPE, HELP TO VETERANS IN A. Most of it comes out of our pockets. barely existing, often finding comfort in al- ALASKA—VAO: OUTREACH BY 7 VETS IN- Sometimes people give fundraisers, spaghetti cohol, only to have the alcohol lead to unem- CLUDES FOOD, CLAIMS HELP AND FLIGHTS TO dinners, garage sales, cookie bakes or what- ployment. THE DOCTOR ever. We do lots of stuff. I tell you what, I’m From the beginning, Bailey said, trust was (By Zaz Hollander) the critical factor in the success they’ve had. not just bragging, I’m really proud. We’ve Because of his long experience flying around WASILLA—A national veteran’s group re- had a heckuva impact doing things for peo- Alaska, he came to know many of the dis- port released last month highlighted health- ple, little things that (otherwise) people, tant veterans. It made a difference when he care struggles facing Alaska Army National they got to paperwork it to death. broached the subject of benefits. By way of Guard members returning from deployments We just gave away 2,100 pounds of moose illustration, he tells of another veteran who to rural villages. But news of under-served meat. We do it every year, have a deal with went to a small village where no one came Bush veterans came as no surprise to Mau- guides in Healy. They bring Lower 48’ers on out to greet him. But when Aviation Out- rice ‘‘Mo’’ Bailey, a Wasilla flight instructor hunts. They want horns. We want meat. We reach went to the same place, they signed up who served as a helicopter flight engineer caravan a couple of trucks, pick up the meat 29 people in two days for health care and with the U.S. Army during the Vietnam War. and have it processed. The neediest people benefits. Several years ago, Bailey and six other get it first. Valley veterans. Actually, we ‘‘These guys have seen me around these veterans—also pilots—took to the skies in sent meat to the Bush—400 pounds last year villages and they trust me,’’ Bailey said. ‘‘I their own planes to help veterans living in to Naknek. Last week we also bought two know most of them. I know their kids.’’ Western Alaska. All had flown the area for freezers for needy veterans and filled both up Bailey said Moore, with whom he served in fun, and saw veterans in need of help. In 2003, with meat. Vietnam 38 years ago, is a key player in the Bailey created a nonprofit, Veteran’s Avia- Q. How many veterans do you serve? effort and the pilot with the most experi- tion Outreach, which serves ‘‘isolated vet- A. I just started tracking that. We see and ence. erans’’ in rural or remote parts of western help maybe two veterans a week. On a large ‘‘He was a young pilot (19) and I was an old Alaska and elsewhere. scale, like the meat giveaway, it’s to 50 to 60 man (25),’’ Bailey said. ‘‘He flew gunships. He The men mostly help people file for Vet- people. Out in the Bush, we file claims for left the Army and went into the Navy to fly erans Administration benefits. But they’ve people with disabilities, illnesses. We do a jets. He flies 90 percent of the missions for also flown out veterans in need of medical little bit of everything. VAO. At this time he also flies for the State care, made sure deceased veterans got flags Q. Where’s the next trip? of Alaska. We have three pilots and four air- for their graves, and shared literally tons of A. Dillingham. Hopefully (early Novem- planes. Chuck owns two airplanes and the moose meat scored from helpful guides. ber). We’d like to have a gathering there. We other two are owned by Tom Baird and my- In 2005, they filed benefit claims on behalf had 600 people last spring at a Wasilla Air- self.’’ of six Naknek veterans. The next year, they port gathering, with a barbecue and a band Tom Baird underscores the importance of flew a rural resident to Anchorage for emer- . . . We had World War II, Korea, Vietnam, trust with the veteran’s community. gency medical care, a visit that also resulted Iraq and Afghanistan vets. When I travel in the bush, most contacts in diagnoses—and later treatment—of diabe- What made it so amazing was that these are developed by these kinds of relation- tes and post-traumatic stress disorder. young guys that just returned from Iraq and ships,’’ he said. ‘‘Once you establish a rela- Now 69, Bailey last year received the Gov- Afghanistan were able to communicate and tionship with an individual as a friend, you ernor’s Veterans Advocacy Award for his talk to guys that was in World War II. A lot end up being steadfast friends. Individual ‘‘outstanding volunteer service.’’ of those guys won’t be around here next homes are open to one another. Most of the He talked about the flying outreach group year. during a recent conversation. people in this state will stop and give a hand The PRESIDING OFFICER. The Sen- if you need it. We want to reach the Q. Why did you start? unreached who are out of sight and out of A. Seeing the conditions that many vet- ator from New Jersey is recognized. mind. These individuals are extremely inde- erans are in. Me and the rest of the pilots f used to fly to western Alaska. We saw that pendent. They like to do things for them- MORNING BUSINESS selves whether they can or not.’’ people would have medical problems and Bailey says the four members of Veterans some people in some cases died, leaving huge Mr. MENENDEZ. Madam President, I Aviation Outreach have no grand illusions. debts. Had they known they had benefits, the ask unanimous consent that the Sen- They try to do ‘‘small stuff.’’ They sign peo- VA would have taken care of that. It’s most- ate proceed to a period of morning ple for VA benefits; they recruit new VVA ly information: these people are clueless. business, with Senators permitted to members. Believing there is strength in Once you’re released from the military, you numbers, they do what they can to build the are not tracked, updated. speak therein for up to 10 minutes veterans community. Q. Why western Alaska? each. They built a wheelchair ramp for a veteran A. We were retired, just kind of goofing The PRESIDING OFFICER. Without to get in and out of his house. He’s 50, Bailey around (and flying the area). They’re all objection, it is so ordered.

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00080 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.047 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5949 CUBA TRAVEL BAN to peacefully create change in their arrest 52 political prisoners, why will it Mr. MENENDEZ. I have come to the country and who get imprisoned for take 4 months to release all of them? floor many times to speak out about years for that peaceful act, then when It is not a coincidence that during the Castro regime’s abuses of the they are released, they are released the next 3 or 4 months, there will be Cuban people. Today, I come to the only with the understanding that they Members of the Congress who will be floor once again, this time in strong will be deported out of their country so looking to provide the Castro regime opposition to any attempt in this they can no longer be advocates, peace- with billions of dollars of added tour- Chamber to pass any bill that in any ful advocates, for civil society and ism revenue. It is not a coincidence way lifts or lessens the travel ban on democratic change. Imagine if those of that in September, the European Union Cuba. I wish to make it absolutely us who are Americans could be arrested will once again deliberate the wisdom clear that I will oppose and filibuster, simply because we disagreed with the of its remaining sanctions. The nag- if I need to, any effort to ease regula- government, sought to peacefully ging question that lingers in my mind tions that stand to enrich a regime change it, and then ultimately, after is, Will the 47 ever see the light of day that denies its own people basic human being arrested for years, were deported or will they be forcibly deported from rights. I do not want to obstruct the to some other country in the world. their country and another 52 arrested business of this Chamber, but I know The remaining 47 prisoners are set to overnight to take their place? my colleagues on both sides of the aisle be released but not now, not tomorrow, It is possible the regime will never are well aware of how deeply I feel not next week, not even next month, release them because they do not want about freeing the people of Cuba from but sometime during the next 3 to 4 the world to see them because of the the repressive regime under which they months, we are told—or so the regime torture to which they have been sub- have suffered for too long. says. jected. Here is one of those prisoners. The fact is, the big corporate inter- According to reports in the Miami Last month, a man named Ariel Sigler ests behind this misguided attempt to Herald, nine of those prisoners have was released from a Cuban prison on weaken the travel ban could not care said they will refuse to leave for Spain the verge of death. He was a 250-pound less whether the Cuban people are free. if released, and many who were re- amateur boxer. You see him there in They care only about opening a new leased and forcibly deported to Madrid great health. This is the picture of his market and increasing their bottom have vowed to continue their activism release—a 100-pound paraplegic. A 100- line. This is about the color of money, in exile. They have told reporters they pound paraplegic. He did nothing to de- not the desire for freedom. feel the shock of being forced to leave The very fact that a travel bill has serve that set of consequences. their country. Omar Rodriguez Saludes Last month, the regime once again moved through the House Agriculture told a reporter he feels ‘‘like I was still Committee makes one wonder why refused to let the United Nations Spe- in prison. I left behind part of my fam- American agricultural interests would cial Rapporteur on Torture visit the is- ily. I still feel like I have the cuffs on even care about tourist travel to Cuba. land, which, in my own view, speaks my hands.’’ One can only assume it is about gener- volumes about the conditions of the The released men said conditions in ating increased tourism dollars for the thousands of Cubans who have been im- the prison were horrendous. They Castro regime to buy more agricultural prisoned. shared their cells with rats. Diseases products. That would only serve to en- When you oppose the Castro regime, infested the prison. And they told of in- rich the regime and do absolutely noth- you are called dangerous, and there is mates trying to kill themselves or do ing to bring democracy to the island. a charge of dangerousness. Thousands Let’s be clear. Those who believe themselves bodily harm because of the of Cubans have been sent to Castro’s that increasing travel will magically squalid prison conditions they were prisons because of dangerousness. That breed democracy in Cuba are simply forced to endure. Remember, these are is dangerousness: simply opposing the dead wrong. For years, the world has political prisoners, not people who regime and seeking change in your been traveling to Cuba and nothing has committed common crimes. home country—and for other trumped- Julion Cesar Galvez, one of the dis- changed. Millions of tourists from up political charges. sidents, told reporters: democratic nations have visited Ha- If that is what is happening to the 200 The hygiene and health conditions in pris- vana, and the Castro regime has not internationally recognized and known loosened its iron grip on its people. It ons in Cuba are not terrible—they’re worse than terrible. We had to live with rats and political prisoners, then how much has not ended its repressive policies. It cockroaches and excrement. It’s not a lie. worse must it be for the thousands of has not stopped imprisoning and bru- Galvez, a 66-year-old journalist who anonymous political prisoners who tally abusing prodemocracy forces. have not been reported because they Now, sometimes I wonder; those who was sentenced to 15 years simply be- cause of what he sought to write, 15 fall under the charge of dangerousness? lament our dependence on foreign oil According to the State Department: because it enriches regimes and ter- years of his life in these horrible pris- rorist states such as Iran should not ons, said: The total number of detainees is unknown because the government does not disclose have a double standard when it comes There were outbreaks of dengue fever and tuberculosis. such information and keeps its prisons off to enriching a brutal dictatorship such limits to human rights organizations and as Cuba right here in our own back- He said there were more than 1,500 international human rights monitors. yard. prisoners in the prison in Villa Clars— How coincidental that suddenly, now 40 prisoners to a cell measuring 32 Again according to the State Depart- that the Congress is considering lifting square feet. ment: a travel ban, the Castro regime is hop- Another prisoner, Norman Her- One human rights organization lists more ing the world will believe it will re- nandez, said: than 200 political prisoners currently de- tained in Cuba in addition to as many as lease 52 prisoners of conscience. Well, The prisoners are tired of demanding their 5,000 people sentenced for dangerousness. let’s set the record straight. Many peo- rights . . . They lose all hope. They lose ple are wrongly under the impression— their desire to live, and they try to hurt Yet, in the face of this repression, wrongly, reading and watching media themselves so they will get attended to. some Members want to provide the reports—that 52 political prisoners These men were lucky to be released, Castro regime with its No. 1 source of have already been released and are free but they will not give up. They will income: tourism. This is not about in Cuba. The fact is, only about seven continue to tell their stories, and they travel; this is about rewarding a re- have been released, and forcibly—forc- will continue to fight for freedom for pressive regime. We already have hun- ibly—deported from their country—an- all Cubans. dreds of thousands of Americans who other human rights violation—instead It took the regime one night in travel to Cuba for family, education, or of allowing them to stay and peacefully March to arrest these 52 people—one humanitarian reasons under our exist- advocate for change within their own night. That scooped up 52 people who ing law. But tourism to Cuba is a nat- country. were peacefully advocating for change ural resource, akin to providing refined So even when the regime releases in their own country. So we might ask petroleum products to a country such people whose simple crime was trying ourselves: If it took you one night to as Iran. It is reported that 2.5 million

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00081 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.097 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5950 CONGRESSIONAL RECORD — SENATE July 15, 2010 tourists visit Cuba each year—1.5 mil- not change the fate of the Women in Imagine in my home State of New lion from North America, 1 million Ca- White, and it will not change the fate Jersey, where we love the New Jersey nadians; more than 170,000 from Eng- of their family member who remains shore, imagine me not being able to go land; more than 400,000 from Spain, jailed. to any of the beaches in New Jersey be- Italy, Germany, and France combined; It will not change the fate of being cause the government wants to restrict all bringing in nearly $2 billion in rev- imprisoned by the regime and then me from interacting with tourists and enue to the Castro regime. being released, as they have done so that those beaches would be reserved Yet nothing has changed in Cuba ex- many times when there is some inter- only for foreign tourists in my own cept the amount of tourism dollars the national spotlight on an individual, home State in my own home country. regime has at its disposal. What does it only to be rearrested over and over and That is what goes on. do with nearly $2 billion of resources over. Allowing the regime to benefit from from tourism? Does it put more food on It will not change the tragic fate of increased tourism will not change a the plates of Cuban families? Does it Orlando Zapata Tamayo, who was thing in Cuba. It will not bring democ- create a better quality of life for the deemed a prisoner of conscience by racy to Cuba. It will not make condi- Cuban people? No. Even with all of that Amnesty International, who died in tions for the Cuban people any better money coming in, the Castro regime February after being on a hunger or change the history of the brutality still rations people’s food. They have to strike in a Cuban prison for 85 days of the Castro regime, a brutality that stand in line with a coupon to get ac- protesting horrific prison conditions. It continues to this day. Sometimes I cess to a simple meal, waiting in long will not end the desire for freedom or think some of my colleagues just don’t lines for a subsistence meal. Of course, change conditions in Cuba for men like have a sense. This is not using the word when the regime rations people and Guillermo Farinas who began his hun- ‘‘brutality’’ for the sake of it. The pic- they are in line just trying to get a ger strike after the death of Zapata, tures speak a thousand words. I would like my friends in the Senate meal for the day, there is no time for ending it after he heard of the prisoner and others beyond, who may not have promoting democracy or human rights. release, but vowing that he and other fully engaged in understanding what The people are just trying to exist, try- courageous Cubans would join in yet this brutality is all about, to recall the ing to keep their family fed. There is another hunger strike, if the 52 other political prisoners are not released and words of Armando Valladeres who no time but to stand in line, despite wrote the prize-winning book ‘‘Against several billions of dollars to the Castro put back in their homes by November 7. All Hope.’’ He was imprisoned in the regime from tourism. infamous Isla de Pinos in 1960 for his To me, that is an irreversible conces- This photograph shows what he has opposition to communism. He lived sion to a regime that this week ar- been emaciated to in his hunger strike. Lifting the travel ban, allowing tour- through the hell of Castro’s jail, suf- rested a Cuban American for providing ist dollars to flow to the regime will fering violence, forced labor, and soli- laser printers and ink cartridges to a not end any of it. It will not free the tary confinement. His writings were rural woman’s opposition movement in people of Cuba. It will not change the smuggled out of Cuba, read throughout Santiago. He was interrogated, the fate of the Women in White or the de- the world. He was finally released after head of the movement’s home raided by sire for freedom of Guillermo Farinas intense international pressure, 22 years a dozen state security agents, the and the other political prisoners. It after he was taken prisoner. They had printer and cartridges confiscated. will only enrich the regime. to rehabilitate him because they didn’t What a threat, a bunch of printers and Reports this week have pointed out want him released and shown to the ink cartridges. What a threat. He was the economic impact opening travel to world in the circumstances that some subsequently released and put on a Cuba will cause to the Gulf States, of these prisoners are. plane back. Meanwhile, an American Puerto Rico, the Virgin Islands, and Here are some of his memories of ac- remains in prison for helping the is- other democratic neighbors in the Car- tivity at the hands of the Castro broth- land’s Jewish community connect to ibbean. The dollars that will be trans- ers while in captivity: the Internet. After 6 months in jail, ferred from those tourism economies I recalled the two sergeants, Porfirio and this individual still faces no trial and should be for the benefit of a demo- Matanzas, plunging their bayonets into no charges, a U.S. citizen, jailed simply cratic government in a free Cuba not to Ernesto Diaz Madruga’s body. . . . Boitel, de- because he was trying to help the Jew- bail out a brutal regime. The Castros nied water, after more than fifty days on a ish community in Havana to access the don’t deserve it, and the U.S. Gulf hunger strike, because Castro wanted him dead; Clara, Boitel’s poor mother, beaten by Internet. What a crime. What a crime. States and our Caribbean friends can- Yet for the most part we are relatively Lieutenant Abad in a Political Police sta- not afford it. tion just because she wanted to find out silent. According to the Jamaica Daily where her son was buried. . . . Officers . . . They were looking to help the Cuban Gleaner: threatened family members if they cried at a people. But the regime doesn’t want The results of various studies of the likely funeral. anyone engaging with the Cuban peo- impact on the Caribbean of lifting of the U.S. I remember Estebita and Piri dying in ple. They want tourists to provide only travel ban suggests that Cuba’s tourism ar- blackout cells, the victims of biological ex- one thing—hard currency, dollars, rival would surge to full capacity at the ex- perimentation. . . . So many others mur- money. pense of other Caribbean destinations . . . dered in the forced-labor fields, quarries and Visiting the beaches of Varadero and . . . Apart from Puerto Rico and the U.S. camps. A legion of specters, naked, crippled, hobbling and crawling through my mind, and sipping a Cuba libre, which is an Virgin Islands, the most heavily dependent Caribbean destinations on the U.S. and the the hundreds of men mutilated in the oxymoron, provides money to continue most vulnerable, should the legislation to horriffing searches. repression, but it will not let the lift the travel ban pass, ultimately include Eduardo Capote’s fingers chopped off by a Cuban people sip the sweetness of free- [many of the islands in the Caribbean that machete. Concentration camps, tortures, dom. It will not change the plight of would have an enormous economic damage women beaten. . . . the Women in White. These are women to them]. And in the midst of that apocalyptic vision of the most dreadful and horrifying moments who are the mothers, daughters, sis- It seems to me we should be pro- in my life, in the midst of the gray, ashy ters, and wives of those many political moting tourism to the beaches along dust and the orgy of beatings and blood, pris- prisoners in Castro’s jails who each the gulf coast, not to the apartheid oners beaten to the ground, a man week, normally on Sunday, march beaches of Castro’s Cuba. emerged. . . . dressed in white in peaceful protest You are not even allowed, as a Cuban . . . the skeletal figure of a man wasted by with a gladiola and, in doing so, are ul- citizen, to go to the beaches, many of hunger with white hair, blazing blue eyes, the beaches of your own homeland, be- and a heart overflowing with love, raising timately trying to say: Free my rel- his arms to the invisible heaven and pleading ative. cause they are reserved for tourists. for mercy for his executioners. This photograph shows the con- You can’t enter some of the hotels un- ‘‘Forgive them, Father, for they know not sequence of what they face. State secu- less a tourist in your own country what they do.’’ And a burst of machine-gun rity, dressed up as civilians, ulti- brings you in. That is why we call it fire ripping open his chest. mately, as we can see, assaulting them, apartheid. You cannot have access in I hope my colleagues remember these hurting them, arresting them. It will your own homeland. memories of Armando Valladeres and

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00082 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.097 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5951 the realities of Castro’s prisons before am sure we do not disagree about some By the way, using food as a part of an we think about rewarding the Castro parts of this subject; that is, I do not embargo just hurts poor, sick, and hun- regime in any way. Their sins are too like the Cuban Government. I want gry people. Do you think the Castro great, and this is not a thing of the freedom for the Cuban people. We, I as- brothers have missed breakfast or past. Their brutality and repression sume, both believe that and believe the lunch or dinner because we had an em- have been going on since the inception imprisonment of political prisoners in bargo on food shipments to Cuba? and still go on today. It has never Cuba—who languish in Cuban jails for Hardly. So 10 years ago, I got the law stopped. It has never gotten better. It exercising their right of free speech changed. In fact, it was the Dorgan- has never changed. It never will for so and who are doing that in dark cells— Ashcroft amendment. I got the law long as the regime is in power. is wholly unfair and we should as a changed. That allowed us to begin sell- When I hear my colleagues come to country do everything we can to try to ing food into the country of Cuba. That the floor and talk about lifting the bring the vestige of freedom to the was the first opportunity to make any travel ban, I am compelled to ask, Why Cuban people. I understand all that. I changes at all in this embargo. is there such an obvious double stand- support that strongly. Now the question is travel to Cuba by ard when it comes to Cuba? Why are I have been to Cuba. I have spoken to the American people. Should we con- the gulags of Cuba so different than the Cuban Government leaders. I have spo- tinue to say to the American people: gulags of other places in the world? ken to dissidents. I have spoken to peo- You have no right to travel to Cuba. Why are we willing to tighten sanc- ple on the streets of Cuba. And I want We do not like the Cuban Government, tions against some but loosen them Cuba, an island 90 miles off the shore of so what we are going to do is restrict when it comes to an equally repressive our country, to be a free country. the rights of the American people? We regime in Cuba, in effect rewarding Let me describe how long Cuba has have been doing that for 50 years, and them? Why are we so willing to throw had Communist rule and, by the way, it is time—long past the time—for it to up our hands and say: It is time to for- how many Presidents we have had dur- change. get? ing that Communist rule and, there- Let me describe a letter that came I don’t believe it is time to forget. We fore, the embargo that has been leveled recently to the House of Representa- can never forget those who have suf- against Cuba all these years. Let me tives. fered and died at the hands of dictators describe how many Presidencies that By the way, the reason this issue has anywhere, and certainly not in Cuba. It embargo has existed through. The now come to the forefront is the Agri- is clear the repression in Cuba con- Presidencies begin with John F. Ken- culture Committee of the House of tinues unabated, notwithstanding the nedy and go through this administra- Representatives just passed a bill that embargo, notwithstanding calls by tion. That is 10 Presidencies. lifts the travel restrictions on the those who want us to ease travel re- We slapped an embargo on the coun- American people to travel to Cuba. It strictions, ease sanctions, notwith- try of Cuba and punished the American also makes some changes in the condi- standing the fact that we have millions people in the process by saying: We are tions under which agricultural goods of visitors from other places in the going to limit your right to travel to can be sold to Cuba, which is very im- world bringing billions of dollars, and Cuba. And we were going to shut off all portant to do as well because even still the repression goes on. In good commerce to Cuba, including, by the though 10 years ago I got the provision conscience, I cannot do that. I will not way, most of these years, a restriction enacted into law that allows the sale of step back. on sending food and medicine to Cuba. farm products for cash into Cuba, in I have come to the floor in the past The embargo has not seemed to work 2003, as a runup to the 2004 election, to oppose any attempt to do that, to very well. It is now 50 years old, and it President Bush tightened all of those pass any bill that in essence lifts the still exists. Well, what has happened as provisions and actually changed a rule travel ban on Cuba. I will continue to a result of the embargo? We have now so that in order for Cuba to purchase do so. I will continue to do so until we a debate about what should happen goods from our country; that is, agri- have the opportunity to make sure the with respect to our relationship with cultural commodities, they had to pay Cuban people are ultimately free, make Cuba at this point. My colleagues say: in cash before the commodities were sure they have the basic fundamental Well, don’t do anything that would re- even shipped. Well, that never happens rights that you and I enjoy in this ward the Cuban Government. Far from in a transaction. You pay cash when great country, and to ensure the voices it. I have no interest in rewarding a you get the goods. But President Bush of all who languish in Castro’s jails— government that I substantially dis- was attempting to restrict the sale of for which the world seems to be deaf to agree with, a government that I believe agricultural products to Cuba. So we their cries, does not seem to care, does throws innocent people in jail. I have need to fix that as well. not speak about, does not do anything no interest, nor do the people who sup- But the House of Representatives Ag- about—will continue to raise their port the bill Senator ENZI and I have riculture Committee has now passed a voices in this Chamber and beyond. now offered in the Senate, with 40 Sen- bill lifting the travel ban. That means I yield the floor and suggest the ab- ators cosponsoring it—we have no in- this issue is going to be front and cen- sence of a quorum. terest in rewarding the Cuban Govern- ter here in the Senate. Senator ENZI The PRESIDING OFFICER. The ment. That is not the issue. But we do and I have the bill—it is bipartisan— clerk will call the roll. believe the restriction on the American that would lift the travel ban to Cuba, The assistant legislative clerk pro- people’s rights—the decision by a gov- and we have 40 Senators who are co- ceeded to call the roll. ernment that says: We are going to tell sponsors. Mr. DORGAN. Mr. President, I ask the American people where they can Let me read to you a letter that was unanimous consent that the order for and cannot travel—we believe that is sent to the U.S. House of Representa- the quorum call be rescinded. inappropriate. We do believe that tives by 74 Cuban human rights lead- The PRESIDING OFFICER (Mr. ought to change. ers, dated May 30, 2010, just a month UDALL of Colorado). Without objection, So what I would like to do is talk and a half ago. They said: it is so ordered. about a couple things, including, No. 1, The supportive presence of American citi- f lifting the travel ban to Cuba and mak- zens, their direct help, and the many oppor- ing it easier to sell food to Cuba. tunities for exchange, used effectively and in TRAVEL TO CUBA I was the person who changed the law the desired direction, would not be an aban- Mr. DORGAN. Mr. President, some- 10 years ago that allowed for the first donment of Cuban civil society but rather a times on the floor of the Senate, good time just a crack in this embargo that force to strengthen it. Similarly, to further friends disagree—perhaps not as often allows us to sell food into Cuba if it is facilitate the sale of agricultural products as some would think, but on occasion paid for with cash. I think it is im- would help alleviate the food shortages we now suffer. that is the case, and it is the case moral for a countty to use food as a The current Cuban government has always today, when I observed and listened to foreign policy weapon. I do not think violated this right [to travel] and in recent a presentation by my colleague from food ought to be part of any embargo. years has justified its actions with the fact New Jersey on the subject of Cuba. I I think that is immoral. that the government of the United States

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00083 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.099 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5952 CONGRESSIONAL RECORD — SENATE July 15, 2010 also restricts its citizens’ freedom to travel. bility to do that by restoring people-to- suspected of vacationing in Cuba. When The passage of this bill would remove this people visits to Cuba, permanently re- they track them down, they get after spurious justification. storing the original definition of the them. They want to levy a big fine. This is not from me or the cosponsors term ‘‘payment of cash in advance’’ so I have described previously, and I of my bill; this is from 74 Cuban human that farmers can continue to sell agri- will again, because my colleague who rights leaders. cultural products to Cuba. And espe- presented used a lot of posters to show As to the issue of lifting the travel cially, we need here in the Congress to what the circumstances are, but here is ban—the one we have slapped on the pass S. 428, which is the Freedom to what the Office of Foreign Assets Con- American people in order to punish Travel to Cuba Act. trol says with respect to travel to Cuba somebody else; we have punished the The American people have the right by an American citizen: American citizens because we are upset to travel almost anywhere they wish. Unless otherwise authorized, any person with somebody else—here are people They could travel to Russia in the mid- subject to U.S. jurisdiction who engages in who support lifting the travel ban: a dle of the Cold War. In fact, we sent any travel-related transaction in Cuba vio- political prisoner, Marcelo Rodriquez our philharmonic orchestra, in 1959, lates the regulations. from Cuba; Guillermo Farinas, a hun- right at the height of the Cold War, to So what does that mean? What are ger striker in Cuba; Yoani Sanchez, one play music in Communist Russia. They the consequences? Well, it means we of the leading political bloggers in were not restricted. There is no travel are punishing the American people say- Cuba; Oscar Chepe, a former political restriction with respect to Russia. ing: We restrict your right to travel. prisoner; and Miriam Leiva, founder of The New York Philharmonic, in 2008, So Carlos Lazo, a man whom I have the Ladies in White. went to North Korea. And if you want met and who went to Iraq to fight for One of my colleagues recently had a to get a lump in your throat and feel his country and who won a Bronze Star poster I saw about the Ladies in White. really proud, go get the recording, the because he was brave and was a great The founder of the Ladies in White sup- DVD, watching the New York Phil- soldier, came back to this country ports lifting this travel ban. They are harmonic play a concert in North after having served his country in uni- not soft on Castro or soft on a Com- Korea. It is extraordinary. But they form, was awarded with great fanfare a munist government. They just believe were not prohibited from traveling to Bronze Medal for bravery, and then was this travel ban should be lifted because North Korea because you can travel to told, when he was informed—he had it will be beneficial to their interests North Korea. two sons living in Cuba and his older as leaders in human rights in the coun- You can travel to the country of son was sick—you have no right to try of Cuba. Iran. This picture is from the Office of travel to Cuba to see your sick child. The sacrifices of those whom I have Foreign Assets Control, which is the Unbelievable. In fact, I even forced a shown here in photographs, the sac- office down in the bowels of the Treas- vote in the Senate on this question. rifices they have made in Cuba—sitting ury Department that determines how Sergeant Lazo, back from Iraq, with in dark prison cells, hunger strikes, they are going to enforce the travel a sick son in Cuba was told: You have and more—I think give them great ban to Cuba. They say: no right to travel. Unbelievable. Yet credibility when they speak out on All transactions ordinarily incident to that was the case. I have shown this photograph many what is the best way to promote de- travel to or from Iran . . . are permitted. times, but it is useful to describe how mocracy in Cuba. So let’s review. You could travel to unbelievably foolish these policies are. I indicated that I got a law passed Russia in the middle of the Cold War. This is Joan Scott. The Presiding Offi- that allowed us to sell some food into You can travel to Iran right now. You cer knows Joan Scott as well. She went Cuba for cash. Since that time, U.S. can travel to North Korea right now. to Havana to distribute free Bibles on farmers have sold $3.2 billion worth of North Korea is a Communist country. the streets of Havana. For that, her food to Cuba. I mentioned that in 2003 You can travel to China right now. government tracked her down and tried the Bush administration decided to China is a Communist country. You to fine her $10,000. For going to Cuba to dramatically change that to try to re- can travel to Vietnam right now. Viet- distribute free Bibles, this government strict the sale of agricultural products nam is a Communist country. By the is going to track its citizens down to to Cuba, and they succeeded in some way, with respect to China, I am co- try to fine them $10,000. respects. We need to change that as chair of the Congressional Executive I have met Joan Slote as well. She well. It makes no sense to do what they Commission on China. We have the was riding bicycles in Cuba. She joined did in 2003. world’s most complete database of po- a Canadian bicycle tour and took a bi- But let me try to describe what was litical prisoners held in China. There cycle trip to Cuba. This government of done in 2003 so that everybody under- are very serious problems in China ours tracked her down and tried to fine stands what happened. The President, with respect to imprisonment of inno- her $10,000. By the way, this woman, I trying to get tough in 2003, eliminated cent people who are now sitting in the think, made $1,100 a month in Social the people-to-people visits program dark corners of cells in the farthest Security, and her government decided with Cuba; eliminated secondary reaches of China, political prisoners, to try to attach her Social Security school education travel with Cuba; re- and we don’t decide because of that we payments. What was her transgression? stricted family travel to Cuba by are not going to allow travel or trade What was her crime? She took a bicy- Cuban Americans; restricted amateur with China or Vietnam. We have de- cle trip to Cuba as an American cit- athletic travel; prohibited gift parcels cided that engagement through travel izen. with clothing, personal hygiene items, and trade is the most productive way I don’t think there needs to be said soap-making equipment, and so on; re- to move those countries toward greater very much more about this. This is the stricted religious travel; and then also human rights. It is only with Cuba that most unbelievable policy with respect imposed the cash-before-shipment rule our country has decided it is not a to Cuba. I have been to Vietnam, I have in order to restrict the sale of agricul- strategy that works at all. What works been to China—both Communist coun- tural commodities to Cuba. So that is is punishing the American people. tries. We decided engagement through where we have been with respect to So what we have done is decided we trade and travel is constructive. It what happened in the previous admin- are going to punish the American peo- works. It is why I assume the legisla- istration. ple who wish to travel to Cuba by tion Senator ENZI and I have offered is President Obama has taken some tracking them down—by diverting cosponsored by Senator LUGAR, the unilateral actions since taking office. somewhere around 25 percent of the re- ranking member of the Senate Foreign He has removed the restrictions on sources in the Office of Foreign Assets Relations Committee; Senator DODD, Cuban Americans who want to visit Control, which is a little office in the the chairman of the Banking Com- Cuba for family visits, and he has au- Treasury Department that is supposed mittee and chairman of the Sub- thorized U.S. telecommunications com- to be working on tracking financing by committee on Western Hemisphere Af- panies to sell their services in Cuba. I terrorists. Instead, about a quarter of fairs. They are part of the 40 Senators think he should go further imme- their time, I am told, is used to try to who have cosponsored legislation say- diately, and I think he has the capa- track American tourists who are being ing to our government: Would you stop

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00084 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.100 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5953 punishing the American people because cause we disagree with another coun- originate in the United States. Using you are upset with somebody else, and try’s government and, No. 2, do smart trace data from the Bureau of Alcohol, would you stop being so unbelievably things that allow us to find ways to Tobacco, Firearms and Explosives, inconsistent? push and move that government to- ATF, the U.S. Government Account- Don’t tell us that trade and travel is ward greater human rights for its citi- ability Office, GAO, determined that a constructive way to deal with Com- zens. from fiscal year 2004 to fiscal year 2008, munist countries and then tell us that Lifting the travel ban will accom- over 20,000, or 87 percent, of firearms dealing with Cuba 90 miles off our plish both because there are 40 of us in seized by Mexican authorities origi- shore requires us to punish the Amer- the Senate who have sponsored and co- nated in the United States. Addition- ican people by restricting their right to sponsored legislation to lift that travel ally, the GAO reported that the num- travel. ban. When we have the opportunity for ber of assault weapons within this I say again: What right does this gov- that vote in the Senate, I believe we total continues to grow. In fact, ap- ernment have to tell an American cit- will prevail at last—at long last—and proximately 25 percent of the firearms izen where they can travel? They can we will prevail, and it will be construc- seized by Mexican authorities in fiscal go to North Korea, Iran, China, Viet- tive public policy for this country to year 2008 were high-powered assault nam, but not travel to Cuba. That is have done so. Certainly, it will have weapons, such as AR–15 and AK-type obscene. It makes no sense to me. lifted the yolk of oppression by a gov- semi-automatic rifles. Aside from we ought to stop doing stu- ernment that restricts the rights of its However, the threat posed by assault pid things, aside from just that notion, own citizens—I am talking about our weapons is not faced exclusively by law we surely ought to decide that it is not government—that will lift the yolk of enforcement personnel in Mexico. Drug in the interests of this country to have oppression that has existed for some 50 trafficking across the border into the its government telling people how, years by a government that tells its United States has been increasingly ac- when, and where they can travel. citizens where it can and cannot travel. companied by violence in the American I wish to finish by just saying this I don’t want to hear any more about Southwest, forcing police departments again. I don’t deny there are substan- a government that tracks down a guy to combat criminals with military- tial human rights abuses in Cuba. I from the State of Washington whose fa- style arsenals. Former Houston Police have been there. I have talked to the ther was a minister in a small church Chief Harold Hurtt acknowledged the dissidents. I have talked to the Cuban in Cuba, who immigrated to this coun- AK–47 assault rifle has become the people who have come to this country try, and his father died and his father’s ‘‘weapon of choice’’ for major drug who know of, who have seen, who have last wish was that his ashes would be dealers, warring gangs and immigrant watched the unbelievable lack of strewn on the church property in Cuba smugglers. ‘‘The reality on the street human rights that exist in that coun- where he was a minister. So his son is that many of these weapons are try. So that is not the point. The point carried out his father’s wish. He went readily available,’’ according to Hurtt, isn’t to deny the charts that people to Cuba and took his father’s ashes to forcing the Houston Police Department show on the floor of the Senate show- the church where he once served and to consistently upgrade its weaponry ing abuse. I could bring to the floor of deposited them on the lawn by that to match the firepower of criminals the Senate, as chairman of the com- church. For that his government armed with assault weapons. Just last mission that deals with China, dozens tracked him down and attempted to week, Jeffrey Kirkham, the Chief of of photographs of Chinese prisoners levy a very substantial fine on that Police in Nogales, Arizona, reported held in the darkest cells in the farthest young man from the State of Wash- that Mexican drug cartels have made reaches of China who have done noth- ington. death threats against his department ing but are suffering. But we have not I am tired of those stories. Those sto- in response to a successful drug bust. decided as a country that we will re- ries are an embarrassment about public Criminals armed with assault weapons strict the American people’s right to policy gone wrong, and we need to fix are a direct threat to American law en- go to China because that exists in it. forcement officials and the commu- China. We have set quite the opposite Mr. President, I yield the floor. nities they protect. policy. We believe the best way to pro- f Reauthorizing a Federal ban on as- mote a march toward greater human sault weapons would help to reduce vi- CROSS-BORDER THREAT OF rights in China and Vietnam and else- olence in Mexico and the United ASSAULT WEAPONS where is through trade and travel. That States. When the first federal assault is the construction that this country Mr. LEVIN. Mr. President, last weapons ban expired in 2004, 19 of the has taken for a long while, except with month, Mexican President Felipe highest powered and most lethal fire- respect to Cuba. In that circumstance, Caldero´ n addressed a joint session of arms became legal to purchase, includ- we say, no, we must, we must, we must Congress, highlighting the dangerous ing semiautomatic weapons that incor- prevent Americans from traveling to role that American-made firearms play porated bayonet mounts or grenade Cuba. in the violence currently plaguing both launchers. In the absence of a ban, I say, again, 74 leading Cuban human sides of the U.S.-Mexico border. Presi- these lethal weapons continue to rights leaders have signed a letter sent dent Caldero´ n drew a link between the stream across the Mexican border, to us from Havana, Cuba—74 of them— 2004 expiration of the U.S. federal as- arming criminals and placing border and have said: Lift this travel ban. sault weapons ban and a subsequent communities in grave danger. The rein- This travel ban makes no sense. You surge in violence in Mexico. In his statement of a Federal assault weapons want to help Cuba? You want to help speech, President Caldero´ n urged Con- ban has the overwhelming support of the people of Cuba? Lift this travel gress to reinstate a federal ban on as- the law enforcement community, and I ban. sault weapons, a call I have long sup- look forward to working with my col- I also would say again, if I can find ported. By exploiting weak U.S. gun leagues in the Senate toward that goal. the chart that I had, the very brave laws and corrupt gun sellers in the f citizens in Cuba who have spoken out United States, Mexican drug gangs and who are widely recognized, who have amassed arsenals of military- REMEMBERING SENATOR ROBERT have suffered: Marcelo Rodriquez, style assault weapons. These guns have C. BYRD Yoani Sanchez, Guillermo Farinas, been used to kill thousands in Mexico Mr. BARRASSO. Mr. President, West Oscar Chepe, and Miriam Leiva, all of and pose a grave and growing security Virginia, the U.S. Senate, and our Na- them have suffered in Cuba. All of threat to Americans north of the bor- tion have experienced an incredible them believe this travel ban ought to der. loss. Over the last few weeks, this be lifted. Mexican law enforcement officials in- Chamber witnessed poignant eulogies I hope this Senate pays some atten- creasingly are being out-gunned by and remembrances of the legendary tion to that and finally sees we can’t drug gangs bearing military-style as- Senator Robert Byrd. Much has been do two things at the same time: No. 1, sault weapons, .50 caliber sniper rifles said and written since Senator Byrd’s stop punishing the American people be- and other high-powered weapons that death on June 28, 2010.

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00085 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.102 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5954 CONGRESSIONAL RECORD — SENATE July 15, 2010 Those who have so eloquently writ- proximately 400,000 Uzbeks have been elections. The first transition of power ten and spoken knew the Senator much displaced. is critical to the success of this demo- better than I—Presidents, Senators, I am deeply concerned about ethnic cratic transition because it will set the world leaders, dignitaries, as well as clashes and ongoing tension between baseline for all future elections. The members of his family and friends in the Kyrgyz and Uzbeks, especially people of Kyrgyzstan have shown over- West Virginia. given reports that international ob- whelmingly that they want democracy, He will be remembered as an intel- servers have noted they are reminis- and now the provisional government ligent, compassionate and illustrious cent of the tragedies in Bosnia and should do everything in its power to figure. A giant. Rwanda in the 1990s. Today, the situa- make those aspirations a reality. Many people have recalled his his- tion appears to have stabilized, but we Finally, the government must pro- toric milestones, distinguished career cannot discount the potential for re- mote freedom of the press. According and legendary speeches. I first met newed conflict after an apparent lull, to Freedom House, in 2010, Kyrgyzstan Senator Byrd when I arrived in the which happened in both Bosnia and was ranked 159th of 192 countries. At Senate in 2007. I introduced myself and Rwanda. this critical juncture, the interim gov- told him about a friend and patient of We must also not forget that what ernment may feel tempted to muzzle mine from Wyoming who had told me happens in Kyrgyzstan has implica- criticism to avoid giving fodder to dis- that Robert Byrd was his favorite sen- tions for U.S. interests throughout cen- sidents. But to do so would undermine ator. Like Senator Byrd, my friend tral Asia. As the Senate noted in Reso- its credibility far more than any words uses a wheelchair. Senator Byrd asked lution 566, which passed unanimously published in a free press. There is an me why my friend liked him so much. on June 25, the events of the past undeniable connection between a popu- I told him it was because of their mu- month could spark unrest across the lation’s confidence in their political tual commitment to the Constitution. Ferghana Valley, which borders system and the capacity of that system I went on to say that he thought Sen- Kyrgyzstan, Uzbekistan, and to ensure the free flow of information ator Byrd was ‘‘the best thing since Tajikistan. Kyrgyzstan also plays host through an independent media. If the sliced bread.’’ Senator Byrd’s eyes to a U.S. air base at Manas Inter- interim government and its successor brightened and widened with the ref- national Airport that serves as a crit- want to identify the failures of pre- erence to sliced bread. He then gave me ical supply line for NATO and U.S.-led vious governments in Kyrgyzstan, they a complete history of sliced bread in operations in Afghanistan. need look no further than its abysmal America and the date when the first For these reasons, I rise today to record in the area of press freedom. To mechanical bread slicer was used in the urge the provisional government and make the new constitution in United States. As a true man of the all citizens of Kyrgyzstan to move Kyrgyzstan a success, the nation needs people, Senator Byrd also sent a note ahead with the process of reconcili- a truly independent media. and a copy of the Constitution to my ation. I would also like to commend Mr. President, we are at an impor- friend in Wyoming. the Obama administration and others tant turning point in Kyrgyzstan, When former Wyoming Senator Cliff in the international community—par- where there is a glimmer of hope about Hanson died late last year, I shared the ticularly the United Nations and Rus- democracy taking root in the future. news with Senator Byrd. Senator Byrd sia—who have rendered fiscal and hu- At the same time, the potential for re- said, ‘‘I liked Cliff Hansen. Cliff Hansen manitarian aid to the Government of newed unrest, rampant corruption, and was a friend of mine. Cliff Hansen knew Kyrgyzstan during this difficult time. curtailed freedoms could easily jeop- what he stood for.’’ The same can be The international community must ardize recent progress. It is incumbent said for Senator Byrd. call on all parties to refrain from vio- on all sides to act responsibly and to As a public servant, he had few lence, cease persecution of minorities, ensure there is not a resurgence of vio- equals. As a parliamentary expert, he and explore peaceful routes to conflict lence, so that the new Government of had none. Every day, Senator Byrd resolution. Kyrgyzstan can set an example of suc- showed his enduring dedication to his There is other news out of cessful democracy for the region. family, the people of West Virginia, the Kyrgyzstan worth noting—namely, the United States Constitution, and our referendum held on June 27 in support f Nation. of a constitution that will establish central Asia’s first parliamentary de- Senator Byrd leaves us with a mem- SMALL BUSINESS LENDING ory of the man—the memory of his mocracy. This referendum was peaceful kindness, grace, and passion. He had a and inclusive, and I commend the pro- Ms. SNOWE. Mr. President, I rise to depth of institutional understanding visional government for organizing this speak of an amendment, cosponsored and knowledge of the traditions of the process. The referendum marked a his- by Senators GRASSLEY, ENZI, ISAKSON, U.S. Senate that will never be replaced. toric opportunity to usher in a new pe- and COLLINS, which has proven small While many of us are students of his- riod of democracy and stability in business job creating power. tory, Senator Byrd truly lived this Na- Kyrgyzstan, and the stakes are high. It should come as no surprise to any- tion’s history. His strength, determina- This is why I would like to highlight one that it remains difficult for small tion, and unyielding pursuit of knowl- three areas where I hope there can be businesses to access credit. We have all edge serve as a model for all of us. additional progress can be made. heard the justifiable frustration and To his daughters Mona Byrd Fatemi Perhaps most importantly, there outrage expressed by entrepreneurs na- and Marjorie Byrd Moore, his grand- must be a credible investigation into tionwide in response to the albatross of children, and family, I extend my fam- the recent violence. One of the most tight credit which has a chokehold on ily’s sympathy and hope the coming important actions to take is to estab- our economy. And frankly, who could days are filled with love, enduring lish an investigative team that is blame them, when just this past April, strength, and God’s grace. viewed as credible by all sides. This in- the Federal Reserve’s Senior Loan Offi- Bobbi and I wish the Byrd family our vestigation must ensure the perpetra- cer Opinion Survey found the percent- best and our prayers are with you. tors of violence are held accountable age of banks easing credit terms for f for their actions and initiate a process small businesses was just a meager 1.9 whereby all citizens, including ethnic percent—after it was an astonishing KYRGYZSTAN Uzbeks, see themselves as sufficiently zero percent in both the past January Mr. KAUFMAN. Mr. President, in the represented in the country’s national and October surveys! Is this any way to last few weeks, great turmoil has un- institutions. jumpstart an anemic economy? folded in Kyrgyzstan. According to The interim government must also As ranking member of the Senate media reports, ethnic riots in the ensure a smooth transition to the new Small Business Committee I, along southern cities of Osh and Jalalabad Constitution. This means that the with Chair LANDRIEU, have vigorously have left up to 2,000 dead—309 con- Kyrgyz authorities should redouble ef- championed measures to ease credit firmed by the Kyrgyz Government— forts to prevent the escalation of vio- and increase small business lending. thousands have been injured, and ap- lence, and observers must monitor the Together, we fought to include in the

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00086 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.079 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5955 Recovery Act key provisions to in- assistance to those economic engines Shebaab’s leadership has links to al- crease the maximum government guar- that are the lifeblood of our economy— Qaida and has indicated a desire to antee on Small Business Administra- our Nation’s small businesses. It is my work with al-Qaida affiliates world- tion, SBA, loans to 90 percent and to hope that this body can accept this wide, particularly al-Qaida in the Arab appropriate $375 million to reduce fees amendment quickly, by unanimous Peninsula in Yemen. In addition and for SBA 7(a) and 504 borrowers. This consent, so that we can provide our perhaps even more disconcerting, al program proved to be so popular and economic catalysts with at least a Shebaab has recruited a number of viable that its funds were expended modicum of capital security, financial Americans to travel to the region and first in November 2009, then in Feb- stability, and economic certainty. fight. In October 2008, a Somali-Amer- ruary 2010, and again in March 2010, fol- f ican blew himself up in Somalia as part lowing short term extensions. BOMBINGS IN UGANDA of a coordinated attack by al Shebaab. But regrettably, these provisions The Justice Department has since Mr. FEINGOLD. Mr. President, I join have lapsed, and a program that paid brought terrorist charges against more President Obama, Secretary Clinton, tangible dividends, having been cred- than a dozen people for recruiting and and people around the world in con- ited with increasing loan volumes by a raising funds for Americans to fight demning the horrific bombings in remarkable 90 percent nationwide and with al Shebaab. 236 percent in Maine, has to my dismay Uganda last Sunday. These attacks come to a close. At a time when unem- killed scores of innocent people and These developments have not gone ployment hovers at near ten percent wounded many others who had peace- unnoticed by our national security and consumer confidence hangs in fully gathered to watch the World Cup leaders, and the Obama administration abeyance, nothing could be more final. has rightly put greater focus on Soma- counter-intuitive than to allow this to I was particularly saddened to learn lia. But our policy toward the country happen. And the numbers speak for that Nate Henn, an American who still lacks a strategic, long-term vi- themselves. In June alone, the SBA ap- worked as a volunteer with Invisible sion, and sufficient resources. The proved only $647 million in SBA 7(a) Children to help children affected by Obama administration is providing guaranteed loans, a 65.9 percent de- war in Uganda’s northern region, was some support to the Transitional Fed- crease from the $1.9 billion in 7(a) loans among those murdered in this cowardly eral Government and to the AU peace- it approved in May. act. I have worked closely with mem- keeping force in Mogadishu, but this No wonder in a July 11 New York bers of the Invisible Children team to support has done little to change the Times article, SBA Administrator bring attention to the atrocities com- fundamental dynamics of the situation. Karen Mills urged Congress to continue mitted by the Lord’s Resistance Army, We need to go back to the drawing these programs, stating that ‘‘we’ve and I know their passion and dedica- board and develop a strategy that di- been able to put $30 billion in the hands tion. I offer my deepest condolences to rectly targets the conflicts and condi- of small businesses and now is not the the Henn family and the whole Invis- tions that are bolstering al Shebaab time to pull back . . . .’’ Talk about ible Children family, as well as to all and, by extension, al-Qaida. That strat- the proverbial snatching defeat from the other victims and their families. egy may entail greater support for the the jaws of victory! The United States has close ties and TFG and AMISOM, but we may also Our amendment would resuscitate a strong working partnership with the need to explore alternative options. this highly effective program, pro- people and Government of Uganda, and viding $485 million to reinstate SBA fee we stand with them in this difficult To carry out such a strategy, we need reductions and the elevated guarantee moment. I strongly support efforts by a diplomatic effort equal to the chal- on SBA 7(a) loans through the end of the U.S. Government to assist Ugandan lenges we face in Somalia. We need an 2010. And we pay for it by using unobli- authorities to investigate these at- increased, strengthened team with the gated Recovery Act funds. In fact, ac- tacks and bring the perpetrators to jus- necessary resources, access, and man- cording to the Recovery Account- tice. And given the news of another at- date to engage with actors in Somalia ability and Transparency Board, there tempted attack on Tuesday, we should and across the wider region. I have are approximately $50 billion in unobli- also help the government take en- called on the President and Secretary gated stimulus funds, and our amend- hanced security measures. of State to appoint a senior envoy to ment, which would cost less than 1 per- At the same time though, we should help oversee such a diplomatic effort cent—.97 percent to be exact—of the encourage the government to avoid any toward Somalia. Such an envoy could overall amount, is paid for by rescind- actions that could be seen as broadly also advance much needed public diplo- ing, on a pro rated basis, from these targeting Somalis or the Muslim com- macy efforts to address the high level funds. While we all must make difficult munity more generally in Uganda. of suspicion and resentment with spending decisions, it should be clear These communities in Uganda have not which many Somalis continue to view that reinstating these vital provisions been known for violent or extremist ac- the United States. And finally, this represents a commonsense approach to tivity in the past, and it would be person could help ensure that we are providing capital to small businesses counterproductive to alienate them. connecting the dots among all the across our Nation. They should be allies in seeking to other countries affected by the Soma- These are actions we can take right identify and apprehend those individ- lia crisis and al Shebaab. here and right now that complement uals behind these heinous attacks. this bill’s SBA related provisions which Al Shebaab, the Somali terrorist Mr. President, there are no easy or increase the maximum limits for SBA group whose leaders have links to al- quick solutions to Somalia’s troubles, 7(a) and 504 loans from $2 million to $5 Qaida, has claimed responsibility for and attempts by external actors to im- million, raise the maximum microloan this attack. Al Shebaab has been pose solutions have failed. But as the limit from $35,000 to $50,000, and allow threatening for months to carry out at- tragic events in Uganda this week for the refinancing of conventional tacks in Kenya, Uganda, and Burundi, should make clear, the current situa- small business loans through the SBA and if their claim is true, this would be tion in Somalia is intolerable—for the 504 program. the first time that they have carried region and the international commu- They will begin providing capital im- out a major attack outside Somalia’s nity, not to mention the Somali people mediately to small businesses, and borders. It would underscore the threat who continue to suffer one of the they have strong industry support from that this terrorist group poses not only world’s worst humanitarian crises. We the National Association of Develop- to neighboring countries but through- cannot afford to just continue with our ment Companies, which represents 504 out Africa and potentially even to the current halfhearted efforts and hope lenders and the National Association of United States. for the best. Working with our regional Government Guaranteed Lenders, For years, I have drawn attention to partners and others in the inter- which represents 7(a) lenders. the continuing conflict in Somalia and national community, we need to get se- In conclusion, this initiative ought its direct ramifications for our na- rious about a new push for peace and to be a simple way to swiftly provide tional security. As I mentioned, al stability in Somalia.

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00087 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.067 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5956 CONGRESSIONAL RECORD — SENATE July 15, 2010 OSCE PARLIMENTARY ASSEMBLY The theme for this year’s annual ses- prominently engaged in European and SESSION IN OSLO sion was ‘‘Rule of Law: Combating Central Asian affairs; Mr. CARDIN. Mr. President, I want Transnational Crime and Corruption.’’ in addition to my continued tenure to report on the activities of a bi- In addition to resolutions for each of as a vice president in the Parliamen- cameral, bipartisan congressional dele- the three general committees, delega- tary Assembly, Mr. ADERHOLT of Ala- gation I had the privilege to lead last tions introduced a total of 35 addi- bama was reelected as the vice chair of week as chairman of the Helsinki Com- tional resolutions for consideration, a the general committee dealing with de- mission. The purpose of the trip was to record number, including 4 by the mocracy, human rights, and humani- represent the United States at the 19th United States dealing with: tarian questions which ensures strong Annual Session of the Parliamentary Nuclear security, which followed up U.S. representation in OSCE PA deci- Assembly of the Organization for Secu- directly on the Nuclear Summit here in sionmaking; and a Greek parliamentary leader de- rity and Cooperation in Europe, other- Washington in April; feated a prominent Canadian senator in wise known as the OSCE PA. The an- The protection of investigative jour- the election of a new OSCE PA presi- nual session this year was held in Oslo, nalists, a critical human rights issue as dent, following a vigorous but friendly Norway, and the U.S. delegation par- those who seek to expose corruption campaign that encouraged the assem- ticipated fully in the assembly’s stand- are targeted for harassment or worse; bly to take a fresh look at itself and es- ing committee, the plenary sessions, Mediterranean cooperation, building tablish a clearer vision for its future. the three general committees and nu- on the OSCE partnerships to engage While the congressional delegation’s merous side events that included dis- important countries in North Africa work focused heavily on representing cussion of integration in multiethnic and the Middle East; and the United States at the OSCE PA, we societies and addressing gender imbal- Combating the demand for human tried to use our presence in Europe to ances in society. trafficking and electronic forms of ex- advance U.S. interests and express U.S. Although some last-minute develop- ploitation, a longstanding Helsinki concerns more broadly. The meeting ments at home compelled him to re- Commission issue requiring persistence took place in Norway, a very close main behind, our colleague from the and targeted action. friend and strong, long-time ally of the other Chamber, Mr. ALCEE HASTINGS of U.S. drafts on these relevant, impor- United States of America. In discus- Florida, was present in spirit as the tant topics received widespread support sions with Norwegian officials, we ex- deputy head of the delegation. Mr. and were adopted with few if any pressed our sorrow over the recent HASTINGS, who cochairs the Helsinki amendments. deaths of Norwegian soldiers in Af- Commission, was very active in the Beyond these resolutions, the United ghanistan. We also shared our concerns preparations for the trip, and his leg- States delegation also undertook ini- about climate change and particularly acy of leadership in the OSCE PA—for tiatives in the form of packages of the impact global warming has on over a decade—is tangible in the re- amendments to other resolutions. polar regions spect and goodwill afforded the United These initiatives addressed: Indeed, on our return we made a well States during the proceedings. the needs of the people of Afghani- received stop on the archipelago of Our assistant majority leader, Mr. stan in light of the smuggling and Svalbard, well north of the Arctic Cir- DURBIN of Illinois, joined me on the other criminal activity which takes cle, to learn more about the impact trip, as he did last year. Our colleague place there; firsthand, from changing commercial from New Mexico who serves as a fel- the struggle for recovery stability shipping lanes to relocated fisheries to low Helsinki Commissioner, Mr. and human rights in Kyrgyzstan, which ecological imbalance that make far UDALL, also participated. Helsinki is an OSCE state in the midst of crisis; northern flora and fauna increasingly Commissioners from the other Cham- and vulnerable. The delegation also visited ber who were on the delegation include manifestations of racism and xeno- the Svalbard Global Seed Vault, a fa- phobia that have become particularly Mr. CHRISTOPHER SMITH of New Jersey, cility that preserves more than 525,000 prevalent in contemporary Europe. serving as the ranking member of the types of seeds from all over the world A critical U.S. amendment allowed delegation, as well as Mrs. LOUISE as a safeguard for future crop diversity, us generally to support a French reso- MCINTOSH SLAUGHTER of New York, and and took the opportunity to donate ad- lution that usefully addressed issues Mr. ROBERT ADERHOLT of Alabama. Al- ditional U.S. seeds to the collection. though not a member of the Helsinki relating to the closure of the detention Norway is located close to a newer, Commission, Mr. LLOYD DOGGETT of facility in Guantanamo Bay. Still but also very strong, ally with close Texas has a longstanding interest in other amendments coming from spe- ties to the United States, Estonia. OSCE-related issues and also partici- cific members of the U.S. Delegation Since last year’s delegation to the pated on the delegation. covered a wide range of political, envi- OSCE PA Annual Session went to Lith- As many of you know, the OSCE Par- ronmental and social issues relevant to uania and included Latvia as a side liamentary Assembly was created with- policymakers. My colleagues and I trip, I believed it was important to uti- in the framework of the OSCE as an were also active in the successful coun- lize the opportunity of returning to independent, consultative body con- tering of amendments that would have northern Europe to visit this Baltic sisting of over 300 Parliamentarians steered resolutions on the Middle East state as well. from virtually every country in Eu- and on the future of the OSCE multi- While some remained in Oslo to rep- rope, including the Caucasus, as well as lateral diplomatic process in directions resent the United States, others trav- from Central Asia, and the United contrary to U.S. policy. eled to Tallinn, where we had meetings States, and Canada. The annual ses- Beyond the consideration of the reso- with the President, Prime Minister, sions are held in late June/early July lutions which now comprise the Oslo and other senior government officials, as the chief venue for debating issues Declaration, the annual session also visited the NATO Cooperative Cyber- of the day and issuing a declaration ad- handled some important affairs for the Defense Center of Excellence and were dressing human rights, democratic de- OSCE PA itself. These, too, had rel- briefed on electronic networking sys- velopment and the rule of law; eco- evance for U.S. policy interests: tems that make parliament and gov- nomic cooperation and environmental the American serving as OSCE PA ernment more transparent, efficient protection; and confidence building and Secretary General, Spencer Oliver, was and accessible to the citizen. Estonia security among the participating reappointed to a new 5-year term; has come a long way since it reestab- states and globally. a modest—and for the third fiscal lished its independence from the Soviet This active congressional participa- year in a row—frozen OSCE PA budget Union almost 20 years ago, making the tion helps ensure that matters of inter- of about $31⁄2 million was approved that visit quite rewarding for those of us on est to the United States are raised and requires continued and unparalleled ef- the Helsinki Commission who tried to discussed. Robust U.S. engagement has ficiency in organizing additional con- keep a spotlight on the Baltic States been the hallmark of the Parliamen- ferences, election observation mis- during the dark days of the Cold War. tary Assembly since its inception near- sions, and various other activities that During the course of the meeting, the ly 20 years ago. keep the Parliamentary Assembly U.S. delegation also had bilateral

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00088 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.029 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5957 meetings with the delegation of the inces and corrode the institutions of U.S. international broadcasting to Russian Federation and a visiting dele- the Russian state. She knew that vio- Latin America, including targeted gation from Kyrgyzstan to discuss lence and instability are seldom con- broadcasts to Cuba, Venezuela, and issues of mutual concern and interest. tained within internationally recog- other audiences whose airwaves are U.S. engagement in the OSCE Par- nized borders. And she believed that saturated with antidemocracy senti- liamentary Assembly sends a clear justice for victims must be at the cen- ments and propaganda. message to those who are our friends ter of any effort to rebuild societies Further, she has strongly argued for and to those who are not that we will devastated by war. increased oversight and accountability defend U.S. interests and advance the On this day, we are called to remem- with regard to U.S. international causes of peace and prosperity around ber Estemirova’s generosity of spirit broadcasting, recognizing the impor- the world. and dedication of purpose in spite of tance of our broadcasts being above re- f the many blind alleys that confronted proach. In the course of my own inves- her in life. Her voice may be silenced, tigations, I discovered VOA broadcasts REMEMBERING NATALIA but her message of hope and reconcili- to Iran that undermined U.S. policy ESTEMIROVA ation endure. and gave a platform for the propaganda Mr. KERRY. Mr. President, on July f of our enemies. U.S. broadcasts in Ara- 15, 2009, Natalia Estemirova, head of bic have also given uninterrupted and the Memorial Human Rights Center in ADDITIONAL STATEMENTS unchallenged platforms to terrorists Grozny, Chechnya, was abducted from and other enemies of the U.S. and our her home and murdered. Estemirova TRIBUTE TO BLANQUITA CULLUM allies. Blanquita Cullum was the only belonged to a tradition of Russian her- Governor to support my and my col- ∑ oism, persevering for truth and justice Mr. COBURN. Mr. President, as leagues’ calls for greater transparency in spite of great danger, but she de- Blanquita Cullum’s service as Governor and accountability in our broadcasts— serves recognition from all nations. on the Broadcasting Board of Gov- an ongoing need that has yet to be ade- Today, as we commemorate the 1- ernors comes to an end, I wish to make quately rectified. year anniversary of her tragic passing, note of her untiring efforts to maintain In the Asian sphere, she resisted ef- it is fitting to recall the words of the United States international broad- forts by the BBG bureaucracy to re- Memorial’s founder, Andrei Sakharov: casting during times of enormous pres- duce the agency’s Tibetan broadcasts You always have to be aware of [your sures. and made certain that broadcasts to ideals], even if there is no direct path to Throughout her tenure, Blanquita Burma during its violent crackdown of their realization. Were there no ideals, there Cullum has been a champion for the pro-democracy advocates were not in- would be no hope whatsoever. Then every- mission of American international terrupted. thing would be hopelessness, darkness—a broadcasting, but also for the audi- Long before it became a topic of ur- blind alley. ences who rely upon our international gency, Blanquita Cullum recognized In her life and in her work, broadcasts for credible, authoritative, the importance of cybersecurity and Estemirova radiated hope in the face of accurate and factual news and informa- argued for increased vigilance on the adversity, and was steadfast in her tion. part of the agency’s technical compo- ideals even when pursuing them en- Chief among her concerns has been nent to take measures necessary to en- tailed great risk and personal sacrifice. for the continuation of U.S. inter- sure that BBG broadcasts and Internet Natalia Estemirova was born in 1958 national radio broadcasts, the form of assets were protected against such to a Russian mother and a Chechen fa- communication which to this day re- threats. ther, embodying in her parentage what mains the most readily accessible and Finally, it is a secret to no one that was to become her life’s calling: recon- cost-effective means of communication Blanquita Cullum has been a strong be- ciling both peoples through her keen for billions of oppressed people living liever in the human component of the sense of justice and singular commit- in poverty. agency’s operations. She has enjoyed ment to the truth. A widow and a In our technologically driven con- an engaged relationship with the agen- mother, a teacher and an advocate, sumer society, it escapes our attention cy’s employees and bristled over the Estemirova found her purest voice in that almost two billion people make agency’s poor showing in the annual Chechnya. Her reporting on the second less than $2 a day. Blanquita Cullum Human Capital Survey. An organiza- Chechen war and its aftermath exposed has insisted, often in the face of resist- tion that cannot command the con- countless abuses committed by both ance, that these populations not be fidence of its staff is not likely to be sides, and provided an invaluable abandoned and their fate left to fully engaged with the audiences it source of information to the outside chance. portends to serve. world. In addition, she has argued strongly One needs to look no further than Estemirova was no stranger to con- that cuts not be made to critical stra- Governor Blanquita Cullum as the troversy. On more than one occasion, tegic regions of the world where re- model of unselfish public service in the her work raised the ire of the local au- gions are often one incident away from National and Public Interest. She will thorities, and twice she was forced to open conflict. She was among those be sorely missed by those at the BBG flee her homeland. But Estemirova was calling for the resumption of United and in Congress who still believe in the not one to surrender to fear. It is said States international broadcasts to Rus- original purpose of U.S. international that above all she was motivated by sia. This call to action was given added broadcasting. The new Board of Gov- the love of her daughter, Lana, and the impetus during the armed conflict be- ernors will have a challenge ahead of desire to help the victims of tween Russia and the Republic of Geor- them as they attempt to fill her shoes Chechnya’s tragic wars. gia, days after U.S. international and continue her efforts to reform U.S. And help other people she did. From broadcasts to Russia were ended. Even International Broadcasting.∑ the wrongly accused in need of legal as- though the other members of the Board f sistance to the families in search of inexplicably refused to restore Russian their loved ones, Estemirova provided broadcasts, Blanquita Cullum’s force- TRIBUTE TO LEANNE MEDEMA solace and service to generations of ful arguments helped avert their ∑ Mr. CRAPO. Mr. President, today I Russians. She pursued hidden graves, planned termination of U.S. broadcasts join my colleague, Mr. RISCH, to honor requested investigations from the au- to the Republic of Georgia and the an outstanding woman as she retires thorities, and gave voice to Chechens Ukraine. from everyday working life. Leanne by bringing their cases to the European Blanquita Cullum has global vision. Medema has spent close to 20 years Court of Human Rights. International terrorism and other working on behalf of Idaho’s nuclear Estemirova knew better than anyone threats to the United States are research industry, and she has been a about the tenuous stability that reigns globalized. We ignore this fact at our terrific asset to local contractors as in Chechnya. She knew that corruption own risk. For example, she has argued well as to the Idaho congressional dele- there could spread to neighboring prov- strongly for a more robust presence of gation over the years.

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00089 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.029 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5958 CONGRESSIONAL RECORD — SENATE July 15, 2010 Leanne came to Idaho from Illinois Central High School and earned a bach- inspires the next generation of Arkan- in the early 1990s and helped manage a elor of arts degree in social sciences sas leaders as a member of the UA complex and very public transition from Arkansas Baptist College in Lit- team. with one of the Idaho National Labora- tle Rock. He is a graduate of Jackson As an Arkansas farmer’s daughter, tory’s facilities, INL, the Idaho Chem- Theological Seminary of Shorter Col- and as chairman of the Senate Agri- ical Processing Plant. She has spent 30 lege in North Little Rock. culture Committee, I understand first- years working to improve the working Recognized as a pillar of the North hand and appreciate the hard work and environment of the companies who Little Rock community, Pastor Robin- contributions of our Arkansas agri- have employed her. And she has suc- son has been asked to serve in a vari- culture community. Agriculture is the ceeded admirably. She has a personable ety of statewide commissions and lead- backbone of Arkansas’s economy, cre- manner that makes everyone feel com- ership roles, including the Martin Lu- ating more than 270,000 jobs in the fortable, and she has an unerring sense ther King Jr. Commission, the Board of state and providing $9.1 billion in of how best to resolve conflicts and ad- Trustees of the William F. Laman Li- wages and salaries. In total, agri- dress other challenges. brary Commission, and the Executive culture contributes roughly $15.9 bil- Most recently, Leanne worked as the Board of the Union Rescue Mission and lion to the Arkansas economy each protocol officer at the INL, which was Salvation Army. Pastor Robinson is an year. a terrific fit. She always handled her- Honorary Deputy Sheriff of Pulaski I salute Dr. Bourland and the entire self well and dealt with tough situa- County and a Chaplain of the North Arkansas agriculture community for ∑ tions without ever losing her poise. Little Rock Police and Sheriff’s Office. their hard work and dedication. INL’s reputation has increased na- Pastor Robinson has also been in- f tionally and internationally, and vited to take part in numerous inau- ROGERS-LOWELL AREA CHAMBER Leanne’s efforts have been essential to gurations and official events in Arkan- OF COMMERCE the process. She always goes above and sas and Washington, DC. He is the vi- ∑ Mrs. LINCOLN. Mr. President, today beyond to make sure each visitor to sionary of the recently reestablished I congratulate the Rogers-Lowell Area INL feels like they are a special guest. ‘‘4’’ Church Fellowship and serves cur- Chamber of Commerce for receiving a We have particularly appreciated rently as president. This fellowship five star re-accreditation from the U.S. Leanne’s relationship with our own consists of local churches coming to- Chamber of Commerce, the highest ac- Senate offices. Her professionalism was gether to uplift our Savior and the creditation a chamber can receive. always top notch, her knowledge of the community through quarterly worship Of the 6,936 chambers in the United INL is superb and her ability to com- services. Most recently, Pastor Robin- States, only 249 of are accredited. Of municate and work easily with others son served as cochairman of the First these, only 66 are accredited with five is among the finest we have seen. When Interfaith Christian Conference, ‘‘The stars, roughly equal to 1 percent of schedules are tight and people were Arkansas Gathering,’’ featuring na- chambers nationwide. Rogers-Lowell is stressed, Leanne had the ability to rise tionally known pastors and more than the only five-star chamber in the State above it all and navigate the pitfalls 100 local pastors and their churches for of Arkansas. with style, grace and ease. a 4-day retreat. The Rogers-Lowell Area Chamber of We would be remiss if we didn’t men- Pastor Robinson is also a local radio Commerce was founded in 1922 and is tion Leanne and her family and their personality in his own right. For more one of the largest chambers in Arkan- involvement in the local community. than 26 years, he has promoted First sas. Under the leadership of President She was an active volunteer with the Baptist’s ‘‘Sunday Morning at The and CEO Raymond Burns, members are Idaho Falls Chamber of Commerce First,’’’ a 1 hour broadcast that airs committed to growing business and serving as co-chair on the Legislative Sunday evening at 5 p.m., reaching all building community. I commend Chair- Committee and always did an out- four corners of Arkansas. man Tom Spillyards, Accreditation standing job in each of her assign- I salute Pastor Robinson and the Chair Greg Spragg, the Board of Direc- ments. work he does for North Little Rock and tors, and the entire Chamber member- As she nears retirement, we join the entire state of Arkansas. Along ship for their outstanding efforts to many others in thanking her for her with all Arkansans, I congratulate him better their community. service to her community and the state for his years of service, and wish him Located in the center of the booming of Idaho. She has done an outstanding all the best for the years to come.∑ Northwest Arkansas region and the job at the INL, one that will be hard f beautiful Arkansas Ozarks, the Rogers- for others to fill. We wish her the best TRIBUTE TO DR. FRED BOURLAND Lowell area offers quality, growth and in her retirement, knowing that she opportunity to residents and visitors ∑ isn’t one to stay still for long. Thank Mrs. LINCOLN. Mr. President, today alike. As one of the most dynamic com- you, Leanne, and enjoy your future en- I congratulate Arkansan Dr. Fred munities in the region, Rogers and deavors.∑ Bourland, who was recently named the Lowell offer upscale, urban amenities, f International Cotton Researcher of the along with a slower pace, beautiful sce- Year by the International Cotton Advi- nery, and endless outdoor recreational TRIBUE TO PASTOR WILLIAM L. sory Committee. Dr. Bourland is a cot- ROBINSON opportunities. ton breeder and director of the Univer- I salute the Rogers-Lowell Area sity of Arkansas Division of Agri- Chamber of Commerce and the entire ∑ Mrs. LINCOLN. Mr. President, today culture’s Northeast Research and Ex- Rogers community for their efforts to I congratulate William L. Robinson as tension Center in Keiser. Dr. Bourland build and grow their community. As he celebrates 28 years as pastor of First won the award for his innovative cot- my fellow Arkansans know, our state Baptist Church in North Little Rock. ton breeding achievements. is a beautiful one, and I am proud to First Baptist is the oldest Black The Cotton Researcher of the Year see the Rogers-Lowell Chamber of church in North Little Rock, and under award was started in 2009 to help raise Commerce receive this prestigious ac- Pastor Robinson’s leadership, the con- awareness of the importance of re- creditation.∑ gregation has thrived for nearly 30 search to the improvement of the cot- f years. ton industry and to provide inter- From a young age, Pastor Robinson national recognition of exceptional RECOGNIZING THE ROGERS knew his calling. At the age of 12, he achievements. Dr. Bourland will re- COMMUNITY was licensed by Dr. T. M. Chambers, ceive a trophy and $1,000 prize. ∑ Mrs. LINCOLN. Mr. President, today then Pastor of Gaines Street Baptist I commend Dr. Bourland for his re- I congratulate the residents of Rogers Church in Little Rock. In 1977, at the search, which benefits Arkansas’s en- for being named in the ‘‘Top 10’’ list of age of 17, Pastor Robinson became an tire cotton farming community. U.S. small cities, as ranked by Money ordained minister. Through his efforts, he represents the Magazine. An Arkansas native, Pastor Robinson best of our Arkansas values: hard work, The community received this rec- graduated from historic Little Rock dedication, and perseverance. He also ognition for being one of the Nation’s

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00090 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.007 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5959 best small cities in which to raise a Kiwanis and was once awarded the The profile of Louisiana’s res- family. The rankings were determined George R. Hixson award for community taurants industry and culinary tradi- through criteria examining education, service. As a pioneering member of the tions has been significantly enhanced crime rate, housing affordability, jobs, Christmas on the River Committee, during Mr. Funk’s tenure as president diversity, health care, and arts and lei- Daniel worked to revitalize the river- of the Louisiana Restaurant Associa- sure. front area in Baton Rouge. He has been tion. Thus, today, I am proud to honor I also commend Rogers’ community a volunteer youth basketball coach for Jim Funk and thank him for his dedi- leaders, including Raymond Burns, the YMCA and is a founding member of cation to the Louisiana Restaurant As- president and chief executive of the the Vision 21 Foundation, an organiza- sociation and to the State of Lou- Rogers-Lowell Area Chamber of Com- tion that collects and distributes grant isiana.∑ merce. The tireless efforts by these money to nonprofit groups in the leaders to build and maintain a safe, Baton Rouge area. f desirable community helped make this I would like to sincerely thank David TRIBUTE TO COLONEL ALVIN B. top ranking a reality. They represent Daniel for his commitment to his pro- LEE the best of our state, and I am proud of fession, his community, and the state their accomplishments for their com- of Louisiana. His efforts are greatly ap- ∑ Mr. VITTER. Mr. President, I wish to munity. preciated, and I wish Mr. Daniel, his acknowledge the service of COL Alvin I salute the entire Rogers community wife Janet, and their family all the B. Lee as he relinquishes command of for their efforts to maintain the herit- best in their future endeavors.∑ the New Orleans District, U.S. Army age, beauty, and history of their com- f Corps of Engineers. Colonel Lee, the munity. I join all Arkansans to express TRIBUTE TO JIM FUNK New Orleans District’s 60th commander my pride in this jewel of Arkansas.∑ and district engineer, took command ∑ Mr. VITTER. Mr. President, today I f on July 20, 2007, and has served in that wish to recognize Mr. Jim Funk for his position for the past 3 years. TRIBUTE TO DAVID DANIEL leadership and dedication to the Lou- The New Orleans District is the larg- ∑ Mr. VITTER. Mr. President, today I isiana Restaurant Association. Mr. est district within the Corps of Engi- congratulate Mr. J. David Daniel, a Funk has served as the president and neers. The complexity and magnitude resident of my home State, as he nears chief executive officer of the Louisiana of the issues dealt with in this com- the end of his term as the 105th chair- Restaurant Association for almost 30 mand are staggering. In addition to the years, and announced his retirement man of the Nation’s largest insurance normal operating budget of $550 mil- earlier this year. I would like to take association, the Independent Insurance lion, this district includes the $14 bil- some time to remark on his work and Agents & Brokers of America, IIABA. lion hurricane and storm damage risk his contribution to the State of Lou- Mr. Daniel was elected to the IIABA’s reduction system, HSDRRS, program executive committee in 2004 and was isiana. First founded in 1946, the Louisiana for the Greater New Orleans Metropoli- installed as the association’s chairman Restaurant Association promotes, pro- tan area. No other colonel in the Corps last September. tects, and serves the interests of Lou- of Engineers is given responsibility Founded in 1896, IIABA, or the Big isiana’s food service and hospitality in- even remotely close to this. ‘‘I’’ as it is better known, is the Na- dustry. Now one of the premiere asso- Previous to his service as com- tion’s oldest and largest association of ciations in the Nation, the Louisiana mander, New Orleans District, Colonel independent insurance agents and bro- Restaurant Association has grown in Lee served in other key command and kers, representing a network of more membership and status with Jim Funk staff positions which include: Company than 300,000 agents, brokers, and their at the helm during the past three dec- Commander, 317th Engineer Battalion, employees. During his term as chair- ades. Through recessions, hurricanes 3rd Brigade, 24th Infantry Division, man of the Big ‘‘I,’’ David Daniel has and the most recent oil spill, Mr. Funk Mechanized; Commander, Alaska been a leader on a number of issues for has led the industry through a business Projects Office, Cold Regions Research the association including health care climate that has challenged Louisi- Laboratory; Battalion Executive Offi- overhaul legislation and financial serv- ana’s restaurants on many levels. cer of the 10th Engineer Battalion, and ices regulatory reform. In a time of Mr. Funk has also been recognized the Engineer Brigade Operations Offi- tectonic shifts in the financial services nationally for his success in associa- cer, Third Infantry Division, Mecha- industry landscape, Mr. Daniel has tion management, for his clout in Lou- nized. Colonel Lee also served in Af- proven to be a strong leader and a isiana’s politics, and for his dedication ghanistan during Operation Enduring steady hand for the association and the to culinary education. In 2007, he re- Freedom as the Deputy Commander for insurance industry as a whole. ceived the industry’s highest honor— the Afghanistan Engineer District. David Daniel is president of Daniel induction into the National Restaurant This resume serves as a testament to and Eustis Insurance in Baton Rouge, Association Educational Foundation the character of Colonel Lee. LA. Prior to his election to the IIABA College of Diplomats. Mr. Funk was While it is no secret that I do not see Executive Committee in 2004, he served also an impressive advocate for the em- eye-to-eye with the Army Corps of En- on the board of directors of the Inde- ployees of the hospitality industry. As gineers as an organization, I can say pendent Insurance Agents & Brokers of the head of the Louisiana Restaurant that I greatly appreciate the efforts of Louisiana, IIABL, for eight years be- Association, he created the LRA’s Self Colonel Lee individually. Colonel Lee fore becoming president in 1997. Daniel Insurer’s Fund for Worker’s Compensa- earned the respect of many within the served as Louisiana’s national board tion, which provides important and local Louisiana communities over the director beginning in 1998 and has necessary insurance to Louisiana res- past three years through his strong acted as the State association’s rep- taurants and their workers. The fund leadership and hard work. He is a fine resentative to the Louisiana Insurance now ensures more than 2,300 res- officer who has given much in service Rating Commission. Mr. Daniel is also taurants and hotels in Louisiana. to the Nation. I wish him well in future the recipient of IIABL’s Lifetime Mr. Funk also fought to protect the endeavors.∑ Achievement Award and the Out- integrity and reputation of Louisiana standing Committee Chairman Award. restaurants and food products. At the f On the national level, Mr. Daniel has National Restaurant Association Show served on IIABA’s Technical Affairs on May 22 of this year, he stressed the TIMBER LAKE, SOUTH DAKOTA Committee and was chairman of the need to protect the wetlands and Lou- ∑ Mr. THUNE. Mr. President, today I Governance and Communication Task isiana’s prominent fishing and seafood recognize Timber Lake, SD. Founded in Force. industry. Having guided the LRA 1910, the town of Timber will celebrate David Daniel has long been praised through the devastating destruction of its 100th anniversary this year. for his work in Baton Rouge as well as Hurricane Katrina and the current oil- Located in Dewey County, Timber the insurance industry. For 28 years he spill threatening our shores, Mr. Funk Lake possesses the strong sense of has been a member of the Capital City has shown laudable leadership. community that makes South Dakota

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00091 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.035 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5960 CONGRESSIONAL RECORD — SENATE July 15, 2010 an outstanding place to live and work. Mrs. Cole, one of its reading clerks, an- H.R. 5712. An act to provide for certain Throughout its rich history, Timber nounced that the Speaker has signed clarifications and extensions under Medi- Lake has continued to be a strong re- the following enrolled bills: care, Medicaid, and the Children’s Health In- surance Program. flection of South Dakota’s greatest H.R. 689. An act to interchange the admin- values and traditions. The community istrative jurisdiction of certain Federal f of Timber Lake has much to be proud lands between the Forest Service and the Bu- EXECUTIVE AND OTHER of and I am confident that Timber reau of Land Management, and for other pur- COMMUNICATIONS Lake’s success will continue well into poses. H.R. 3360. An act to amend title 46, United The following communications were the future. States Code, to establish requirements to en- laid before the Senate, together with The town of Timber Lake will com- sure the security and safety of passengers accompanying papers, reports, and doc- memorate the 100th anniversary of its and crew on cruise vessels, and for other pur- uments, and were referred as indicated: founding with a celebration held from poses. July 19 through July 25, featuring H.R. 4840. An act to designate the facility EC–6633. A communication from the Execu- events such as a community play, of the United States Postal Service located tive Analyst, Office of the Secretary, Depart- ment of Health and Human Services, trans- rodeo, demolition derby, parade, and a at 1981 Cleveland Avenue in Columbus, Ohio, as the ‘‘Clarence D. Lumpkin Post Office’’. mitting, pursuant to law, a report on the dis- fireworks display. I would like to offer continuation of service in acting role and ac- my congratulations to the citizens of The enrolled bills were subsequently signed by the President pro tempore tion on the nomination for the position of Timber Lake on this milestone anni- Assistant Secretary for Planning and Eval- versary and send my best wishes to (Mr. INOUYE). uation; to the Committee on Health, Edu- them in the years to come.∑ ENROLLED BILL SIGNED cation, Labor, and Pensions. At 5:52 p.m., a message from the EC–6634. A communication from the Sec- f House of Representatives, delivered by retary of Health and Human Services, trans- MESSAGES FROM THE HOUSE Mr. Novotny, one of its reading clerks, mitting, pursuant to law, a report entitled announced that the Speaker has signed ‘‘Fiscal Year 2009 Medical Device User Fee ENROLLED BILL SIGNED and Modernization Act (MDUFMA) Financial At 10:24 a.m., a message from the the following enrolled bill: Report’’; to the Committee on Health, Edu- House of Representatives, delivered by H.R. 4173. An act to promote the financial cation, Labor, and Pensions. Mrs. Cole, one of its reading clerks, an- stability of the United States by improving EC–6635. A communication from the Pro- accountability and transparency in the fi- gram Manager, Office of the National Coordi- nounced that the Speaker has signed nancial system, to end ‘‘too big to fail’’, to the following enrolled bill: nator for Health Information Technology, protect the American taxpayer by ending Department of Health and Human Services, H.R. 5502. An act to amend the effective bailouts, to protect consumers from abusive transmitting, pursuant to law, the report of date of the gift card provisions of the Credit financial services practices, and for other a rule entitled ‘‘Health Information Tech- Card Accountability Responsibility and Dis- purposes. nology: Initial Set of Standards, Implemen- closure Act of 2009. The enrolled bill was subsequently tation Specifications, and Certification Cri- The enrolled bill was subsequently signed by the President pro tempore teria for Electronic Health Record Tech- signed by the President pro tempore (Mr. INOUYE). nology’’ (RIN0991–AB58) received in the Of- (Mr. INOUYE). fice of the President of the Senate on July f 13, 2010; to the Committee on Health, Edu- At 11:10 a.m., a message from the MEASURES REFERRED cation, Labor, and Pensions. EC–6636. A communication from the Acting House of Representatives, delivered by The following bills were read the first Mrs. Cole, one of its reading clerks, an- Deputy Associate Administrator for Acquisi- and the second times by unanimous tion Policy, General Services Administra- nounced that the House has passed the consent, and referred as indicated: tion, transmitting, pursuant to law, the re- following bills, in which it requests the H.R. 1722. An act to require the head of port of a rule entitled ‘‘Federal Acquisition concurrence of the Senate: each executive agency to establish and im- Regulation; FAR Circular 2005–44, Introduc- H.R. 1722. An act to require the head of plement a policy under which employees tion’’ (FAC 2005–44) received in the Office of each executive agency to establish and im- shall be authorized to telework, and for the President of the Senate on July 12, 2010; plement a policy under which employees other purposes; to the Committee on Home- to the Committee on Homeland Security and shall be authorized to telework, and for land Security and Governmental Affairs. Governmental Affairs. other purposes. H.R. 2864. An act to amend the Hydro- EC–6637. A communication from the Acting H.R. 2864. An act to amend the Hydro- graphic Services Improvement Act of 1998 to Deputy Associate Administrator for Acquisi- graphic Services Improvement Act of 1998 to authorize funds to acquire hydrographic data tion Policy, General Services Administra- authorize funds to acquire hydrographic data and provide hydrographic services specific to tion, transmitting, pursuant to law, the re- and provide hydrographic services specific to the Arctic for safe navigation, delineating port of a rule entitled ‘‘Federal Acquisition the Arctic for safe navigation, delineating the United States extended continental Regulation; FAR Circular 2008–039, Reporting the United States extended continental shelf, and the monitoring and description of Executive Compensation and First—Tier shelf, and the monitoring and description of coastal changes; to the Committee on Com- Subcontract Awards’’ (FAC 2005–44) received coastal changes. merce, Science, and Transportation. in the Office of the President of the Senate H.R. 5390. An act to designate the facility H.R. 5390. An act to designate the facility on July 12, 2010; to the Committee on Home- of the United States Postal Service located of the United States Postal Service located land Security and Governmental Affairs. at 13301 Smith Road in Cleveland, Ohio, as at 13301 Smith Road in Cleveland, Ohio, as EC–6638. A communication from the Acting the ‘‘David John Donafee Post Office Build- the ‘‘David John Donafee Post Office Build- Deputy Associate Administrator for Acquisi- ing’’. ing’’; to the Committee on Homeland Secu- tion Policy, General Services Administra- H.R. 5450. An act to designate the facility rity and Governmental Affairs. tion, transmitting, pursuant to law, the re- of the United States Postal Service located H.R. 5450. An act to designate the facility port of a rule entitled ‘‘Federal Acquisition at 3894 Crenshaw Boulevard in Los Angeles, of the United States Postal Service located Regulation; FAR Circular 2005–44, Small En- California, as the ‘‘Tom Bradley Post Office at 3894 Crenshaw Boulevard in Los Angeles, tity Compliance Guide’’ (FAC 2005–44) re- Building’’. California, as the ‘‘Tom Bradley Post Office ceived in the Office of the President of the H.R. 5712. An act to provide for certain Building’’; to the Committee on Homeland Senate on July 12, 2010; to the Committee on clarifications and extensions under Medi- Security and Governmental Affairs. Homeland Security and Governmental Af- care, Medicaid, and the Children’s Health In- f fairs. surance Program. EC–6639. A communication from the Asso- MEASURES PLACED ON THE ciate General Counsel, Department of Home- At 2:38 p.m., a message from the CALENDAR land Security, transmitting, pursuant to House of Representatives, delivered by The following bill was read the sec- law, a report relative to a vacancy in the one of its reading clerks, Mrs. Cole, an- ond time, and placed on the calendar: Federal Emergency Management Agency in the position of Administrator, U.S. Fire Ad- nounced that the House has passed the S. 3588. A bill to limit the moratorium on ministration; to the Committee on Home- following bill, without amendment: certain permitting and drilling activities land Security and Governmental Affairs. S. 1508. An act to amend the Improper Pay- issued by the Secretary of the Interior, and EC–6640. A communication from the Direc- ments Information Act of 2002 (31 U.S.C. 3321 for other purposes. tor, Office of Personnel Management, trans- note) in order to prevent the loss of billions f mitting, pursuant to law, the Office’s annual in taxpayer dollars. MEASURES READ THE FIRST TIME report on Federal agencies’ use of the physi- ENROLLED BILLS SIGNED cians comparability allowance (PCA) pro- At 2:48 p.m., a message from the The following bill was read the first gram; to the Committee on Homeland Secu- House of Representatives, delivered by time: rity and Governmental Affairs.

VerDate Mar 15 2010 04:25 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00092 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.050 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5961 EC–6641. A communication from the Direc- tain of the Port Sector Northern New Eng- ((RIN1625–AA00)(Docket No. USCG–2010– tor, Office of Personnel Management, trans- land Area of Responsibility, July through 0476)) received in the Office of the President mitting a legislative proposal entitled ‘‘Fed- September’’ ((RIN1625–AA00)(Docket No. of the Senate on July 14, 2010; to the Com- eral Civilian Employees in Zones of Armed USCG–2010–0315)) received in the Office of the mittee on Commerce, Science, and Transpor- Conflict Benefits Act of 2010’’; to the Com- President of the Senate on July 14, 2010; to tation. mittee on Homeland Security and Govern- the Committee on Commerce, Science, and EC–6659. A communication from the Attor- mental Affairs. Transportation. ney Advisor, U.S. Coast Guard, Department EC–6642. A communication from the Gen- EC–6651. A communication from the Attor- of Homeland Security, transmitting, pursu- eral Counsel of the Department of Defense, ney Advisor, U.S. Coast Guard, Department ant to law, the report of a rule entitled transmitting a legislative proposal entitled of Homeland Security, transmitting, pursu- ‘‘Safety Zone; Neptune Deep Water Port, At- ‘‘Federal Civilian Employees in Zones of ant to law, the report of a rule entitled lantic Ocean, Boston, MA’’ ((RIN1625– Armed Conflict Benefits Act of 2010’’; to the ‘‘Safety Zone; Ship Repair in Penobscot Bay, AA00)(Docket No. USCG–2010–0542)) received Committee on Homeland Security and Gov- ME’’ ((RIN1625–AA00)(Docket No. USCG– in the Office of the President of the Senate ernmental Affairs. 2010–0519)) received in the Office of the Presi- on July 14, 2010; to the Committee on Com- EC–6643. A communication from the Con- dent of the Senate on July 14, 2010; to the merce, Science, and Transportation. gressional Review Coordinator, Animal and Committee on Commerce, Science, and EC–6660. A communication from the Attor- Plant Health Inspection Service, Department Transportation. ney Advisor, U.S. Coast Guard, Department of Agriculture, transmitting, pursuant to EC–6652. A communication from the Attor- of Homeland Security, transmitting, pursu- law, the report of a rule entitled ‘‘Viruses, ney Advisor, U.S. Coast Guard, Department ant to law, the report of a rule entitled Serums, Toxins, and Analogous Products and of Homeland Security, transmitting, pursu- ‘‘Safety Zone; City of Martinez 4th of July Patent Term Restoration; Nonsubstantive ant to law, the report of a rule entitled Fireworks, Martinez, CA’’ ((RIN1625– Amendments’’ (Docket No. APHIS–2009–0069) ‘‘Safety Zone; AVI May Fireworks Display, AA00)(Docket No. USCG–2010–0371)) received received in the Office of the President of the Laughlin, Nevada, NV’’ ((RIN1625– in the Office of the President of the Senate Senate on July 14, 2010; to the Committee on AA00)(Docket No. USCG–2009–1132)) received on July 14, 2010; to the Committee on Com- Agriculture, Nutrition, and Forestry. in the Office of the President of the Senate merce, Science, and Transportation. EC–6644. A communication from the Chief on July 14, 2010; to the Committee on Com- EC–6661. A communication from the Attor- of the Publications and Regulations Branch, merce, Science, and Transportation. ney Advisor, U.S. Coast Guard, Department Internal Revenue Service, Department of the EC–6653. A communication from the Attor- of Homeland Security, transmitting, pursu- Treasury, transmitting, pursuant to law, the ney Advisor, U.S. Coast Guard, Department ant to law, the report of a rule entitled report of a rule entitled ‘‘Tier I Issue: IRC δ of Homeland Security, transmitting, pursu- ‘‘Safety Zone; Grand Marais Splash-In, West 118 Abuse Directive No. 9’’ (LMSB–4–0710–020) ant to law, the report of a rule entitled Bay, Lake Superior, Grand Marais, MI’’ received in the Office of the President of the ‘‘Safety Zone; America’s Discount Tire 50th ((RIN1625–AA00)(Docket No. USCG–2010– Senate on July 14, 2010; to the Committee on Anniversary, Fireworks Display, South Lake 0470)) received in the Office of the President Finance. Tahoe, CA’’ ((RIN1625–AA00)(Docket No. of the Senate on July 14, 2010; to the Com- EC–6645. A communication from the Dep- USCG–2010–0151)) received in the Office of the mittee on Commerce, Science, and Transpor- uty Associate Director for Management and President of the Senate on July 14, 2010; to tation. Administration and Designated Reporting the Committee on Commerce, Science, and EC–6662. A communication from the Attor- Official, Office of National Drug Control Pol- Transportation. ney Advisor, U.S. Coast Guard, Department icy, Executive Office of the President, trans- EC–6654. A communication from the Attor- of Homeland Security, transmitting, pursu- mitting, pursuant to law, (2) reports relative ney Advisor, U.S. Coast Guard, Department ant to law, the report of a rule entitled to vacancies in the Office of National Drug of Homeland Security, transmitting, pursu- ‘‘Safety Zone; DEEPWATER HORIZON at Control Policy in the positions of Deputy Di- ant to law, the report of a rule entitled Mississippi Canyon 252 Outer Continental rector for Demand Reduction and Deputy Di- ‘‘Safety Zone; Tacoma Freedom Fair Air Shelf MODU in the Gulf of Mexico’’ rector for State, Local and Tribal Affairs; to Show, Commencement Bay, Tacoma, Wash- ((RIN1625–AA00)(Docket No. USCG–2010– the Committee on the Judiciary. ington’’ ((RIN1625–AA00)(Docket No. USCG– 0448)) received in the Office of the President EC–6646. A communication from the Sec- 2010–0495)) received in the Office of the Presi- of the Senate on July 14, 2010; to the Com- retary, Federal Trade Commission, transmit- dent of the Senate on July 14, 2010; to the mittee on Commerce, Science, and Transpor- ting, pursuant to law, a report entitled ‘‘Col- Committee on Commerce, Science, and tation. lege Scholarship Fraud Prevention Act of Transportation. EC–6663. A communication from the Attor- 2000 Annual Report to Congress: July 2010’’; EC–6655. A communication from the Attor- ney, U.S. Coast Guard, Department of Home- to the Committee on the Judiciary. ney Advisor, U.S. Coast Guard, Department land Security, transmitting, pursuant to EC–6647. A communication from the Attor- of Homeland Security, transmitting, pursu- law, the report of a rule entitled ‘‘Safety ney Advisor, U.S. Coast Guard, Department ant to law, the report of a rule entitled Zone; Shore Thing and Independence Day of Homeland Security, transmitting, pursu- ‘‘Safety Zone; Delta Independence Day Foun- Fireworks, Chesapeake Bay, Norfolk, VA’’ ant to law, the report of a rule entitled dation Celebration, Mandeville Island, CA’’ ((RIN1625–AA00)(Docket No. USCG–2010– ‘‘Safety Zone; Fourth of July Fireworks ((RIN1625–AA00)(Docket No. USCG–2010– 0294)) received in the Office of the President Event, Pagan River, Smithfield, VA’’ 0364)) received in the Office of the President of the Senate on July 14, 2010; to the Com- ((RIN1625–AA00)(Docket No. UCSG–2010– of the Senate on July 14, 2010; to the Com- mittee on Commerce, Science, and Transpor- 0454)) received in the Office of the President mittee on Commerce, Science, and Transpor- tation. of the Senate on July 14, 2010; to the Com- tation. EC–6664. A communication from the Attor- mittee on Commerce, Science, and Transpor- EC–6656. A communication from the Attor- ney, U.S. Coast Guard, Department of Home- tation. ney Advisor, U.S. Coast Guard, Department land Security, transmitting, pursuant to EC–6648. A communication from the Attor- of Homeland Security, transmitting, pursu- law, the report of a rule entitled ‘‘Safety ney Advisor, U.S. Coast Guard, Department ant to law, the report of a rule entitled Zone; Mackinac Island 4th of July Fire- of Homeland Security, transmitting, pursu- ‘‘Safety Zone; City of Pittsburg Independ- works, Lake Huron, Mackinac Island, MI’’ ant to law, the report of a rule entitled ence Day Celebration, Pittsburg, CA’’ ((RIN1625–AA00)(Docket No. USCG–2010– ‘‘Safety Zone; Stockton Ports Baseball Club/ ((RIN1625–AA00)(Docket No. USCG–2010– 0497)) received in the Office of the President City of Stockton, 4th of July Fireworks Dis- 0366)) received in the Office of the President of the Senate on July 14, 2010; to the Com- play, Stockton, CA’’ ((RIN1625–AA00)(Docket of the Senate on July 14, 2010; to the Com- mittee on Commerce, Science, and Transpor- No. USCG–2010–0369)) received in the Office of mittee on Commerce, Science, and Transpor- tation. the President of the Senate on July 14, 2010; tation. EC–6665. A communication from the Attor- to the Committee on Commerce, Science, EC–6657. A communication from the Attor- ney, U.S. Coast Guard, Department of Home- and Transportation. ney Advisor, U.S. Coast Guard, Department land Security, transmitting, pursuant to EC–6649. A communication from the Attor- of Homeland Security, transmitting, pursu- law, the report of a rule entitled ‘‘Safety ney Advisor, U.S. Coast Guard, Department ant to law, the report of a rule entitled Zone; Festivals and Fireworks Celebration, of Homeland Security, transmitting, pursu- ‘‘Safety Zone; Fourth of July Fireworks East Moran Bay, Lake Huron, St. Ignace, ant to law, the report of a rule entitled Event, Cape Charles City Harbor, Cape MI’’ ((RIN1625–AA00) (Docket No. USCG–2010– ‘‘Safety Zone; Jameson Beach 4th of July Charles, VA’’ ((RIN1625–AA00)(Docket No. 0452)) received in the Office of the President Fireworks Display’’ ((RIN1625–AA00)(Docket USCG–2010–0477)) received in the Office of the of the Senate on July 14, 2010; to the Com- No. USCG–2010–0378)) received in the Office of President of the Senate on July 14, 2010; to mittee on Commerce, Science, and Transpor- the President of the Senate on July 14, 2010; the Committee on Commerce, Science, and tation. to the Committee on Commerce, Science, Transportation. EC–6666. A communication from the Attor- and Transportation. EC–6658. A communication from the Attor- ney, U.S. Coast Guard, Department of Home- EC–6650. A communication from the Attor- ney Advisor, U.S. Coast Guard, Department land Security, transmitting, pursuant to ney Advisor, U.S. Coast Guard, Department of Homeland Security, transmitting, pursu- law, the report of a rule entitled ‘‘Safety of Homeland Security, transmitting, pursu- ant to law, the report of a rule entitled Zone; Reedville July 4th Celebration, ant to law, the report of a rule entitled ‘‘Safety Zone; July Firework Display in Cap- Cockrell’s Creek, Reedville, VA’’ ((RIN1625– ‘‘Safety Zone; Marine Events within the Cap- tain of the Port, Puget Sound AOR’’ AA00) (Docket No. USCG–2010–0293)) received

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00093 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.075 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5962 CONGRESSIONAL RECORD — SENATE July 15, 2010 in the Office of the President of the Senate land Security, transmitting, pursuant to ((RIN1625–AA00) (Docket No. USCG–2010– on July 14, 2010; to the Committee on Com- law, the report of a rule entitled ‘‘Safety 0332)) received in the Office of the President merce, Science, and Transportation. Zone; Michigan Orthopaedic Society 50th An- of the Senate on July 14, 2010; to the Com- EC–6667. A communication from the Attor- niversary Fireworks, Lake Huron, Mackinac mittee on Commerce, Science, and Transpor- ney, U.S. Coast Guard, Department of Home- Island, MI’’ ((RIN1625–AA00) (Docket No. tation. land Security, transmitting, pursuant to USCG–2010–0496)) received in the Office of the EC–6684. A communication from the Attor- law, the report of a rule entitled ‘‘Safety President of the Senate on July 14, 2010; to ney, U.S. Coast Guard, Department of Home- Zone; Sault Sainte Marie 4th of July Fire- the Committee on Commerce, Science, and land Security, transmitting, pursuant to works, St. Mary’s River, Sault Sainte Marie, Transportation. law, the report of a rule entitled ‘‘Safety MI’’ ((RIN1625–AA00) (Docket No. USCG–2010– EC–6676. A communication from the Attor- Zone; Pierce County, Washington, Depart- 0543)) received in the Office of the President ney, U.S. Coast Guard, Department of Home- ment of Emergency Management, Regional of the Senate on July 14, 2010; to the Com- land Security, transmitting, pursuant to Water Exercise’’ ((RIN1625–AA00) (Docket mittee on Commerce, Science, and Transpor- law, the report of a rule entitled ‘‘Safety No. USCG–2010–0475)) received in the Office of tation. Zone; McNary-John Day Transmission Line the President of the Senate on July 14, 2010; EC–6668. A communication from the Attor- Project, Columbia River, Hermiston, OR’’ to the Committee on Commerce, Science, ney, U.S. Coast Guard, Department of Home- ((RIN1625–AA00) (Docket No. USCG–2010– and Transportation. land Security, transmitting, pursuant to 0504)) received in the Office of the President EC–6685. A communication from the Attor- law, the report of a rule entitled ‘‘Safety of the Senate on July 14, 2010; to the Com- ney, U.S. Coast Guard, Department of Home- Zone; Michigan City Super Boat Grand Prix, mittee on Commerce, Science, and Transpor- land Security, transmitting, pursuant to Lake Michigan, Michigan City, IN’’ tation. law, the report of a rule entitled ‘‘Safety ((RIN1625–AA00) (Docket No. USCG–2010– EC–6677. A communication from the Attor- Zone; Alligator River, NC’’ ((RIN1625–AA00) 0235)) received in the Office of the President ney, U.S. Coast Guard, Department of Home- (Docket No. USCG–2010–0091)) received in the of the Senate on July 14, 2010; to the Com- land Security, transmitting, pursuant to Office of the President of the Senate on July mittee on Commerce, Science, and Transpor- law, the report of a rule entitled ‘‘Safety 14, 2010; to the Committee on Commerce, tation. Zone; Milwaukee Air and Water Show, Lake Science, and Transportation. EC–6669. A communication from the Attor- Michigan, Milwaukee, WI’’ ((RIN1625–AA00) EC–6686. A communication from the Attor- ney, U.S. Coast Guard, Department of Home- (Docket No. USCG–2010–0225)) received in the ney, U.S. Coast Guard, Department of Home- land Security, transmitting, pursuant to Office of the President of the Senate on July land Security, transmitting, pursuant to law, the report of a rule entitled ‘‘Safety 14, 2010; to the Committee on Commerce, law, the report of a rule entitled ‘‘Safety Zone; Chicago Tall Ships Fireworks, Lake Science, and Transportation. Zone; Wilson Bay, Jacksonville, NC’’ Michigan, Chicago, IL’’ ((RIN1625–AA00) EC–6678. A communication from the Attor- ((RIN1625–AA00) (Docket No. USCG–2010– (Docket No. USCG–2010–0250)) received in the ney, U.S. Coast Guard, Department of Home- 0158)) received in the Office of the President Office of the President of the Senate on July land Security, transmitting, pursuant to of the Senate on July 14, 2010; to the Com- 14, 2010; to the Committee on Commerce, law, the report of a rule entitled ‘‘Safety mittee on Commerce, Science, and Transpor- Science, and Transportation. Zones; 2010 Muskegon Summer Celebration tation. EC–6670. A communication from the Attor- Air Show, Muskegon Lake, Muskegon, MI’’ ney, U.S. Coast Guard, Department of Home- f ((RIN1625–AA00) (Docket No. USCG–2010– land Security, transmitting, pursuant to 0506)) received in the Office of the President PETITIONS AND MEMORIALS law, the report of a rule entitled ‘‘Safety of the Senate on July 14, 2010; to the Com- Zone; Wicomico Community Fireworks, The following petitions and memo- mittee on Commerce, Science, and Transpor- Great Wicomico River, Mila, VA’’ ((RIN1625– rials were laid before the Senate and AA00) (Docket No. USCG–2010–0023)) received tation. EC–6679. A communication from the Attor- were referred or ordered to lie on the in the Office of the President of the Senate ney, U.S. Coast Guard, Department of Home- table as indicated: on July 14, 2010; to the Committee on Com- land Security, transmitting, pursuant to POM–l28. A resolution adopted by the merce, Science, and Transportation. House of Representatives of the State of Illi- EC–6671. A communication from the Attor- law, the report of a rule entitled ‘‘Safety nois urging Congress to pass legislation that ney, U.S. Coast Guard, Department of Home- Zone; Parade of Ships, Seattle SeaFair Fleet would provide financial assistance to those land Security, transmitting, pursuant to Week, Pier 66, Elliot Bay, WA’’ ((RIN1625– states with budget deficits in order that the law, the report of a rule entitled ‘‘Safety AA00) (Docket No. USCG–2010–0525)) received length and depth of the recession will not be Zone; Red Bull Air Race, Detroit River, De- in the Office of the President of the Senate worsened due to the limited resources and troit, MI’’ ((RIN1625–AA00) (Docket No. on July 14, 2010; to the Committee on Com- difficult alternatives presently confronting USCG–2010–0174)) received in the Office of the merce, Science, and Transportation. many states; to the Committee on Appro- President of the Senate on July 14, 2010; to EC–6680. A communication from the Attor- priations. the Committee on Commerce, Science, and ney, U.S. Coast Guard, Department of Home- Transportation. land Security, transmitting, pursuant to HOUSE RESOLUTION NO. 551 EC–6672. A communication from the Attor- law, the report of a rule entitled ‘‘Safety Whereas, at this time, the United States is ney, U.S. Coast Guard, Department of Home- Zone; Marquette 4th of July Fireworks, Mar- continuing to experience one of the worst land Security, transmitting, pursuant to quette Harbor, Lake Superior, Marquette, economic downturns in its history; and law, the report of a rule entitled ‘‘Safety MI’’ ((RIN1625–AA00) (Docket No. USCG–2010– Whereas, the Department of Labor re- Zone; Private Fireworks, Wilson Creek, 0512)) received in the Office of the President cently reported that the unemployment rate Gloucester, VA’’ ((RIN1625–AA00) (Docket of the Senate on July 14, 2010; to the Com- in June rose to a level of 9.5%; and No. USCG–2010–0257)) received in the Office of mittee on Commerce, Science, and Transpor- Whereas, approximately 3.5 million jobs the President of the Senate on July 14, 2010; tation. have been lost in the United States since the to the Committee on Commerce, Science, EC–6681. A communication from the Attor- beginning of the year; and and Transportation. ney, U.S. Coast Guard, Department of Home- Whereas, state governments furnish assist- EC–6673. A communication from the Attor- land Security, transmitting, pursuant to ance to the unemployed and also provide di- ney, U.S. Coast Guard, Department of Home- law, the report of a rule entitled ‘‘Safety rect and indirect services to the neediest land Security, transmitting, pursuant to Zone; Fireworks for the Virginia Lake Fes- people in our communities, including the el- law, the report of a rule entitled ‘‘Safety tival, Buggs Island Lake, Clarksville, VA’’ derly, the disabled, and the very young; and Zones; City of Chicago’s July 4th Celebration ((RIN1625–AA00) (Docket No. USCG–2010– Whereas, although the American Recovery Fireworks, Lake Michigan, Chicago, IL’’ 0478)) received in the Office of the President and Reinvestment Act of 2009 is providing ((RIN1625–AA00) (Docket No. USCG–2010– of the Senate on July 14, 2010; to the Com- funds to state governments as part of the 0249)) received in the Office of the President mittee on Commerce, Science, and Transpor- economic stimulus package designed to spur of the Senate on July 14, 2010; to the Com- tation. our nation’s economic recovery, the budget mittee on Commerce, Science, and Transpor- EC–6682. A communication from the Attor- deficits of many states have grown signifi- tation. ney, U.S. Coast Guard, Department of Home- cantly, even with the original infusion of EC–6674. A communication from the Attor- land Security, transmitting, pursuant to federal funds, as shown by the current budg- ney, U.S. Coast Guard, Department of Home- law, the report of a rule entitled ‘‘Safety et gaps of $26.3 billion in California and ap- land Security, transmitting, pursuant to Zone; North Jetty, Named the Barview proximately $9.2 billion in Illinois; and law, the report of a rule entitled ‘‘Safety Jetty, Tillamook Bay, OR’’ ((RIN1625–AA00) Whereas, each state with a revenue short- Zones; Annual Firework Displays within the (Docket No. USCG–2010–0214)) received in the fall faces difficult decisions involving raising Captain of the Port, Puget Sound Area of Re- Office of the President of the Senate on July taxes and fees on its citizens and businesses sponsibility’’ ((RIN1625–AA00) (Docket No. 14, 2010; to the Committee on Commerce, that are already adversely affected by the re- USCG–2010–0063)) received in the Office of the Science, and Transportation. cession and unemployment; reducing finan- President of the Senate on July 14, 2010; to EC–6683. A communication from the Attor- cial assistance and grants to educational in- the Committee on Commerce, Science, and ney, U.S. Coast Guard, Department of Home- stitutions, local governments, and social Transportation. land Security, transmitting, pursuant to service agencies; and laying off significant EC–6675. A communication from the Attor- law, the report of a rule entitled ‘‘Safety numbers of employees from the state work- ney, U.S. Coast Guard, Department of Home- Zone; Fireworks Display in Stevenson, WA’’ force; and

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00094 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.077 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5963 Whereas, the effect of a state, like Illinois, ture and jeopardize future job growth. There- support expansion and use of domestic nat- taking one or more of those difficult alter- fore, be it ural gas reserves and alternative energies to natives may be to worsen the effects of the Resolved, That the Senate of the Legisla- reduce our reliance on imported oil by sup- recession in that state because of higher un- ture of Louisiana memorializes the president porting H.R. 1835 and S. 1408, which are under employment, increased state costs of health of the United States, the United States Con- consideration by the United States Congress. care for the uninsured, increased numbers of gress, and the Federal Communications Be it further foreclosures, increased state expenditures for Commission to refrain from regulating Inter- Resolved, That the Legislature of Louisiana unemployment insurance, and lower state net broadband services as common carrier urges state and federal agencies to purchase, tax revenues due to reduced economic activ- services under Title II of the Communica- when possible, vehicles that can be converted ity; and tions Act of 1934. Be it further to run on compressed natural gas, when it is Whereas, the federal government has the Resolved, That a copy of this Resolution be available. Be it further resources and the ability to assist states transmitted to the president of the United Resolved, That a copy of this Resolution be with budget deficits during this difficult States, to the presiding officers of the Sen- transmitted to the secretary of the United time so that the rate of unemployment can ate and the House of Representatives of the States Senate and the clerk of the United be reduced, or at least not increased, and so United States Congress, to each member of States House of Representatives, and to each that educational and social service programs the Louisiana congressional delegation, and member of the Louisiana delegation to the can be continued at current levels; and to the chairman of the Federal Communica- United States Congress. Whereas, the state budget deficits could be tions Commission. f eliminated if Congress passed new legisla- tion, with reasonable repayment require- POM–130. A concurrent resolution adopted REPORTS OF COMMITTEES ments, to provide financial assistance to the by the Legislature of the State of Louisiana The following reports of committees states with budget deficits; therefore, be it urging Congress to support expansion and were submitted: Resolved, by the House of Representatives of use of domestic natural gas reserves and al- By Mr. KOHL, from the Committee on Ap- the Ninety-sixth General Assembly of the State ternative energies to reduce our reliance on propriations, without amendment: of Illinois, That we urge Congress to pass leg- imported oil by supporting H.R. 1835 and S. S. 3606. A bill making appropriations for islation that would provide financial assist- 1408; to the Committee on Energy and Nat- Agriculture, Rural Development, Food and ance to those states with budget deficits in ural Resources. Drug Administration, and Related Agencies order that the length and depth of the reces- SENATE CONCURRENT RESOLUTION NO. 8 programs for the fiscal year ending Sep- sion will not be worsened due to the limited To memorialize the United States Congress tember 30, 2011, and for other purposes (Rept. resources and difficult alternatives presently to support expansion and use of domestic No. 111–221). confronting many states; and be it further natural gas and alternative energies, and to Resolved, That suitable copies of this reso- f urge agencies to operate vehicles using com- lution be presented to President Barack pressed natural gas. EXECUTIVE REPORT OF Obama, the Speaker of the United States Whereas, the United States imports more COMMITTEE House of Representatives, the President pro than sixty-five percent of its petroleum, two- tempore of the United States Senate, and The following executive report of a thirds of which is used in the form of gaso- each member of the Illinois congressional nomination was submitted: line and diesel fuel to power vehicles; and delegation. By Mr. ROCKEFELLER for the Committee Whereas, a large percentage of worldwide on Commerce, Science, and Transportation. petroleum reserves are located in politically POM–l29. A resolution adopted by the Sen- *Coast Guard nominations of Rear Adm. volatile countries, making the United States ate of the State of Louisiana urging the (lh) Sandra L. Stosz, to be Rear Admiral vulnerable to supply disruptions; and President of the United States, Congress, Lower Half. Whereas, the United States has an abun- and the Federal Communications Commis- dance of natural gas; and *Nomination was reported with rec- sion to refrain from regulating Internet Whereas, compressed natural gas provides ommendation that it be confirmed sub- broadband services as common carrier serv- safe, clean, reliable, efficient, and secure en- ject to the nominee’s commitment to ices under Title II of the Communications ergy, and is the alternative fuel most used respond to requests to appear and tes- Act of 1934; to the Committee on Commerce, today for transportation in the United Science, and Transportation. tify before any duly constituted com- States, with more than two hundred thou- mittee of the Senate. SENATE RESOLUTION NO. 117 sand buses, taxis, delivery vehicles, and To memorialize the president of the United other fleet vehicles across the nation using f States, the United States Congress, and the compressed natural gas daily; and INTRODUCTION OF BILLS AND Federal Communications Commission to re- Whereas, the United States Department of JOINT RESOLUTIONS frain from regulating Internet broadband Energy indicates that compressed natural services as common carrier services under gas can be used as a replacement for gasoline The following bills and joint resolu- Title II of the Communications Act of 1934. in light-duty vehicles and as a replacement tions were introduced, read the first Whereas, due in large part to the unregu- for diesel in heavy-duty vehicles; and and second times by unanimous con- lated efforts of private enterprise over the Whereas, vehicles powered by compressed sent, and referred as indicated: past twenty-five years, the development of natural gas discharge far fewer harmful By Mr. CHAMBLISS (for himself and the Internet has dramatically transformed emissions than vehicles powered by gasoline Mr. ISAKSON): the way Louisiana citizens work, live, and or diesel fuel; and S. 3592. A bill to designate the facility of learn; and Whereas, studies indicate that mainte- the United States Postal Service located at Whereas, the deployment of efficient, fast, nance costs for vehicles powered by com- 100 Commerce Drive in Tyrone, Georgia, as and reliable broadband networks throughout pressed natural gas are lower than for vehi- the ‘‘First Lieutenant Robert Wilson Collins the state has created thousands of jobs and cles powered by gasoline or diesel fuel; and Post Office Building″; to the Committee on many benefits for local economies; and Whereas, the federal government currently Homeland Security and Governmental Af- Whereas, in order to encourage the growth provides, and is expected to increase, incen- fairs. and development of the Internet, the Federal tives for use of alternative fuels and, at the By Mr. JOHANNS: Communications Commission (FCC) histori- current price of various fuels, any additional S. 3593. A bill to require the Federal Gov- cally has refrained from regulating costs to purchase vehicles to run on com- ernment to pay the costs incurred by a State broadband Internet services as common car- pressed natural gas would be quickly re- or local government in defending a State or rier services under Title II of the Commu- couped; and local immigration law that survives a con- nications Act of 1934; and Whereas, in 2009, the United States im- stitutional challenge by the Federal Govern- Whereas, as a result, the United States has ported four billion, three hundred and fifty ment in Federal court; to the Committee on been at the forefront of technological, busi- million barrels of oil, spending roughly two the Judiciary. ness, and social innovation on the Internet; hundred and sixty-five million dollars; and By Mr. NELSON of Florida: and Whereas, eighty-five million barrels of oil S. 3594. A bill to amend the Magnuson-Ste- Whereas, on May 6, 2010, the chairman of were produced daily around the world; and vens Fishery Conservation and Management the FCC announced a policy to reclassify Whereas, twenty-one million barrels of oil Act to mitigate the economic impact of the broadband Internet services as common car- are used daily in the United States; and transition to sustainable fisheries on fishing rier services so that they can be more tight- Whereas, world oil production has been de- communities, and for other purposes; to the ly regulated, with a proposal to forebear clining since 2005; and Committee on Commerce, Science, and from imposing certain common carrier obli- Whereas, roughly twenty percent of every Transportation. gations on broadband Internet providers; and barrel of oil imported into the United States By Mr. BROWN of Ohio (for himself Whereas, using antiquated provisions of is used to fuel the transport of goods around and Mr. SANDERS): Title II of the Communications Act of 1934 to the country by road. Therefore, be it S. 3595. A bill to strengthen student regulate the Internet will slow investment in Resolved, That the Legislature of Louisiana achievement and graduation rates and pre- Louisiana’s Internet broadband infrastruc- memorializes the United States Congress to pare young people for college, careers, and

VerDate Mar 15 2010 05:21 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00095 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.091 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5964 CONGRESSIONAL RECORD — SENATE July 15, 2010 citizenship through innovative partnerships SUBMISSION OF CONCURRENT AND S. 850 that meet the comprehensive needs of chil- SENATE RESOLUTIONS At the request of Mr. KERRY, the dren and youth; to the Committee on Health, name of the Senator from Connecticut Education, Labor, and Pensions. The following concurrent resolutions (Mr. LIEBERMAN) was added as a co- By Mrs. HAGAN: and Senate resolutions were read, and S. 3596. A bill to establish the Culture of referred (or acted upon), as indicated: sponsor of S. 850, a bill to amend the Safety Hospital Accountability Study and By Mr. ENSIGN: High Seas Driftnet Fishing Morato- Demonstration Program; to the Committee S. Res. 583. A resolution expressing support rium Protection Act and the Magnu- on Finance. for designation of 2011 as ‘‘World Veterinary son-Stevens Fishery Conservation and By Mr. ROCKEFELLER: Year’’ to bring attention to and show appre- Management Act to improve the con- S. 3597. A bill to improve the ability of the ciation for the veterinary profession on its servation of sharks. National Oceanic and Atmospheric Adminis- 250th anniversary; to the Committee on the S. 887 tration, the Coast Guard, and coastal States Judiciary. to sustain healthy ocean and coastal eco- By Mr. JOHANNS: At the request of Mr. DURBIN, the systems by maintaining and sustaining their S. Res. 584. A resolution commemorating name of the Senator from Vermont capabilities relating to oil spill prepared- the 2010 Special Olympics USA National (Mr. SANDERS) was added as a cospon- ness, prevention, response, restoration, and Games; to the Committee on Commerce, sor of S. 887, a bill to amend the Immi- research, and for other purposes; to the Com- Science, and Transportation. mittee on Commerce, Science, and Transpor- gration and Nationality Act to reform f tation. and reduce fraud and abuse in certain By Mr. LAUTENBERG (for himself and ADDITIONAL COSPONSORS visa programs for aliens working tem- Mrs. GILLIBRAND): porarily in the United States and for S. 28 S. 3598. A bill to amend the Safe Drinking other purposes. Water Act and the Federal Water Pollution At the request of Mr. SCHUMER, the S. 1553 Control Act to authorize the Administrator name of the Senator from Connecticut of the Environmental Protection Agency to (Mr. LIEBERMAN) was added as a co- At the request of Mr. GRASSLEY, the reduce or eliminate the risk of releases of sponsor of S. 28, a bill to ensure that name of the Senator from Montana hazardous chemicals from public water sys- the courts of the United States may (Mr. TESTER) was added as a cosponsor tems and wastewater treatment works, and provide an impartial forum for claims of S. 1553, a bill to require the Sec- for other purposes; to the Committee on En- brought by United States citizens and retary of the Treasury to mint coins in vironment and Public Works. others against any railroad organized commemoration of the National Fu- By Mr. LAUTENBERG (for himself and ture Farmers of America Organization Mrs. GILLIBRAND): as a separate legal entity, arising from S. 3599. A bill to enhance the security of the deportation of United States citi- and the 85th anniversary of the found- chemical facilities and for other purposes; to zens and others to Nazi concentration ing of the National Future Farmers of the Committee on Homeland Security and camps on trains owned or operated by America Organization. Governmental Affairs. such railroad, and by the heirs and sur- S. 1567 By Mr. ROCKEFELLER: vivors of such persons. S. 3600. A bill to amend the Jones Act and At the request of Mr. INHOFE, his related statutes with respect to the liability S. 311 name was added as a cosponsor of S. of vessel owners and operators for damages; At the request of Mrs. BOXER, the 1567, a bill to provide for the issuance to the Committee on Commerce, Science, name of the Senator from Montana of a Multinational Species Conserva- and Transportation. (Mr. TESTER) was added as a cosponsor tion Funds Semipostal Stamp. By Mr. MERKLEY (for himself, Mr. of S. 311, a bill to prohibit the applica- S. 1674 CARPER, Mr. UDALL of New Mexico, tion of certain restrictive eligibility At the request of Mr. WYDEN, the and Mr. BENNET): requirements to foreign nongovern- S. 3601. A bill to promote the oil independ- name of the Senator from North Caro- ence of the United States, and for other pur- mental organizations with respect to lina (Mr. BURR) was added as a cospon- poses; to the Committee on Finance. the provision of assistance under part I sor of S. 1674, a bill to provide for an By Mr. CARDIN: of the Foreign Assistance Act of 1961. exclusion under the Supplemental Se- S. 3602. A bill to amend title 23, United S. 653 curity Income program and the Med- States Code, to direct the Secretary to es- At the request of Mr. CARDIN, the icaid program for compensation pro- tablish a comprehensive program to control names of the Senator from New York and treat polluted stormwater runoff from vided to individuals who participate in federally funded highways and roads, and for (Mrs. GILLIBRAND), the Senator from clinical trials for rare diseases or con- other purposes; to the Committee on Envi- South Carolina (Mr. GRAHAM) and the ditions. Senator from South Dakota (Mr. ronment and Public Works. S. 2747 By Ms. CANTWELL: THUNE) were added as cosponsors of S. At the request of Mr. BINGAMAN, the S. 3603. A bill to amend the Oil Pollution 653, a bill to require the Secretary of name of the Senator from North Caro- Act of 1990 to establish the Federal Oil Spill the Treasury to mint coins in com- lina (Mr. BURR) was added as a cospon- Research Committee and to amend the Fed- memoration of the bicentennial of the eral Water Pollution Control Act to include sor of S. 2747, a bill to amend the Land writing of the Star-Spangled Banner, in a response plan certain planned and dem- and Water Conservation Fund Act of and for other purposes. onstrated investments in research relating 1965 to provide consistent and reliable to discharges of oil and to modify the dates S. 749 authority for, and for the funding of, by which a response plan is required to be At the request of Mr. COCHRAN, the the land and water conservation fund updated; to the Committee on Commerce, name of the Senator from Indiana (Mr. to maximize the effectiveness of the Science, and Transportation. BAYH) was added as a cosponsor of S. fund for future generations, and for By Ms. SNOWE (for herself, Mr. GRASS- 749, a bill to improve and expand geo- LEY, Mr. ENZI, Mr. ISAKSON, and Ms. other purposes. graphic literacy among kindergarten COLLINS): S. 2982 S. 3604. A bill to extend the small business through grade 12 students in the United loan enhancements; to the Committee on States by improving professional devel- At the request of Mr. KERRY, the Small Business and Entrepreneurship. opment programs for kindergarten name of the Senator from New Mexico By Mr. ROCKEFELLER: through grade 12 teachers offered (Mr. BINGAMAN) was added as a cospon- S. 3605. A bill to invest in innovation through institutions of higher edu- sor of S. 2982, a bill to combat inter- through research and development, to im- cation. national violence against women and prove the competitiveness of the United girls. States, and for other purposes; to the Com- S. 831 S. 2989 mittee on Commerce, Science, and Transpor- At the request of Mr. KERRY, the tation. name of the Senator from California At the request of Ms. LANDRIEU, the By Mr. KOHL: (Mrs. BOXER) was added as a cosponsor name of the Senator from Maryland S. 3606. A bill making appropriations for of S. 831, a bill to amend title 10, (Mr. CARDIN) was added as a cosponsor Agriculture, Rural Development, Food and United States Code, to include service of S. 2989, a bill to improve the Small Drug Administration, and Related Agencies Business Act, and for other purposes. programs for the fiscal year ending Sep- after September 11, 2001, as service tember 30, 2011, and for other purposes; from qualifying for the determination of a S. 2998 the Committee on Appropriations; placed on reduced eligibility age for receipt of At the request of Mrs. GILLIBRAND, the calendar. non-regular service retired pay. the name of the Senator from Vermont

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00096 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.084 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5965 (Mr. LEAHY) was added as a cosponsor S. 3424 S. 3566 of S. 2998, a bill to temporarily expand At the request of Mr. DURBIN, the At the request of Mr. LAUTENBERG, the V nonimmigrant visa category to names of the Senator from Connecticut the names of the Senator from South include Haitians whose petition for a (Mr. LIEBERMAN), the Senator from Dakota (Mr. THUNE) and the Senator family-sponsored immigrant visa was Rhode Island (Mr. WHITEHOUSE) and the from Texas (Mrs. HUTCHISON) were approved on or before January 12, 2010. Senator from New Jersey (Mr. LAUTEN- added as cosponsors of S. 3566, a bill to S. 3151 BERG) were added as cosponsors of S. authorize certain maritime programs of the Department of Transportation, At the request of Mr. KERRY, the 3424, a bill to amend the Animal Wel- name of the Senator from Oregon (Mr. fare Act to provide further protection and for other purposes. S. 3572 MERKLEY) was added as a cosponsor of for puppies. S. 3151, a bill to establish the Office for S. 3430 At the request of Mrs. LINCOLN, the Global Women’s Issues and the Wom- At the request of Ms. SNOWE, the names of the Senator from New Hamp- en’s Development Advisor to facilitate name of the Senator from Maryland shire (Mrs. SHAHEEN), the Senator from interagency coordination and the inte- (Mr. CARDIN) was added as a cosponsor Maryland (Mr. CARDIN), the Senator gration of gender considerations into of S. 3430, a bill to amend the Internal from Ohio (Mr. BROWN) and the Senator from New Jersey (Mr. MENENDEZ) were the strategies, programming, and asso- Revenue Code of 1986 to expand the tip added as cosponsors of S. 3572, a bill to ciated outcomes of the Department of tax credit to employers of cosmetolo- require the Secretary of the Treasury State and the United States Agency for gists and to promote tax compliance in to mint coins in commemoration of the International Development, and for the cosmetology sector. 225th anniversary of the establishment other purposes. S. 3508 of the Nation’s first law enforcement S. 3199 At the request of Mr. UDALL of New Mexico, the name of the Senator from agency, the United States Marshals At the request of Ms. SNOWE, the Service. names of the Senator from New Jersey Maine (Ms. COLLINS) was added as a co- sponsor of S. 3508, a bill to strengthen S. 3578 (Mr. MENENDEZ) and the Senator from the capacity of the United States to At the request of Mr. JOHANNS, the South Dakota (Mr. JOHNSON) were lead the international community in name of the Senator from North Caro- added as cosponsors of S. 3199, a bill to lina (Mr. BURR) was added as a cospon- amend the Public Health Service Act reversing renewable natural resource degradation trends around the world sor of S. 3578, a bill to repeal the expan- regarding early detection, diagnosis, sion of information reporting require- and treatment of hearing loss. that threaten to undermine global prosperity and security and eliminate ments for payments of $600 or more to S. 3235 the diversity of life on Earth, and for corporations, and for other purposes. At the request of Mr. DORGAN, the other purposes. S. CON. RES. 63 name of the Senator from Connecticut At the request of Mr. JOHNSON, the S. 3510 (Mr. DODD) was added as a cosponsor of name of the Senator from North Da- At the request of Mr. CONRAD, the kota (Mr. DORGAN) was added as a co- S. 3235, a bill to amend the Act titled name of the Senator from Louisiana ‘‘An Act to authorize the leasing of re- sponsor of S. Con. Res. 63, a concurrent (Ms. LANDRIEU) was added as a cospon- resolution expressing the sense of Con- stricted Indian lands for public, reli- sor of S. 3510, a bill to amend the Inter- gress that Taiwan should be accorded gious, educational, recreational, resi- nal Revenue Code of 1986 to perma- observer status in the International dential, business, and other purposes nently extend the 15-year recovery pe- Civil Aviation Organization (ICAO). requiring the grant of long-term riod for qualified leasehold improve- S. RES. 519 leases’’, approved August 9, 1955, to ment property, qualified restaurant At the request of Mr. DEMINT, the provide for Indian tribes to enter into property, and qualified retail improve- name of the Senator from Alaska (Ms. certain leases without prior express ap- ment property. proval from the Secretary of the Inte- MURKOWSKI) was added as a cosponsor S. 3513 rior. of S. Res. 519, a resolution expressing At the request of Mr. JOHANNS, his S. 3406 the sense of the Senate that the pri- name was added as a cosponsor of S. mary safeguard for the well-being and At the request of Mrs. HAGAN, the 3513, a bill to amend the Internal Rev- name of the Senator from California protection of children is the family, enue Code of 1986 to extend for one year and that the primary safeguards for (Mrs. BOXER) was added as a cosponsor the special depreciation allowances for the legal rights of children in the of S. 3406, a bill to amend title 10, certain property. United States Code, to eliminate the United States are the Constitutions of S. 3519 the United States and the several per-fiscal year calculation of days of At the request of Ms. SNOWE, the States, and that, because the use of certain active duty or active service name of the Senator from Vermont international treaties to govern policy used to reduce the minimum age at (Mr. LEAHY) was added as a cosponsor in the United States on families and which a member of a reserve compo- of S. 3519, a bill to stabilize the match- children is contrary to principles of nent of the uniformed services may re- ing requirement for participants in the self-government and federalism, and tire for non-regular service. Hollings Manufacturing Partnership that, because the United Nations Con- S. 3414 Program. vention on the Rights of the Child un- At the request of Mr. HARKIN, the S. 3521 dermines traditional principles of law name of the Senator from Tennessee At the request of Ms. MURKOWSKI, the in the United States regarding parents (Mr. CORKER) was added as a cosponsor names of the Senator from Wyoming and children, the President should not of S. 3414, a bill to ensure that the Die- (Mr. BARRASSO), the Senator from Lou- transmit the Convention to the Senate tary Supplement Health and Education isiana (Mr. VITTER), the Senator from for its advice and consent. Act of 1994 and other requirements for Wyoming (Mr. ENZI) and the Senator AMENDMENT NO. 4453 dietary supplements under the jurisdic- from Idaho (Mr. RISCH) were added as At the request of Mr. THUNE, the tion of the Food and Drug Administra- cosponsors of S. 3521, a bill to provide names of the Senator from Wyoming tion are fully implemented and en- for the reestablishment of a domestic (Mr. ENZI) and the Senator from Utah forced, and for other purposes. rare earths materials production and (Mr. HATCH) were added as cosponsors S. 3419 supply industry in the United States, of amendment No. 4453 intended to be At the request of Mr. MERKLEY, the and for other purposes. proposed to H.R. 5297, an act to create name of the Senator from Massachu- S. 3561 the Small Business Lending Fund Pro- setts (Mr. KERRY) was added as a co- At the request of Mr. UDALL of New gram to direct the Secretary of the sponsor of S. 3419, a bill to exclude Mexico, the name of the Senator from Treasury to make capital investments from consumer credit reports medical Maryland (Mr. CARDIN) was added as a in eligible institutions in order to in- debt that has been in collection and cosponsor of S. 3561, a bill to establish crease the availability of credit for has been fully paid or settled, and for centers of excellence for green infra- small businesses, to amend the Inter- other purposes. structure, and for other purposes. nal Revenue Code of 1986 to provide tax

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00097 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.085 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5966 CONGRESSIONAL RECORD — SENATE July 15, 2010 incentives for small business job cre- to enforce immigration laws because of with a sufficient legal basis for preemption. ation, and for other purposes. the supremacy clause of the Constitu- Executive departments and agencies should be mindful that in our Federal system, the AMENDMENT NO. 4464 tion is, in fact, inconsistent with the citizens of the several States have distinc- At the request of Mr. DEMINT, the President’s own internal policies. Just tive circumstances and values, and that in name of the Senator from Idaho (Mr. last year, President Obama authored a many instances it is appropriate for them to RISCH) was added as a cosponsor of memo, sent it out to all Federal de- apply to themselves rules and principles that amendment No. 4464 intended to be pro- partments and agencies, requiring seri- reflect these circumstances and values. As posed to H.R. 5297, an act to create the ous and careful consideration when Justice Brandeis explained more than 70 Small Business Lending Fund Program using Federal preemption of State years ago, ‘‘[i]t is one of the happy incidents to direct the Secretary of the Treasury laws. of the federal system that a single coura- geous state may, if its citizens choose, serve to make capital investments in eligible In this memo, dated May 20, 2009, as a laboratory; and try novel social and eco- institutions in order to increase the with the subject ‘‘Preemption,’’ the nomic experiments without risk to the rest availability of credit for small busi- President stated: of the country.’’ nesses, to amend the Internal Revenue The purpose of this memorandum is to To ensure that executive departments and Code of 1986 to provide tax incentives state the general policy of my Administra- agencies include statements of preemption for small business job creation, and for tion that preemption of State law by execu- in regulations only when such statements other purposes. tive departments and agencies should be have a sufficient legal basis: taken only with full consideration of legiti- (1) Heads of departments and agencies f mate prerogatives of the States and with suf- should not include in regulatory preambles STATEMENTS ON INTRODUCED ficient legal basis for preemption. statements that the department or agency intends to preempt State law through the BILLS AND JOINT RESOLUTIONS That seems clear. But the memo regulation except where preemption provi- By Mr. JOHANNS: went on further to say: sions are also included in the codified regula- S. 3593. A bill to require the Federal Executive departments and agencies tion. Government to pay the costs incurred should be mindful that in our Federal sys- (2) Heads of departments and agencies by a State or local government in de- tem, the citizens of the several States have should not include preemption provisions in codified regulations except where such provi- fending a State or local immigration distinctive circumstances and values, and that in many instances it is appropriate for sions would be justified under legal prin- law that survives a constitutional chal- them to apply to themselves rules and prin- ciples governing preemption, including the lenge by the Federal Government in ciples that reflect those circumstances and principles outlined in Executive Order 13132. Federal court; to the Committee on the values. (3) Heads of departments and agencies Judiciary. Then, finally, the President goes on should review regulations issued within the Mr. JOHANNS. Mr. President, I rise to say: past 10 years that contain statements in reg- ulatory preambles or codified provisions in- to discuss a bill I have introduced be- It is one of the happy incidents of the fed- cause I see a very unfair battle unfold- tended by the department or agency to pre- eral system that a single courageous state empt State law, in order to decide whether ing right in front of us. The battle I may, if its citizens choose, serve as a labora- such statements or provisions are justified foresee is this: In one corner we have tory; and try novel social experimental ex- under applicable legal principles governing the enormous resources of the Federal periments without risk to the rest of the preemption. Where the head of a department Government; in the other corner, cities country. or agency determines that a regulatory and States with very limited resources, Mr. President, I ask unanimous con- statement of preemption or codified regu- especially in these economic times, but sent that a copy of this memo be print- latory provision cannot be so justified, the with a good-faith desire to protect ed in the RECORD. head of that department or agency should their communities. There being no objection, the mate- initiate appropriate action, which may in- clude amendment of the relevant regulation. What I am speaking of today and rial was ordered to be printed in the Executive departments and agencies shall what my legislation goes to is the Fed- RECORD, as follows: carry out the provisions of this memo- eral Government’s use of litigation to THE WHITE HOUSE, randum to the extent permitted by law and insert itself into State and potentially OFFICE OF THE PRESS SECRETARY, consistent with their statutory authorities. local immigration laws. MAY 20, 2009. Heads of departments and agencies should I rise with a great deal of knowledge MEMORANDUM FOR THE HEADS OF EXECUTIVE consult as necessary with the Attorney Gen- about this. As a former mayor and DEPARTMENTS AND AGENCIES eral and the Office of Management and Budg- et’s Office of Information and Regulatory Af- county commissioner, city council Subject: Preemption fairs to determine how the requirements of member and Governor, I know what it From our Nation’s founding, the American this memorandum apply to particular situa- is like when the Federal Government constitutional order has been a Federal sys- tions. swoops in and brings its power to bear tem, ensuring a strong role for both the na- This memorandum is not intended to, and on an issue. I have seen it from both tional Government and the States. The Fed- does not, create any right or benefit, sub- sides, having also served as a member eral Government’s role in promoting the stantive or procedural, enforceable at law or of the President’s Cabinet. I know that general welfare and guarding individual lib- in equity by any party against the United erties is critical, but State law and national when the resources of the Federal Gov- States, its departments, agencies, or enti- law often operate concurrently to provide ties, its officers, employees, or agents, or ernment are used to weigh in with liti- independent safeguards for the public. any other person. gation, it is crushing. The administra- Throughout our history, State and local gov- The Director of the Office of Management tion can send in a team of lawyers and ernments have frequently protected health, and Budget is authorized and directed to overwhelm the resources of a commu- safety, and the environment more aggres- publish this memorandum in the Federal nity or a State. Litigation brings with sively than has the national Government. Register. it a huge financial burden for cities and An understanding of the important role of BARACK OBAMA. States. In fact, litigation can and does State governments in our Federal system is Mr. JOHANNS. So if the use of Fed- have a chilling effect on the local deci- reflected in longstanding practices by execu- eral power to preempt a State requires tive departments and agencies, which have such an extremely high threshold, how sionmaking process, even if local lead- shown respect for the traditional preroga- ers believe their action in good faith is tives of the States. In recent years, however, can one reconcile that with the admin- appropriate and necessary. notwithstanding Executive Order 13132 of istration’s decision to file a lawsuit? I believe that is the exact reaction August 4, 1999 (Federalism), executive de- My bill sends a message to the ad- this administration is hoping to cause partments and agencies have sometimes an- ministration that it cannot use the among communities and States across nounced that their regulations preempt crushing force and threat and reality of the Nation that are considering action State law, including State common law, litigation to intimidate local officials on immigration issues. without explicit preemption by the Congress or to scare them into inaction. In this case, I believe litigation is or an otherwise sufficient basis under appli- It would allow a State or a municipal being used to send a warning to other cable legal principles. government the ability, the right, to The purpose of this memorandum is to communities, other States that might state the general policy of my Administra- recover attorney’s fees and other court be considering taking action in this tion that preemption of State law by execu- costs associated with defending a Fed- arena. tive departments and agencies should be un- eral challenge of their immigration The administration’s claim that the dertaken only with full consideration of the laws. In other words, this straight- Federal Government has sole authority legitimate prerogatives of the States and forward legislation just simply levels

VerDate Mar 15 2010 05:37 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00098 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.087 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5967 the playing field between the huge The 2007 Magnuson-Stevens Reau- S. 3594 power of the Federal Government in thorization contained a 2010 deadline to Be it enacted by the Senate and House of Rep- one corner, as I said, and the right of end overfishing. But the justification resentatives of the United States of America in local communities in States to pass for that deadline rested on two assump- Congress assembled, laws to protect their citizens. tions. First, that there would be recent SECTION 1. SHORT TITLE. It carries this simple message to any and accurate stock assessments. Sec- This Act may be cited as the ‘‘Fishery Con- administration: If you file a lawsuit ond, that there would be improved servation Transition Act’’. and lose, cities and States will not face catch data. I think the National Oce- SEC. 2. TRANSITION TO SUSTAINABLE FISHERIES. depleted resources as a result. anic and Atmospheric Administration (a) IN GENERAL.—Within 180 days after the close of fishing year 2010 (within the mean- My bill ensures that when the Fed- is doing the best they can with avail- eral Government takes on communities ing given that term in the Magnuson-Ste- able resources to gather this data. vens Fishery conservation and Management in court, the reasons are pure and However, for years good data from rec- Act (16 U.S.C. 1802 et seq.), the Secretary of based in law or else the impact on our reational anglers has been a challenge Commerce shall determine, with respect to communities will be neutralized. but because of the changes to Magnu- each fishery for which a fishery management The administration should focus time son-Stevens, regulations are coming plan that meets the requirements of section and resources on what is the crux of out faster than the data used to sup- 303(a)(15) of that Act (16 U.S.C. 1853(a)(15)) is this issue; that is, securing our borders port them. in effect that contains a complete prohibi- and doing the job and enforcing exist- Having that hard and fast 2010 dead- tion on the retention of stocks subject to ing immigration laws and not using line created a situation where the re- overfishing within the fishery for the entire fishing season, whether the prohibition is litigation as a tool to send a message. source managers are left without op- I encourage my colleagues to sign on sufficient to prevent or end overfishing for tions. This has led to closures of large the stocks, or stocks undergoing overfishing, and cosponsor this commonsense meas- geographic areas to all fishing with no to which it applies. ure and level the playing field for com- end on the horizon. These closures have (b) REMEDIAL ACTION.—If the Secretary de- munities when they are forced to de- devastated small businesses that rely termines that the prohibition contained in fend themselves against the enormous, on fishing and left many frustrated such a fishery management plan is not suffi- nearly unlimited power of the Federal that they cannot access the same wa- cient to prevent or end overfishing for the Government. ters that they always could. stocks to which it applies, the Secretary Being a native Floridian, I know that may authorize retention of fish that are not undergoing overfishing within that fishery, By Mr. NELSON of Florida: many people develop a love for the S. 3594. A bill to amend the Magnu- notwithstanding that discard mortality of ocean and a desire to protect it after son-Stevens Fishery Conservation and stocks for which retention is prohibited may they truly experience it by swimming, Management Act to mitigate the eco- be inconsistent with provisions on ending or fishing off their boat, or listening to nomic impact of the transition to sus- preventing overfishing, if, within 90 days the waves. This access is a necessary after a determination by the Secretary under tainable fisheries on fishing commu- component of conservation because the subsection (a), the Regional Fishery Manage- nities, and for other purposes; to the public gains a sense of ownership and ment Council with jurisdiction over the fish- Committee on Commerce, Science, and this leads to a sense of responsibility. ery implements— Transportation. That is why I am filing the Fishery (1) measures to minimize bycatch and by- Mr. NELSON of Florida. Mr. Presi- catch mortality to the extent practicable; Conservation Transition Act today. dent, I would like to speak about fish- (2) an enhanced data collection require- The bill will enable individuals, busi- ing, a very important special pastime ment, such as an electronic logbook data col- nesses, and communities to make a and industry for the Nation. Fishing in lection system, for recreational, for hire, and smooth transition while the science Florida is a way of life for many. The commercial fishers; and catches up by creating a phase-in pe- (3) a program of on-board observers for small bait and tackle shops, the hotels, riod for Federal fishing regulations and charter, for-hire, and commercial fishers the restaurants, the charter boat cap- requiring enhanced data collection in that will monitor and collect data on by- tains, and the parents who want to see the interim. It also allows for eco- catch and bycatch mortality in multispecies their children marvel when they pull a nomic assistance for those who are fisheries with prohibitions on retention on fish out of the ocean for the first time one or more species in the fisheries; and negatively impacted by management rely on being able to access the water. (4) in coordination with the Secretary, measures. other measures to ensure accountability of In fact, just last week, a Washington Others have proposed different solu- Post article traced the path of fish the fishery, including those that will sub- tions to this problem, but I believe stantially contribute to addressing data gaps caught in the Florida Keys and off of that my bill is a targeted solution that in stock assessments. Florida’s East Coast to a Whole Foods gives resource managers options to (c) ADDITIONAL REQUIREMENTS.—The Sec- market here in the DC area. And sadly, allow access to the water in a way that retary shall take such action as may be nec- the Deepwater Horizon has shown us will also achieve conservation goals. essary to ensure that, with respect to any how much healthy, high-quality sea- There are provisions in the bill that stock subject to overfishing in a fishery to food comes out of the Gulf of Mexico require fishery managers to use the which a determination under subsection (b) every year. applies— transition time wisely and research (1) a monitoring and research program to In 2007, the Congress reauthorized the creative solutions to complex manage- Magnuson-Stevens Fishery Conserva- monitor the recovery of the affected stocks ment issues, like how to manage multi- of fish is implemented for the fishery within tion and Management Act. The Magnu- species fisheries in a way that protects 1 year after the date of enactment of this son Act has certainly done some good the vulnerable stocks but still allows Act; things to ensure the long-term viabil- for access. This bill is also about jobs. (2) a stock assessment for the overfished ity of our Nation’s fishery resources. Small businesses that rely on the fish- species within the affected stocks of fish is But some of the provisions of the law ing industry can ride out these difficult initiated, taking into account relevant life have had major unintended con- history of the stock, within 6 months after economic times without sacrificing the the date on which the Secretary makes such sequences in Florida. resource their businesses rely on. I have spoken before about the need a determination; and I hope that my colleagues in the Sen- (3) the Regional Fishery Management for robust science on the status of our ate will support this effort to provide a Council with jurisdiction over the affected oceans and our fishery stocks. In fact, smooth transition to sustainable fish- fishery submits a report to Congress and the most recently, I worked with Gulf eries, healthy economic prospects for Secretary detailing a long-term plan for re- Coast Senators to get funding in the small businesses, access to the oceans ducing discard mortality of the affected Supplemental Appropriations bill for and natural resources, and robust stocks of fish to which a determination fisheries science in the Gulf of Mexico. science. under subsection (a) applies within 2 years But despite the potential influx of dol- Mr. President, I ask unanimous con- after the date of enactment of this Act. lars, fisheries data for the Southeast in (d) FURTHER ACTION REQUIRED.—If the Sec- sent that the text of the bill be printed retary determines that— particular, is still sparse. This lack of in the RECORD. (1) the Regional Fishery Management data has lead to a crisis in confidence There being no objection, the text of Council with jurisdiction over a fishery has amongst many in the fishing commu- the bill was ordered to be printed in complied with the requirements of para- nity. Here is why. the RECORD, as follows: graphs (b) and (c), and

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00099 Fmt 4624 Sfmt 0634 E:\CR\FM\G15JY6.066 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5968 CONGRESSIONAL RECORD — SENATE July 15, 2010 (2) the fishery management plan’s prohibi- cumstances that present serious conserva- By Mrs. HAGAN: tion on the retention of stocks subject to tion or management problems in the fishery, S. 3596. A bill to establish the Culture overfishing continues to be insufficient to including ecological, economic, social, or of Safety Hospital Accountability prevent or end over-fishing for those stocks, public health interests. An emergency may Study and Demonstration Program; to the Secretary shall take such action as may include increasing or decreasing a catch the Committee on Finance. be necessary to end overfishing for the limit, or modifying a time or area closure or Mrs. HAGAN. Mr. President, today I stocks to which the prohibition applies be- retention prohibition in response to new science or stock assessment information, but am proud to introduce the Culture of fore the end of fishery year 2015. Safety Hospital Accountability Act. SEC. 3. ECONOMIC ASSISTANCE PROGRAM. only if such action is needed to address seri- ous conservation or management problems This bill will test alternatives to the (a) IN GENERAL.—Section 208 of the Magnu- current, inflexible system to ensure son-Stevens Fishery Conservation and Man- in the fishery.’’. agement Reauthorization Act of 2006 (16 SEC. 5. FISHERY STUDIES AND REPORTS. that hospitals are meeting the highest U.S.C. 1891b) is amended— (a) STATUS OF FISHERY REPORT.—Section health and safety standards for their (1) by striking ‘‘and’’ after the semicolon 304(e) of the Magnuson-Stevens Fishery Con- patients. in subsection (b)(6); servation and Management Act (16 U.S.C. Under the current system, the Cen- (2) by striking ‘‘materia.’’ in subsection 1854(e)) is amended— ters for Medicare and Medicaid, or (b)(7) and inserting ‘‘materia; and’’; (1) by inserting ‘‘(A)’’ before ‘‘The Sec- CMS, requires hospitals participating (3) by adding at the end of subsection (b) retary’’; (2) by redesignating subparagraphs (A) and in Medicare and Medicaid to comply the following: with Conditions of Participation— ‘‘(8) the economic assistance program (B) as clauses (i) and (ii); and under subsection (f).’’; (3) by adding at the end the following: health and safety standards established (4) by striking ‘‘and’’ after the semicolon ‘‘(B) In the review, the Secretary shall con- by CMS for the protection of Medicare in subsection (c)(2)(A); sider— and Medicaid beneficiaries. CMS con- ‘‘(i) a stock assessment conducted pursu- (5) by striking ‘‘section.’’ in subsection (c) tracts with State agencies to perform ant to subsection (c); (2)(B) and inserting ‘‘section; and’’; ‘‘(ii) an analysis of the local, regional, and inspections of hospitals, nursing (6) by adding at the end of subsection (c)(2) national social and economic impacts on homes, and other health care facilities the following.: fishing communities and industries directly to ensure compliance. ‘‘(C) fees collected under permit programs and indirectly related to the fishery; and However, there are significant defi- for a fishery significantly affected by a pro- ‘‘(iii) fishery management measures to en- ciencies in the current system. A major hibition on the retention of stocks to end or hance the sustainability of stocks of fish prevent overfishing.’’; and concern among hospitals is CMS’ as- that are overfished, and an evaluation of al- (7) by adding at the end thereof the fol- signment of Immediate Jeopardy, ternative management approaches that may lowing: which puts hospitals on a 23-day fast- be implemented to enhance such sustain- ‘‘(f) ECONOMIC ASSISTANCE PROGRAM.— track to losing their Medicare and ability. ‘‘ (1) IN GENERAL.—The Secretary shall es- ‘‘(C) Stock assessment updates for each Medicaid funding. Right now, the only tablish an economic assistance program to stock of fish that is overfished or undergoing remedy that CMS has when a hospital assist recreational and commercial fishery overfishing shall be conducted at 2 year in- receives a citation is termination. participants, fishing industries, and fishing tervals, and a full stock assessment pursuant There is no flexibility to consider the communities significantly affected by a pro- to subsection (c) shall be conducted no less hibition on the retention of stocks to end or incident on a case-by-case basis—or frequently than once every 5 years. even to consider whether the hospital prevent overfishing or rebuild overfished ‘‘(D) The Secretary shall include a sum- stocks and use amounts in the Fund to pro- self-reported and immediately cor- mary of reviews conducted under subpara- rected the incident. Moreover, current vide such assistance. graph (A) in the report required by para- ‘‘(2) CRITERIA FOR ASSISTANCE.—In the ad- graph (1) of this subsection. To the extent procedures fail to consider the substan- ministration of the program, the Secretary possible, the Secretary shall include in the tial resources and efforts that hospitals shall develop criteria for prioritizing eco- report recommendations for actions that are already investing in quality im- nomic assistance requests, including consid- could be taken to encourage the sustainable provement and patient safety. eration of the conservation and management management of stocks of fish listed in the Take, for example, a hospital in my history of the fishery, the sustainability of Fish Stocks Sustainability Index.’’. State, which last year got a 23-day ter- conservation and management approaches, (b) ASSESSMENT OF CURRENT MANAGEMENT the magnitude of the economic impact of the mination notice after they self-re- MEASURES.— retention prohibition, and community and ported that one of their nurses had (1) IN GENERAL.—The Secretary of Com- H1N1. The hospital immediately sent social impacts. merce shall conduct a study, in cooperation ‘‘(3) APPLICATION PROCESS.—The Secretary with the National Academy of Sciences, to the nurse home and, as I mentioned, shall develop an application process to deter- determine if current fishery management immediately reported the incident to mine eligibility for economic assistance measures for stocks in a multi-species fish- CMS. Nevertheless, the hospital was re- under the program and shall consult with ery yield the most productive use of marine quired to undergo an inspection and States whose recreational and commercial resources while effectively conserving sus- submit the requisite plan of correction fishery participants, fishing industries, or tainable populations and a healthy marine to CMS. The agency was not able to fishing communities have been affected by ecosystem. The study shall include— the prohibition. Any person or community process the paperwork until day 22 of (A) the identification of the statutory and the 23-day notice, causing undue stress seeking assistance under the program shall regulatory impediments to achieving the submit an application at such time, in such maximum sustainable yield from the entire for the community as they wondered manner, and containing such information fishery; whether the hospital was going to be and assurances as the Secretary may re- (B) the identification of fishery inde- forced to close its doors. quire. pendent environmental stressors on the fish- In addition to the uncertainty for the ‘‘(4) STATE MATCHING FUNDS.—The Federal ery; hospital, the human resources required share of assistance provided under the pro- (C) the economic value derived from the and costs incurred to implement this gram to recreational and commercial fishery yield in the fishery; and inflexible system are enormous. Once a participants, fishing industries, or fishing (D) alternative fishery management meas- hospital is cited as out of compliance communities may not exceed 75 percent. Be- ures and technologies which would result in fore granting assistance under the program, increased economic and harvest yields con- with their Condition of Participation, the Secretary shall consult with the State in sistent with sound conservation. the State CMS inspectors are required which the recipient is located and request (2) REPORT.—Within 180 days after the date to survey the entire hospital and any that the State provide matching funds. The of enactment of this Act, the Secretary shall other hospitals under the same CMS Secretary may waive, in whole or in part, transmit a report to the Senate Committee provider number. In the case of the the matching requirement under this para- on Commerce, Science, and Transportation hospital I just mentioned, it took State graph.’’. and the House of Representatives Committee inspectors an entire week with 17 staff SEC. 4. AUTHORITY TO ACT. on Natural Resources containing the Sec- to survey their hospital system. (a) CLARIFICATION OF EMERGENCY AUTHOR- retary’s findings, conclusions, and rec- To address this inflexibility in the ommendations. ITY.—Section 305(c) of the Magnuson-Stevens current system, I am introducing the Fishery Conservation and Management Act SEC. 6. AUTHORIZATION OF APPROPRIATIONS. (16 U.S.C. 1855(c)) is amended by adding at There are authorized to be appropriated to Culture of Safety Hospital Account- the end the following: the Secretary of Commerce such sums as ability Act. This bill would do three ‘‘(4) For purposes of this section, an emer- may be necessary to carry out the provisions things: gency is a situation that results from recent, of this Act and the amendments made by First, it would require the Secretary unforeseen, or recently discovered cir- this Act. of Health and Human Services to study

VerDate Mar 15 2010 05:37 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00100 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.090 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5969 existing quality assurance and patient curbs and retaining walls, into storm mittee, the Government Account- safety activities within hospitals and drains and into the nearest natural ability Office issued a report exam- identify best practices that should be water body. According to research ining key issues and challenges that replicated. compiled by the National Oceanic & need to be addressed in the next reau- Second, it would create a demonstra- Atmospheric Administration’s, NOAA, thorization of the transportation bill. tion program among hospitals, State National Geophysical Data Center, the That report highlighted the clear link health care agencies, and HHS to pro- U.S. is covered by more than 112,600 between transportation policy and the mote and implement best practices for square kilometers of impervious sur- environment. Taking a policy approach improving patient safety and quality of faces. That is a space larger than the to require that the planning, design, care. HHS would identify up to 6 States State of Ohio. With 985,139 miles of fed- and construction of highways are done and not more than 24 hospitals to par- eral aid highways stretching from in an environmentally responsible ticipate in a 3-year demonstration pro- every corner of the country, polluted manner, with an eye toward mitigating gram. highway runoff is no small problem the water quality impacts highways Finally, the bill would authorize the facing our nation’s waters. have on our Nation’s water resources, Secretary of HHS to promulgate regu- The effects of polluted stormwater will help address this issue and better lations modifying termination agree- runoff are real. For example, the Ana- meet our Nation’s transportation ments regarding health and safety re- costia River—Washington’s ‘‘other’’ goals. This legislation also helps ad- and often forgotten river—can be seen quirements with hospitals and critical vance the October 5, 2009, Executive from the Capitol Dome as it flows out access hospitals to better ensure com- Order affirming that Federal policy of Prince George’s County, Maryland, pliance, prevent recurrence of viola- and Federal agencies shall ‘‘conserve and into the District and on to its con- tions, and improve internal structures and protect water resources through ef- fluence with the Potomac. Runoff from and processes that address patient within the 176 square mile watershed of ficiency, reuse, and stormwater man- quality and safety. the Anacostia, most of which is in agement; eliminate waste, recycle, and Patient safety must be first and fore- Maryland, but also includes the east prevent pollution; and leverage agency most, and it is not the intent of the side of DC and the entire Capitol com- acquisitions to foster markets for sus- demonstration project to keep CMS or plex, all makes its way into the Ana- tainable technologies and environ- State inspectors out of hospitals, nor costia. The stormwater that enters the mentally preferable materials, prod- to impair the remedies CMS needs to Anacostia is extremely polluted from ucts and services.’’ address quality issues. Instead, the bill the thousands of acres of road surfaces The approach my legislation takes to will help to explore how CMS, State that cover the watershed, which exac- mitigate polluted highway runoff is regulatory authorities, and hospitals erbates the incidence of combined through the implementation of a min- can work collaboratively to address sewer overflows and has impaired the imum design standard, developed by quality and safety issues in ways that Anacostia for many years. It is no co- the United States Department of will ensure the best quality of care for incidence that the U.S. Fish & Wildlife Transportation, that requires the patients. Service has found the Anacostia’s bot- maintenance or restoration of the pre- tom-feeder catfish to have the highest development hydrology of a Federal- By Mr. CARDIN: incidence of liver tumors than any aid highway project site. This same ap- S. 3602. A bill to amend title 23, other population of catfish in the coun- proach was made law by the Energy United States Code, to direct the Sec- try. The cause of the tumors are the Independence & Security Act of 2007 for retary to establish a comprehensive high levels of polycyclic aromatic hy- the development of new Federal build- program to control and treat polluted drocarbons, a by-product of fuel com- ings and facilities. stormwater runoff from federally fund- bustion, that come from vehicle tail- My bill would require that all signifi- ed highways and roads, and for other pipe emissions and are deposited on the cant Federal highway projects must be purposes; to the Committee on Envi- road and in the air and then washed planned and designed ‘‘to maintain or ronment and Public Works. into the river with every shower or restore, to the maximum extent tech- Mr. CARDIN. Mr. President, today I thunderstorm. nically feasible, the predevelopment am proud to introduce legislation that This is not a problem unique to hydrology of the project site with re- will help prevent millions of gallons of Maryland or the Chesapeake Bay re- gard to the temperature, rate, chem- pollution from entering our Nation’s gion, nor is it a problem unique to ical composition, volume and duration precious water resources. The season urban environments as opposed to of flow’’ of stormwater. This would be we are in makes my legislation par- rural environments. Polluted runoff is achieved by approaches that avoid and ticularly timely. Spring is one of the a problem that affects any watershed minimize alteration of natural features wettest times of year, and with every where impervious paved road and high- and hydrology and maximize the use of Spring shower polluted stormwater way surfaces have altered the natural onsite pollution control measures runoff washes a myriad of chemicals hydrology of a watershed. Over time, using existing terrain and natural fea- pollutants, sediment, debris, oil and Federal highway policy has come to tures. grease, and other contaminates from recognize the drastic impacts highways My bill also recognizes that geog- our Nation’s roads and highways into and surface transportation can have on raphy and other physical characteris- our lakes, rivers, streams, bays, and the environment and on water quality. tics of the land may not always allow coastal waters. Title 23 of the U.S. Code states: ‘‘trans- on-site treatment of polluted highway Stormwater is the nation’s largest portation should play a significant role runoff. When conditions are impracti- source of water pollution. While rain in promoting economic growth, im- cable my legislation would allow for an itself contains air pollution particu- proving the environment, and sus- ‘‘appropriate off-site runoff pollution lates that are deposited in every drop, taining the quality of life’’ through the mitigation program’’ within the water- most stormwater pollution is picked up use of ‘‘context sensitive solutions.’’ shed of a Federal-aid highway project on the surface and carried off as runoff. The Intermodal Surface Transpor- site that can protect against the water Stormwater washes contaminants like tation Efficiency Act, ISTEA, author- quality impacts of the project. oil, grease, heavy metals, nutrients, as- ized using transportation enhancement The Clean Water Act requires that bestos, sediments, road salts and other funds for ‘‘environmental mitigation to we protect the waters of the United de-icing agents, brake dust, and road address water pollution due to highway States. As with most pollution abate- debris from the millions of miles of runoff.’’ It’s important to note, how- ment strategies, preventing storm- America’s roads and into storm drains ever, that this is just one of 12 types of water pollution is cheaper, more effec- that discharge into nearby waters. Al- eligible enhancement projects and only tive, and easier to implement than try- most all of this polluted stormwater is 1.1 percent of enhancement project ing to clean up and remediate the prob- discharged without any treatment. funds have gone toward environmental lem after the contamination has oc- When rain falls on these hard, imper- mitigation projects since 1992. curred. vious surfaces it often has no where to In 2008, at the request of the House Not addressing stormwater pollution go but down the channels created by Transportation & Infrastructure Com- at its source just kicks the proverbial

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00101 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.101 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5970 CONGRESSIONAL RECORD — SENATE July 15, 2010 can down the road for someone else’s watershed-based environmental management ‘‘(C) construction of a significant Federal- attention. When water resources are or equivalent approach: aid highway improvement. contaminated by polluted highway run- ‘‘(A) Pretreatment and treatment of runoff ‘‘(3) FEDERAL-AID HIGHWAY RUNOFF CONTROL off, mitigating the pollution, which is a with appropriate control measures on the MEASURE RETROFIT.—The term ‘Federal-aid project site. highway runoff control measure retrofit’ preventable discharge in the first ‘‘(B) Discharge of highway runoff pollution means the installation or modification of a place, should not be the responsibility directly to an off-site control measure under control measure for highway runoff pollution of local governments, wastewater the control of the State with documented ca- serving a Federal-aid highway or associated treatment facilities, or drinking water pacity to provide functionally and quan- facility originally constructed before the utilities. titatively equivalent management of runoff date of enactment of this section. Water pollution has many sources pollution to that required to achieve the ‘‘(4) HIGHWAY RUNOFF POLLUTION.—The and our Nation’s highways produce a minimum standards of this subsection for term ‘highway runoff pollution’ means in re- lation to a Federal-aid highway, associated tremendous volume of contaminated the design life of the project. ‘‘(C) If the control measures in subpara- facility, or control measure retrofit projects stormwater. Time and time again, ex- graphs (A) and (B) are found impracticable one or more of the following— perience has taught us that addressing based on site conditions or other appropriate ‘‘(A) a discharge of sediment, metals, bac- pollution at its source is the most ef- factors, and an appropriate off-site runoff teria, chemicals, nutrients, or oil and grease fective means of abating pollution. It pollution mitigation program is in place, in runoff; or is time we applied this principle to our contribution to a mitigation program that ‘‘(B) a discharge of peak flow rate, water Nation’s Federal-aid highways. I urge will produce functionally and quantitatively temperature, and volume of runoff that ex- my colleagues to support my legisla- equivalent management of runoff pollution ceeds predevelopment amounts generated from a Federal-aid highway, associated facil- tion and help move our country closer to that required to achieve the minimum standards. Under this subparagraph, priority ity, or control measure retrofit project that to meeting the goals of the Clean shall be given to off-site control measures violates the water quality standards of the Water Act and the goals of our na- that address the impacts of runoff pollution receiving water set by the Federal Water tional transportation policy. to waterways that are listed as impaired in Pollution Control Act (33 U.S.C. 125 et seq.) Mr. President, I ask unanimous con- the same or adjacent 8-digit Hydrologic Unit and related State programs. sent that the text of the bill be printed Code as the project site. ‘‘(5) SIGNIFICANT FEDERAL-AID HIGHWAY IM- in the RECORD. ‘‘(d) GUIDANCE.— PROVEMENT.—The term ‘significant Federal- There being no objection, the text of ‘‘(1) IN GENERAL.—Not later than 180 days aid highway improvement’ means the reha- the bill was ordered to be printed in after the date of enactment of this section, bilitation, reconstruction, reconfiguration, renovation, or major resurfacing of an exist- the RECORD, as follows: the Secretary, with the concurrence of the Administrator of the Environmental Protec- ing Federal-aid highway or associated facil- S. 3602 tion Agency, shall publish guidance to assist ity that disturbs 5 or more acres of land. Be it enacted by the Senate and House of Rep- States in complying with the requirements ‘‘(6) WATERSHED-BASED ENVIRONMENTAL resentatives of the United States of America in of this section. MANAGEMENT APPROACH.—The term ‘water- Congress assembled, ‘‘(2) CONTENTS OF GUIDANCE.—The guidance shed-based environmental management ap- SECTION 1. SHORT TITLE. shall include guidelines for the establish- proach’ means an approach under which— This Act may be cited as the ‘‘Safe Treat- ment of State processes and programs that ‘‘(A) the selection of solutions that prevent ment of Polluted Stormwater Runoff Act’’ or will be used to assist in managing highway or minimize the environmental impact of an the ‘‘STOPS Runoff Act’’. runoff pollution from covered projects in ac- individual project is made within the broad- SEC. 2. FEDERAL-AID HIGHWAY RUNOFF POLLU- cordance with the minimum standards de- er context of the environmental protection TION MANAGEMENT PROGRAM. scribed in subsection (c), including— and restoration goals of any watershed that (a) IN GENERAL.—Chapter 3 of title 23, ‘‘(A) guidance to help States integrate the drains the project site, rather than selecting United States Code, is amended by adding at planning, selection, design, and long-term solutions solely based on site level consider- the end the following: operation and maintenance of control meas- ations; and ‘‘§ 330. Federal-aid highway runoff pollution ures consistent with the minimum standards ‘‘(B) priority consideration is given to— management program in the overall project planning process; ‘‘(i) protection of drinking water supplies; ‘‘(ii) protection and restoration of water- ‘‘(a) ESTABLISHMENT.—The Secretary shall ‘‘(B) creation of a watershed-based environ- ways listed by a State as impaired in accord- establish a Federal-aid highway runoff pollu- mental management approach to assist ance with section 303(d) of the Federal Water tion management program to ensure that projects in achieving consistency with the Pollution Control Act (33 U.S.C. 1313(d)); covered projects are constructed in accord- minimum standards; ‘‘(iii) preservation of aquatic ecosystems ance with minimum standards designed to ‘‘(C) guidelines for the development and and fisheries; and protect surface and ground water quality. utilization of off-site runoff pollution miti- ‘‘(iv) cost-effective expenditure of Federal ‘‘(b) PROJECT APPROVAL.—The Secretary gation programs to achieve compliance with funds.’’. may approve a covered project of a State the minimum standards; and (b) EFFECTIVE DATE.—The provisions of under section 106 only if the State provides ‘‘(D) provisions for State inspection, moni- toring, and reporting to document State this legislation will be effective and applica- assurances satisfactory to the Secretary ble to construction of Federal-Aid Highway that the State will construct the project in compliance and project consistency with this section. projects as defined in subsection (g)(2) 1 year accordance with the minimum standards de- after enactment. ‘‘(e) LIMITATION ON STATUTORY CONSTRUC- scribed in subsection (c). (c) CLERICAL AMENDMENT.—The analysis ‘‘(c) MINIMUM STANDARDS.—The following TION.—Nothing in this section shall be con- for chapter 3 is amended by adding at the minimum standards shall apply to the con- strued to affect the applicability of any pro- end the following: vision of Federal, State, or local law that is struction of covered projects to maintain or ‘‘330. Federal-aid highway runoff pollution more stringent than the requirements of this restore, to the maximum extent technically management program.’’. feasible, the predevelopment hydrology of section. the project site with regard to the tempera- ‘‘(f) REPORTING.—The Secretary shall re- By Ms. CANTWELL: ture, rate, chemical composition, volume quire each State to report annually to the S. 3603. A bill to amend the Oil Pollu- and duration of flow: Secretary on the highway runoff pollution tion Act of 1990 to establish the Fed- ‘‘(1) Avoid and minimize alteration of nat- reductions achieved for covered projects car- ural features and hydrology and maximize ried out by the State after the date of enact- eral Oil Spill Research Committee and use of pollution source control measures ment of this section. to amend the Federal Water Pollution that utilize existing terrain and natural fea- ‘‘(g) DEFINITIONS.—In this section, the fol- Control Act to include in a response tures and reduce chemical introduction to lowing definitions apply: plan certain planned and demonstrated reduce creation of pollution on the project ‘‘(1) CONTROL MEASURE.—The term ‘control investments in research relating to dis- site. measure’ means a program, structural or charges of oil and to modify the dates ‘‘(2) Maximize capture of highway runoff nonstructural management practice, oper- by which a response plan is required to pollution on the project site through ational procedure, or policy on or off the be updated; to the Committee on Com- pretreatment and treatment, including envi- project site that is intended to control, re- merce, Science, and Transportation. ronmental site design techniques and other duce, or prevent highway runoff pollution. Mr. President, over 21 years ago the control measures that promote ‘‘(2) COVERED PROJECT.—The term ‘covered tanker Exxon Valdez, en route from evapotransporation and infiltration. project’ means a project carried out under ‘‘(3) Prevent any remaining highway runoff this title for— Valdez, Alaska, to Los Angeles, failed pollution not addressed under paragraphs (1) ‘‘(A) construction of a new highway or as- to turn back into the shipping lane and (2) to the maximum extent practicable sociated facility; after detouring to avoid ice. At 12:04 by implementing one or more of the fol- ‘‘(B) construction of a Federal-aid highway a.m., it ran aground on Bligh Reef in lowing control measures selected through a runoff control measure retrofit; or Prince William Sound.

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00102 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.104 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5971 Within six hours, the Exxon Valdez S. 3603 ‘‘(I) the current state of real-time data spilled 11 million gallons of crude oil Be it enacted by the Senate and House of Rep- available to mariners, including data on into the Sound’s pristine waters and resentatives of the United States of America in water level, currents, and weather (including wrote itself into the history books as— Congress assembled, predictions); and SECTION 1. SHORT TITLE. ‘‘(II) whether a lack of timely information at that time—the worst oil spill ever in increases the risk of oil discharges; and U.S. waters. Eventually, oil covered This Act may be cited as the ‘‘Oil Spill Technology and Research Act of 2010’’. ‘‘(vii) includes such other information or 11,000 square miles of ocean. recommendations as the Committee deter- The environmental and economic SEC. 2. FEDERAL OIL SPILL RESEARCH COM- MITTEE. mines to be appropriate. damage is impossible to both fathom (a) IN GENERAL.—Section 7001 of the Oil ‘‘(B) 5-YEAR UPDATES.—Not later than 5 and assess; countless seabirds, marine Pollution Act of 1990 (33 U.S.C. 2761) is years after the date of enactment of the Oil mammals, and fish were killed. As a re- amended to read as follows: Spill Technology and Research Act of 2010, and every 5 years thereafter, the Committee sult, companies like the Chugach Alas- ‘‘SEC. 7001. FEDERAL OIL SPILL RESEARCH COM- ka Corporation went bankrupt. There MITTEE. shall submit to Congress a report updating the information contained in the previous re- were huge losses to recreational sports, ‘‘(a) ESTABLISHMENT.—There is established port submitted under subparagraph (A). fisheries, and tourism. And 21 years a committee, to be known as the ‘Federal Oil later there is still oil in the area. Spill Research Committee’ (referred to in ‘‘(d) RESEARCH AND DEVELOPMENT PRO- Today, we are re-living a similar this section as the ‘Committee’). GRAM.— ‘‘(b) MEMBERSHIP.— ‘‘(1) IN GENERAL.—In carrying out the du- nightmare—only this time on an even ‘‘(1) COMPOSITION.—The Committee shall be ties of the Committee under subsection larger scale. The BP oil spill in the composed of— (c)(1), the Committee shall establish a pro- Gulf of Mexico, triggered by the explo- ‘‘(A) at least 1 representative of the Na- gram to conduct oil pollution research and sion of the Deepwater Horizon oil rig tional Oceanic and Atmospheric Administra- development. and the failure of its safety systems, tion; ‘‘(2) PROGRAM ELEMENTS.—The program es- has shattered all previous records as ‘‘(B) at least 1 representative of the Coast tablished under paragraph (1) shall provide the single largest marine oil spill in Guard; for research, development, and demonstra- our Nation’s history. Even today, oil ‘‘(C) at least 1 representative of the Envi- tion of new or improved technologies and continues to gush from the uncapped ronmental Protection Agency; and methods that are effective in preventing, de- ‘‘(D) at least 1 representative of each of tecting, or responding to, mitigating, and re- well, furthering the devastation to the such other Federal agencies as the President storing damage from oil discharges and that Gulf of Mexico’s environment and considers to be appropriate. protect the environment, including each of economy. ‘‘(2) CHAIRPERSON.—The Under Secretary of the following: The Exxon Valdez showed us just how Commerce for Oceans and Atmosphere (re- ‘‘(A) High priority research areas described unprepared we were in 1989, and the BP ferred to in this section as the ‘Under Sec- in the reports under subsection (c)(2). oil spill is showing us today how unpre- retary’) shall designate a Chairperson from ‘‘(B) Environmental effects of acute and pared we are in 2010. While the Oil Pol- among members of the Committee who rep- chronic oil discharges on coastal and marine lution Act of 1990 has been successful resent the National Oceanic and Atmos- resources, including impacts on protected in achieving many of its policy goals, pheric Administration. areas and protected species. ‘‘(C) Long-term effects of major discharges the BP oil spill is proving to us that oil ‘‘(3) MEETINGS.—At a minimum, the mem- bers of the Committee shall meet once each and the long-term cumulative effects of spill response technology remains quarter. smaller endemic discharges. largely stagnant, and that our response ‘‘(c) DUTIES OF THE COMMITTEE.— ‘‘(D) New technologies to detect accidental infrastructure remains inadequate. ‘‘(1) RESEARCH.—The Committee shall— or intentional overboard discharges. This is why I rise today to introduce ‘‘(A) coordinate a comprehensive program ‘‘(E) Response, containment, and removal the Oil Spill Technology and Research of oil pollution research, technology develop- capabilities, such as improved booms, oil Act. ment, and demonstration among the Federal skimmers, and storage capacity. This legislation is designed to ad- agencies, in cooperation and coordination ‘‘(F) Oil discharge risk assessment meth- dress the massive gap in oil spill re- with industry, institutions of higher edu- ods, including the identification of areas of search and development that has con- cation, research institutions, State govern- high risk and potential risk reductions for tributed to our inability to respond to ments, tribal governments, and other coun- the prevention of discharges. tries, as the Committee considers to be ap- ‘‘(G) Capabilities for predicting the envi- the BP oil spill. It will: put mecha- propriate; and ronmental fate, transport, and effects of oil nisms in place that will foster contin- ‘‘(B) foster cost-effective research mecha- discharges, including prediction of the effec- uous research and development on oil nisms, including the joint funding of re- tiveness of discharge response systems to spill response methods and tech- search. contain and remove oil discharges. nologies; provide an incentive struc- ‘‘(2) REPORTS ON CURRENT STATE OF OIL DIS- ‘‘(H) Methods to restore and rehabilitate ture for translating new technologies CHARGE PREVENTION AND RESPONSE CAPABILI- natural resources and ecosystem functions from ideas into reality; and continu- TIES.— damaged by oil discharges. ously add new layers to our oil spill ‘‘(A) IN GENERAL.—Not later than 180 days ‘‘(I) Research and training, in consultation safety net. after the date of enactment of the Oil Spill with the National Response Team, to im- This is an important step in the right Technology and Research Act of 2010, the prove the ability of industry and the Federal Committee shall submit to Congress a report Government to remove an oil discharge direction to improve our Nation’s abil- on the state of oil discharge prevention and quickly and effectively. ity to contain and clean up oil spills in response capabilities that— ‘‘(J) Oil pollution technology evaluation. the future. ‘‘(i) identifies current research programs ‘‘(K) Any other priorities identified by the It is a proclamation that we are not conducted by governments, universities, and Committee. going to allow complacency back at corporate entities; ‘‘(3) IMPLEMENTATION PLAN.— the wheel, nor are we going to allow ‘‘(ii) assesses the current status of knowl- ‘‘(A) IN GENERAL.—Not later than 180 days politics to get in the way of doing what edge on oil pollution prevention, response, after the date of submission of the report is right. and mitigation technologies; under subsection (c)(2)(A), the Committee Twenty-one years ago we saw the ‘‘(iii) establishes national research prior- shall submit to Congress a plan for the im- ities and goals for oil pollution technology plementation of the program required by devastating costs of complacency, and development relating to prevention, re- paragraph (1). we are living that nightmare again sponse, mitigation, and environmental ef- ‘‘(B) ASSESSMENT BY NATIONAL ACADEMY OF today. It is up to us to ensure that this fects; SCIENCES.—The Chairperson of the Com- country’s environment, economy, and ‘‘(iv) identifies regional oil pollution re- mittee, acting through the Administrator of people are protected with the greatest search needs and priorities for a coordinated the National Oceanic and Atmospheric Ad- rigor that we can muster. Our oceans, program of research at the regional level de- ministration, shall enter into an arrange- coasts, and citizens deserve nothing veloped in consultation with the State and ment with the National Academy of Sciences less. local governments and Indian tribes; under which the National Academy of Mr. President, I ask unanimous con- ‘‘(v) assesses the current state of discharge Sciences shall— response equipment, and determines areas in ‘‘(i) provide advice and guidance in the sent that the text of the bill be printed need of improvement, including with respect preparation and development of the plan re- in the RECORD. to the quantity, age, quality, and effective- quired by subparagraph (A); and There being no objection, the text of ness of equipment, or necessary techno- ‘‘(ii) assess the adequacy of the plan as the bill was ordered to be printed in logical improvements; submitted, and submit a report to Congress the RECORD, as follows: ‘‘(vi) assesses— on the conclusions of the assessment.

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00103 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.096 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5972 CONGRESSIONAL RECORD — SENATE July 15, 2010 ‘‘(e) GRANT PROGRAM IN SUPPORT OF RE- (1) in subparagraph (D)— SUBMITTED RESOLUTIONS SEARCH AND DEVELOPMENT PROGRAM.— (A) by striking clause (v) and inserting the ‘‘(1) IN GENERAL.—The Under Secretary of following: Commerce shall manage a program of com- ‘‘(v)(I) be updated at least every 5 years; SENATE RESOLUTION 583—EX- petitive grants to universities or other re- ‘‘(II) require the use of the best available PRESSING SUPPORT FOR DES- search institutions, or groups of universities technology and methods to contain and re- IGNATION OF 2011 AS ‘‘WORLD or research institutions, for the purposes of move, to the maximum extent practicable, a VETERINARY YEAR’’ TO BRING conducting the program established under worst-case discharge (including a discharge ATTENTION TO AND SHOW AP- subsection (d). resulting from fire or explosion), and to ‘‘(2) APPLICATIONS AND CONDITIONS.—In con- PRECIATION FOR THE VETERI- mitigate or prevent a substantial threat of ducting the program, the Under Secretary— NARY PROFESSION ON ITS 250TH such a discharge; and ‘‘(A) shall establish a notification and ap- ANNIVERSARY ‘‘(III) be resubmitted for approval upon plication procedure; Mr. ENSIGN submitted the following ‘‘(B) may establish such conditions and re- each update (which shall be considered to be a significant change to the response plan) resolution; which was referred to the quire such assurances as are appropriate to Committee on the Judiciary: ensure the efficiency and integrity of the under this clause;’’; grant program; and (B) in clause (vi), by striking the period at S. RES. 583 ‘‘(C) may provide grants under the program the end and inserting ‘‘; and’’; and Whereas the first veterinary school in the on a matching or nonmatching basis. (C) by adding at the end the following: world was founded in Lyon, France, in 1761; ‘‘(f) ADVICE AND GUIDANCE.— ‘‘(vii) include planned and demonstrated Whereas 2011 will mark the 250th anniver- ‘‘(1) IN GENERAL.—The Committee shall ac- investments in research relating to oil dis- sary of veterinary education and the found- cept comments and input from State and charges, risk assessment, and development of ing of the veterinary medical profession; local governments, Indian tribes, industry technologies for oil discharge response and Whereas 2011 will mark the beginnings of representatives, and other stakeholders in prevention.’’. comparative biopathology, a basic tenet of carrying out the duties of the Committee (2) by adding at the end the following: the ‘‘one health’’ concept; Whereas veterinarians have played an inte- under subsection (c). ‘‘(J) TECHNOLOGY STANDARDS.—The Coast gral role in discovering the causes of numer- ‘‘(2) ADVISORY COUNCIL.—The Committee Guard may establish requirements and issue ous diseases that affect the people of the may establish an Advisory Council con- guidance for the use of best available tech- sisting of nongovernment experts and stake- United States, such as salmonellosis, West nology and methods under subparagraph Nile Virus, yellow fever, and malaria; holders for the purpose of providing guidance (D)(v), which technology and methods shall to the Committee on matters under this sec- Whereas veterinarians provide valuable be based on performance metrics and stand- tion. public health service through preventive ards, to the maximum extent practicable.’’. ‘‘(g) FACILITATION.—The Committee may medicine, control of zoonotic diseases, and develop joint partnerships or enter into SEC. 4. OIL DISCHARGE TECHNOLOGY INVEST- scientific research; memoranda of agreement or memoranda of MENT. Whereas veterinarians have advanced understanding with institutions of higher human and animal health by inventing and (a) IN GENERAL.—The Secretary of the De- education, States, and other entities to fa- refining techniques and instrumentations cilitate the research program required by partment in which the Coast Guard is oper- such as artificial hips, bone plates, splints, subsection (d). ating (referred to in this section as the ‘‘Sec- and arthroscopy; Whereas veterinarians play an integral ‘‘(h) ANNUAL REPORTS.—Not later than 1 retary’’) shall establish a program for the year after the date of enactment of the Oil formal evaluation and validation of oil pollu- role in protecting the quality and security of Spill Technology and Research Act of 2010, tion containment and removal methods and the herd and food supply of the Nation; Whereas military veterinarians provide and annually thereafter, the Chairperson of technologies. the Committee shall submit to Congress a crucial assistance to the agricultural inde- (b) APPROVAL.— report that describes— pendence of developing nations around the (1) IN GENERAL.—The program shall estab- world; ‘‘(1) the activities carried out under this Whereas disaster relief veterinarians pro- section during the preceding fiscal year; and lish a process for new methods and tech- vide public health service and veterinary ‘‘(2) the activities that are proposed to be nologies to be submitted, evaluated, and gain medical support to animals and humans dis- carried out under this section for the fiscal validation for use in responses to discharges placed and ravaged by disasters; year during which the report is submitted. of oil and inclusion in response plans. Whereas veterinarians are dedicated to ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.— (2) CONSIDERATION OF CAPABILITY.—Fol- preserving the human-animal bond and pro- There are authorized to be appropriated to lowing each validation of a method or tech- moting the highest standards of science- the Secretary of Commerce to carry out this nology described in paragraph (1), the Sec- based, ethical animal welfare; section— retary shall consider whether the method or Whereas 2011 would be an appropriate year technology meets a performance capability ‘‘(1) $200,000 for fiscal year 2010, to remain to designate as ‘‘World Veterinary Year’’ to available until expended, for use in entering warranting designation of a new standard for bring attention to and show appreciation for into arrangements with the National Acad- best available technology or methods. the veterinary profession on its 250th anni- emy of Sciences and for paying other ex- (3) LACK OF VALIDATION.—The lack of vali- versary; and penses incurred in developing the reports and dation of a method or technology under this Whereas colleagues in the United States research program under this section; and section shall not preclude— will join veterinarians from around the ‘‘(2) $2,000,000 for each of fiscal years 2010 (A) the use of the method or technology in world to celebrate this momentous occasion: through 2012, to remain available until ex- response to a discharge of oil; or Now, therefore, be it pended.’’. (B) the inclusion of the method or tech- Resolved, That the Senate— (b) TERMINATION OF AUTHORITY OF INTER- nology in a response plan. (1) supports the designation of 2011 as AGENCY COMMITTEE.— ‘‘World Veterinary Year’’; (c) TECHNOLOGY CLEARINGHOUSE.—Each (1) IN GENERAL.—The Interagency Coordi- (2) supports the goals and ideals of World nating Committee on Oil Pollution Research technology and method validated under this Veterinary Year of bringing attention to and established under section 7001 of the Oil Pol- section shall be included in the comprehen- expressing appreciation for the contributions lution Act of 1990 (33 U.S.C. 2761) (as in effect sive list of discharge removal resources that the veterinary profession has made and on the day before the date of enactment of maintained through the National Response continues to make to animal health, public this Act), and all authority of that Com- Unit of the Coast Guard. health, animal welfare, and food safety; and mittee, terminate on the date of enactment (3) requests that the President issue a (d) CONSULTATION.—In carrying out this of this Act. proclamation calling upon the people of the section, the Secretary shall consult with— (2) FUNDING.—Any funds made available for United States to observe 2011 as World Vet- (1) the Secretary of the Interior; the Interagency Coordinating Committee on erinary Year with appropriate programs, Oil Pollution Research described in para- (2) the Administrator of the National Oce- ceremonies, and activities. graph (1) and remaining available as of the anic and Atmospheric Administration; date of enactment of this Act shall be trans- (3) the Administrator of the Environ- f ferred to and available for use by the Federal mental Protection Agency; and SENATE RESOLUTION 584—COM- Oil Spill Research Committee (as established (4) the Secretary of Transportation. MEMORATING THE 2010 SPECIAL by the amendment made by subsection (a)), OLYMPICS USA NATIONAL without further appropriation or fiscal year limitation. GAMES SEC. 3. RESPONSE PLAN UPDATE REQUIREMENT. Mr. JOHANNS submitted the fol- Section 311(j)(5) of the Federal Water Pol- lowing resolution; which was referred lution Control Act (33 U.S.C. 1321(j)(5)) is to the Committee on Commerce, amended— Science, and Transportation:

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S. RES. 584 SA 4481. Mr. UDALL of New Mexico sub- sponsibility to examine Presidential nomi- Whereas the 2010 Special Olympics USA mitted an amendment intended to be pro- nees related to these programs. National Games will be held in Lincoln, Ne- posed to amendment SA 4402 proposed by Mr. (6) It is especially true that Dr. Berwick’s braska, from July 18 to July 23, 2010; REID (for Mr. BAUCUS (for himself, Ms. nomination should have undergone the Sen- Whereas nearly 4,000 athletes and coaches LANDRIEU, and Mr. REID)) to the bill H.R. ate Finance Committee nomination review from 49 State delegations will participate in 5297, supra; which was ordered to lie on the process in light of the significant respon- the Games; table. sibilities of the Administrator of CMS. Whereas approximately 30,000 people, in- SA 4482. Mr. UDALL of New Mexico sub- (7) CMS is responsible for the health care cluding families and friends of the athletes, mitted an amendment intended to be pro- of more than 100,000,000 Americans, and is and enthusiastic supporters, are expected to posed to amendment SA 4402 proposed by Mr. one of the largest agencies in the Federal visit or attend the Games; REID (for Mr. BAUCUS (for himself, Ms. Government. Whereas more than 8,500 volunteers will LANDRIEU, and Mr. REID)) to the bill H.R. (8) The recently enacted Patient Protec- contribute time and talent to make the 5297, supra; which was ordered to lie on the tion and Affordable Care Act (commonly re- Games a success; table. ferred to as the ‘‘health care reform law’’) Whereas, for decades, the Special Olympics SA 4483. Ms. SNOWE (for herself, Mr. significantly increases the responsibilities of has provided athletes with a unique oppor- GRASSLEY, Mr. ENZI, Mr. ISAKSON, and Ms. CMS, including half a trillion dollars in tunity to participate in athletic competition COLLINS) submitted an amendment intended Medicare provider cuts and the largest ex- while developing confidence, skill, and deter- to be proposed to amendment SA 4402 pro- pansion of the Medicaid program since its in- mination; posed by Mr. REID (for Mr. BAUCUS (for him- ception. Whereas the 2010 Special Olympics USA self, Ms. LANDRIEU, and Mr. REID)) to the bill (9) The manner in which an individual National Games continues the great tradi- H.R. 5297, supra; which was ordered to lie on nominated to serve as the Administrator of tion begun by Eunice Shriver in 1968, and the table. CMS intends to carry out these responsibil- ities is a serious matter and warrants a thor- proves the belief of Ms. Shriver that through f sports, people with intellectual disabilities ough review. A thorough review is especially ‘‘can realize their potential for growth’’; TEXT OF AMENDMENTS needed for Dr. Berwick’s appointment in light of statements he has made in the past Whereas 70 Nebraska communities are par- Mr. ROBERTS submitted an ticipating in the Law Enforcement Torch SA 4477. about health care rationing as well as the Run, in which law enforcement officials from amendment intended to be proposed to role of government in health care. the State of Nebraska and across the United amendment SA 4402 proposed by Mr. (10) By recess-appointing Dr. Berwick, the States carry the ‘‘Flame of Hope’’ through REID (for Mr. BAUCUS (for himself, Ms. President has attempted to short circuit the Nebraska; and LANDRIEU, and Mr. REID)) to the bill requirement of article II, section 2, clause 2 Whereas the State of Nebraska, the city of H.R. 5297, to create the Small Business of the Constitution that he appoint officers Lincoln, and more than 100 State and local Lending Fund Program to direct the of the United States ‘‘by and with the Advice and Consent of the Senate’’. businesses and organizations have made Secretary of the Treasury to make cap- (b) SENSE OF THE SENATE.—It is the sense major contributions and opened their doors ital investments in eligible institu- so that people from across the United States of the Senate that— can participate in and enjoy the 2010 Special tions in order to increase the avail- (1) the recess appointment of Dr. Donald Olympics USA National Games: Now, there- ability of credit for small businesses, Berwick, while consideration of his nomina- fore, be it to amend the Internal Revenue Code of tion to serve as Administrator of CMS was Resolved, That the Senate— 1986 to provide tax incentives for small proceeding normally through the Senate Fi- (1) applauds the participants and coaches business job creation, and for other nance Committee nomination review proc- of the 2010 Special Olympics USA National purposes; which was ordered to lie on ess, constitutes an abuse of power by the Games, as well as the volunteers and law en- the table; as follows: President; and forcement officers who support the Games; (2) notwithstanding his recess appointment and At the end, add the following: to that position, Dr. Donald Berwick should (2) thanks all the people who contributed TITLE V—MISCELLANEOUS appear before the Senate Finance Committee to the Games for their generous efforts and SEC. lll. SENSE OF THE SENATE REGARDING and respond to questions by members about gifts to make the Games a reality. THE RECESS APPOINTMENT OF DR. his qualifications to serve as Administrator f DONALD BERWICK. of CMS. (a) FINDINGS.—The Senate makes the fol- AMENDMENTS SUBMITTED AND lowing findings: SA 4478. Mr. BENNET submitted an PROPOSED (1) On April 19, 2010, the President nomi- amendment intended to be proposed to SA 4477. Mr. ROBERTS submitted an nated Dr. Donald Berwick to serve as the Ad- amendment SA 4402 proposed by Mr. ministrator of the Centers for Medicare & amendment intended to be proposed to REID (for Mr. BAUCUS (for himself, Ms. amendment SA 4402 proposed by Mr. REID Medicaid Services (in this section referred to as ‘‘CMS’’) in the Department of Health and LANDRIEU, and Mr. REID)) to the bill (for Mr. BAUCUS (for himself, Ms. LANDRIEU, H.R. 5297, to create the Small Business and Mr. REID)) to the bill H.R. 5297, to create Human Services. As of that date, the posi- the Small Business Lending Fund Program tion was vacant for the first 16 months of the Lending Fund Program to direct the to direct the Secretary of the Treasury to Obama Administration. Secretary of the Treasury to make cap- make capital investments in eligible institu- (2) Since that date, Dr. Berwick has been ital investments in eligible institu- tions in order to increase the availability of undergoing the bipartisan nomination inves- tions in order to increase the avail- credit for small businesses, to amend the In- tigation review process of the Committee on ability of credit for small businesses, ternal Revenue Code of 1986 to provide tax Finance of the Senate (in this section re- to amend the Internal Revenue Code of incentives for small business job creation, ferred to as the ‘‘Senate Finance Com- mittee’’) and there has been ongoing activity 1986 to provide tax incentives for small and for other purposes; which was ordered to business job creation, and for other lie on the table. as the Senate Finance Committee continues SA 4478. Mr. BENNET submitted an to gather and review information from Dr. purposes; which was ordered to lie on amendment intended to be proposed to Berwick. the table; as follows: amendment SA 4402 proposed by Mr. REID (3) The Senate Finance Committee review At the end of subtitle A of title II, add the (for Mr. BAUCUS (for himself, Ms. LANDRIEU, process for the Berwick nomination was pro- following: and Mr. REID)) to the bill H.R. 5297, supra; ceeding normally. A hearing on the nomina- PART V—OTHER PROVISIONS which was ordered to lie on the table. tion of Dr. Berwick had been requested and SA 4479. Mr. CARPER (for himself, Mr. no objections had been raised to having the SEC. lll. CREDIT FOR EMPLOYER-PROVIDED SCHUMER, Mr. CARDIN, Mr. LIEBERMAN, and hearing. CLEAN ENERGY JOB TRAINING PRO- Mr. WYDEN) submitted an amendment in- (4) On July 7, 2010, less than 3 months after GRAMS. tended to be proposed to amendment SA 4402 the nomination and without a Senate Fi- (a) PURPOSES.—The purposes of this section proposed by Mr. REID (for Mr. BAUCUS (for nance Committee hearing taking place, the are— himself, Ms. LANDRIEU, and Mr. REID)) to the President recess-appointed Dr. Berwick to (1) to meet the growing need for a work- bill H.R. 5297, supra; which was ordered to lie serve as the Administrator of CMS. Dr. Ber- force that is trained and prepared to fill jobs on the table. wick was sworn in on July 12, 2010. in clean energy industries; SA 4480. Mr. UDALL of New Mexico sub- (5) The appointment of the Administrator (2) to assist employers to transition their mitted an amendment intended to be pro- of CMS is subject to Senate confirmation workforce towards the clean energy econ- posed to amendment SA 4402 proposed by Mr. under article II, section 2, clause 2 of the omy; and REID (for Mr. BAUCUS (for himself, Ms. Constitution. Dr. Berwick’s nomination was (3) to provide incentives for employers to LANDRIEU, and Mr. REID)) to the bill H.R. referred to the Senate Finance Committee play a role in the training, preparation, and 5297, supra; which was ordered to lie on the which has jurisdiction over health programs development of their workforce for the clean table. under the Social Security Act and the re- energy economy.

VerDate Mar 15 2010 04:40 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00105 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.098 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5974 CONGRESSIONAL RECORD — SENATE July 15, 2010 (b) CREDIT.—Subpart D of part IV of sub- ‘‘(3) INCREMENTAL HYDROPOWER.—The term SA 4480. Mr. UDALL of New Mexico chapter A of chapter 1 of the Internal Rev- ‘incremental hydropower’ means additional submitted an amendment intended to enue Code of 1986 is amended by adding at generation that is achieved from increased be proposed to amendment SA 4402 pro- the end the following new section: efficiency or additions of capacity made on posed by Mr. REID (for Mr. BAUCUS (for ‘‘SEC. 45S. EMPLOYER-PROVIDED CLEAN ENERGY or after— himself, Ms. LANDRIEU, and Mr. REID)) JOB TRAINING PROGRAMS. ‘‘(A) the date of enactment of this section; ‘‘(a) IN GENERAL.—For the purposes of sec- or to the bill H.R. 5297, to create the tion 38, in the case of an eligible employer, ‘‘(B) the effective date of an existing appli- Small Business Lending Fund Program the employer-provided clean energy job cable State renewable portfolio standard to direct the Secretary of the Treasury training credit determined under this section program at a hydroelectric facility that was to make capital investments in eligible for the taxable year is an amount equal to 25 placed in service before that date. institutions in order to increase the percent of qualified education program ex- ‘‘(e) DENIAL OF DOUBLE BENEFIT.—No de- availability of credit for small busi- penses paid by the eligible employer for such duction or credit shall be allowed under any taxable year. nesses, to amend the Internal Revenue other provision of this chapter for any Code of 1986 to provide tax incentives ‘‘(b) LIMITATION.—The credit allowed under amount taken into account in determining subsection (a) for any taxable year shall not for small business job creation, and for the credit under this section. exceed $500 with respect to any full-time em- other purposes; which was ordered to ‘‘(f) ELECTION TO HAVE CREDIT NOT ployee of the eligible employer that partici- APPLY.—A taxpayer may elect (at such time lie on the table; as follows: pates in a qualified education program dur- and in such manner as the Secretary may by On page 177, line 16, insert ‘‘and planned ing such taxable year. regulations prescribe) to have this section outreach efforts to women-owned businesses, ‘‘(c) DEFINITIONS.—For purposes of this sec- veteran-owned businesses, and minority- tion— not apply for any taxable year. ‘‘(g) TERMINATION.—This section shall not owned businesses’’ before ‘‘, where appro- ‘‘(1) QUALIFIED EDUCATION PROGRAM EX- apply to any expenses incurred after Decem- priate’’. PENSES.—The term ‘qualified education pro- ber 31, 2014.’’. gram expenses’ means expenses paid or in- SA 4481. Mr. UDALL of New Mexico curred by an eligible employer for participa- (c) CREDIT TO BE PART OF GENERAL BUSI- NESS CREDIT.—Subsection (b) of section 38 of submitted an amendment intended to tion of full-time employees in a qualified be proposed to amendment SA 4402 pro- education program. the Internal Revenue Code of 1986 is amend- ed— posed by Mr. REID (for Mr. BAUCUS (for ‘‘(2) QUALIFIED EDUCATION PROGRAM.—The term ‘qualified education program’ means (1) by striking ‘‘plus’’ at the end of para- himself, Ms. LANDRIEU, and Mr. REID)) adult education (within the meaning of sec- graph (35); to the bill H.R. 5297, to create the tion 203 of the Adult Education and Family (2) by striking the period at the end of Small Business Lending Fund Program Literacy Act) and job training that is— paragraph (36) and inserting ‘‘, plus’’; and to direct the Secretary of the Treasury ‘‘(A) provided— (3) by adding at the end the following new to make capital investments in eligible ‘‘(i) by a provider that is identified as an paragraph: institutions in order to increase the eligible provider in accordance with section ‘‘(37) the employer-provided clean energy job training credit determined under section availability of credit for small busi- 122 of the Workforce Investment Act of 1998, nesses, to amend the Internal Revenue or 45S(a).’’. (d) CONFORMING AMENDMENT.—Section Code of 1986 to provide tax incentives ‘‘(ii) in a curriculum approved by the As- for small business job creation, and for sistant Secretary of Labor for Employment 6501(m) of the Internal Revenue Code of 1986 Training, is amended by inserting ‘‘ ‘45S(f),’ ’’ after other purposes; which was ordered to ‘‘(B) certified by the Assistant Secretary of ‘‘ ‘45H(g),’ ’’. lie on the table; as follows: Labor for Employment Training for purposes (e) CLERICAL AMENDMENT.—The table of On page 193, line 8, before the period insert of this section, and sections for subpart D of part IV of sub- ‘‘including, to the extent possible based on ‘‘(C) provided to full-time employees of the chapter A of chapter 1 of such Code is the available reporting data, details on lend- eligible employer who will be employed in amended by adding at the end the following ing to women-owned businesses, veteran- clean energy jobs (as defined in subsection new item: owned businesses, and minority-owned busi- (d)) and will require such education and ‘‘Sec. 45S. Employer-provided clean energy nesses’’. training in order to fulfill their employment job training programs.’’. SA 4482. Mr. UDALL of New Mexico responsibilities in such jobs. (f) REGULATIONS.—Not later than 180 days submitted an amendment intended to ‘‘(3) ELIGIBLE EMPLOYER.— after the date of the enactment of this Act, ‘‘(A) IN GENERAL.—The term ‘eligible em- the Secretary of the Treasury shall promul- be proposed to amendment SA 4402 pro- ployer’ means, with respect to any taxable gate regulations implementing the provi- posed by Mr. REID (for Mr. BAUCUS (for year, any employer which employed an aver- sions of this section. himself, Ms. LANDRIEU, and Mr. REID)) age of at least 1 but not more than 500 full- (g) EFFECTIVE DATE.—The amendments to the bill H.R. 5297, to create the time employees on business days during the made by this section shall apply to taxable Small Business Lending Fund Program preceding taxable year. years beginning after December 31, 2010. to direct the Secretary of the Treasury ‘‘(B) EMPLOYERS NOT IN EXISTENCE DURING to make capital investments in eligible PRECEDING YEAR.—If an employer was not in SA 4479. Mr. CARPER (for himself, institutions in order to increase the existence throughout the preceding year, the Mr. SCHUMER, Mr. CARDIN, Mr. determination under subparagraph (A) shall availability of credit for small busi- LIEBERMAN, and Mr. WYDEN) submitted nesses, to amend the Internal Revenue be based on the average number of full-time an amendment intended to be proposed employees that it is reasonably expected Code of 1986 to provide tax incentives such employer will employ on business days to amendment SA 4402 proposed by Mr. for small business job creation, and for in the current year. REID (for Mr. BAUCUS (for himself, Ms. other purposes; which was ordered to ‘‘(C) PREDECESSORS.—Any reference in this LANDRIEU, and Mr. REID)) to the bill lie on the table; as follows: paragraph to an employer shall include a ref- H.R. 5297, to create the Small Business On page 199, line 6, strike ‘‘The Secretary’’ erence to any predecessor of such employer. Lending Fund Program to direct the and insert ‘‘Not later than 1 year after the ‘‘(D) AGGREGATION RULE.—All persons Secretary of the Treasury to make cap- date of enactment of this Act, and every treated as a single employer under sub- ital investments in eligible institu- year thereafter for 5 years, the Secretary’’. section (a) or (b) or section 52, or subsection tions in order to increase the avail- On page 199, line 10, insert ‘‘and every year (m) or (o) of section 414, shall be treated as thereafter for 5 years,’’ before ‘‘the Sec- one person. ability of credit for small businesses, retary shall submit’’. ‘‘(4) FULL-TIME EMPLOYMENT.—An employee to amend the Internal Revenue Code of On page 199, between lines 19 and 20, insert shall be considered full-time if such em- 1986 to provide tax incentives for small the following: ployee is employed at least 30 hours per week business job creation, and for other (d) APPROPRIATE ACTION.—If the Secretary for 25 or more calendar weeks in the taxable purposes; which was ordered to lie on determines that the Program has not effec- tively served women-owned businesses, vet- year. the table; as follows: ‘‘(d) CLEAN ENERGY JOB.— eran-owned businesses, or minority-owned At the end of title II, insert the following: ‘‘(1) IN GENERAL.—The term ‘clean energy businesses, the Secretary may formulate a job’ means a job directly connected with pro- Subtitle C—Other Relief plan to redress the needs of the affected busi- nesses. ducing electric energy generated by a renew- SEC. —. INCREASED EXCLUSION AMOUNT FOR able energy resource. COMMUTER TRANSIT BENEFITS AND SA 4483. Ms. SNOWE (for herself, Mr. ‘‘(2) RENEWABLE ENERGY RESOURCE.—The TRANSIT PASSES. term ‘renewable energy resource’ means Paragraph (2) of section 132(f) of the Inter- GRASSLEY, Mr. ENZI, Mr. ISAKSON, and solar, wind, ocean, tidal, geothermal energy, nal Revenue Code of 1986 is amended by Ms. COLLINS) submitted an amendment landfill gas, incremental hydropower, or striking ‘‘January 1, 2011’’ and inserting intended to be proposed to amendment hydrokinetic energy. ‘‘January 1, 2012’’. SA 4402 proposed by Mr. REID (for Mr.

VerDate Mar 15 2010 05:37 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00106 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.099 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE July 15, 2010 CONGRESSIONAL RECORD — SENATE S5975 BAUCUS (for himself, Ms. LANDRIEU, and that a business meeting scheduled be- SUBCOMMITTEE ON CONSUMER PROTECTION, Mr. REID)) to the bill H.R. 5297, to cre- fore the Committee on Energy and Nat- PRODUCT SAFETY, AND INSURANCE ate the Small Business Lending Fund ural Resources, previously announced Mr. KAUFMAN. Mr. President, I ask Program to direct the Secretary of the for July 15th, has been rescheduled and unanimous consent that the Sub- Treasury to make capital investments will not be held on Wednesday, July 21, committee on Consumer Protection, in eligible institutions in order to in- 2010, at 9:30 a.m., in room SD–366 of the Product Safety, and Insurance of the crease the availability of credit for Dirksen Senate Office Building. Committee on Commerce, Science, and small businesses, to amend the Inter- The purpose of the business meeting Transportation be authorized to meet nal Revenue Code of 1986 to provide tax is to consider pending legislation. during the session of the Senate on incentives for small business job cre- For further information, please con- July 15, 2010, at 2 p.m., in room 253 of ation, and for other purposes; which tact Sam Fowler or Amanda Kelly. the Russell Senate Office Building. was ordered to lie on the table; as fol- f The PRESIDING OFFICER. Without objection, it is so ordered. lows: AUTHORITY FOR COMMITTEES TO On page 128, between lines 19 and 20, insert MEET SUBCOMMITTEE ON FEDERAL FINANCIAL MAN- the following: AGEMENT, GOVERNMENT INFORMATION, FED- COMMITTEE ON ARMED SERVICES SEC. 1704. SMALL BUSINESS LOAN GUARANTEE ERAL SERVICES, AND INTERNATIONAL SECU- ENHANCEMENT EXTENSIONS. Mr. KAUFMAN. Mr. President, I ask RITY (a) APPROPRIATION.—There is appropriated, unanimous consent that the Com- Mr. KAUFMAN. Mr. President, I ask out of any funds in the Treasury not other- mittee on Armed Services be author- unanimous consent that the Com- wise appropriated, for an additional amount ized to meet during the session of the mittee on Homeland Security and Gov- for ‘‘Small Business Administration—Busi- Senate on July 15, 2010, at 9:30 a.m. ernmental Affairs’ Subcommittee on ness Loans Program Account’’, $480,000,000, The PRESIDING OFFICER. Without Federal Financial Management, Gov- to remain available through December 31, objection, it is so ordered. 2010, for the cost of— ernment Information, Federal Serv- (1) fee reductions and eliminations under COMMITTEE ON BANKING, HOUSING, AND URBAN ices, and International Security be au- section 501 of division A of the American Re- AFFAIRS thorized to meet during the session of covery and Reinvestment Act of 2009 (Public Mr. KAUFMAN. Mr. President, I ask the Senate on July 15, 2010, at 10 a.m., Law 111–5; 123 Stat. 151), as amended by this unanimous consent that the Com- to conduct a hearing entitled, ‘‘Pre- section; and mittee on Banking, Housing, and venting and Recovering Government (2) loan guarantees under section 502 of di- Urban Affairs be authorized to meet Payment Errors.’’ vision A of the American Recovery and Rein- during the session of the Senate on The PRESIDING OFFICER. Without vestment Act of 2009 (Public Law 111–5; 123 July 15, 2010, at 9:00 a.m. objection, it is so ordered. Stat. 152), as amended by this section. The PRESIDING OFFICER. Without Such costs, including the cost of modifying SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT such loans, shall be as defined in section 502 objection, it is so ordered. MANAGEMENT, THE FEDERAL WORKFORCE, of the Congressional Budget Act of 1974. COMMITTEE ON COMMERCE, SCIENCE, AND AND THE DISTRICT OF COLUMBIA (b) EXTENSION OF PROGRAMS.— TRANSPORTATION Mr. KAUFMAN. Mr. President, I ask (1) FEES.—Section 501 of division A of the Mr. KAUFMAN. Mr. President, I ask unanimous consent that the Com- American Recovery and Reinvestment Act of unanimous consent that the Com- mittee on Homeland Security and Gov- 2009 (Public Law 111–5; 123 Stat. 151) is mittee on Commerce, Science, and ernmental Affairs’ Subcommittee on amended by striking ‘‘September 30, 2010’’ Transportation be authorized to meet Oversight of Government Management, each place it appears and inserting ‘‘Decem- during the session of the Senate on ber 31, 2010’’. the Federal Workforce, and the Dis- July 15, 2010, at 10:00 a.m. in Room 253 (2) LOAN GUARANTEES.—Section 502(f) of di- trict of Columbia be authorized to vision A of the American Recovery and Rein- of the Russell Senate Office Building. meet during the session of the Senate vestment Act of 2009 (Public Law 111–5; 123 The PRESIDING OFFICER. Without on July 15, 2010, at 2:30 p.m., to conduct Stat. 153) is amended by striking ‘‘May 31, objection, it is so ordered. a hearing entitled ‘‘The Federal Gov- 2010’’ and inserting ‘‘December 31, 2010’’. COMMITTEE ON FINANCE ernment’s Role in Empowering Ameri- (c) APPROPRIATION.—There is appropriated Mr. KAUFMAN. Mr. President, I ask cans to Make Informed Financial Deci- for an additional amount, out of any funds in unanimous consent that the Com- sions.’’ the Treasury not otherwise appropriated, for mittee on Finance be authorized to administrative expenses to carry out sec- The PRESIDING OFFICER. Without tions 501 and 502 of division A of the Amer- meet during the session of the Senate objection, it is so ordered. ican Recovery and Reinvestment Act of 2009 on July 15, 2010, at 10 a.m., in room 215 PRIVILEGES OF THE FLOOR (Public Law 111–5), $5,000,000, to remain of the Dirksen Senate Office Building, Mr. SPECTER. Mr. President, I ask available until expended, which may be to conduct a hearing entitled ‘‘Choos- unanimous consent that floor privi- transferred and merged with the appropria- ing to Work During Retirement and tion for ‘‘Small Business Administration— leges be given to Linda Hoffa, a the Impact on Social Security.’’ detailee in my office, for the remainder Salaries and Expenses’’. The PRESIDING OFFICER. Without of this Congress. (d) USE OF STIMULUS FUNDS TO OFFSET objection, it is so ordered. SPENDING.—Notwithstanding section 5 of the The PRESIDING OFFICER. Without American Recovery and Reinvestment Act of COMMITTEE ON FOREIGN RELATIONS objection, it is so ordered. 2009 (Public Law 111–5; 123 Stat. 116), Mr. KAUFMAN. Mr. President, I ask unanimous consent that the Com- $485,000,000 is rescinded on a pro rata basis, f by account, from unobligated amounts ap- mittee on Foreign Relations be author- propriated or made available under division ized to meet during the session of the A of the American Recovery and Reinvest- Senate on July 15, 2010, at 2:30 p.m. to NOTICE: REGISTRATION OF MASS ment Act of 2009 (Public Law 111–5; 123 Stat. hold a hearing entitled ‘‘The New MAILINGS 116) (other than under title X of division A of START Treaty: Maintaining a Safe, The filing date for 2010 second quar- such Act) in order to offset the increase in spending resulting from subsections (a) and Secure and Effective Nuclear Arsenal.’’ ter Mass Mailings is Monday, July 26, (c) of this section. The Director of the Office The PRESIDING OFFICER. Without 2010. If your office did no mass mailings of Management and Budget shall report to objection, it is so ordered. during this period, please submit a each congressional committee the amounts COMMITTEE ON THE JUDICIARY form that states ‘‘none.’’ rescinded under this subsection within the Mr. KAUFMAN. Mr. President, I ask Mass mailing registrations, or nega- jurisdiction of such committee. unanimous consent that the Com- tive reports, should be submitted to f mittee on the Judiciary be authorized the Senate Office of Public Records, 232 to meet during the session of the Sen- Hart Building, Washington, D.C. 20510– NOTICE OF HEARING ate on July 15, 2010, at 4 p.m., in room 7116. COMMITTEE ON ENERGY AND NATURAL SD–226 of the Dirksen Senate Office The Public Records office will be RESOURCES Building, to conduct a hearing entitled open from 9:00 a.m. to 6:00 p.m. on the Mr. BINGAMAN. Mr. President, I ‘‘Nominations.’’ filing date to accept these filings. For would like to announce for the infor- The PRESIDING OFFICER. Without further information, please contact the mation of the Senate and the public objection, it is so ordered. Public Records office.

VerDate Mar 15 2010 05:37 Jul 16, 2010 Jkt 089060 PO 00000 Frm 00107 Fmt 4624 Sfmt 0634 E:\CR\FM\A15JY6.105 S15JYPT1 smartinez on DSKB9S0YB1PROD with SENATE S5976 CONGRESSIONAL RECORD — SENATE July 15, 2010 UNANIMOUS-CONSENT Under the previous order, the mo- Mr. DORGAN. Mr. President, I ask AGREEMENT—H.R. 4213 tions to reconsider are considered made for its second reading and object to my Mr. DORGAN. Mr. President, I ask and laid upon the table en bloc. own request. unanimous consent that at 2:30 p.m. on The resolutions of ratification are as The PRESIDING OFFICER. Objec- Tuesday, July 20, the Senate resume follows: tion is heard. consideration of the House message to The Senate approved the following The bill will be read for the second company H.R. 4213; that the motion to treaties on the Executive Calendar: time on the next legislative day. reconsider be agreed to and the Senate Tax Convention with Malta (Treaty Doc. Mr. DORGAN. Mr. President, I sug- then proceed to vote on the motion to 111–1) gest the absence of a quorum. invoke cloture on the motion to concur TEXT OF RESOLUTION OF ADVICE AND CONSENT The PRESIDING OFFICER. The in the House amendment to the Senate TO RATIFICATION: clerk will call the roll. amendment to H.R. 4213, with amend- Resolved (two-thirds of the Senators present The assistant legislative clerk pro- concurring therein), ceeded to call the roll. ment No. 4425. SECTION 1. SENATE ADVICE AND CON- The PRESIDING OFFICER. Without Mr. DURBIN. Mr. President, I ask SENT SUBJECT TO A DECLARATION unanimous consent that the order for objection, it is so ordered. The Senate advises and consents to the the quorum call be rescinded. f ratification of the Convention Between the Government of the United States of America The PRESIDING OFFICER. Without EXECUTIVE SESSION and the Government of Malta for the Avoid- objection, it is so ordered. ance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on f TAX CONVENTION WITH MALTA Income, signed on August 8, 2008, at Valletta (the ‘‘Convention’’) (Treaty Doc. 111–1), sub- ORDERS FOR MONDAY, JULY 19, ject to the declaration of section 2. 2010 SECTION 2. DECLARATION Mr. DURBIN. Mr. President, I ask PROTOCOL AMENDING TAX The advice and consent of the Senate CONVENTION WITH NEW ZEALAND under section 1 is subject to the following unanimous consent that when the Sen- ate completes its business today, it ad- Mr. DORGAN. Mr. President, I ask declaration: journ until 2 p.m. on Monday, July 19; unanimous consent that the Senate The Convention is self-executing. that following the prayer and the proceed to executive session to con- Protocol Amending Tax Convention with pledge, the Journal of proceedings be sider Calendar Nos. 3 and 4, treaty doc- New Zealand (Treaty Doc. 111–3) approved to date, the morning hour be uments 111–1 and 111–3; that the trea- TEXT OF RESOLUTION OF ADVICE AND CONSENT deemed expired, the time for the two ties be considered as having advanced TO RATIFICATION leaders be reserved for their use later through the various parliamentary SECTION 1. SENATE ADVICE AND CON- in the day, and, following any leader stages up to and including the presen- SENT SUBJECT TO A DECLARATION remarks, the Senate then proceed to a tation of the resolution of ratification; The Senate advises and consents to the period for the transaction of morning that any committee reservations and ratification of the Protocol Amending the business until 3 p.m., with Senators declarations be agreed to as applicable; Convention between the United States of permitted to speak therein for up to 10 that any statements be printed in the America and New Zealand for the Avoidance minutes each; that following morning RECORD; further, that when the votes of Double Taxation and the Prevention of business, the Senate resume consider- on the resolutions of ratification are Fiscal Evasion with Respect to Taxes on In- come, signed on December 1, 2008, at Wash- ation of H.R. 5297, the small business taken, the motions to reconsider be ington (the ‘‘Protocol’’) (Treaty Doc. 111–3), jobs bill. considered made and laid upon the subject to the declaration of section 2. The PRESIDING OFFICER. Without table en bloc; that the President be im- SECTION 2. DECLARATION objection, it is so ordered. mediately notified of the Senate’s ac- The advice and consent of the Senate tion, and the Senate then resume legis- under section 1 is subject to the following f lative session. declaration: The PRESIDING OFFICER. Without The Protocol is self-executing. PROGRAM objection, it is so ordered. f Mr. DURBIN. Mr. President, there Mr. DORGAN. Mr. President, I ask LEGISLATIVE SESSION will be no rollcall votes during Mon- for a division vote on each of the reso- The PRESIDING OFFICER. The Sen- day’s session of the Senate. Senators lutions of ratification. ate will now return to legislative ses- should expect the next vote to occur at The PRESIDING OFFICER. A divi- sion. approximately 2:30 p.m. on Tuesday, sion vote has been requested. On treaty f July 20. That vote will be on the mo- document 111–1, all those in favor stand tion to invoke cloture with respect to and be counted. MEASURE READ FIRST TIME—H.R. H.R. 4213, which extends unemploy- All those opposed stand and be count- 5712 ment benefits through November. ed. Mr. DORGAN. Mr. President, I under- On a division, two-thirds of the Sen- stand that H.R. 5712 has been received f ators present having voted in the af- from the House and is at the desk. firmative, the resolution of ratification ADJOURNMENT UNTIL MONDAY, The PRESIDING OFFICER. The Sen- JULY 19, 2010, AT 2 P.M. on treaty document 111–1 is agreed to. ator is correct. The question is now on treaty docu- The clerk will read the title of the Mr. DURBIN. Mr. President, if there ment 111–3. All those in favor stand and bill for the first time. is no further business to come before be counted. The assistant legislative clerk read the Senate, I ask unanimous consent All those opposed stand and be count- as follows: that it adjourn under the previous ed. A bill (H.R. 5712) to provide for certain order. Two-thirds of the Senators present clarifications and extensions under Medi- There being no objection, the Senate, having voted in the affirmative, the care, Medicaid, and the Children’s Health In- at 6:33 p.m., adjourned until Monday, resolution of ratification is agreed to. surance Program. July 19, 2010, at 2 p.m.

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