Congressional Record—Senate S3303
Total Page:16
File Type:pdf, Size:1020Kb
May 6, 2010 CONGRESSIONAL RECORD — SENATE S3303 The outrageous case that this some- that proposal at the moment. I wanted bling down, I fail to see where assets how reaches into retailers and mer- to speak about an amendment I have are going to exist in substantial quan- chants is highly offensive to me. It is discussed previously on the issue of too tity to repay the taxpayer. the last thing I would ever suggest to big to fail. But that was yesterday. I did not my colleagues, that we somehow get There is much yet to do on this sub- support that. That was yesterday. This into the business as Federal regulators ject of too big to fail. I recall, in a issue of creating a circumstance of of poring over florists and dentists and room just steps from here, on a Friday, early warning on too-big-to-fail firms butchers and accountants and lawyers. I believe it was, the Treasury Sec- is not satisfactory to me. The only way Nothing could be further from the retary leaning over the lectern in a to resolve too big to fail is to abolish truth. very stern way saying to the caucus too big to fail. I mean abolish too big This goes after those businesses in- that I was involved in, if within 3 days to fail. That means having firms that volved in financial services and prod- a three-page bill granting $700 billion are not too big to fail, that will not ucts. It does so in a way that provides to the Secretary of the Treasury, with cause a moral hazard or a grave risk to clarity, provides an opportunity for which to provide funds to stabilize the entire economy should they fail. those institutions to be regulated, to some of the biggest financial institu- Do you believe that is the case with know what rules they have to follow, tions in the country, if that did not this graph? Is there anything here and who is in charge of insisting that come about, our economy could very that—as this graph shows, we have they meet those obligations. well collapse completely. firms that are too big, far too big to So with that, I urge my colleagues to I remember that moment and remem- fail. Is there anything here that is vote against this amendment. My hope ber thinking that it was pretty bizarre going to solve that in this bill? The an- is we will vote fairly soon. Again, we that our country got to that point: swer is no. The only direct and effec- have hundreds of amendments that that all of a sudden 1 day, after being tive way to address this is to decide, if people want to be heard on, and we do told month after month that the econ- you are, in fact, too big to fail, then not have all of the time in the world to omy was strong, the economy was in there has to be some sort of divestiture deal with it. So we have to move on on good shape, that there were some rip- or dissolution to bring that firm back these issues. ples and hiccups here and there, but down to a point where in size and scope I think people understand the debate. things were on course and we had con- such firm is not too big to fail and is They can read the amendment. I urge fidence in the strength of the economy, not causing the kind of dramatic spe- you to read 1027 in our bill, the section that we were now being told the econ- cial risk to the country’s economy that dealing with consumer protection, omy may well collapse in days unless it would bring the economy down with dealing with who is covered. Then we the Congress comes up with $700 bil- it. will have a vote. lion. That is the only direct and effective Why was that the case? Because in- solution. Is that radical? Well, I have f stitutions that were so large in this an amendment that requires that if EXECUTIVE SESSION country, at the top of the financial in- you are determined to be too big to dustry, were so important to the econ- fail, then we begin a process, over 2 omy that their failure could very well years, of breaking away those parts EXECUTIVE CALENDAR result in failure of the entire American that make you too big to fail. Is it a Mr. DODD. Madam President, I ask economy. That is what is called too big radical idea? I do not think so. unanimous consent that the Senate to fail. One-fourth of the Board of Governors Let me show a chart that shows the proceed to executive session to con- of the Federal Reserve Board says we six largest financial institutions in the sider Calendar No. 789, the nomination ought to do that. Richard Fisher, presi- country and what has happened to of Larry Robinson to be Assistant Sec- dent of the Dallas Fed: Too big to fail them since 1995. This is their growth as retary of Commerce for Oceans and At- is not a policy, it is a problem. Too big a percentage of GDP. It shows that mosphere; that the nomination be con- to fail means too big period. We ought they are getting larger and larger and firmed and the motion to reconsider be to break them up. larger and much larger. Even during considered made and laid upon the Federal Reserve Bank of St. Louis, this period of near collapse, the same table; that any statements be printed James Bullard, president and chief ex- institutions that were judged too large ecutive officer: I do kind of agree that in the RECORD; the President be imme- to fail and judged to represent a grave diately notified of the Senate’s action, too big to fail is too big to exist. risk to the entire economy have gotten and the Senate resume legislative ses- The economist, Joe Stiglitz, Nobel larger than just too big to fail. sion. Prize winner: Too-big-to-fail banks We had a vote yesterday, but that have perverse incentives. If they gam- The PRESIDING OFFICER. Without cannot be the end of this discussion objection, it is so ordered. ble and win, they walk off with the pro- about how to address too big to fail. ceeds. If they fail, taxpayers, pick up The nomination considered and con- The vote yesterday was rather Byzan- firmed is as follows: the tab. tine, as far as I was concerned. I was Alan Greenspan—I seldom, if ever, DEPARTMENT OF COMMERCE not someone who was a big fan of the agree with Alan Greenspan, but I have Larry Robinson, of Florida, to be Assistant $50 billion to be pre-funded for resolu- used a quote of his to describe where Secretary of Commerce for Oceans and At- tion of too-big-to-fail companies. But we are now. He was around sitting on mosphere. having said that, to decide that the $50 his hands for a good many years while f billion, which would come from the these problems developed, despite the very institutions that are too big to LEGISLATIVE SESSION fact that he had the authority to have fail, should be abolished, and that the avoided them. Then he has written a The PRESIDING OFFICER. Under funds instead would come from the book acting as if he was exploring the the previous order, the Senate will re- FDIC, which are initially funds from surface of Mars while all of this went sume legislative session. the American taxpayer, made no sense on. f to me. Then suggesting that it will be But now he says: The notion that all right because the FDIC will be re- risks can be identified in a sufficiently RESTORING AMERICAN FINANCIAL paid with the sale of assets—oh, really? timely manner to enable the liquida- STABILITY ACT OF 2010—Continued Well, firms that are too big to fail that tion of a large failing bank with min- The PRESIDING OFFICER. The Sen- are going to get in trouble in the fu- imum loss has proved untenable during ator form North Dakota is recognized. ture are not going to have very many this crisis, and I suspect in the future Mr. DORGAN. Madam President, I assets. They are going to be in trouble crises as well. will join my colleague from Con- because of dramatic amounts of over- Simon Johnson, professor of entre- necticut in opposing the amendment on leverage, leverage that goes far beyond preneurship, the Sloan School: There is the floor if it weakens the underlying their ability to continue to do busi- simply no evidence, and I mean no evi- bill, but I do not come to speak about ness. And when the firm comes tum- dence, that society gains from banks VerDate Mar 15 2010 00:36 May 07, 2010 Jkt 089060 PO 00000 Frm 00009 Fmt 4624 Sfmt 0634 E:\CR\FM\G06MY6.012 S06MYPT1 jbell on DSKDVH8Z91PROD with SENATE S3304 CONGRESSIONAL RECORD — SENATE May 6, 2010 having a balance sheet larger than $100 The PRESIDING OFFICER. The Sen- have stopped the subprime mess before billion. ator from Colorado. it spiraled out of control. For example, I do not know whether I agree or dis- Mr. BENNET. Thank you, Madam subprime giant Ameriquest would have agree with that. But his point is that President.