To improve consumer notification of numerical credit scores used in certain lending transactions.

RESTORING AMERICAN FINANCIAL STABILITY ACT OF 2010

The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will resume consideration of S. 3217, which the clerk will
report.
The assistant legislative clerk read as follows:

A bill (S. 3217) to promote the financial stability of the
United States by improving accountability and transparency in
the financial system, to end ``too big to fail,'' to protect
the American taxpayer by ending bailouts, to protect
consumers from abusive financial services practices, and for
other purposes.

Pending:

Reid (for Dodd/Lincoln) amendment No. 3739, in the nature
of a substitute.
Brownback modified amendment No. 3789 (to amendment No.
3739), to provide for an exclusion from the authority of the
Bureau of Consumer Financial Protection for certain
automobile manufacturers.
Brownback (for Snowe/Pryor) amendment No. 3883 (to
amendment No. 3739), to ensure small business fairness and
regulatory transparency.
Specter modified amendment No. 3776 (to amendment No.
3739), to amend section 20 of the Securities Exchange Act of
1934 to allow for a private civil action against a person
that provides substantial assistance in violation of such
Act.
Dodd (for Leahy) amendment No. 3823 (to amendment No.
3739), to restore the application of the Federal antitrust
laws to the business of health insurance to protect
competition and consumers.
Whitehouse amendment No. 3746 (to amendment No. 3739), to
restore to the States the right to protect consumers from
usurious lenders.
Dodd (for Rockefeller) amendment No. 3758 (to amendment No.
3739), to preserve the Federal Trade Commission's rule making
authority.

The ACTING PRESIDENT pro tempore. The Senator from Pennsylvania.
Mr. CASEY. Mr. President, I ask unanimous consent to speak as in
morning business.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.

Afghanistan

Mr. CASEY. Mr. President, I rise this morning to speak about the
visit this week by Afghan President Karzai and many of his ministers,
as well as the policy that is unfolding all these many months in
Afghanistan.
I rise in the midst of a debate we are having in the Senate on
financial reform and continuing efforts and strategies to be put in
place to create jobs. Even in the midst of all those domestic concerns
that are economic in nature--and we are still very concerned about and
working on the problems of those who are out of work--we need, in that
context, to also be concerned about what is happening in Afghanistan.
So I wish to discuss President Karzai's visit and, as I mentioned, the
visit, as well, by other Afghan government officials.
The other reason I rise in connection with that topic is to talk
about the continuing threat our troops face from improvised explosive
devices known by the acronym IEDs. They continue to pose a threat to
our troops, and we have to continue to be concerned about the nature of
that threat.
In a broader sense, when it comes to this policy, we have to get this
right. We have to make sure our government is continually focused on
getting this strategy right in Afghanistan, as it relates to security,
governance, and development--all aspects of the strategy, working with
our coalition partners in doing that.

[[Page S3770]]

First and foremost, on the question of IEDs, the Los Angeles Times
reported last week that three-fifths of the 602 combat-related deaths
of U.S. troops in Afghanistan were due to roadside bombs, the so-called
IEDs, improvised explosive devices. The primary ingredient in these
bombs is ammonium nitrate, a fertilizer that can also be used as an
explosive. We know this from our recent history.
We also know we have some domestic history to consider. Timothy
McVeigh used a 4,800-pound ammonium nitrate bomb to attack the Alfred
Murrah building in Oklahoma City in April of 1995.
The Afghan Government has recognized this problem--the use of
ammonium nitrate--and has begun working with coalition troops to crack
down on the use of ammonium nitrate. It is no longer legal in
Afghanistan to use ammonium nitrate in farming, and Afghan farmers
receive training on how to use other types of fertilizer.
During yesterday's press conference President Karzai had with
President Obama, he discussed the use of ammonium nitrate and, in
particular, its impact on U.S. troops. I was glad he did that. I am
glad President Obama has been focused on this issue as well. I had a
chance yesterday, in a lunch with a small group of Senators, to ask
President Karzai directly about this issue. So we talked about it
yesterday at lunch as well.
Despite this ban in Afghanistan, ammonium nitrate manages to make its
way to Afghanistan, reportedly from Pakistan. The Los Angeles Times
reported that transport routes are lined with corrupt Pakistani police
officers--according to the Los Angeles Times--and border officials who
accept bribes to allow this smuggling to occur. This smuggling is a
lucrative enterprise. One Pakistani businessman reported making almost
$950 a month smuggling ammonium nitrate for use in Afghanistan. This is
a country where the monthly average income is $216 a month.

I urge the Pakistani Government to track and regulate the transport
of this dangerous material. The government appears to recognize that
ammonium nitrate could also pose a threat to Pakistan's national
security as extremists across the country step up their activities
there as well. As in Afghanistan, it is important for the authorities
in Pakistan to first show the political will to address this problem,
and to put in place proper legal mechanisms to diminish its use across
the border in Afghanistan.
Ammonium nitrate's use in IEDs is the main killer of U.S. troops in
Afghanistan. We must do all we can--all we can--to limit its use.
I understand that if ammonium nitrate did not come from Pakistan,
smugglers would identify new sources from other bordering countries.
While this may be the case, it appears as though the primary source
today is Pakistan. In this case, Pakistan is where we should focus our
attention. So let's get at the supply of ammonium nitrate. Let's make
it much harder for terrorists to kill U.S. troops.
Let me move next to the overall policy in Afghanistan. I was honored
to be one of seven or eight Senators to have lunch yesterday with
President Karzai. During his time in Washington, we were all pleased--I
think both sides of the aisle in the Senate were pleased--that
President Karzai reiterated his commitments to improving governance and
reducing corruption. They are commitments, but I think the people of
Pennsylvania and the people across America need to see results from
those commitments. I also hope President Karzai will restate his
support for NATO efforts to win back the country from the Taliban and
drive the insurgents to the negotiating table.
In a meeting with Afghan Government ministers on Wednesday, five or
six other Senators and I emphasized the importance of women's rights in
Afghanistan. Afghan women play a key role in the decisionmaking
process. Any peace process or agreement that does not respect and
uphold the rights of half of the population--the women--of Afghanistan
will fail to achieve long-term goals for security and stability.
In February, Senator Boxer and I cohosted a Senate Foreign Relations
Subcommittee hearing on the future of Afghan women and girls. At that
hearing, Melanne Verveer, the U.S. Ambassador at Large for Women's
Issues, testified about the challenges Afghan women and girls face. She
said:

Perhaps the greatest remaining impediment to women's full
civic participation is violence against women and girls,
which remains endemic in Afghan society. Crimes go unpunished
because of anemic rule of law and weak institutions of
justice. Approximately 80 percent of crimes and disputes are
settled through traditional justice mechanisms.

So said Melanne Verveer, who knows of what she speaks.
This is a continuing problem. It is not just a moral problem. This is
a problem long term for us as well because if the women of
Afghanistan--women and girls--are not treated with respect, are not
accorded the kind of rights and being given the benefit of a system of
justice that will protect them, then our whole strategy in Afghanistan
is undermined.
We cannot just win this on the battlefield. This is not just about
the military. There are two other aspects that are so important to this
strategy: governance and development. Of course, when you are talking
about governance, you are talking about a system of justice. If half
the population is the continued target of violence, and if half the
population is not accorded basic rights and given the benefit of a
functioning system of justice, our strategy in Afghanistan will fail.
This is a problem, not only because of the current concern we have
about how women and girls are treated in Afghanistan and around the
world, as well as here in the United States--that is the main reason
for our concern--but it is also connected directly, and I think is
inextricably intertwined, with our strategy as it relates to governance
in Afghanistan.
We know that since the fall of the Taliban, there have been some
improvements in women's rights, such as the creation of the Ministry
for Women's Affairs and the guarantee of equal rights for men and women
in the new constitution. Indeed, Afghan women remain among the worst
off in the world with respect to life expectancy as well as quality of
life. So even though progress has been made, we need to see a lot more
in the way of results.
I am encouraged by the recent measures undertaken at the top of
Afghanistan's Government to include the voices of women in the
consultation process leading up to the Peace Jirga. However, I believe
it is essential the Afghan Government take immediate measures--
immediate measures--to include qualified women, who have a record of
public service--civic or community service--in meaningful senior roles
at every level of the government and in the peace process.
We were--I know I was; and many of us were--very impressed by the
women we met who are active participants in the Afghan Government. But
much more needs to be done.
Let me move next to more of the military aspects of our strategy:
both in Marjah--the operation that took place over the last couple of
months--as well as the upcoming operations in Kandahar.
On April 29, the Pentagon released its biannual report to Congress on
the last 6 months in Afghanistan. By all accounts, it was sobering. The
report portrays an Afghan Government with limited credibility among its
people. In 92 districts assessed for their support of the Afghan
Government or their antagonism to it, not one supported the government,
not one in 92. I realize that sometimes when a report comes out, it is
dated and it may be that improvements may have been made over the last
couple of months, but the most recent report was not good in terms of
support for the Afghan Government.
Again, our strategy will not be successful unless the Afghan
Government can improve those numbers of support from its own people.
This is an important issue that President Karzai and the rest of the
government must continue to address. I think they are taking steps to
do that but much more needs to be done.
The Pentagon report highlights one positive development: The Taliban
is seen by 52 percent of Afghans as the chief cause of instability. So
the message is getting out to the people about the destructive impact
of the Taliban. This perception provides the Afghan Government with an
opportunity to show itself as the protector of the people.

[[Page S3771]]

One area in which ISAF and international aid donors can help build
public confidence in their government is food security and
distribution. Not only is the agricultural sector critical to the well-
being of all Afghans, both agriculture and food distribution are caught
up in the problems raised by Afghan dependence on opium cultivation,
extortion, and corruption in aid and transport operations for that, as
well as manipulation by national and local power brokers.
The United States has begun shaping operations, mostly political, in
and around Kandahar to prepare for the next major military campaign.
While we can apply the lessons learned in Marjah, the Kandahar campaign
will be a formidable test of our counterinsurgency plan. Kandahar is
the second largest city in Afghanistan, the birthplace of the Taliban,
and the Taliban still has considerable support there.
In judging the success of Kandahar from Washington, we should be
aware of the significant political and cultural complexities because of
the coalition's need to shift between fighting and outreach in
Afghanistan. The contest for public sentiment among Afghan civilians
will arguably be more important over the long run than the relative
effectiveness of each side's military skill.
A functioning government which maintains credibility in the eyes of
the people of Afghanistan will be necessary if civil military strategy
is going to have any chance of success. We must continually stress the
movement toward this goal so as not to lose sight of our objectives in
Afghanistan. Again, we have to be concerned about three things: first,
military concerns and the strategy as it relates to the military
campaigns; second, governance; and third, development.
The ability of nongovernmental organizations and other aid
organizations to do great work is hampered by corruption and the
ineffectiveness of the government. Militarily removing the Taliban
influence must be accompanied by the timely and effective delivery of
emergency aid and refugee assistance. It is only when the government
has the capacity to operate in an effective manner that all the tools
can be applied to increasing the quality of life of local Afghans as
well as presenting an alternative to the Taliban's form of rule.
The upcoming operations in Kandahar will be the largest to date aimed
at securing the population through General McChrystal's population
centric civil-military strategy. However, if the government is not
capable of providing the capacity necessary to follow the military
clearing operations, the strategy will not succeed.
Our brave men and women who serve this country deserve a reliable
partner in the Afghan Government. We must work assiduously and
continually to realize this vision of a peaceful and stable
Afghanistan.
In conclusion, first of all, I wish to thank President Karzai for
what he said here in the United States, what he did here to reiterate
the goals we have, the partnership between our government and his
government to get this policy right. After my two visits to Afghanistan
in 2008 and 2009, I have been very critical of President Karzai. I must
say, based upon the last couple of months, based upon the work he did
here, the statements he made, and some actions he has taken, I have
more cautious optimism, I will say, than I had before about his ability
to move forward, helping us on this strategy; his ability to build
confidence, the confidence of his own people; his ability to have a
positive impact not only as it relates to our military strategy but, of
course, especially governance as well as the development after military
campaigns take place. I also appreciate the fact that President Karzai
showed great respect not only for our fighting men and women in the
field and their families but especially for those who gave, as
President Lincoln said a long time ago in Gettysburg, the last full
measure of devotion to their country when he visited the graves of some
of those who perished in that conflict.
So we have reason to be more optimistic, but the test will be over
time and based upon real results, facts on the ground as it relates to
the military operations, governance, and development. So this strategy
bears a lot of scrutiny.
In conclusion, I ask unanimous consent to have printed in the Record
a Los Angeles Times story of May 3, 2010, entitled ``Key Bomb
Ingredient is Smuggled in Freely in Pakistan.''
There being no objection, the material was ordered to be printed in
the Record, as follows;

[From the Los Angeles Times, May 3, 2010]

Key Bomb Ingredient Is Smuggled in Freely in Pakistan

(By Alex Rodriguez)

Peshawar, Pakistan.--Twice a week, a caravan of trucks
lumbers out of this volatile northwest Pakistan city in the
dead of night and makes its way toward Afghanistan, loaded
with one of the most coveted substances in a Taliban bomb
maker's arsenal: ammonium nitrate fertilizer.
Every time the illicit caravan makes its trip, it moves
unhindered past a gantlet of Pakistani police checkpoints
along the Pak-Afghan Highway. A string of bribes paid out to
police, politicians and bureaucrats ensures that the smuggled
explosive agent reaches its destination, middlemen on the
Afghan side of the border who sell it to insurgents, says the
co-owner of a Pakistani trucking firm that dispatches the
caravans.
Banned in Afghanistan, ammonium nitrate is the basic
ingredient of the Taliban's roadside bombs. The amounts
ferried into Afghanistan are staggering. Each truck carries
130 bags, each of which contains 110 pounds of ammonium
nitrate. A caravan typically has at least 12 trucks, which
means a single night's shipment can move 85 tons of the
fertilizer.
The caravans head out every third night.
``I know that it's used to kill American soldiers,'' said
the businessman, a lanky, thirty-something Pashtun from the
Khyber district in Pakistan's tribal areas, a haven for
Taliban militants. He agreed to discuss his company's
smuggling on condition of anonymity.
``But people in the tribal areas don't have any choice but
to do this,'' he said. ``If they would give us another way to
make money, we would take it.''
Of all the threats U.S. troops face in Afghanistan, the
roadside bomb is the one they dread most. Western forces have
suffered 602 combat-related deaths since the beginning of
2009, and 361, or three out of five, have been caused by
roadside bombs, according to icasualties.org, a website that
keeps track of war-related deaths in Afghanistan and Iraq.
Ammonium nitrate bombs, often crude wood-and-graphite
pressure-plate devices buried in dirt lanes or heaps of
trash, are difficult to detect and devastating when they
detonate. The fertilizer's might as an explosive agent was
witnessed in the United States in 1995, when Timothy
McVeigh's 4,800-pound ammonium nitrate bomb killed 168 people
at a government building in Oklahoma City.
In Afghanistan, a typical homemade bomb weighs about 65
pounds, most of it ammonium nitrate. A shipment of 85 tons of
ammonium nitrate could yield more than 2,500 bombs.
Made by combining ammonia gas and nitric acid, ammonium
nitrate is one of the world's most popular fertilizers. It
was used by Afghan farmers, but because of the roadside
bombs, the United States persuaded President Hamid Karzai's
government to ban the substance in January.
But Pakistani smugglers continue to truck massive amounts
into Afghanistan. Several other countries in the region,
including Uzbekistan and Iran, also manufacture the
fertilizer, but almost all that gets into Afghanistan comes
from Pakistan, says Kenneth Corner, director of intelligence
at the Joint Improvised Explosive Device Defeat Organization,
a research arm of the U.S. military that develops ways to
detect and withstand roadside bombs.
Pakistan makes 496,000 tons of ammonium nitrate fertilizer
each year. It also imports ammonium nitrate from several
countries, including China, Germany and Sweden, Comer said.
The U.S. has begun talks with Pakistani officials to persuade
them to ban the manufacture and use of ammonium nitrate and
switch to urea as the country's main fertilizer. Unlike
ammonium nitrate, urea cannot be readily used as an
explosive.
``I can't find anyone who thinks ammonium nitrate makes
sense as a fertilizer as opposed to what's more commonly used
in both (Pakistan and Afghanistan), which is urea,'' Comer
said.
Officials in Islamabad, the Pakistani capital, say such a
ban would be a hard sell in Pakistan. ``It would cost
hundreds of thousands of dollars for the (sole) manufacturer
to switch to urea,'' said Qadir Bux Baloch, spokesman for the
Agriculture Ministry.
As long as ammonium nitrate remains legal in Pakistan, the
U.S. will have to rely on Pakistani police and border
authorities to curb smuggling. For the time being, however,
rampant corruption within the ranks of law enforcement and
local government allows ammonium nitrate to be smuggled
freely into Afghanistan.
The Khyber businessman said his company pays about $830 in
bribes for a single truckload of ammonium nitrate. About 40
percent of that goes to local police, he said, and the rest
gets paid out to local officials.
Middlemen on the other side of the border bribe Afghan
authorities so they can transfer the shipments to their own
trucks and move the explosive agent through their country,
the Khyber businessman said.

[[Page S3772]]

The businessman said he clears about $950 a month smuggling
ammonium nitrate. At least eight trucking firms on the
outskirts of Peshawar regularly smuggle the substance into
Afghanistan, he said.
Peshawar authorities have never raided his warehouse, he
said. ``There are only a few police officials in Peshawar who
know what we do, and we bribe them.''
Peshawar's top administrative official, Commissioner Azam
Khan, said no Pakistani court had ever convicted anyone of
smuggling ammonium nitrate into Afghanistan. He said he had
begun meeting with law enforcement and other officials to
find ways to tackle the smuggling of ammonium nitrate and
other commodities into Afghanistan.
``We're trying to think out of the box,'' Khan said.
``We're looking at what laws we can use to get at the black
market storage of ammonium nitrate, to make it more difficult
to store it in bulk.''
Some security officials say Pakistan should have ample
incentive to better scrutinize the movement of ammonium
nitrate, given its own struggle with Islamic militants.
In March, police seized 6,600 pounds of ammonium nitrate
stashed in a fruit market in Lahore's Allama Iqbal
neighborhood. Investigators believe the three men arrested in
the seizure were connected to a series of suicide attacks
that killed more than 50 people in March.
Zulfiqar Hameed, a senior Lahore police official in charge
of investigations, said his officers could have tracked down
the middlemen who supplied the ammonium nitrate to the
militants if Pakistan required manufacturers to put tracking
numbers on each fertilizer bag.
``It's a totally undocumented market,'' Hameed said.
``There's no reliable way of finding out who bought those
bags. That's a huge problem.''
Even if Pakistani authorities took steps to clamp down on
ammonium nitrate smuggling, the Khyber businessman said he
doubted they would derail his operation. Along Pakistan's
tribal belt, where smuggling is a way of life, the policemen
and officials accustomed to a steady stream of payoffs aren't
likely to turn over a new leaf anytime soon.
``Never have these supplies been interfered with,'' the
businessman said, chuckling. ``These shipments always reach
their destination.''

Mr. CASEY. Finally, let me also ask unanimous consent to have printed
in the Record a summary of a ``Report on Progress Toward Security and
Stability in Afghanistan'' issued by the Department of Defense dated
April 2010.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Report on Progress Toward Security and Stability in Afghanistan

(Issued by the DOD, Apr. 2010)

The ANP consists of four major categories of police; the
Afghan Uniformed Police (AUP), the Afghan Border Police
(ABP), the Afghan National Civil Order Police (ANCOP) and
Specialized Police.
In January 2010, the JCMB, the international community, and
the U.S. Government agreed to the Afghan proposal to grow the
ANP to 109,000 by October 2010 and 134,000 by October 2011.
March goal: 99261. Actual: 102,138.
One of the major past weaknesses of the ANP program is the
lack of centralized command and control for recruiting and
training.
A major concern of the international community is the lack
of personnel accountability in the ANP force. There have been
accounts of ``over-the-tashkil'' police in various districts
doing police work while not being paid through LOTF-A, as
well as accounts of ``ghost police'' who are on the payroll
but are not actually present for duty.
Training is a key challenge to building the capacity of the
ANP. In recent years, because of the lack of program
resourcing, 60-70% of the force was hired and deployed with
no formal training (the ``recruit-assign'' model).
High levels of corruption persist in the ANP and reports of
promotions being sold are common.
As with the ANA, the logistics systems in the ANP have been
weak. Over the past year, the NTM-A has assisted the
Logistics Training and Advisory Group in improving its
logistics system to better meet the needs of the ANP. Despite
progress, the MoI logistics system is in its early stages of
development and lacks automation, infrastructure, and
expertise.
Establishment of effective rule of law institutions is
critical to the sustainment of an effective police force. To
date, in the justice sector, there has been little enduring
progress despite investment toward reform, infrastructure,
and training. Courts are understaffed and chronically
corrupt. Corruption can be stemmed by ensuring there are
adequate salaries and an adequate number of defense
attorneys, and by implementation of a case management system
and court watch or court monitoring program. Security for
judges and prosecutors continued to be a significant problem,
especially in RC-South.

Mr. CASEY. Thank you, Mr. President.
With that, I yield the floor and note the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. UDALL of Colorado. Mr. President, I ask unanimous consent that
the order for the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. UDALL of Colorado. Mr. President, before I ask a unanimous
consent on an amendment, I will comment on Senator Casey's remarks that
were just delivered so powerfully and eloquently. He is right on point
that the efforts underway in Afghanistan are crucial to our country's
national security.
It was important, as well, that he talked about the three main
factors that are in play there in our ultimate success. This week, we
had President Karzai and much of his Cabinet in Washington. I certainly
appreciate the effort President Karzai made to show his respect for
those who have fallen in Afghanistan in the war there. I also note
General McChrystal was here briefing many of us. I think the Presiding
Officer, as well, heard from him on the state of the situation in
Afghanistan.
This isn't going to be easy. I am heartened by what I heard. I
express my appreciation for the valor, commitment, and honor that our
forces in Afghanistan have displayed.

Amendment No. 4016 to Amendment No. 3739

Mr. UDALL of Colorado. Mr. President, I ask unanimous consent that
the pending amendment be set aside, and I call up my amendment No.
4016.
The ACTING PRESIDENT pro tempore. Is there objection?
Without objection, it is so ordered.
The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Colorado [Mr. Udall], for himself, Mr.
Lugar, Mr. Lautenberg, Mr. Bond, and Mr. Begich, proposes an
amendment numbered 4016 to amendment No. 3739.

Mr. UDALL of Colorado. Mr. President, I ask unanimous consent that
reading of the amendment be dispensed with.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
The amendment is as follows:

(Purpose: To improve consumer notification of numerical credit scores
used in certain lending transactions)

On page 1455, after line 25, insert the following:

SEC. 1077. USE OF CONSUMER REPORTS.

Section 615 of the Fair Credit Reporting Act (15 U.S.C.
1681m) is amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively;
(B) by inserting after paragraph (1) the following:
``(2) provide to the consumer written or electronic
disclosure--
``(A) of a numerical credit score as defined in section
609(f)(2)(A) used by such person in taking any adverse action
based in whole or in part on any information in a consumer
report; and
``(B) of the information set forth in subparagraphs (B)
through (E) of section 609(f)(1);''; and
(C) in paragraph (4) (as so redesignated), by striking
``paragraph (2)'' and inserting ``paragraph (3)''; and
(2) in subsection (h)(5)--
(A) in subparagraph (C), by striking ``; and'' and
inserting a semicolon;
(B) in subparagraph (D), by striking the period and
inserting ``; and''; and
(C) by inserting at the end the following:
``(E) include a statement informing the consumer of--
``(i) a numerical credit score as defined in section
609(f)(2)(A), used by such person in connection with the
credit decision described in paragraph (1) based in whole or
in part on any information in a consumer report; and
``(ii) the information set forth in subparagraphs (B)
through (E) of section 609(f)(1).''.

Mr. UDALL of Colorado. Mr. President, Senator Lugar and I introduced
this modified amendment in working with Senator Dodd, the Treasury
Department, and the Federal Reserve to find a way to increase
Americans' access to their credit scores.
Before I talk about the amendment, the chairman of the committee, my
friend and colleague from Connecticut, is on the floor. I thank him for
working with me and a group of about 20 bipartisan Senators to provide
greater access to consumer credit scores. Senator Dodd had a
thoughtful, incisive idea about how we might be able to move this
amendment to the floor, and that was to provide a credit score on a
transactional basis.

[[Page S3773]]

That is exactly what this amendment does. A credit score affects
consumers' interest rates and monthly payments on home loans and can
even influence a consumer's capacity to buy a car or rent an apartment,
even get phone or Internet service.
Our amendment would take the two consumer notices that the Federal
law requires lenders to give consumers and makes sure the credit score
used to evaluate the consumer is disclosed to that individual.
Right now--and I found this out in the process of researching what we
are trying to do--if you receive a general notice of your credit
application being turned down or if you are offered credit at less
favorable terms, you don't receive a disclosure of the credit score
used to determine that outcome.
Under our amendment, if you are turned down for a loan or you are
given a higher interest rate because of a low credit score, you now
have the right to see the credit score that was used. I know of the
Presiding Officer's interest and long experience in the world of
housing and providing access to people in that way. I know this is
something he has followed with great interest.
There is a fundamental principle at stake. If your credit score is
being used against you, you ought to have the right to at least see it.
I know every single American would want to improve that credit score
and understand how they could have a greater financial opportunity,
greater financial standing.
I thank Chairman Dodd and Senators Lugar, Levin, Bond, Scott Brown,
Schumer, Begich, Lautenberg, and all the 20-plus Senators who helped
push for this important issue.
I especially thank Senator Pryor for working with us to find
something everyone could agree to in this modified version. I am
appreciative that we were able to work it out.
I understand that the amendment is scheduled to be addressed Monday
night. I hope we can perhaps accept it on a voice vote at the proper
time as well.
With that, I yield the floor.
Mr. DODD. Mr. President, again, I cannot thank our friend and
colleague from Colorado enough. He has done a great job. This is a
terrific idea--one that is long overdue. The Presiding Officer is a
member of our Banking Committee. We have talked a lot about these
issues over the last couple years. We have had hearings and, in fact,
legislation dealing with credit scores. A lot of people have had their
good names stolen from them, in a sense, as a result of the thievery
that goes on with credit cards and the like, and people's credit scores
have been manipulated.
It is difficult to find out where you are in all this. It is ironic
that we are citizens in our country, and other people are determining
whether we are creditworthy when we are buying an automobile,
purchasing a home or getting a student loan. The idea that we as
consumers cannot have access to these scores that people are writing
about us--it is kind of offensive that we even have to go through this.
It is degrading, to put it mildly. I am grateful to the Senator from
Colorado for pursuing this. He would have gone a bit further. I would
have, too, but I sense we are going to have a problem here to get
anything done at all. The fact that are going to have this on a
transactional basis is a major step forward and may alleviate 80 to 90
percent of the difficulties. That is not to say there isn't room for
further improvement down the road. There will be other steps we can
take in the future to make sure people have access to their scores and
where they stand on their ability to afford the things they need as a
family.
The Senator from Colorado has made a significant contribution. We are
going to have to vote on it. I am confident we can prevail. I believe
both Democrats and Republicans share the concerns the Senator has
raised. He has made a valuable contribution to this effort. I thank the
Senator personally for that.
I look forward to being supportive of this amendment early next week.
I thank the Senator.
Mr. UDALL of Colorado. Let me again thank the chairman of the Banking
Committee for his willingness to work with those of us in a bipartisan
coalition. His comments are right on point, as always.
I think the Senator from Connecticut is right when he suggests that,
as Americans have access to credit scores, they are going to be more
interested, as time goes on, in understanding how to build and
strengthen that score and be more financially literate, if you will.
The chairman has been remarkable in the time he has spent on the
floor and the strength he has shown, with the lack of sleep he has
endured. His product, which many of us have contributed to, will be
seen by historians as a seminal moment, when we put Wall Street on a
more accountable basis.
Under the chairman's leadership, we have also given consumers more
recourse and access. In the end, I think that is what the chairman
wanted to do, and will do, to protect consumers all over our great
Nation. This is one small but important way to do that.
Again, I thank the chairman and look forward to the vote on Monday
night. I agree this will have widespread support. I will continue to
ask for those votes, and I know we will work to have a successful
outcome Monday.
Mr. LEVIN. Mr. President, I am pleased to cosponsor amendment No.
4016, introduced by Senator Mark Udall and Senator Lugar, to help
provide Americans access to their credit score, an essential piece of
personal financial information.
The way things stand now, the three primary credit bureaus charge
people to gain access to their credit scores. Seven years ago, the 2003
Fair and Accurate Credit Transactions Act took a big step in the right
direction by giving Americans access to their credit report once a
year, on a no-cost, no-strings-attached basis, at each of the big three
credit bureaus. But a credit report only goes so far. It is the credit
score itself, not the report, that is so critical to the consumer when
navigating our financial system, and free access to credit scores was
not included in the 2003 act.
Credit score is often the single most important factor in obtaining a
loan to buy a car or a house or in securing a credit card with a
reasonable rate of interest. Credit scores can also play a key role in
finding an apartment or purchasing a major household appliance. More
and more, credit scores are also used by employers in the hiring
process.
With so much riding on this number, it is essential that Americans be
able to readily obtain their credit score, so they can evaluate whether
it accurately reflects their credit risk. If the score is low, a
consumer can evaluate the underlying credit information to see if there
is an error in the data and what, if anything, they should do to
correct an error. Consumers can also evaluate what steps they can take
to improve their credit score by, for example, paying off debt or
tearing up a credit card. To make those types of informed decisions,
however, it is only fair for the consumer to know what all their
creditors know--the credit score that has been electronically assigned
to them by an impersonal, computer-driven credit bureau.
A credit score is calculated from a person's personal financial
history as that history is captured in specific data points included in
a credit report. We already know that the data in a credit report is
often incomplete, out of date, or incorrect. We also know that the
formulas used to produce credit scores from that data are complex,
unpublished, and of uncertain predictive value.
The credit bureaus chum out profits by running people's personal
financial information through their formulas. Then they sell the
information to financial institutions, marketing companies, landlords,
and others. The companies then turn around and sell the credit scores
back to the consumers who otherwise can't find out what is being sent
to multiple third parties about their credit status, without their ever
having been informed about the score.
This whole setup is unfair. While credit scores serve a useful
function in our financial system, fundamental fairness requires that
people have ready access to this basic information about themselves--
information that is already being sold to their bank, their landlord,
their employer, their government, and any other creditor willing to pay
for it.
One more point. Right now, despite the efforts of Congress and the
Federal

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Trade Commission, some credit bureaus continue to engage in deceptive
advertising of ostensibly ``free'' credit reports and scores that, in
fact, require enrollment in a subscription credit monitoring service
that charges a monthly fee, often $15. It is astonishing to me that
some bureaus fight tooth and nail to avoid straightforward disclosures
about the cost of their products and instead try to slip them in with
deceptive offers of ``free'' credit scores or reports that are anything
but. This is an issue we addressed in the credit card reform bill with
new provisions to stop the deceptive advertising, and which the FTC is
now working to implement. The credit bureaus have got to clean up their
act.
What we can do today is pass the Udall-Lugar amendment, which would
require that every time a consumer suffers an adverse event--such as a
rejected loan--or receives materially less favorable terms--such as a
high interest rate on a credit card--due to the consumer's credit
score, the lender or potential lender would have to provide that credit
score to the consumer. This requirement would enable people to find out
what the credit bureaus are telling their creditors about their credit
risk, whenever that information is used against them.
This amendment would help Americans take control of their credit
histories, help restore fairness in the credit industry, and begin to
close a gaping loophole that the credit bureaus have been exploiting
for years. I commend Senator Udall for his leadership on this issue and
encourage my colleagues to vote for it.
Mr. DODD. Mr. President, I support the amendment offered by Senator
Collins, amendment No. 3879, and thank the Senator from Maine for her
efforts to protect the financial stability of the United States and
safeguard the financial security of families in her State of Maine, my
State of Connecticut, and all across America. Her amendment complements
the provisions in my bill, S. 3217, that strengthen capital standards
for large, interconnected financial companies. Under S. 3217, the
Federal Reserve must impose heightened standards for leverage and risk-
based capital on large bank holding companies and on nonbank financial
companies supervised by the Federal Reserve. These tougher standards
will serve as speed bumps to keep financial companies from growing too
large and risky and threatening the nation's financial stability.
The Collins amendment, endorsed by FDIC Chairman Sheila Bair, would
prevent regulators from weakening risk-based capital and leverage
standards now in effect. It effectively sets a floor for such standards
going forward that would apply to all banks, bank holding companies,
and nonbank financial companies supervised by the Federal Reserve. The
Collins amendment also reinforces the bill's requirement that capital
for large, interconnected financial companies should reflect the risks
that their failure may pose to financial stability.
As Chairman Bair noted, bank holding companies are supposed to serve
as a source of strength for the banks they own. But during the
financial crisis, many large bank holding companies became a source of
weakness and ultimately required Federal support. The crisis also
revealed how dangerously overleveraged many large investment banks and
other nonbank financial companies were. The Collins amendment and
provisions of S. 3217 will help to ensure that the largest, most
interconnected financial companies maintain a robust level of capital
and to eliminate gaps in capital standards between banks and other
financial companies that could undermine the financial stability of the
United States.
Again, I thank my colleague from Maine, Senator Collins, for her
valuable contribution to the collective, bipartisan effort here in the
United States Senate to reform Wall Street and protect American
families.
I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. DODD. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. DODD. Mr. President, I want to share some thoughts, if I can for
a couple of minutes, on one of the proposals that will be coming up, I
think, next week on the bill.
Again, I want to express my gratitude to all of our colleagues for
the way in which this debate has been conducted. Contrary to what many
people may think about the Senate, we are capable of having a full-
throated debate, one filled with emotion and passion about strongly
held views, and yet also respect each other to allow for the debate to
go forward and amendments to be considered and voted up and down.
I think we have done that now some 33 or 34 times over the last 6 or
7 legislative days. I know there is much more to be done in the coming
days before we conclude our consideration of the Wall Street reform
bill. But it is a reflection of how this institution can operate and
how we should operate, in my view, on a matter of this import.
So it is not only important about what we are doing in terms of
reforming the financial system of our Nation, but I would argue in a
way history may never record it as such, but also how we conducted this
debate on an important issue. It may not make the headlines, but it is
very important for the integrity of this institution and as a model for
how important comprehensive legislation can be handled.
I know it is cumbersome. I know it can take a long time. There are
delays that occur during consideration of matters in the Senate. But
that is as it was intended by our forefathers, in a sense, to have an
institution where there would be the ample opportunity for debate,
including unlimited debate by any one single Member, contrary to the
other Chamber that comprises the Congress where they are limited to 5
minutes, and the majority rules allow for matters and insists upon the
majority prevailing.
In this institution the rules favor the minority, including a
minority of one that can engage in extended debate. So we are different
in this institution and with good reason. If they had wanted a
unicameral system of one body, where just majority rules would prevail
every time, they would have created it. In fact, they tried to.
But I take some pride in the fact that it was two Senators from
Connecticut, Oliver Ellsworth and Roger Sherman, who in the
consideration of the Constitutional Convention--when all was about to
fail over a contest between large States and small States; they were
fearful that large States, having the dominant number of members in the
Halls of Congress, would be overwhelmed and their interests be
disregarded because they did not have the votes to counter it--so
Oliver Ellsworth and Roger Sherman came up with the idea of creating a
bicameral system, one wherein one body's membership would be made up
based on population, the size of the State, the number of seats it
would hold, and this body, regardless of our size, would have equal
representation.
So the smallest of our States, States such as Wyoming with a few
hundred thousand people, has two Senators. The State of California,
with millions of people, has two Senators. So regardless of size,
regardless of economic influence or other matters, we are all coequals,
at least as far as our States are represented and the opportunity as
well for minority voices to be heard, not overwhelmed with the tyranny
of the majority which can happen.
So there is a value to the existence of the Senate, and we are slower
to act. It can be frustrating, as my colleague and Presiding Officer
has come to appreciate, and as a former Speaker of his own State
legislative body, I know he appreciates how difficult that can be as a
leader in trying to move business and product along so that matters can
be considered.
So I say all of that as a backdrop because in recent years, recent
months, in fact, we have been bogged down, frustrated. There has been a
lot of obstructionism that has gone on to prohibit us to move forward
on important matters. But at least in this case, up to now at this
point anyway, we have conducted this debate on financial reform in a
way that I think our forbearers would have appreciated.
Members have had ample opportunity. The rules are still there for
them to use to make sure they can be

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heard in these matters. But, again, I emphasis that while the subject
matter of our consideration certainly is tremendously important, the
means and the manner by which we have conducted debate also has value.
It is with that backdrop that I want to again thank my colleagues,
Democrats and Republicans. I thank majority leader Harry Reid because
without his insistence as the leader, this could not happen. I think
the fact that he has demonstrated as a leader the ability to move this
institution in a way that allows for equal participation and debate is
a great tribute to the leadership he has demonstrated as majority
leader of the Senate over many years now.
This morning I would like to concentrate, if I could, on one subject
matter, as I mentioned, that will probably come up in the next few days
when we reconvene at the first part of next week. That has to do with a
very important part of this bill, one in which the Presiding Officer
has demonstrated great interest, and I have a tremendous amount of
interest in as well.
It deals with the issue of establishing, for the first time in our
Nation's history, an actual bureau, a division, that is designed
specifically to protect individual consumers from what can happen to
them when financial matters put them in a desperate condition, whether
it be on credit cards, home sales, all sorts of other financial
activities. There has been no place that actually consumers' interests
are paramount.
There are seven agencies in the Federal Government that have
divisions that deal with consumer protection. But the history has been
one of either malfeasance, inaction, uninterest or lack of interest.
What we are creating is a place where the dominant principal, sole
interest will be to watch for consumer interests.
One of the debates we are going to have is whether a major area of
financial interest will be exempted from the consideration of the
Consumer Financial Protection Bureau, and that is in the area of
financing an automobile.
I know this has been one of the most heavily lobbied parts of the
whole Wall Street reform bill. I certainly understand that many of us
know our auto dealers back home make important contributions to our
communities. I said in my remarks the other day, I have worked very
closely with the car dealers of my State over recent past years and
months.
We have had major debates about the automobile industry and the
rights of auto dealers, the cash for clunkers bill, to try to increase
sales, which is something I was deeply involved in to try to make it
possible for our automobile dealers and manufacturers to get back on
their feet.
So I take a back seat to no one in my concern and care about the work
they do, the economic vitality they provide for our community, the jobs
that get created as a result of their efforts. My debate and argument
is not with the auto dealers; it is over the financing of automobiles
and how that occurs, and whether consumers are going to be protected in
what for most Americans is the second largest purchase any of us ever
make.
Our home, if we have one, is the most important. Then, secondly, is
the purchase of an automobile. Most Americans, other than having a
401(k) for retirement, do not deal with the stockbrokers every day, are
not buying or trading or engaging in sophisticated financial
instruments. That is limited to a few of the 300 million in our
population.
But you only need to get up in the morning and head off to work, and
you know that everybody needs an automobile--one might argue maybe too
many. But, nonetheless, that is a separate debate. So that purchase of
an automobile is critically important to people. It is a critical part
of our economy.
But it is over the financing of automobiles, in certain areas, that I
have great concern and do not want to see consumers disadvantaged. So
it is in that spirit that my support and admiration for people who work
in that sector of our economy, to say to you today that those
responsible corporate citizens, small businesses, have nothing to fear
from this legislation whatsoever.
They conduct their business admirably, ethically, morally. They treat
their customers as if they were members of their family. That is the
overwhelming majority of people who engage in the sale of automobiles.
But like all statutes and laws, they are not designed necessarily for
the majority of people who operate within the law and act and operate
ethically and morally.
We also understand there are those who take advantage of people, and
so we craft legislation to protect all of us against those abuses that
can occur. As President Obama said on April 22:

Unless your business model depends on bilking people, there
is little to fear with this legislation at all.

In fact, there is nothing to fear. In a challenge to this Congress,
Michael Hayden, from the Military Officers Association of America, said
to us the following:

You have an opportunity to do something about unscrupulous
auto dealers. The above-board firms should not have a problem
with the Consumer Financial Product Protection Bureau.

They should not, and let me explain why briefly this morning. First,
the Wall Street reform legislation as being considered by the Senate
has gone more than halfway to meet the concerns originally raised by
financing of automobiles. The bill, and let me enumerate, eliminates
assessments on the auto dealers. Unlike other financial
institutions, there are no assessments on auto dealers.

The Brownback amendment would prohibit assessments. The underlying
bill already does that. There is no reason for that provision in the
amendment of my colleague from Kansas. The bill further eliminates the
authority of the bureau of financial protection to examine and enforce
new rules on auto dealers.
State authorities and the Federal Trade Commission will continue as
they have to perform this role. Thirdly, as a result of our bill, the
only impact the consumer bureau will have on auto dealers is through
rule writing. It is crucial that auto dealers, in the financing of
autos, play by the same rules as their competitors do in communities
all across our country.
One has to ask: What could be more reasonable than that? There are a
variety of places people can go to finance an automobile. You can go to
a credit union; you can go to your community bank. There may be other
means by which you can finance. Why should we disadvantage those
institutions in a community at the expense of one other who is seeking
exemption from these rules?
That brings me to the second point. The legislation we have written
creates a level playing field among auto dealers, community banks,
credit unions, and others. This will empower consumers to shop
effectively for the best financing available as they see it. They ought
to have that opportunity, not fearing that if they go to one financial
service provider or another, the rules apply in one case and do not in
another. That disadvantages all consumers in this country who want to
be able to shop effectively.
How many times have we seen that ad: When providers of financial
services have to compete, consumers win? If they have to compete on a
level playing field, then we are going to make it possible for people
to get the best value that is available to them.
Consumers should be treated the same regardless of whether they get a
loan from an auto dealer, a credit union, a community bank, or anyone
else for that matter who is engaged in the financial products and
service industry.
Community banks and credit unions should not be forced to live under
more stringent rules for making auto loans than do auto dealers. Just
imagine, in small communities, where on the same street you might have
a community bank, a credit union, and an automobile dealer that is
financing automobiles.
Why should there be a disparity in terms of the protections consumers
get depending upon which door they walk through on that Main Street:
walk into the credit union, walk into the community bank, or walk into
the auto dealer who is financing. Why should that last place be treated
differently than the other two when it comes to financing?
That is at the heart of what our bill is trying to do. That is what
makes it especially important that car salesmen follow the same rules
and provide customers with clear, transparent, easy-

[[Page S3776]]

to-understand information, so those consumers, those who are also our
neighbors, are empowered to make smart financial choices for themselves
and their families without having to worry about hidden markups that
can cost them hundreds of dollars over the course of paying off a loan.
Let me emphasize again what I said at the outset. The overwhelming
majority of auto dealers play by the rules. Again, I am not talking
about the vast majority that do this but the unscrupulous ones, those
who engage in ripping off people and are doing everything they can to
get away with it.
That is what the legislation is designed to deal with. This is the
way the marketplace is supposed to work, where people can shop fairly,
knowing the rules apply to everyone equally, and there is competition
to provide higher quality products and services and better prices.
A strong consumer bureau will be good for responsible auto dealers as
well. If the Brownback amendment wins, Wall Street wins, and those
responsible dealers will lose. Let me explain why this is true.
If auto dealers are carved out of this bill, as the Brownback
amendment would do, it means we are essentially exempting Wall Street-
funded auto dealers and putting credit unions and community banks at a
disadvantage. It means Wall Street will continue to incentivize auto
dealers to offer bad, overpriced loans that make it impossible for
responsible dealers to compete. We have seen this time and time again
in every market. The bad money pushes out the good money. The
responsible players who play by the rules are undercut by the sharp
dealers who cut corners.
Furthermore, a strong consumer bureau will restore America's faith in
auto dealers and the loans they make. Responsible auto dealers ought to
welcome this. What happens when we have this kind of uneven playing
field? Unfortunately, we have seen many cases where people,
particularly those serving in the military, have been the victims of
shady auto dealers' financing practices. Let me share some of the many
stories I have heard, and I know my colleagues have as well.
A recent news story describes five young men and women in uniform at
Fort Riley, KS who were conned into paying for phantom options on
vehicles they bought from a local auto dealer. In other words, they
were charged for options on their cars they never received. According
to their lawyer, despite having decent credit scores, these young men
and women in uniform were ending up paying interest on their car loans
averaging almost 18 percent.
Yesterday I told a story that appeared in the New York Times of
Matthew Garcia, a 25-year-old Army specialist who was recently
subjected to a trick called ``yo-yo financing'' by an unscrupulous car
dealer, just as he was preparing to deploy to Afghanistan. Specialist
Garcia, stationed at Fort Hood, TX, bought an automobile at a used car
lot and signed up for a loan at 19.9 percent interest rate. That is not
even the biggest abuse, however, believe it or not. The problem came
when he drove the car home. The auto dealer called him up several days
later to say the financing contract had actually fallen through and
demanded an additional $2,500 in cash. To make sure he paid up, the
dealer blocked the soldier's car so he could not leave.
In North Carolina, SGT Diann Traina, who works in military
intelligence/psychology, purchased a used BMW from a dealership near
Fort Bragg. The dealer who sold Sergeant Traina the car never provided
her with the registration and, in fact, did not have title to the car.
Sergeant Traina got to drive the BMW for 1 week before she was deployed
to Iraq. Then it was repossessed. Through no fault of her own, she now
has a repossession on her credit rating, her credit. In addition, the
lender insists she has to pay $10,800 that is still owed on the car.
She is married. She and her spouse have been without the use of a
vehicle for a long time but are still being pressured to pay for it.
Sergeant Traina later learned that the dealer where she brought her
automobile had sold numerous cars to military personnel, even though it
didn't own them. The North Carolina Attorney General eventually sued
the dealership, and it has subsequently gone out of business.
This story is a classic example of predatory auto lending, where the
dealer is clearly culpable and the military member had no way of
knowing in advance that the dealer was selling automobiles and
originating loans for vehicles it did not own. This type of practice is
actually fairly common among unscrupulous auto dealers who finance,
particularly, around military bases. Some go in and out of business
repeatedly, reopening under different names each time, leaving many
customers in the lurch. Regrettably, this kind of abuse of lending to
members of the military and their families is far too common.
Holly Petraeus, who directs a better business program for military
families, noted at a press conference yesterday that auto lending to
the military needs oversight, because:

Sadly, many of [those in the military] end up paying far
more for those cars than they should.

That is why The Military Coalition, a consortium of over 30
nationally prominent military and veterans organizations representing
more than 5.5 million current and former servicemembers and their
families, opposes the Brownback amendment. We talk all the time about
protecting and defending and standing up for our men and women in
uniform, many of whom are in Iraq and Afghanistan in harm's way. Yet we
are about to pass legislation that would exempt automobile financing
dealers from the very people we try to protect. I am not making up
these quotes and these numbers. When we have that many organizations
expressing their opposition to this amendment, Members ought to take
note. Again, I emphasize--I know my language here is talking about auto
dealers in a generic way. I emphasize over and over, the overwhelming
majority do a good job, a fair job, an ethical and moral job, but they
would tell us themselves how they can be disadvantaged by those
unscrupulous dealers who take advantage, particularly of the young men
and women in the military.
The coalition includes such groups as the Veterans of Foreign Wars,
the National Guard Association, Military Officers Association, the
Military Order of the Purple Heart, and many others which oppose the
Brownback amendment. I am taking advantage of this time today to tell
my colleagues, please pay attention to this. I know we care about our
auto dealers. I know they have been lobbying heavily. But they should
not receive an exemption in the financing area that can put so many
people at a disadvantage.
The coalition, in fact, sent me a letter. I wish to read a little
from the letter. I quote:

The most significant financial obligation for the majority
of servicemembers is auto financing. Including the auto
dealer financing . . . in the financial reform bill will
provide greater protections for our servicemembers and their
families.

The letter goes on:

Providing a carve-out for auto dealers does just the
opposite--it will allow unscrupulous dealers to continue to
take advantage of servicemembers and their families.

Clifford Stanley, Under Secretary of Defense, said in a letter to the
assistant Secretary of the Treasury Michael Barr that the Department of
Defense ``would welcome and encourage the [Consumer Financial
Protection Bureau] protections provided to Servicemembers and their
families with regard to unscrupulous automobile . . . financing
practice.''
Secretary Stanley cites the ``bait and switch'' financing,
falsification of loan applications, failure to pay off liens on trade-
in vehicles, ``packing'' loans with items whose price bears little if
any relationship to the real cost, and discriminatory lending as the
kinds of problems members of our Armed Forces and their families face
when dealing with financing their automobiles with car dealers. In
fact, Secretary Stanley reports that 72 percent of counselors and
attorneys surveyed have cited problems with auto dealer abuses in the
past 6 months alone.
This is not my list of abuses. This is the Under Secretary of Defense
in a letter.
Two days ago Senator Jack Reed and Senator Scott Brown of
Massachusetts offered an amendment to create an office of military
liaison within the consumer protection bureau. That amendment carried
98 to 1. Only one colleague voted against providing an office within
the Consumer Financial

[[Page S3777]]

Protection Bureau with the kind of protections the Secretary of Defense
is talking about in his letter.
The amendment carried by a vote of 98 to 1 because Members recognize
that our service men and women deserve protection from these shady
financial service providers, including, of course, the major abuser,
the very group that our colleague from Kansas wants to exempt from this
legislation.
A crucial part of providing this protection is coverage of auto
dealers. Yesterday I received a letter from the Secretary of the Army
John McHugh. Secretary McHugh makes the point that auto dealers are
often ``the most significant financial obligations of our soldiers--
particularly within the junior enlisted grades . . . ''
If we carve out auto dealers--the businesses that make the loans that
are ``the most significant financial obligations of our soldiers,'' in
the words of the Secretary of the Army--why did we vote to create the
military liaison office in the first place?
If we pass the Brownback amendment and carve it out of our
legislation, we will have gutted the very office of military liaison
before it even gets off the ground.
Yesterday the Senator from Kansas made the point that we ought to
regulate the people who are making the loans, not simply the people who
are processing the paperwork. I agree. By that standard, we should
defeat the Brownback amendment because, in fact, the auto dealers are
the legal lenders. It isn't the financing company. The legal lender is
the automobile dealer who engages in financing of automobiles. Auto
dealers finance cars in much the same way mortgage brokers and bankers
finance mortgages. They shop among a number of wholesale lenders, often
on Wall Street, and they steer buyers into higher interest rates than
those borrowers would otherwise qualify for. In exchange, the auto
dealers who get this kind of financing get the equivalent of a yield
spread premium or a backend payment. The higher the interest rate they
can get the borrower to agree to, particularly service men and women,
the higher the payment the auto dealer receives from the Wall Street
financing firm.
The incentive is to get the customer to pay as much as possible. That
is the way they get rewarded financially. This is not the way the
market should work, whether it is for a young soldier, a first
responder, or a single mother working hard to raise her family.
Let me read the court testimony of a former auto dealer finance and
insurance manager from Tennessee about how the process works. Again,
this is a former auto dealer finance and insurance manager in court
testimony. I am quoting:

The standard industry practice is to prepare financing
documents so that the customer is not alerted in any manner
that the person with whom he is dealing has the ability to
control the customer's price of credit.

Let me explain that. The dealer ``has the ability to control the
customer's price of credit.''
He continues:

This allows the finance arranger to present himself as the
ally of the customer, which further relaxes and disarms the
customer. . . . The nature of the transaction creates the
perfect opportunity for a dealer to obtain a large kickback
from an unsuspecting customer by subjectively inflating the
interest rates.

What better evidence could we have than someone in court testimony
engaged in the very business telling us exactly how it operates? Again,
the Brownback amendment would basically exempt that person from the
rules of consumer financial bureau. What does this remind us of? It
reminds me exactly of the mortgage broker I described a few days ago,
who is taught and encouraged in training sessions to convince the
borrower that he is their financial adviser while profiting from
steering the customer into the more expensive loans.
Let me go back and read the quote from the witness, the former auto
dealer finance manager:

This allows the finance arranger to present himself as the
ally of the customer. . . .

Tell me what difference there is between that and the unscrupulous
broker who tries to convince a borrower that ``I am your financial
adviser''? It is exactly the same kind of abuse. So the mortgage
broker, without any regulations, gets away with it. If we adopt this
amendment, it will allow the automobile finance dealer to get away with
it as well. We ought not to allow that to happen in this legislation.
Moreover, there is a history of discrimination in auto dealer
financing. For example, African-American borrowers were charged more
than 2.5 times the amount in subjective rate markups compared to
majority White populations, after controlling for creditworthiness. And
similar disparities were found for Hispanics. These abuses have been
curbed temporarily as a result of a series of court orders and consent
decrees. However, these consent decrees expire, and they will shortly.
Finally, the Brownback amendment is simply unworkable and would
create a duplicative bureaucracy. The amendment leaves rule writing
under the Truth in Lending Act with the Federal Reserve for auto
dealers loans only. All other Truth in Lending Act rules will be
written by the consumer bureau. That means the Fed will have to
maintain a separate bureaucracy to write rules for this one sector of
the lending industry--not the legal, responsible entity, the auto
dealer--while the consumer bureau writes the Truth in Lending Act rules
for everyone else.
Frankly, that makes no sense whatsoever. One of the things we are
trying to do is to get rid of unnecessary burdensome paperwork and
duplication.
Several weeks ago, when the debate on this Wall Street reform bill
first started, I told my colleagues about the Luntz memo, which lays
out a strategy for attacking real Wall Street reform. Well, let me read
to my colleagues one thing from the Luntz memo I happen to agree with,
and it is the following--I quote from the memo:

The public is angriest about lobbyist loopholes. Part of
the perception that Washington cannot do anything right is
the belief that lobbyists write most of the bills. The
American people are tired of add-ons, earmarks, and backroom
deals--but they are mad as hell at ``lobbyist loopholes.''

What is one of the loopholes that Mr. Luntz's memo refers to
specifically? Car dealers--the very lobbyist loophole the Brownback
amendment would create. The memo, in fact, warns specifically about
this amendment we may be asked to vote on because it has been so
heavily lobbied by those who would take advantage, unfortunately, of
people.
Finally, I would like to read to my colleagues a statement on this
amendment that the White House released yesterday from the President of
the United States. The President says:

Throughout the debate on Wall Street reform, I have urged
members of the Senate to fight the efforts of special
interests and their lobbyists to weaken consumer protections.
An amendment that the Senate will soon consider would do
exactly that, undermining strong consumer protections with a
special loophole for auto dealer-lenders. This amendment
would carve out a special exemption for these lenders that
would allow them to inflate rates, insert hidden fees into
the fine print of paperwork, and include expensive add-ons
that catch purchasers by surprise. This amendment guts
provisions that empower consumers with clear information that
allows them to make the financial decisions that work best
for them and simply encourages misleading sales tactics that
hurt American consumers. Unfortunately, countless families--
particularly military families--have been the target of these
deceptive practices.
Claims by opponents of reform that this legislation
unfairly targets auto dealers are simply mistaken. The fact
is, auto dealer-lenders make nearly 80 percent of the
automobile loans in our country, and these lenders should be
subject to the same standards as any local or community bank
that provides loans. Auto dealer-lenders offering transparent
and fair financing products to their customers should welcome
these reforms, which will make their competitors who don't
play by the rules compete on a level playing field.

The President concludes by saying:

We simply cannot let lobbyist-inspired loopholes and
special carve-outs weaken real reform that will empower
American families. I urge the Senate to continue to defeat
the efforts of special interests to weaken protections for
all American consumers.

I further note that while I have emphasized what happens among the
5.5 million of our service men and women and how they are treated in
overwhelming cases and that I do not recall another time the Department
of Defense and military organizations have gotten involved in a debate
such as this--normally, they get involved in debates involving the
armed services of our Nation, national security issues,

[[Page S3778]]

but the fact that they have gone out of their way to communicate to me
and every other Member of this body about their concerns over the
Brownback amendment ought to set off alarm bells to each and every one
of us. Rare is it, indeed, when the Secretary of the Army or the
Secretary of Defense or military associations, such as the Veterans of
Foreign Wars and others, write to Members of Congress about something
such as this. Yet they feel so strongly about it that they are urging
us not to succumb to the temptations of carving out this second most
important financial arrangement that most Americans ever engage in: the
purchase of the automobiles they need.
I would also point out that among the Better Business Bureau
statistics, the single largest number of complaints--and the number
hovers around 70 percent nationwide--aside from the military side, come
in the area of automobile dealer financing arrangements; that is,
almost 75 percent of all complaints are in this one area. What more
information do you need to have about whether we ought to keep this
section of the bill intact to make sure they are not going to be exempt
from these kinds of activities?
So when the amendment comes up, I will speak further about this. But
I wished to remind my colleagues particularly of the information we are
receiving from our military organizations, from the military at the
Pentagon, and others about how important this issue is.
I noticed the other day there were votes in the other body to
increase the pay of our military men and women and I applaud that and
agree with that. We have taken steps. Jim Webb, our colleague from
Virginia, recently got passed a bill of rights for our veterans, which
we all applauded and supported.
As I said, the other day Jack Reed and Scott Brown of Massachusetts,
by a vote of 98 to 1, got passed an amendment that creates within this
bureau the only special section of this bureau designated to protect a
class of our citizenry--one designed to protect our men and women in
uniform. It is the only one. We do not have a section for the elderly
or for students or for anyone else. The only class we protected by a
vote of 98 to 1 is our military.
For, particularly, our junior age military, they do not own homes
yet. They are too young. They are 18-, 19-, 20-, 21-year-olds. Their
largest purchase is in the automobile area. What an irony it would be
to have adopted an amendment to create a special division within the
consumer protection area to protect our men and women in uniform--we
are told by the Defense Department the single largest area of abuse of
these young men and women is in automobile financing--and yet we are
about, next week, to exempt it from this bill.
I cannot believe that will happen. I am hopeful my colleagues, as
much as we respect our friend from Kansas--and I do. Senator Brownback
and I are very good friends. We work together. In fact, on several
provisions of the bill, he and I support the same ideas. But on this
one, I passionately disagree with what he is trying to do. I think it
is a carve-out. It is a loophole.
There are 1,000 lobbyists in this town doing everything they can to
gut one provision after another in this bill. Millions of dollars are
being paid for them to walk the halls of these buildings to do
everything they can to gut this kind of legislation. What a tragedy it
would be that on the cusp of adopting this legislation, for the first
time establishing a national Consumer Financial Protection Bureau in
our Nation, that we would carve out an area that affects the very young
people who are sitting in harm's way in Afghanistan, Iraq, and
elsewhere around the world. My hope is we would not let that happen.
With that, I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. DODD. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. DODD. Mr. President, this is not a unanimous consent request I am
making, but just based on the conversations we have had between the
majority and the minority in preparation for votes next week--I know
Members will be interested about possible votes--there will be votes,
we are hoping and planning, on Monday evening, I think it is fair to
say, at sometime around 5:30 p.m.
At least the amendments I think we can have some votes on Monday
evening involve the amendment of Senator Udall of Colorado, dealing
with credit scores; the amendment of Senator Cornyn of Texas, dealing
with the International Monetary Fund, the IMF; the amendment of Senator
Rockefeller and Senator Hutchison, dealing with the Federal Trade
Commission; the amendment of Senator Bond, Senator Warner, and myself,
dealing with angel investors as well.
Those are four amendments we may have recorded votes on. Some may be
voice votes, but those are four we think we can have votes on, on
Monday evening. So we are planning to have votes.

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