H.R. 3149House111th Congress (2009-2011)In Committee

Equal Employment for All Act

Legislative Activity

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2 earlier actions

HouseCommittee Latest Action

Hearings Held by the Subcommittee on Financial Institutions and Consumer Credit Prior to Referral.

September 23, 2010

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HouseIntro Referral

Introduced in House

July 9, 2009

HouseIntro Referral

Referred to the House Committee on Financial Services.

Financial Services Committee

July 9, 2009

HouseCommittee

Hearings Held by the Subcommittee on Financial Institutions and Consumer Credit Prior to Referral.

September 23, 2010

Floor Debate

21 members

What members said about H.R. 3149 on the floor

+16

7 Republicans14 Democrats

Sen. Judd GreggR-NH · May 4, 2010

Mr. President, will the Senator yield for a second? I ask unanimous consent that after Senator Brown speaks, Senator Mikulski be recognized and then I be recognized. Mr. President, I wish to speak…

Mr. President, will the Senator yield for a second?

I ask unanimous consent that after Senator Brown speaks, Senator Mikulski be recognized and then I be recognized.

Mr. President, I wish to speak briefly on the bill that is before us and how I think it can be improved.

First, I congratulate the chairman of the committee, working with the ranking member. I understand they have reached an agreement on how to do the issue of resolution, which addresses the issue of too big to fail, which is a very critical part of this bill. I congratulate them for making that type of initiative. I hope the rumors are true and that such an amendment will address strong too-big-to-fail language so the American taxpayers will not be on the hook for institutions that overextend themselves and take on too much risk but are institutions that are so large it is felt they are too big to fail, that concept will no longer be part of our lexicon, and we will essentially put an end to that. I congratulate the chairman and ranking member.

There are, however, other major issues in this bill that need to be addressed. They are substantial and rather complex. A few that are not even in the bill--for example, how we address Fannie Mae and Freddie Mac. We know that the American taxpayers today are on the hook for somewhere between $400 billion and $500 billion--$400 billion to $500 billion--that we are going to have to underwrite in order to stabilize those two entities on the credits which they have run up which have gone bad and they have purchased. That is serious.

There will be a proposal that comes from our side of the aisle. It will not totally be structured to Fannie and Freddie. It should. I would like to see that. It is too complex to do in this bill. It will at least address some of the core issues that ought to be addressed. For example, we ought to tell the American people upfront and forthrightly how much they owe. It should be put on budget. We ought to put on budget what the obligations are, because they are scoreable, relative to the costs the American taxpayers are going to have to bear to bail out and maintain Fannie and Freddie. It is going to be somewhere around $400 billion to $500 billion additional debt. It is coming. We do not want to talk about it because it affects other debt obligations of this country in a lot of different ways, primarily in crowding out.

Second, the bill has language on underwriting but it is not strong enough. If you want to look at what caused this event at the end of 2008, what caused this traumatic event which almost brought the entire financial system of America down, which almost put us into a depression and put us into a very severe recession, cost a lot of people their jobs--and there are still a lot of people experiencing trauma because of it--there are three or four main causes. I have talked about them before:

One, of course, is that I believe the money was made too easy to get, at too low a price, for too long by the Fed.

Another was the fact that the Congress specifically encouraged and, in fact, forced lenders, for all intents and purposes, to lend to people who couldn't afford the homes they were buying because it became congressional policy to do that.

Another was that people were shopping for the weakest regulators. This is what happened in the derivatives market, and the derivatives were not structured in a way that actually put capital or liquidity or margin behind derivatives.

The fourth and I think probably the most significant was that there was a total breakdown in underwriting standards. In other words, the people who were making the loans on subprime mortgages and on other types of exotic instruments so that people could buy houses who couldn't afford them were making those loans and not looking at the underlying value of the asset, and they weren't looking at the ability of the person to pay back that loan. What they were doing, quite simply, was making the loan because they were going to get a fee for it and then they were going to sell the loan, securitize it. It was going to be chopped up, sent out, and syndicated, and they didn't really care what the loan did because they were basically making a loan for the purpose of making a fee. Those were the one-off lenders.

In the banking industry, you had a complete breakdown. Banks were lending to people they knew couldn't repay when these loans reset, and they knew the value of the asset could only support that loan if there was an appreciation in the market, which was a gamble.

This happens every time we go through one of these events, by the way, one of these real estate-driven recessionary events. It happened in the late 1970s; it happened in the late 1980s when I was Governor of New Hampshire and New England went through a horrific contraction as a result of an expansive effort of lending money in the real estate markets--underwriting standards break down.

There needs to be a clear national definition of what proper underwriting standards are. Senator Isakson and I and a number of other people--Senator Corker--are going to put forward an amendment in that area.

One of the core areas here that needs to be addressed and hopefully will be included in this bill and improve the bill in this area--one area of this bill that simply has to be changed if it is to be effective in doing what it is supposed to do is the language of derivatives.

Most Americans don't understand derivatives. It is understandable. They are complex products. But basically think of it this way: You are on Main Street, and you have a business--usually a fairly large business--and you are making a product. You want to be able to sell that product to somebody at the price you quote that person and make the profit you expected at that quoted price.

But there are a lot of things that affect that product that you can't control. If you are selling it to another country, you can't control what the dollar is going to do in relationship to the currency of that country--for example, if you are selling it to Brazil, whether their currency goes up or down vis-a-vis the dollar. If you enter into a contract today and can't sell your product for 6 months, your whole profit could be wiped out by the market devaluing as relates to that currency. The materials you buy to make that product may change in value or viability. The person you are getting a loan from to allow you to expand your business to build that product may have financial troubles and you may have an issue there or, vice versa, you may have an issue with that person. All of these are things which are usually beyond the ability of the individual who is making the product--and in this case, I am talking about making products--to control.

So there is something called a derivative, which is an insurance item. Basically, someone insures for you over those risks. There is a lot of complexity to this because these insurance items mutate into all sorts of different instruments. They can affect financial instruments, they can affect commodities, they can affect goods, they can affect just plain currencies, but they are critical instruments--derivatives-- for making the economic engine work. They are sort of the grease you put in the economic engine to make sure it doesn't seize up, to allow the economic engine to move down the road. They are so critical, in fact, that they are approximately $600 trillion--trillion--of notional value. Notional value is not really what the risk is because there are underlying assets here, but that is a big number--a big number.

So we have to make sure that when we amend the derivatives section of this bill to try to have a stronger derivatives industry, we don't make big mistakes and basically undermine the ability of people to use this type of instrument to get credit and to make the markets work and to create jobs on Main Street because these all tie back to jobs on Main Street. Even if you are not working for the company that uses the derivatives, you are probably working for somebody who does business with a company that does derivatives. In Nashua, NH, there are a bunch of big companies that do derivatives. There are a lot more smaller companies that sell products to those companies on Main Street. So it will affect Main Street if we do this wrong because credit will contract.

The unique advantage America has is that we are the place in the world where, if you have a good idea and you are willing to take a risk yourself and you are an entrepreneur, you can usually get capital and credit to allow you to do that idea, to take that risk and thus create jobs, which is the bottom line for all of us; we want to create jobs. So derivatives play a large role in making that system work. This bill, unfortunately, adopted language which was put forward in the Agriculture Committee which literally undermines the safety and soundness of the derivatives market and, secondly, the ability of America to be a leader in the derivatives market.

Our goal here should be very simple. Our goal should be two steps: One, make our banking and financial system safer, sounder, and a system which will, to the extent we can anticipate it, avoid systemic risk. While doing that, our second goal must be to have a vibrant credit market and capital market and be the primary place in the world where people come to create credit and capital because that gives us a competitive advantage over the rest of the world. That creates jobs here in the United States. Unfortunately, this bill, as structured, doesn't accomplish that. In fact, it undermines that.

A good derivatives reform bill would essentially create an atmosphere where derivatives are more transparent, where the pricing is more transparent, and where there is standing behind the two parties to an agreement on a derivatives contract--assets, liquidity, margin-- something that can be turned to should one of the parties fail to perform on the contract. This can be done by creating a reasonable exception for end-use derivatives--those are the ones where you basically have a purely commercial purpose--and if people don't fall into that reasonable exception, then requiring essentially all the other derivatives to go through what is called a clearinghouse.

The clearinghouse becomes basically the situation where the two parties to the contract--there are multiple parties to the contract-- essentially put up collateral, margin, liquidity, so that the contracts are supported--the counterparties are supported. The clearinghouse itself also has to be collateralized adequately, capitalized adequately, so that it doesn't become a risk because it is going to be the insurer, basically, of these contracts--all very doable through new regulatory restructure or a modified regulatory restructure.

Then, as these contracts become more standardized or are standardized, they move over to an exchange. A lot of them could do that right now, but some simply can't because their contracts are too customized to move directly to an exchange. But over time, most of them probably will. And that is the way it should be structured.

Unfortunately, in this bill, it is directed that we set up a new process for doing these derivatives by taking basically the market makers in these derivatives--which are the swap desks--and moving them out of the financial institutions into separate institutions. Where this idea came from is hard to fathom because on its face it makes absolutely no sense. I mean, it is so counterproductive to the purpose of making the derivatives market safer, sounder, and more efficient and, as a result, a better market which creates credit in a transparent, fair, effective, and sound way. It is so counterproductive to that on its face, you would think anybody who suggested it would have it immediately pointed out that this doesn't work. But for some reason, it has found its way into this bill.

The practical effect of doing this is that you will create these separate entities. These separate entities are going to have to be capitalized because you have to have capital behind these derivatives desks. That is the whole point. You have to have something standing behind these desks to make them viable so that you don't end up with an AIG. What was the AIG problem? There was nothing behind the derivative contracts except for the name AIG. You don't want to do that again. You want capital.

It is estimated that it would cost $250 billion to set up these separate desks. What does that mean? That means that capital is not going to be available for the creation of credit. You will see an immediate contraction. It is estimated by the industry--and again, this is an industry number, not mine, so you can take it with a grain of salt--that will cause a $\3/4\ trillion contraction in credit. That is Main Street not being able to get credit. Let's even say they have exaggerated. Say it is only going to contract 80 percent. That is still $600 billion to $700 billion of credit that is not available on Main Street to do business, to create jobs, to take risk. It is foolish to do that type of contraction and to set up this structure.

Plus, you have nobody who is going to oversight this as effectively as the people who oversight the present derivative market makers. The FDIC won't be able to get on top of this. The Fed probably will have trouble getting on top of this. You will create a less stable platform from which to view these markets, when the whole purpose of the bill was to make it more stable. It makes absolutely no sense.

This is section 106 in the Agriculture bill. I think it is section 714 in this bill. And you don't have to believe me on this. I mean, two of the major, premier regulatory agencies--which are the fair arbiters here, really; I mean, they are the umpires--have come out in a very unusual way, because they do not usually comment in the middle of a legislative process such as this, and said that this--this is my paraphrasing--is a stupid idea, a counterproductive idea, the type of idea which, if it were to be put in place, would be cutting off your nose to spite your face and we would end up with a less sound system.

Let me read to you from the commentary of the Federal Reserve staff on section 106, which is now, I believe, section 714. Here is what the Federal Reserve staff said about this approach:

Section 106 would impair financial stability and strong

prudential regulation of derivatives; would have serious

consequences for the competitiveness of United States

financial institutions; and would be highly disruptive and

costly, both for banks and their customers.

That is pretty specific. That is pretty damning testimony as to the effect of this language. It is going to reduce our competitiveness because a lot of these derivatives will go overseas. It is going to make it much more difficult to have sound regulatory policy toward derivatives, and it will be highly disruptive and costly not only for the banks but for their customers. That is called Main Street--the people who create the jobs. This is a very inappropriate idea that has been put in this bill.

But don't just rely on the Fed if you are a Fed hater--and there appear to be a number in this body, for reasons I still have trouble fathoming. They must have something against having a sound money policy. But if you don't like the Fed, listen to the FDIC. I don't think anybody around here doesn't give great credibility to the way Sheila Bair, the Chairman of the FDIC, handled the bank crisis. Very honestly, they stepped in, they settled out a lot of major banks, and they did it in a way that was extraordinarily professional. As a result, the markets remained calm, people got their money back, and deposits were not at risk.

This is an agency which has high credibility, and this is what Chairman Sheila Bair has specifically said about this:

If all derivatives market-making activities were moved

outside the bank holding companies, most of the activities

would no doubt continue, but in less regulated and more

highly leveraged venues.

In other words, be much more risky.

Such affiliates would have to rely on less stable sources

of liquidity which--as we saw during the past crisis--would

be destabilizing to the banking organizations in times of

financial distress, which in turn would put additional

pressure on the insured banks to provide stability.

In other words, bad idea. It undermines the banking industry to do it this way.

Finally: ``Thus, one unintended''--actually, this is not finally. The whole letter is three pages long and has a lot of strong points. But the final part I am going to read:

Thus, one unintended outcome of this provision would be

weakened, not strengthened, protection of the insured bank

and the Deposit Insurance Fund, which I know is not the

result any of us want.

That is pretty specific. So you have the Fed on one side, one of the major regulators, saying this idea doesn't work, it will undermine the structure of the banking industry. You have the FDIC on the other side saying this proposal doesn't work, it is going to undermine the insurance deposit system.

So you do not have to listen to myself or others who pointed out the failure of this section. Listen to these regulators. This section has to be removed from this bill.

There are other things that need to be done in the derivatives areas which would improve the language. For example, once you are on a clearinghouse, you should not be mandated to go directly to an exchange because it simply will not work. There needs to be an intermediary step as standardization and then the best thing to do would be to require regulators to look at these different instruments and then, if they feel they can be standardized, tell the people producing them they can be standardized and then move them over. To unilaterally say everything has to go to an exchange is, I think, going to be counterproductive and again push a lot of business offshore.

But clearly this one section is damaging to our efforts to produce a safer, sounder, more transparent derivatives regime which has adequate liquidity and capital behind it and which keeps America as the primary place to do credit in the world so our entrepreneurs can get credit at a reasonable price, so they can go out and take the risks to create the jobs in America.

I ask unanimous consent to have both these statements printed in the Record, and I yield the floor.

Sen. Byron L. DorganD-ND · May 4, 2010

Madam President, I ask unanimous consent that the order for the quorum call be rescinded. Madam President, I know the Senator from Connecticut has been on the floor all of this day managing a piece…

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, I know the Senator from Connecticut has been on the floor all of this day managing a piece of legislation, and it appears to be kind of a lonely process here. He is managing what is a very important piece of legislation dealing with financial reform or Wall Street reform. I know he is perhaps as frustrated as everybody else that we are not making more progress and voting on amendments. I know work is going on behind the scenes as well.

I hope we will be able to move ahead and get a good piece of legislation through the Senate. I don't know what time it will take, but what is far more important is that we get it right. The consequences of not making the changes necessary would be that we would experience again at some point in the future the kind of financial crisis we have seen in the last couple years. It is a significant crisis for a lot of Americans--about $15 trillion of lost value, but that is an aggregate number that doesn't mean much.

What means something is that millions of people are losing their jobs, their homes, and many are losing hope. That is the consequence of this kind of very deep recession--the deepest recession since the Great Depression.

Following the Great Depression, if you read the economic history of the country, you will find that a number of very aggressive pieces of legislation were put into place to protect our country and make certain that could not happen again. Those pieces of legislation enacted into law lasted for a long time--70 or 80 years--to protect this country's economic interests. But what happened was that a number of people decided they were old-fashioned provisions and needed to be modernized, so we had modernization legislation that I did not support. We had to modernize the system. That modernization a decade ago caused massive problems. So now we are back having experienced the last couple of years and a very deep recession that is not a natural economic disaster; it is manmade. I think it is caused by the most unprecedented greed this country has ever seen among some of its largest financial institutions.

It is important to say that banking is critical to this country's economic existence. You need production and you need finance. I don't think we ought to suggest--and nobody has--that finance is not worthwhile. It is very important. You can't produce or have businesses without the ability to provide finance for those businesses. But over a couple of centuries of economic history in this country, sometimes producers have had the upper hand; sometimes those in the finance production have had the upper hand. For the last 15, 20 years, those in finance production in this country have had an unbelievable amount of clout and sway and the upper hand. That has caused us serious problems.

Today, I am not talking about the origins of this latest economic wreck--I have done that many times before--but starting with the subprime loan scandal that permeated much of the country, there was unbelievable greed and excess, securitization of bad mortgages that were rated AAA and passed from one to another, from mortgage bankers, to hedge funds, to investment banks, and back and forth.

Then even that wasn't enough. They were passing a bunch of bad paper around where everybody was making big fees, not knowing what they were buying, and buying things they would not get from people who never had it.

That wasn't enough. Then we created synthetic securities and naked swaps. I guess that was a natural extension by those who were greedy enough to believe you have to have something to trade no matter what the circumstances. So they created instruments--debt instruments, securities, and others--that had no value. They were debt instruments related to values of things that were extraneous, so there was no insurable interest.

A naked credit default swap is something that has no insurable interest on either end. It is simply two people who have decided to bet on whether a bondholder over there may or may not default, despite the fact that neither of these people has an economic interest in the bond. They are just making a wager. They could have just as well put

it on black or red at the roulette wheel or played the craps table or played blackjack. It is not an investment; it is just betting.

That all went on, and there was a dramatic amount of new leverage and borrowing. I cannot begin to describe the excess that occurred. I guess the final circumstance for me to see what was wrong with all of this was that in 2008 the ``Wall Street'' firms earned a net negative of about $36 billion, that is, they had $36 billion of losses, and still paid, I believe, $17 billion in bonuses. That represents sort of the most egregious excesses you can imagine.

The question now and the circumstance that exists that I know the Senator from Connecticut cares a lot about is how do we restore confidence? How do we restore some confidence for the American people going forward? If we do not have confidence, this economy is not going to expand and rebound.

The answer is, we put together a piece of legislation called Wall Street or financial reform and construct it the right way to try to make certain the things that were done cannot be done again, to make certain the kind of economic wreck that occurred cannot happen again.

My colleague from the Banking Committee, the chairman of the Banking Committee, Senator Dodd, and others have done quite a good job of putting together a piece of legislation that moves in that direction. It can be improved, in my judgment, and perhaps will be. I know he will agree with that as well. There are other ideas that can be brought to the floor of the Senate on this legislation.

I am going to talk about two of them ever so briefly--actually three, but one of them will be very quick.

Senator Grassley and I intend to offer an amendment that says to the Federal Reserve Board: You must disclose to whom you were providing emergency assistance during the financial debacle on Wall Street, including loans out of the discount window to investment banks for the first time in history. You must disclose whom you provided loans to, what the terms were, and how much those loans amounted to. Two Federal courts--the district court and now the appeals court--have ordered the Fed to do so. The American people, they said, deserve to know. The Fed announced they intend to appeal that once again.

Tomorrow, Senator Grassley and I will offer an amendment that says the law will require them to make that disclosure. The American people deserve to know.

On the other two issues, one is on too big to fail. This is central to the bill. There are a lot of ideas about too big to fail. Mine is, I think, the most direct, the most decisive, and the most effective.

If the Financial Stability Oversight Council decides that an institution is too big to fail--that is, by definition, the construct and size of that organization would create a moral hazard to this country, would create unacceptable risks and grave risks to the entire future of the American economy--if that is the case, if that is the judgment, then it seems to me you have to pare back portions of that enterprise until it is not any longer too big to fail and causing grave risk to the future of this economy.

In my judgment, the most direct and reasonable thing to do is to simply require that you restructure and require divestiture, where necessary, of those portions of an institution that have become too big to fail and cause a grave risk to the future of this country's economy, should they fail.

I will be offering that amendment. I know it is different than some others. My colleagues, Senator Brown and Senator Kaufman, have an amendment which I will vote for and support as well on this issue. I think this is probably the most direct and probably the most effective amendment on the issue of too big to fail.

Finally, I am going to offer an amendment that would ban what are called naked credit default swaps. If people want to gamble, just bet one another. There are plenty of places to do that in America. Las Vegas comes to mind. Atlantic City comes to mind. It seems to me, we should not mistake betting for investing. We ought to get back to basics in our financial institutions.

I think we have something close to $25 trillion of credit default swaps that exist now. I don't know what percent of them have no insurable interest, that represent just wagers, just flatout bets rather than investments. In England, a study suggested that about 80 percent of credit default swaps are what are called naked credit default swaps with no insurable interest. If that is the case on this side, we are talking about a notional value of perhaps $16 trillion, $17 trillion of instruments out there that simply allow for the making of wagers that have nothing at all to do with the insurable interest and bonds.

I mentioned earlier that Mr. Pearlstein, who writes for the Washington Post, once observed a pretty simple question: Why should there be more insurance policies to insure bonds than there are bonds to insure? The answer is obvious. They created these excess insurance policies that have no insurable interest so people could just gamble. It is fine if you are gambling with your own money, but once you start gambling with the taxpayers' money, if you are a federally insured bank and the taxpayers are going to bear the risk, that is a different matter.

I am going to offer these amendments. I say, again, as I said when I started, all of us who come to this debate about financial reform or Wall Street reform understand that an effective, functioning system of finance in this country is essential to the well-being of America. I do not think anybody wants to take apart a system of finance that has the different levels of FDIC insured banking, commercial banking, investment banking, venture capitals, hedge funds--all those are important to this country's long-term future. I personally would like to see hedge funds and derivatives regulated. I have talked about that with Senator Feinstein and others for a long time. It is very important that we have a system of finance that has the confidence of the American people and that we need in order to finance the production in this country.

Ultimately, all of us would like the productive sector to be repaired, to grow and hire people once again, employ people, and have ``Made in America'' put on products once again. All of us would like to see that happen. That will not happen unless we have a working system of finance as well.

We had a hearing where representatives from three businesses came to that hearing. All three were small- to medium-sized businesses. All three had sailed through this deep recession, with some difficulty, but were still profitable. All three were ready to expand, ready to hire more people, and none of them could find any financing to do it. None of them have been delinquent. All of them had existing banking enterprises with which they had a relationship and always paid back everything they owed. They had never been delinquent. Yet they could not find the funding to expand their business and hire more people. That is what is wrong.

Even today, by the way, some of these record profits that are coming from some of the biggest financial institutions are coming not as a result of their lending money to people but as a result of their trading, in many cases in some of the same securities that caused some of the same problems a couple years ago and over the last decade.

This reform legislation is essential. This is one of the most important pieces of legislation we will have considered in this Congress--probably the most important. In many ways, the consequences of what we do will be with us for a decade or more. That is why it is important to get this right.

I say to my colleague from Connecticut, I wish to be helpful to him. He has written a piece of legislation that has much to commend it. This Senate owes him a debt of thanks and the Banking Committee a debt of thanks. That does not mean we cannot offer amendments that might improve pieces here and there. But this is an awfully good start.

My hope is, Senator Dodd will have sufficient cooperation in the Senate to begin getting votes on amendments so we can get through this, have the debate, and get the best ideas that everybody has to offer and get a piece of legislation that will give the American people some confidence once again.

I yield the floor. I suggest the absence of a quorum.

Sen. Chuck GrassleyR-IA · May 4, 2010

Madam President, I ask unanimous consent that the order for the quorum call be rescinded. Madam President, I wish to speak as in morning business for 15 minutes. Madam President, last Tuesday,…

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, I wish to speak as in morning business for 15 minutes.

Madam President, last Tuesday, President Obama traveled to Iowa. He visited counties and towns that have been hit particularly hard by the economic downturn. While Iowa's average unemployment rate stands at 6.8 percent, Lee County's unemployment rate stands near 11 percent. Wapello County's unemployment rate is at 9.5 percent. These were the counties that President Obama visited. Over 1,000 jobs have been lost in each of the 3 counties he visited since the recession began.

The visit to Iowa was billed as an effort to highlight the steps taken to achieve long-term growth and prosperity by creating a new, clean energy economy.

During his trip, the President visited a Siemens wind blade manufacturing facility in Fort Madison. I had the opportunity to visit there about a year and a half ago. The President touted Iowa's leadership in the production of wind energy. This Siemens facility is a great facility. I recall just a few years ago speaking to Siemens manufacturing when they were looking for a site for their first wind production facility in the United States. I told the executives at Siemens they would not be disappointed if they chose Fort Madison for their facility because Iowans are some of the hardest working and honest people in the country.

I am particularly proud of the second-in-the-Nation status of Iowa's wind production. I first authored and won enactment of the wind production tax credit in 1992. This incentive has led to the exponential growth in the production of wind across our entire United States.

It has also helped my State of Iowa to become a leader in the production of wind energy component manufacturing.

The emerging wind industry has created thousands of jobs in recent years in the cities of Newton, West Branch, Cedar Rapids, and Fort Madison.

When President Obama says energy security should be a top priority, I agree with our President. When he says we need to rely more on homegrown fuels and clean energy, I agree with our President. When he says our security and our economy depend on making America more energy independent, I agree with our President.

During a subsequent visit to an ethanol facility in Missouri, President Obama stated unequivocally that his administration would ensure the domestic biofuel industry would be successful. The President and I are in strong agreement that renewable biofuels are a key part of our future.

Unfortunately, I believe President Obama missed an important opportunity to make a push for the message of the biodiesel tax credit. While the President was in Iowa touting green jobs, this Democratic Congress has, in effect, sent pink slips to about 18,000 people who depend on the production of biodiesel for their livelihood.

On December 31, 2009, the biodiesel tax credit, which is essential to keep a young bioindustry competitive, expired. In anticipation of the expiration of the tax credit, Senator Cantwell and I introduced a long- term extension in August of 2009. That bill was never considered last year.

In December, as the expiration loomed, I came to the Senate floor to implore my colleagues to put partisan politics aside and pass a clean extension of the biodiesel tax credit because, without an extension, I knew the industry would come to a grinding halt, and it has.

For whatever reason, the Democratic leadership in the House and the Senate have never considered this extension a priority. Now the industry is experiencing the dire situation I predicted.

On January 1 of this year, about 23,000 people were employed in the biodiesel industry. Because of the lapse in the credit, nearly every biodiesel facility in the country is idle or operating at a fraction of capacity. Nearly all of Iowa's 15 biodiesel refineries have completely halted production. This has led to the loss of about 2,000 jobs in Iowa alone.

The thousands of jobs created by the wind industry in Iowa have essentially been offset by the thousands of jobs lost in the biodiesel industry.

You do not have to take my word for the dire state of the industry. A $50 million biodiesel facility in Farley, IA--that is in northeast Iowa--announced that they just laid off 23 workers and cut the pay of the rest of the staff. Renewable Energy Group laid off 9 employees in a facility in Ralston, IA, and 13 in Newton, IA. Ironically, the Newton biodiesel facility is 1 mile down the road from a wind manufacturing facility that President Obama visited on Earth Day just last year. During President Obama's trip to Iowa, he was within a few miles of three biodiesel facilities that are idle: one in Keokuk, IA, one in Washington, IA, and another in Crawfordsville, IA.

According to a press release from the Iowa Renewable Fuels Association, an Iowan affiliated with biodiesel industry was able to speak to President Obama very briefly following a townhall session in Ottumwa, IA. Mr. Albin, vice president at Renewable Energy Group, told President Obama that plants are idle and 90 percent of the biodiesel employees have been laid off simply as a result of the tax credit lapse. According to Mr. Albin, President Obama assured him that he would not let the biodiesel industry die.

He recalls the President saying something like this--and I want to quote what I suppose was a paraphrase by Mr. Albin:

I'm the President and I promise I will do whatever I can.

Look, I'm on your side, but I've got a Congress to deal with.

Well, I can understand what the President would say. I happen to believe that in my 4 years of serving with then-Senator Obama, that Senator Obama, now President Obama, is very sincere about the promotion of ethanol and biodiesel or biofuels--whatever you want to call it. In fact, I had the good occasion of working with then-Senator Obama on a Senate bill when I was still chairman of the Finance Committee to promote the tax credit that is now in place so that filling stations can get a tax credit for putting in for E85 ethanol, as an example. So I don't question President Obama's response to Mr. Albin. Of course, we do have checks and balances in government and the President has Congress to deal with. But I hope President Obama will take strong action to insert himself into this debate in the Congress.

It seems that even President Obama, from this quote, is frustrated by the lack of action by the Democratic congressional leadership on this issue.

Mr. President, I ask unanimous consent to have printed in the Record this press release from Iowa RFA at the conclusion of my remarks.

The board president of Western Iowa Energy in Wall Lake, IA, recently stated:

Due to the continued lapse of the biodiesel tax credit,

Western Iowa Energy continues to suffer from significantly

limited sales and reduced sales forecasts. Due to these

market conditions, we have made the difficult decision to

idle our facility. Today we are laying off 15 full-time

employees. This represents more than 50 percent of our staff.

On February 10, Senator Baucus, chairman of the Finance Committee, and I worked in a bipartisan fashion to develop an $84 billion jobs package that included a 1-year extension of several energy tax credits, including the biodiesel tax incentive. Before the ink was even dry on the paper, Majority Leader Reid scuttled our bipartisan package in favor of a partisan approach. That delayed passage of an extension in the Senate for well over a month, until the month of March.

Now it has been languishing for 6 weeks. Where is the urgency? This Congress jammed through a stimulus bill that spent $800 billion to keep the unemployment rate below 8 percent, and of course it didn't stay below 8 percent. Yet we can't find the time to pass a

simple tax extension that will likely reinstate 20,000 jobs overnight. We are 4 months delinquent in our obligation to these biofuel producers with no end game in sight. The lack of action on this issue defies logic or common sense.

So while the Democratic leadership talks about creating green jobs, their action has led to job cuts. Americans are unemployed today because of the action--or more aptly the inaction--of the Democratic congressional leadership, particularly on this biodiesel issue.

The United States is more dependent upon foreign oil because of the inaction of the Congress. Automobiles are producing more pollution because we have essentially eliminated this renewable, cleaner-burning biofuel. Rural economies are being stripped of the economic gain of this value-added agricultural product.

So I urge the Senate to take immediate action to extend this tax incentive and reduce our dependence upon foreign oil and save green jobs.

Mr. President, I yield the floor.

Exhibit 1

President Obama Gets Biodiesel Message in Ottumwa

IRFA Secretary Albin Uses 90 Seconds with the President to Share

Urgency of Tax Credit

Ottumwa, IA.--During his Iowa visit on April 27, 2010,

President Barack Obama heard firsthand of the urgency to

reinstate the biodiesel tax credit from Brad Albin, Vice

President at Renewable Energy Group and Secretary of the Iowa

Renewable Fuels Association (IRFA).

Following President Obama's speech and town hall session at

Indian Hills Community College, Albin grabbed the President's

attention. During a 90 second exchange, Albin shared the

message of the biodiesel industry's state of disruption and

uncertainty resulting from the lapse of the federal biodiesel

blenders tax credit since January 1, 2010.

``I shook his hand and told him that we're losing jobs as

we stand here, which seemed to get his attention,'' explained

Albin, who had been sitting in the second row. ``I told him

about plants idling and that more than 90 percent of

manufacturing staff at U.S. biodiesel plants have been laid

off as a result of the tax credit lapse.''

President Obama acknowledged that his biodiesel tax credit

updates are coming through USDA Secretary Vilsack. The

President continued to listen as Albin explained that for 20

years Americans have worked to meet the challenge of

increasing energy independence, that farmers and families

have invested billions, and that now companies are bleeding

to death or bankrupt. Albin further explained that the five

month lapse of the tax credit could not have come at a worse

time as the Renewable Fuels Standard goes into effect July 1,

2010.

``We're going to die without this tax credit,'' Albin added

even after the President's assurances. ``The President then

responded, `We won't let you die.' ''

``Those that know me know I want to make sure my message is

clearly understood; so as the President was walking away to

shake another hand, I asked him if he could commit to the tax

credit being in place by May 31,'' Albin said. May 31, 2010,

the start of the Memorial Day recess, is the date Chairman

Sander Levin of the House Ways and Means Committee promised

as a reinstatement deadline for the biodiesel tax credit

during an energy hearing earlier this month.

``The President heard me ask him again about the May 31

date. He turned back to me and said, `I'm the President and I

promise I'll do whatever I can,' '' Albin recalled of the

exchange. ``President Obama then assured me of his commitment

to clean energy by saying, `Look, I'm on your side, but I've

got a Congress to deal with.' ''

``I believe he now has our urgent message straight from the

state where the tax credit lapse is having the most impact--

the nation's top biodiesel state,'' Albin said. ``It really

was a miracle to be in that right spot at the right moment to

be able to get the biodiesel message straight to the

President of the United States of America.''

The Iowa Renewable Fuels Association was formed in 2002 to

represent the state's ethanol and biodiesel producers. The

trade group fosters the development and growth of the

renewable fuels industry in Iowa through education,

promotion, legislation and infrastructure development.

Sen. Dianne FeinsteinD-CA · May 4, 2010

I have filed an amendment to the Wall Street reform bill before us that would remove one barrier between the unemployed and a job. Forty-seven percent of employers use credit reports to screen at…

I have filed an amendment to the Wall Street reform bill before us that would remove one barrier between the unemployed and a job.

Forty-seven percent of employers use credit reports to screen at least some potential hires, according to the Society for Human Resource Management. Thirteen percent of employers checked the credit history of all hires.

Unfortunately, many of our country's 15 million unemployed are facing more challenges than ever. For instance, some have seen their credit drop precipitously as a result of the economic downturn. In some cases, their credit history is affecting their ability to find employment.

My amendment would prohibit employers from using a consumer credit report as a condition of employment. It would impact potential hires and current workers.

Put simply, an employer would not be able to hire or fire someone based upon their credit history.

I certainly understand that some jobs require workers to display a pattern of financial responsibility. To that end, my amendment would exempt those applying for the following:

Positions at financial institutions, including banks and credit unions, that require substantive work with customer accounts and funds; jobs that require a national security or Federal Deposit Insurance Corporation clearance; State or local government jobs that otherwise require a credit report; and, positions otherwise requiring credit checks by law.

This amendment is similar to a bill introduced in the House of Representatives by Representative Steve Cohen known as the Equal Employment for All Act, H.R. 3149.

Why is this legislation needed? As of March 2010, 15 million Americans continue to struggle with unemployment, and over 2.3 million of them live in my State alone.

It is critical that obstacles to employment be removed for these victims of the economic downturn.

During these difficult times, many unemployed Americans have seen their credit scores reduced precipitously for events largely outside of their control. These events include bankruptcy, foreclosure, and credit card debt.

Millions of American homeowners have also experienced foreclosure over the past 3 years. Through the first 3 months of this year alone, 216,000 have been filed in California. Last year, more than 1 million foreclosures were filed in my State.

Foreclosures can have a devastating impact on one's credit history. Moreover, responsible alternatives to foreclosure, such as a short sale or loan modification can also affect a homeowner's credit.

A short sale can reduce a homeowner's credit score between 200 to 300 points, according to the Third Way.

And in a report prepared by First American CoreLogic, in February 2010, 35 percent of California homeowners were underwater, or owed more on their mortgage than the value of their home. This means that short sales, in which a homeowner sells a home for less than they owe, will likely continue as an alternative to foreclosure.

According to the National Bankruptcy Research Center, more than 1.4 million individuals and businesses filed for bankruptcy in 2009. This is a 32-percent increase over the prior year 2008.

Federal Reserve statistics show that average credit card debt in the U.S. per household is over $16,000.

These are disturbing trends, and display a pattern of difficult financial situations facing many Americans.

Unfortunately, if you have lost your job in this economy, these circumstances are often out of your control. But, they should not impede your ability to find another job.

I have received many heartbreaking letters from Californians facing these situations. They can't pay off debt because their debt is limiting their ability to find work.

For example, a chemist from San Diego wrote to me about her student loans, which have ballooned from $60,000 to $110,000. At the time she wrote, she had been unemployed for 15 months.

But, she feels she cannot find a job in the field she trained for due to her poor credit score.

A former job recruiter from Corona wrote to share her firsthand experience with this practice, which prevented her from hiring well- qualified, experienced candidates. This constituent, herself now unemployed and late on her mortgage payment, is worried that her credit will now prevent her from finding a new job in the recruiting field.

These are just two examples of how credit history is posing an unnecessary obstacle for the long-term unemployed.

An April 9, 2010, article in the New York Times highlighted the issue that my amendment seeks to address.

It cited testimony provided by an executive of the credit bureau TransUnion before the Oregon legislature. He stated that he was not aware of research linking job performance to the contents of a worker's credit report.

Research by Professor Jerry K. Palmer of Eastern Kentucky University has also found no correlation between worker performance and the strength of their credit report.

While credit bureaus argue that credit background checks are a helpful tool in preventing employee theft and workplace violence, little evidence supports that conclusion.

To be clear, I recognize that in some cases, a credit history is important. Mortgage brokers or bank employees working with deposits should be able to demonstrate a responsible credit history.

That is why my bill would exempt these industries from the prohibition in my amendment.

The unemployment situation in California is untenable. It is my goal to develop fiscally responsible solutions to help those in need.

My amendment does just that.

Workers should not be prevented from a job they are well-qualified for, on account of reasons beyond their control.

If my colleagues have concerns about this legislation, I am happy to work with them to improve it.

I hope this amendment will be adopted and provide assurance to workers that their credit will not keep them out of work.

Mr. President, I have also filed an amendment to the Wall Street Reform legislation that would require the Consumer Financial Protection Bureau to undertake a study on the availability of credit to the unemployed.

An article in the Los Angeles Times in March 2010 highlighted a disturbing new trend in the payday lending industry targeting the unemployed. Specifically, payday lenders are providing cash advances to individuals using unemployment checks as collateral.

This is a troubling practice, especially for those surviving solely on their unemployment benefits.

In California, payday loans can carry interest rates of up to 459 percent.

In light of this, I believe more must be done to ensure reasonable and fair credit terms are available to the unemployed.

This Wall Street Reform bill creates a research unit within the Bureau of Consumer Financial Protection housed at the Federal Reserve.

My amendment would require this unit to conduct a study on the following:

The effects of payday lending on the unemployed; the potential impacts, both positive and negative, of providing payday loans to individuals using their unemployment checks as collateral; alternative credit options for the unemployed, including the accessibility and costs associated with them; and policy recommendations that the Bureau of Consumer Financial Protection could implement to prevent unscrupulous lending practices.

This report would be completed within 1-year of the bill's enactment and be made available to the public.

To be clear, my amendment would not provide the Bureau of Consumer Financial Protection with any new authorities, nor require it to carry out the study's recommendations. It is intended as a guide for the Bureau as it works on rules to protect consumers, notably the unemployed, from deceptive and predatory lending practices.

In California, those individuals who turn to cash advances from payday lenders can expect to pay roughly $15 in fees for every $100 they borrow.

This interest rate, when expressed in terms of an annual percentage rate, amounts to 459 percent. While this is the maximum rate that may be charged for a payday loan in California, some States, such as Delaware and Wisconsin, have no interest rate limit at all.

The maximum payday loan that can be extended to a borrower at any one time in California is $300.

So in practical terms, a borrower wishing to take out the maximum $300 payday loan will pay $45 in fees just to borrow $255.

Often, borrowers must take out additional payday loans in order to pay off their current debts. In 2006, approximately 450,000 borrowers in California made more than six back-to-back payday loans.

Such reliance on this form of credit can lead some working families to fall into a harmful spiral of debt.

Over 2.3 million people in California are out work and roughly 100,000 of them have reached the 99-week maximum for receiving unemployment benefits.

The average unemployed Californian receives roughly $300 a week in benefits, which is also the State's limit for a payday loan.

Typically, payday loans are offered as advances on paychecks and should be used in cases of emergency. Such cases include falling short on bills or rent during a difficult month.

However, unemployment, especially in this economy, can be long-term. Payday loans may not offer a sustainable solution.

Unemployment is one of the underlying factors contributing to the rise in foreclosures throughout our country. In California alone, over 215,000 foreclosures were filed in just the first 3 months of this year. In tough months, those facing the dual threat of unemployment and foreclosure need to access credit more than ever.

And now, payday lenders have made it easier for the unemployed to fall into a cycle of debt.

By offering cash advances on their primary source of income, Federal or State unemployment benefit checks, payday lenders are specifically targeting this vulnerable group of borrowers.

Now is not the time to be doing this.

Such high loan fees are a burden for those surviving solely on their unemployment benefits.

So why is this study important?

Studies and reports on the effects of payday lending are already available, some of which consider its benefits and others its burden to borrowers. But the study required by my amendment should offer much more than just the pros and cons of payday lending.

I hope this study will determine if payday lending practices, including cash advances on unemployment checks, are useful credit options for the unemployed.

If they provide a benefit, I hope the study's recommendations will make these loans more fair and reasonable to borrowers.

If not, the study should review and recommend alternative credit options for the unemployed.

As I mentioned, we all agree this is not the time to be exploiting the unemployed. Many of the unemployed are experiencing some desperate financial straits right now.

I believe policymakers should be provided with clear options to help improve the financial situation for them.

Sen. Christopher J. DoddD-CT · May 4, 2010

Will my colleague yield before yielding the floor? Mr. President, I commend my colleague and friend and our colleague from Texas, Senator Hutchison. This is exactly the kind of effort we are trying…

Will my colleague yield before yielding the floor?

Mr. President, I commend my colleague and friend and our colleague from Texas, Senator Hutchison. This is exactly the kind of effort we are trying to achieve in this bill. It is a complicated area of law. I appreciate the work of Senator Tester and others. I didn't hear all. I gather it is Senator Tester, Senator Hutchison, Senator Scott Brown, Senator Harkin--you have a list of Democrats and Republicans here who have worked on this amendment to bring it to this point. I support the amendment. I think this is a strong amendment that will require the FDIC, as I understand it--my colleague will correct me--to change how it charges for deposit insurance, which I think makes a lot of sense--from charging each bank's domestic deposits as it does now, to charging its total liabilities, which makes far more sense. This is a great help to community banks across the country, of which Senator Tester has been a champion since his arrival in the Senate and as a member of our Banking Committee. The change will help ease the burden of FDIC assessments on our community banks by requiring the largest banks in the country to shoulder a little more of the responsibility to rebuild and maintain a sound deposit insurance fund.

The amendment is fundamentally about fairness, which I think is one of its most important features. Community banks, as we all know, have been victims of a severe economic recession brought on by the behavior of major Wall Street firms. This has led to a high rate of community bank failures and a sharp increase in premiums necessary to rebuild the FDIC's insurance fund. Meanwhile, the largest banks have been saved by TARP moneys and other government programs that were necessary, obviously, as we all know, to avoid the economic meltdown and catastrophe we were facing in the fall of 2008.

The change required by this amendment will lead to a far more equitable distribution of the responsibility to maintain a strong deposit insurance fund. It also will free up new resources for smaller banks to lend to households.

So on every front, this amendment is a very positive contribution to this overall bill and one of the real features Members ought to keep in mind as we try to get this bill done. Without this amendment, which I support and want to see included, this will make even additional pressures on our community banks.

I thank both our colleagues, from Montana and Texas, as well as our new Senate colleague from Massachusetts, and Senator Harkin as well, for their contribution. As soon as we find a window here to bring this up, we wish to see this amendment get adopted and be part of the bill.

Mr. President, we have some potential action here. I hope in a few minutes to move along. The amendment of Senator Tester and Senator Hutchison is an amendment I hope we can deal with at some point fairly quickly. Again, it is one of those amendments where we have reached an agreement on both sides. My experience is when you have an agreement such as that, you better move on it.

I know there are others as well. The Boxer amendment I hope we can get up. Senator Shelby and I have worked on a larger amendment to deal with the too-big-to-fail provisions. Again, all of us want to see language, but let me say in the absence of language, we have reached agreement. Obviously we both need to look at the language of it before we can say that categorically. But I am satisfied, as is, I believe, my colleague from Alabama, that we have reached that agreement on the too- big-to-fail provisions which, with the Boxer amendment, takes that issue completely off the table as far as any further debate goes about title I and title II of the bill.

We have other issues. Senator Gregg mentioned a couple that obviously are going to need some work and some amendments are going to be offered on those. But in my view the sooner we move along on the ones where we have agreement, such as the Tester-Hutchison amendment, and some ideas I believe our colleague from Maine, Senator Snowe, wants to offer, we will demonstrate, I think once again, that we have the capacity to work with each other to actually advance what we are all trying to achieve, and that is reform of the financial system. My hope is rather shortly we will get to some agreements on time and bring up these efforts and not have another day go by when we are not actually dealing with specific amendments in this bill.

With that, I don't see another Member seeking recognition, so I suggest the absence of a quorum.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER (Mrs. Gillibrand.) Without objection, it is so ordered.

I ask unanimous consent that the pending Boxer amendment No. 3737 be temporarily set aside and that Senator Snowe of Maine be recognized to call up two amendments, Nos. 3755 and 3757; that no amendments be in order to either amendment; that upon the conclusion of debate with respect to the Snowe amendments, they be set aside and the Boxer amendment reoccur.

Madam President, I thank my fellow New Englander and colleague for her two amendments. They are very strong and positive contributions to the bill. She raises very worthwhile points. We have a tendency to think of small businesses all operating the same way, and they obviously don't. Particularly, the seasonal businesses have moments of peak activity and then periods when not much happens, whether we are talking about farming or fishing or tourism, other such industries. It was never our intent that they be adversely affected, but the amendment she has offered makes a huge difference in that regard. I thank her. The Consumer Financial Protection Agency to allow mortgages to be made on the basis of seasonal income is of great value.

The second amendment, 3755, on the collection of deposit account data, is a very good suggestion. The last thing we want to do is overburden the regulatory environment. The intentions were sound enough. We have an awful lot of people who go into the sort of nonbank, nontraditional sources of support financially. That was sort of the motivation behind it. Her concern, that this could be burdensome--and the last thing we need is more burdens--is worthwhile. I thank her for her contributions. I support these efforts.

I believe, at the appropriate moment, we can adopt these amendments.

I suggest the absence of a quorum.

Madam President, very briefly, let me thank my colleague from Texas. I already commented when Senator Tester of Montana spoke, but I will again thank her and the Senator from Montana and others cosponsoring this amendment. It is a very solid contribution to the bill.

Again, I think the idea of considering the total liabilities obviously makes a lot more sense. It alleviates the burden financially on smaller institutions. It adds that larger institutions have a greater capacity to share more equitably in these costs. Whether it is in our State or not, we read accounts of--as we have seen over the last year and a half--small banks having to close their doors. The pressures on the FDIC are mounting. Again, you don't want to keep adding assessments on institutions that are already trying to lend to

businesses in their communities, to provide mortgages and the like.

This is a very constructive amendment and a very solid idea to add to the bill. I thank the Senator from Texas and the Senator from Montana and the others involved. As soon as we work out time agreements, hopefully we can conclude and give the Senator from Texas a couple of minutes before we vote. It is exactly the way I want to manage this bill, if I can. There is a lot of commonality and many common interests, and too often the public only sees the fights we have and they don't realize how many issues we agree on. We are making the effort to try to reach agreements with each other. Obviously, it is not as interesting a story when we agree. It is not as exciting as when there is a brawl on the floor over some issue. I appreciate the media's appreciation of the brawls, but my intention is to limit that and get us to the point where we have common interests in putting a good bill together. Senator Hutchison's contribution to this amendment does exactly that, just as our colleague from Maine, who talked about her amendment a moment ago. Senator Warner has also been very helpful in this bill. I see Senator Whitehouse here. He is also interested in the subject matter. I thank my colleague from Texas.

Madam President, one of the important things about this amendment is this: There will be amendments offered in which we will take things out of the bill or put things in, but this is an idea which has great value as a freestanding idea in many ways. That is why it has great value. This is something we clearly need to do. You can talk about other parts of the bill, but this is an idea that brings value to the bill--significant value, in my view, in light of the economic circumstances we are in. I appreciate this amendment more than kind of a strike something in the bill or modify something. This adds real value to the legislation. I am appreciative of that.

Mr. President, I just wish to say to my friend how much I appreciate his involvement and support and effort over the past many months that we have worked in this area, since the collapse of our economy back in the fall of--well, it began earlier than that, actually, as we witnessed early in 2007 the mortgage crisis occurring across the country.

Senator Johnson has been tremendously helpful and valuable. He is my seatmate on the Banking Committee. We have been sitting next to each other on that committee for the past 3 years and working on these issues together. He brought great value to this debate and discussion, contributed significantly to the product before us, and I wished to thank him for that.

We have some work to do, obviously, in the next number of days on this bill. But it is a good bill. I appreciate his comments about how it has been a bill crafted not by one member, not by a chairman of a committee but by a group of us on that committee, Democrats as well as Republicans who contributed to this bill.

So I thank him for his work.

I suggest the absence of a quorum.

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Introduced in HouseIssued July 9, 2009

111th CONGRESS

1st Session

H. R. 3149

IN THE HOUSE OF REPRESENTATIVES

July 9, 2009

Mr. Cohen (for himself, Mr. Gutierrez, Mr. Meek of Florida, Ms. Edwards of Maryland, Mr. Conyers, Mr. Al Green of Texas, Ms. Waters, Ms. Clarke, Mr. Johnson of Georgia, Ms. Kilpatrick of Michigan, Ms. Watson, Ms. Moore of Wisconsin, Ms. Eddie Bernice Johnson of Texas, Mr. Davis of Illinois, Mr. Ellison, Mr. McGovern, Mr. Grijalva, Mr. Towns, Ms. Velázquez, Mr. Thompson of Mississippi, Mr. Jackson of Illinois, Ms. Sutton, Mr. Lewis of Georgia, Ms. Jackson-Lee of Texas, Mr. Hastings of Florida, Mr. Rush, and Mr. Meeks of New York) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To amend the Fair Credit Reporting Act to prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions.

Short title

This Act may be cited as the Equal Employment for All Act.

Use of credit checks prohibited for employment purposes

(a)

Prohibition for employment and adverse action

Section 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is amended—

(1)

in subsection (a)(3)(B), by inserting within the restrictions set forth in subsection (b) after purposes;

(2)

by redesignating subsections (b) through (g) as subsections (c) through (h), respectively; and

(3)

by inserting after subsection (a) the following new subsection:

(b)

Use of certain consumer report prohibited for employment purposes or adverse action

(1)

General prohibition

Except as provided in paragraph (3), a person, including a prospective employer or current employer, may not use a consumer report or investigative consumer report, or cause a consumer report or investigative consumer report to be procured, with respect to any consumer where any information contained in the report bears on the consumer's creditworthiness, credit standing, or credit capacity—

(A)

for employment purposes; or

(B)

for making an adverse action, as described in section 603(k)(1)(B)(ii).

(2)

Source of consumer report irrelevant

The prohibition described in paragraph (1) shall apply even if the consumer consents or otherwise authorizes the procurement or use of a consumer report for employment purposes or in connection with an adverse action with respect to such consumer.

(3)

Exceptions

Notwithstanding the prohibitions set forth in this subsection, and consistent with the other sections of this Act, an employer may use a consumer report with respect to a consumer in the following situations:

(A)

When the consumer applies for, or currently holds, employment that requires national security or FDIC clearance.

(B)

When the consumer applies for, or currently holds, employment with a State or local government agency which otherwise requires use of a consumer report.

(C)

When the consumer applies for, or currently holds, a supervisory, managerial, professional, or executive position at a financial institution.

(D)

When otherwise required by law.

(4)

Effect on disclosure and notification requirements

The exceptions described in paragraph (3) shall have no effect upon the other requirements of this Act, including requirements in regards to disclosure and notification to a consumer when permissibly using a consumer report for employment purposes or for making an adverse action against such consumer.

(b)

Conforming amendments and cross references

Such Act is further amended as follows:

(1)

In section 603 (15 U.S.C. 1681a)—

(A)

in subsection (d)(3), by striking 604(g)(3) and inserting 604(h)(3); and

(B)

in subsection (o), by striking A and inserting Subject to the restrictions set forth in section 604(b), a.

(2)

In section 604 (15 U.S.C. 1681b)—

(A)

in subsection (a), by striking subsection (c) and inserting subsection (d);

(B)

in subsection (c), as redesignated by subsection (a)(2) of this section—

(i)

in paragraph (2)(A), by inserting and subject to the restrictions set forth in subsection (b) after subparagraph (B); and

(ii)

in paragraph (3)(A), by inserting and subject to the restrictions set forth in subsection (b) after subparagraph (B);

(C)

in subsection (d)(1), as redesignated by subsection (a)(2) of this section, by striking subsection (e) in both places it appears and inserting subsection (f);

(D)

in subsection (f), as redesignated by subsection (a)(2) of this section—

(i)

in paragraph (1), by striking subsection (c)(1)(B) and inserting subsection (d)(1)(B); and

(ii)

in paragraph (5), by striking subsection (c)(1)(B) and inserting subsection (d)(1)(B).

(3)

In section 607(e)(3)(A) (15 U.S.C. 1681e(e)(3)(A)), by striking 604(b)(4)(E)(i) and inserting 604(c)(4)(E)(i).

(4)

In section 609 (15 U.S.C. 1681g)—

(A)

in subsection (a)(3)(C)(i), by striking 604(b)(4)(E)(i) and inserting 604(c)(4)(E)(i); and

(B)

in subsection (a)(3)(C)(ii), by striking 604(b)(4)(A) and inserting 604(c)(4)(A).

(5)

In section 613(a) (15 U.S.C. 1681k(a)) by striking section 604(b)(4)(A) and inserting section 604(c)(4)(A).

(6)

In section 615 (15 U.S.C. 1681m)—

(A)

in subsection (d)(1), by striking section 604(c)(1)(B) and inserting section 604(d)(1)(B);

(B)

in subsection (d)(1)(E), by striking section 604(e) and inserting section 604(f); and

(C)

in subsection (d)(2)(A), by striking section 604(e) and inserting section 604(f).