United States Civil Rights Trail Special Resource Study Act of 2009

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, what is the order of business before the Senate?

Mr. President, I stand in support of the Merkley amendment.

This is an effort by Jeff Merkley of Oregon and Carl Levin of Michigan to try to strengthen the bill that is before us on Wall Street reform; to try to minimize the types of investments made by banks which could, in fact, jeopardize those government institutions that guarantee the deposits at banks because some bankers make bad decisions and bad investments. What Senator Merkley is trying to do is to reduce that likelihood, which means banks are less likely to fail and taxpayers are less likely to be holding the bag.

Senator Levin of Michigan, you will remember, 3 or 4 weeks ago held a historic hearing with Goldman Sachs representatives, including Mr. Lloyd Blankfein, their CEO, to discuss some of their practices. Those of us who know Senator Levin know he is a very studious and thoughtful individual and he doesn't take on complex issues lightly. He spent months in preparation for that hearing, and coincidentally it came up just as we began the debate here on Wall Street reform. It was quite a hearing. It went on for many hours because there was an effort by the witnesses to avoid answering questions, so the committee decided they would keep the witnesses there until the questions were answered. As a result, they stayed into the night. At the end of the day, I think people had a better understanding of some of the practices at Goldman Sachs, one of the largest financial institutions on Wall Street. I think they also may have had some second thoughts about some of the standards being used by that firm and others.

We know Goldman Sachs is currently being investigated by the government for alleged wrongdoing when it comes to the sale of investment products. It turns out, as best I understand it, that this Wall Street firm of Goldman Sachs was selling investments to individuals and then basically betting they would fail--with their own money. It strikes me as a complete abdication of any financial or fiduciary responsibility, to put their customers in that kind of compromised position. It is interesting that I have had a conversation with people in other firms on Wall Street who think this is routine and not extraordinary. That makes it all the more troubling.

The Levin portion of the Merkley-Levin amendment addresses this issue about the ethical considerations of these companies that, in fact, are selling products to their customers and then turning around and secretly, quietly betting with their own investments that those products will fail.

So that sort of thing should be addressed in this bill. The Merkley- Levin amendment is an amendment which would have been considered regardless of whether today's cloture motion had passed.

For those who do not follow the Senate, the cloture motion is an attempt to at least bring a close to the beginning of a debate and start to wind down the debate toward a vote. So we had a vote today. We needed 60 votes in the Senate out of 100 Members to vote in favor of the cloture vote.

After 4 weeks on the floor of the Senate on this Wall Street reform bill, the majority leader and many of us felt we had reached a point where we needed to start winding this bill down and bring it to a final vote. Well, we needed 60 votes to do it. There are 59 Democratic Senators here when all are present and accounted for. One of our Senators, Mr. Specter of Pennsylvania, was not here today, and as a consequence we found ourselves needing help from the other side of the aisle.

We needed at least one--it turns out three--Republican vote in order to move forward and to bring this bill to a vote. At the end of the day, we did not have them. We fell one vote short. We had two Republican Senators who crossed the aisle and voted with us--that would be the two Senators from Maine, Susan Collins and Olympia Snowe--and no other Republicans who would join us in trying to bring this bill to a close with some closing amendments and a vote.

If you followed the debate on this bill, it is no surprise that the Republicans are reluctant to be part of Wall Street reform. When the debate started, it started with three--not one but three--straight filibuster votes. Those were efforts by the Republicans to stop us from even bringing this issue and subject to the floor of the Senate. Many of us felt this discussion and debate over this bill was long overdue. We know this recession has cost us dearly in the United States. We know it extracted $17 trillion out of the American economy.

We felt it personally. You felt it in your savings account, your IRA, your retirement account. You saw it when the business down the street started to lay off its employees and another one closed. You noticed the home across the street going into foreclosure.

You heard all the stories about unemployed people, maybe some in your own family. So we knew what this recession meant and what it cost us, $17 trillion. What we are trying to do with this Wall Street reform bill is to change the way they do business on Wall Street so we never face another recession such as the one we are in, brought on by the greed and stupidity of the so-called banking experts on Wall Street.

We know what happened. Wall Street got away with murder for years, and taxpayers ended up holding the bag. Hundreds of billions of dollars out of the Treasury, out of the wallets of families across America in terms of tax payments, that ultimately found their way to Wall Street to rescue the failing businesses there.

Why were they failing? Well, try reading ``The Big Short'' by Michael Lewis, one of the most popular books now in America. Mr. Lewis was in my office today. He has written a number of books, and he is pretty good at it. He talked about his experience sitting down with people who were insiders on Wall Street who were describing what went on literally for years.

What you think is that when you get to the top, you will find the smartest people. I guess that is possible and likely. But in this case, when you got to the top, you found some of the dumbest people who were involved in constructing investment ideas that were fundamentally flawed, taking failing mortgages across the United States and packaging them together and then trying to sell them locally and globally and watching the bottom eventually fall out.

Lewis wrote this in this his book, ``The Big Short.'' Many of us have read it. He and I had a chance to talk about it today. But it was that kind of conduct that led to this recession that cost us all these jobs, that wrecked the savings accounts of American families, that has set us back on our heels, and we are finally coming out of it slowly. But it has cost us dearly as a nation.

We are trying to change the way Wall Street does business so we never have to face a recession such as this again. The Republicans in the Senate, with only a few exceptions, have resisted our efforts to pass this bill.

First, with three straight filibusters to stop us from bringing the Wall Street reform bill to the floor, three efforts to stop us from even debating the bill, then 4 weeks of debate on the floor of the Senate, and I will tell you, that is rare. I have been around here for a few years. It is very rare that you would spend 4 weeks on one bill. Well, this is our fourth week on this bill.

During that time, Senator Dodd, the chairman of the Senate Banking Committee, has been working with Senator Shelby, the ranking Republican from Alabama, who is on the floor, and they have been going back and forth with amendments.

I think Senator Dodd said today almost 60 amendments have been considered, pretty close. A lot of different ideas have come to the floor back and forth. Some Democratic amendments have been considered and failed, some passed. Some Republican amendments were considered and failed. There were bipartisan rollcalls. It has been a real Senate debate.

It feels good. It does not happen enough around here. This so-called deliberative body spends a lot of time, such as at this moment, where nothing is going on, on the floor except some profound speeches by the Members. What we have tried to do, during the course of this debate, is give everybody a chance to bring out their point of view. Points of view are much different. That is OK. That is why we are here. We are supposed to debate these things and vote on them.

I had an amendment last week, one that I have been working on for literally 3 years or more, that deals with

the credit card companies' charges to merchants and retailers. When a customer uses a credit card, they not only get credit to buy a meal, for example, that restaurant has to pay a percentage of the bill, the cost of the meal, back to the credit card company. This interchange fee has become unfair to small businesses.

Well, after working at it for more than a week, we finally had the amendment called 6 days ago, and it was enacted, passed by the Senate, with a vote of 64 to 33, 17 Republicans joined me. So it was a good bipartisan amendment. It was a surprise to many because the credit card companies and the banks that support them are very powerful. In this case, they came up short. The retailers, the merchants, the convenience stores, the gas stations, the restaurants, grocery stores all across America finally prevailed in this long battle against the credit card companies.

But that was the best of the Senate, I thought, and of course I am partial because my amendment passed. But it was the best of the Senate because it was a real debate and a real vote and an outcome which was bipartisan.

We felt this was a good time, in the course of the debate, to start winding it down and come down to a handful of amendments, vote on them, and then vote for final passage so we can conference this bill, work it out with the House, send to it the President to be signed into law. But we could not get the votes.

The Republicans, but for two Senators, refused to give us the votes to end this part of the debate and bring this bill to a final vote. It is frustrating. I do not know that they can argue that we have been unfair. We have given pretty wide berth to the Republican side to offer the amendments they wanted to offer. They have offered quite a few, and we have, too, on our side of the aisle.

So I do not think you can argue that we should not stop debate over fairness in the course of the debate. They might be arguing they do not want a bill at all. That is possible. First, they filibustered to stop us from bringing the bill to the floor. Now they are basically filibustering to stop us from ending the debate on the bill and bring it to a final vote.

I only know of several groups across the country that want to stop the debate on this bill: Wall Street, the biggest credit card companies, and the biggest banks. They want to stop this bill. They want to kill it. They have spent a fortune on lobbyists, roaming around our offices on Capitol Hill, to try to convince Members to stop this Wall Street reform bill.

Well, they at least were successful today. They convinced all but two Republican Senators to come to their side of the issue and to stop this debate on Wall Street reform. That is unfortunate because I think the American people expect us to get something done. They expect us to hold Wall Street accountable, to make sure the reckless gambling by Wall Street institutions that led to the loss of more than 8 million American jobs comes to an end.

They want to end taxpayer bailouts once and for all. They do not ever want to hear the word ``TARP'' again, unless it is something you can put over the top of your station wagon. They certainly do not want us in a situation where we are coming up with hundreds of billions of dollars to bail out these banks. Thanks to an amendment by Senator Barbara Boxer of California, one of the first, we made it clear that we are prohibiting any future bank bailouts under this bill. Senator Boxer was a real leader on that issue.

I think most Americans believe we need to have an agency that is going to be here in Washington which will administer the strongest consumer financial protection law in the history of the United States, a law that will empower consumers when they go through a real estate closing or sign a credit card agreement or sit down next to their son or daughter to sign the student loan forms or take out a loan for a car, knowing they are not going to be cheated and treated poorly.

This agency is there to empower consumers so they are not, in fact, swindled out of their life savings and are not brought into legal deals which are totally unfair. We want to bring sunlight and transparency to shadowy markets. Some of the things we voted on will move us in that direction, to start eliminating some of the trading that has gone on that is an outrage.

I do not think business as usual is the right way to go. But the Republican votes today, all but two Republican Senators voted to continue business as usual on Wall Street. They do not want this bill to pass. So they voted that way today. At the end of the day, 39 out of 41 Republican Senators voted for the status quo, keep things as they are on Wall Street.

In addition, of course, we understand that Wall Street is powerful. When my amendment came up on interchange fees, the banks warned Senators: If you vote for the Durbin amendment, we are not going to support you; that is, contribute, in the next election campaign. That was on the front page of the New York Times last Saturday. It is the most bald-faced admission I have ever seen by special interest groups that they are putting the pressure on Members who vote for Wall Street reform.

So I say to my colleagues: They may have won today and kept the banks happy. But, ultimately, it is more than the bankers who will be voting in November. It is people all across America who are angry at what happened on Wall Street and do not want it to happen again. They are going to remember the Senators who voted with Wall Street and those who voted for reform, and today we have a rollcall that indicates it.

We have to make sure we make the changes that make the difference across America. Some of the things that have happened here are pretty graphic. Paul Krugman, a writer from the New York Times, wrote a few weeks ago:

The main moral you should draw from the charges against

Goldman, though, doesn't involve the fine print of reform; it

involves the urgent need to change Wall Street. Listening to

financial industry lobbyists and the Republican politicians

who have been huddling with them, you'd think that everything

will be fine as long as the federal government promises not

to do any more bailouts. But that's totally wrong--and not

just because no such promise would be credible.

For the fact is that much of the financial industry has

become a racket--a game in which a handful of people are

lavishly paid to mislead and exploit consumers and investors.

And if we don't lower the boom on those practices, the racket

will just go on.

That is why this vote today was so critically important. Those who want to stick with the status quo, who want to reward the special interests, who want to load up this bill with lobbyists' loopholes, prevailed today on this vote today by one vote on the floor of the Senate. There will be another vote tomorrow and maybe the day after too. The question is, Will any other Republicans, aside from the two Senators from Maine, break ranks and join the Democrats for Wall Street reform?

This is a once-in-a-political-lifetime opportunity. If they want to stand with the special interests and Wall Street to stop this reform, they will certainly have to answer for it when the time comes and they face the voters.

This attempt we are making to change the rules on Wall Street is an attempt to empower the people of this country to help them make the right decisions personally and to make certain that they do not end up losing their savings and their homes and their jobs because of the greed and selfishness of those on Wall Street.

I can remember many years ago on the floor of the Senate, when I was a brand new Senator, way in the back row there, and offered an amendment to a bankruptcy bill. The amendment said: If you are a predatory lender; that is, if you violated the laws of America in the loans that you are making, such as mortgages, you cannot then turn around in bankruptcy court and recover from the debtor who has been the victim of your predatory lending practices.

I was arguing on the floor with Senator Phil Gramm of Texas, who was here arguing against my amendment. He was high ranking on the Senate Banking Committee. He said: If the Durbin amendment passes, it is going to kill the subprime mortgage market in America. Well, I lost by one vote. If my amendment had prevailed, who knows, history might have been a little different. That is why one vote makes a difference.

Today, we needed one more Republican Senator to vote for Wall Street reform. We had two. We needed one more. I understand two of our Democratic Senators withheld their votes

because they want this bill to be stronger. I hope they will come around. I hope they will vote with us. But at the end of the day, we only had two Republican Senators who stepped up and said they favored Wall Street reform.

Well, I lost my amendment by one vote that might have changed a little bit of financial history if it had passed. Today, we lost by one vote when it came to Wall Street reform.

We are not going to quit. President Obama is committed to it. Democrats in the Senate are committed to it. Democrats in the House already passed their bill. We need to get this done. It is time to stop the obstructionism. It is time to stop the stonewalling. It is time to bring this to a close with a handful of amendments on both sides of the aisle. Let's have an up-or-down vote, and let's get on with it. Let's pass this bill.

On final passage, a number of Republicans who have been holding back and would not support this bill may have second thoughts. They may decide they don't want to be found on the wrong side of history again; that it isn't worth standing up with the special interest groups or Wall Street lobbyists when America is crying for basic reform and accountability.

I yield the floor.

Mr. President, at the risk of a real debate, I invite the Senator from Georgia to stay, if he would, for a moment so we can engage.

I have the highest respect for the Senator from Georgia personally, and I thank him for his support on my interchange amendment. We have worked on many other issues, and we will in the future. I will concede what he pointed to as a fundamental flaw, a mistake that was made. There was a presumption made that owning a home was such a valuable American ideal--and I know your background; you certainly agree with that--but we went too far. We extended the opportunity for home ownership to people who were not ready. We believed if we pushed them to the limit of how much they could pay, the home would appreciate in value, their incomes would go up, and everything would work out. It turned out that gamble was wrong for some people. Certainly, Fannie Mae and Freddie Mac, as the ultimate guarantors of mortgages, were part of that. There is a government element here. I don't question that for a moment. Certainly some blame lies there.

Blame lies with those people who overextended, bought more than they could afford. They may have been misled into it, but the fact is, they did it. They made mistakes.

Having said that, though, there were a lot of people involved in financial institutions which led them into this, misled them into this. No-doc closings, where people didn't have to present a document proving the amount of income they had, basically telling people: We will give you a mortgage where it is; you will be paying just interest for a few years, and everything will be just fine.

These mortgages where the interest rates would explode in the outyears, and people would not be able to pay, there was a lot of things that went wrong there. But I hope the Senator from Georgia will agree that behind this bill is the notion that some things happened on Wall Street which were outrageous. The fact that we ended up coming up with somewhere in the range of $700 or $800 billion to save most Wall Street institutions is an indication that things were out of hand on Wall Street, that we never want to return to that again.

I will concede to the Senator from Georgia his premise. Do we need to reform Fannie Mae and Freddie Mac? Yes, we do. If we don't, we will pay dearly for it. I don't know if we can accomplish it in this bill, accomplish it at this moment, but it literally has to be done. I have never quarreled with that premise in the debate, nor do I question his starting point that this was part of the problem that led to where we are today.

It is always the best is the enemy of the good around here. We have a good Wall Street reform bill that moves in the right direction to avoid some of the abuses there. To argue that it doesn't include Fannie Mae and Freddie Mac and therefore we can't support it, perhaps we just have a different point of view. I think this is a valuable thing to do to move forward. I will concede his point. He is right in what he said.

Yes.

I thank my colleague from Georgia. It depends on one's perspective. The amendment he just described that he added to the bill is a valuable part of this bill. It wasn't there originally. It is now. I am glad it is. I am happy to support it. That is what we are trying to do today, to move its passage so it becomes the law of the land. But because we fell short by only two Republican votes coming forward today, we can't move forward.

If the position of the Senator is we should not pass his amendment or this underlying bill until we reform Fannie Mae and Freddie Mac, I am with him in terms of the reformation. I don't believe it is reasonable to require this bill to do everything that needs to be done. That is my only difference with the Senator from Georgia.

I announce that the Senator from West Virginia (Mr. Byrd), the Senator from Connecticut (Mr. Lieberman), the Senator from New Jersey (Mr. Menendez), the Senator from Pennsylvania (Mr. Specter), and the Senator from Virginia (Mr. Warner) are necessarily absent.

Mr. President, I rise today to commend and thank Senators Dodd and Shelby for their extraordinary leadership and tenacity in shepherding this complex bill through the arduous floor consideration process over the past several weeks, and for their years of work to reach this point. Their task has not been an easy one. The amendment process was delicate at times, but certainly collegial and fair. The fruits of our labor are an improved product emerging from the Senate, albeit not a perfect one. Invariably, in a bill of this scope and significance, some matters were not fully addressed or resolved to everyone's satisfaction.

I am disappointed that we did not consider an important bipartisan amendment submitted by Senators Inouye and Cochran relating to the funding of the Securities and Exchange Commission.

Section 991 of the bill would permit the Securities and Exchange Commission to be ``self-funded,'' thus removing a critical oversight role for the Appropriations Committee. The Inouye-Cochran amendment would have stricken this section.

Retention of the language in the bill is objectionable for a host of reasons. Section 991 removes the role of Congress in dictating how potentially limitless funds, up to whatever level is generated in fees under a budget that would be set by the SEC itself, are to be spent. It would make the agency potentially less, rather than more, responsive to congressional priorities.

Spending would go unmonitored. The critical role of the Office of Management and Budget for apportionment of funds would also disappear.

Congress oversees Federal agencies primarily through two distinct but complementary processes--authorizations and appropriations. The authorizing committees are responsible for creating a program, mandating the terms and conditions under which it operates, and establishing the basis for congressional oversight and control. The appropriations committees and subcommittees are charged with assessing the need for, amount of, and period of availability of appropriations for agencies and programs under their jurisdiction.

Exempting an agency from the appropriations process reduces opportunities for annual congressional oversight. The appropriations process, with its annual budget justifications, hearings, and markups, provides a useful layer of congressional review and scrutiny of agency operations, in addition to what is provided by the authorizing process. In the appropriations subcommittee I am privileged to chair, I have conducted annual hearings on the SEC's budget through which I have learned much about this agency's requirements, particularly its staffing and information technology needs.

Allowing an agency to set its own budget is an abdication of the constitutional responsibility of the legislative branch of government. It is a dangerous surrender of the congressional power of the purse.

It does not make sense--in this comprehensive bill aimed at bolstering oversight, transparency, and accountability of the world that the SEC regulates--that we would weaken, in fact, abolish, the vital role of the appropriations committee to evaluate the resource needs and spending by this agency.

This comprehensive bill confers significant new responsibilities on the SEC as a financial regulator. Shouldn't we evaluate on a regular basis whether this agency is responsive to the mandates we impose? Shouldn't Congress determine if the SEC has adequate funds and is using those resources wisely, in the right places, to accomplish its mission? Under section 991, we toss out the important, longstanding role and responsibility of appropriators to do just that.

Public opinion of the SEC as a vigilant investor-protector has been less than stellar in recent years. The SEC has been under withering criticism over the past years with the release of the inspector general's report chronicling the SEC's failure to identify Madoff's Ponzi scheme as far back as 1992. The recent IG report on the Stanford case is another example of years of SEC inaction to act against a Ponzi scheme.

Under the leadership of Chairman Mary Schapiro, the SEC is making strides to turn things around. I think Chairman Schapiro is doing a commendable job leading the charge for reform. However, she herself admits that there's more to do and much room for improvement. Our interest in leaving the appropriations oversight process intact is not a verdict on Chairman Schapiro's ability to effect meaningful change.

Those who contend that the SEC ought to set its own budget argue that requiring the agency to compete for funding in the annual appropriations process will lead to chronic underfunding and limited flexibility. Recent experience suggests to the contrary. My Financial Services and General Government Appropriations Subcommittee has placed high priority on the budgets of several agencies including healthy and justified increases above the President's request. For the current fiscal year, Congress provided $1.111 billion, a 25-percent increase over the fiscal year 2007 level--and $85 million above the amount that the President and the SEC requested. We have also acted promptly to consider and approve reprogramming and internal reorganization requests.

Those who claim that the SEC has been shortchanged in past years should consider that in each of the past 7 years, the SEC has had substantial amounts of unobligated balances from prior years. This means there were appropriations provided that the SEC was not able to use.

The SEC has not been reauthorized since the Sarbanes-Oxley Act of 2002, when Congress authorized $776 million for fiscal year 2003. Instead of putting this agency beyond the reach and oversight of appropriators, we should act to authorize levels of robust funding for each of the ensuing 5 years--like the House did--and thus clearly express the intent of Congress that this agency be adequately funded.

Reauthorization of suitable and reasonable funding levels would certainly send a strong signal about the amount of resources that Congress believes are necessary for this agency to thrive and grow to meet its important mission and satisfy its many new responsibilities. Leaving this agency unchecked in its budgeting and spending activities is simply the wrong way to go.

I trust that as we reconcile this bill with the version adopted in the House that this matter will be favorably resolved and that the conference agreement will acknowledge and preserve the critical oversight role of the appropriations process.

Mr. President, I don't mean to jump into these things, but I wanted to make a couple comments. First, no one knows real estate like Johnny Isakson. I have had the privilege of working with the Senator from Georgia over the last year or so on a couple of proposals, one of which I think made a big difference. That was the $8,000 tax credit for home buyers to go out and encourage home purchases and sales. It has proven to be pretty worthwhile. I haven't seen the latest data. My friend is far more familiar than I. But, clearly, for most Americans, home ownership is the single largest and most important acquisition they ever have. It is the greatest wealth creator for most Americans.

As the Senator from Illinois points out, that additional trajectory is where we increased this, and people used that equity to help with retirement and student loans, a variety of things they need as a family.

As my friend from New Hampshire pointed out the other day, there is a history here. I acknowledge that we in Congress have failed in this responsibility, actually going back to around 2003. The Senator from Alabama can correct me. There were various attempts. A good friend of ours, the former chairman of the House Financial Services Committee, Mike Oxley, a Republican, offered one as chairman. They actually got one done.

It was a bipartisan bill in the House on Fannie and Freddie in 2005. It then came to the Senate, and things got bogged down over here. There were attempts, including the former chairman from Alabama, who offered a proposal. Senator Sarbanes did. It went back and forth. We didn't get the job done.

It is important to remember during times such as this, when we are not hesitant to point an accusing finger at other institutions for having helped create this problem, we in Congress collectively did not get the job done with Fannie and Freddie. I join with my colleague from Illinois, it is important we acknowledge that if we are going to be accusing other institutions for malfeasance or misfeasance. In this case, we should have done a better job.

Here is the problem. As the Senator from New Hampshire pointed out--I am quoting him--this issue was ``too complex'' for this bill. The reason is, we don't know what to replace it with at this point. There are a number of ideas floating around because all of us recognize we need to have a housing financing system in place. In the absence of having any in place, around 97 percent of all home mortgages are backed by the Federal Government today. If we pull that rug out at this particular juncture, I don't know what the implications would be. I think they would be pretty profound.

We are caught in this quandary, acknowledging the need to reform and replace Fannie and Freddie, the present structure, but doing so without replacing it with something could pose serious problems in the very area the Senator from Georgia is so knowledgeable in; that is, how do we continue to promote home ownership.

What we did--and I would be the first to admit it, being the author of the provision--is fairly anemic in light of what we need to be doing. We have said we are mandating that there be a study completed with options presented within 6 months. The President of the United States I have heard say on one occasion, maybe more, this is a top priority come next January for him and this Congress to grapple with.

Again, there is nothing there that absolutely requires it, but it will be essential that we come up with options.

I recall the previous Secretary of the Treasury advocating for a public utility concept to replace Fannie and Freddie. I would be the last one to tell others whether that is a good idea or a bad one. But it is one option. Clearly, we have conflicting goals--one of home ownership, which is the very one we all support, combined with the goal of satisfying shareholder interests. What happened is, shareholder interests trumped in a sense the kind of manageable, sensible policy that would promote home ownership at the expense of returning investments for shareholders. That is also a laudable goal. But to have the same entity have the two missions, one for home ownership, one for a return on investment, they collided with each other. We have ended up in the situation we are in without a great answer--yet--as to how to replace it.

The point I guess I am making is, I totally agree with the Senator's premise. The question is, as chairman of this committee, how do we fix this thing at this point? And I have never suggested with this bill we were dealing with every financial problem in the country. It would be an impossible task for us to take that on.

So all I can say to the Senator, as someone who will not be here next January, is, I hope whoever sits at this desk--or at this desk, across from my good friend from Alabama chairing the committee--that this will be a priority of our Banking Committee. I cannot dictate that. I cannot even bind the next Congress constitutionally with anything we require here. But my fervent hope would be--I cannot think of a more important priority for the Banking Committee of the Senate than to have the reform of Fannie and Freddie because I think we are going to be in deeper and deeper trouble both financially and in terms of home ownership if we do not. So whatever else happens here in the next few days with regard to this bill, I want to thank my friend from Georgia for his continuing commitment to the issue and to say that I associate myself with his concerns. I would also plead that failure to deal with that issue in this bill ought not to be justification for walking away from all the other good things we are trying to accomplish in this legislation.

I thank the Senator for hanging around and listening to this filibuster.

I am happy to yield to my friend.

I did not hear it. I apologize.

I thank my friend from Georgia.

With that, Mr. President, I suggest the absence of a quorum.

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

Mr. President, I ask unanimous consent that the Senate now resume consideration of the Whitehouse amendment No. 3746 and that the amendment be further modified with the changes at the desk; that it also be in order for the Ensign amendment to be considered; that they be debated for a total of 10 minutes, with time equally divided and controlled between Senators Whitehouse and Ensign or their designees; that upon the use or yielding back of time, the Senate proceed to vote in relation to the Whitehouse amendment, to be followed by a vote in relation to the Ensign amendment; that each of these amendments be subject to an affirmative 60-vote threshold; that if they achieve that threshold, then they be agreed to and the motion to reconsider be laid upon the table; that if they do not achieve that threshold, then they be withdrawn; further, that prior to the second vote, there be 4 minutes of debate, divided as specified above, and the second vote be limited to 10 minutes.

Mr. President, I further ask unanimous consent that there be no further amendments to those amendments.

Further, Mr. President, I ask unanimous consent that it be in order for the Cantwell amendment No. 4086 to be called up for consideration.

Mr. President, I commend the Senator from Rhode Island for his passionate and persistent advocacy for his amendment. He has been extremely eloquent.

However, I have to oppose the Senator's amendment. I do it with some reluctance.

Nobody has been more concerned about credit card abuses in this body than I have.

We passed strong, new legislation to address many of these abuses just last year, and the Federal Reserve has written regulations to implement these protections.

In addition, the Wall Street Reform Act includes a strong new consumer financial protection bureau that will, for the first time, create an independent entity devoted to empowering consumers with clear, transparent, easy-to-understand disclosures so that they can make smart financial decisions for themselves.

This bureau will help achieve the goals that Senator Whitehouse hopes to accomplish with his amendment, though it will not be done in exactly the way he seeks to do it.

By creating better disclosures, by eliminating confusing fine print, the consumer bureau will help consumers become better shoppers. This will help drive down credit card interest rates.

In addition, as Senator Whitehouse knows, the Wall Street Reform Act will use States as partners in enforcing new rules under the consumer title. This will put additional cops on the beat to make sure American families are not lured into buying unfair, deceptive, or abusive financial products.

In sum, the underlying legislation would be a giant leap forward for consumer protection.

But as I have said earlier, I reluctantly oppose Senator Whitehouse's amendment. One of the reasons is that this amendment does not actually address the problems that it is supposed to solve. It would only stop national banks from exporting interest rates. Out-of-state savings associations and state-chartered banks can still charge a higher interest rate. So it does not restore the states ability to enforce interest rate caps against all out-of-state lenders. And it does not level the playing field for local lenders as intended.

I believe that the Wall Street Reform Act represents an important step forward for consumer protection. If, indeed, the Whitehouse amendment is even the right thing to do, we should not make the perfect the enemy of the very good.

Finally, let me say that the abuses of which Senator Whitehouse speaks are very real. The interest rates so many of these banks charge are outrageous. However, it is a complex issue that will not be solved in this debate.

I urge my colleagues, let's pass the Wall Street reform bill into law, so the consumer bureau can start doing its work and start helping the American people make smart financial choices.

Mr. President, I have great respect for our colleague. He has worked hard on this amendment. He has been trying to get attention over the past 2 weeks, probably as much as anyone in this Chamber, and he is anxious to be heard. So I am grateful to my colleagues for giving him the opportunity to have this debate on a legitimate issue; that is, interest rates. All of us, of course, hear from our constituents about the rising and higher cost of interest rates.

This amendment takes an approach that would, in effect, repeal the so-called Marquette decision reached a number of years ago that allowed for interest rates to basically be determined by the home State of a corporation. That the corporation actually does business in other States is not terribly relevant to whatever the rates would be, but whatever the rate is in the State where their corporate headquarters is domiciled is what would determine that. I may not be stating that quite as eloquently as the author of the amendment will, but it is words to that effect. I am getting tired after days of describing these.

While I respect the effort here, there are some problems associated with this, in my view, so I will vote against the Whitehouse amendment. But, again, I respect my colleague's proposal. I respect the efforts he has made and believe there is legitimacy to the issue. I am not sure, however, the approach is the correct one to pursue.

With that, I see my colleague and I yield the floor.

Mr. President, the pending business is the Ensign amendment; is that correct?

I would suggest that we call up the Ensign amendment. I understand the Senator from Nevada has a modification.

With the modification.

I understand there is no need for a recorded vote, we can have a voice vote?

Mr. President, I ask unanimous consent that the Senate now consider the Vitter amendment No. 4003, and that the amendment then be modified with the Pryor amendment No. 4087; that the amendment, as modified, then be agreed to, and the motion to reconsider be laid upon the table.

With that, Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that at 2:30 p.m. Thursday, May 20, the motion to proceed to the motion to reconsider be agreed to, the motion to reconsider be agreed to, and the Senate then proceed to vote on the motion to invoke cloture on the Dodd-Lincoln substitute, amendment No. 3739.

Mr. President, I have two cloture motions at the desk.

Mr. President, the gentleman is correct; the purpose of the Bureau of Consumer Protection is to protect consumers and not to address disputes between businesses over the terms of their business relationships.

Mr. President, I rise to further discuss the reasons for my votes against two amendments relating to credit rating agencies, amendment No. 3991 creating a new credit rating agency board and amendment No. 3774 which eliminates references to requiring credit ratings from certain financial laws.

First, I want to emphasize that I agree with my colleagues that erroneous credit ratings on asset backed securities played a central role in the financial crisis and that we need to improve the regulation of credit ratings.

Credit rating agency reform is an extremely important area of the Restoring American Financial Stability Act of 2010 passed by the Banking Committee. It has 40 pages of carefully constructed credit rating reforms to improve regulation, transparency and accountability. Let me highlight some of these strong provisions, as they would improve the SEC, reform rating agencies and empower investors.

The SEC will have a new Office of Credit Ratings to regulate and promote accuracy in ratings, staffed with experts in structured, corporate and municipal debt finance. The office's own examination staff will conduct annual inspections and the essential findings will be available to the public. The SEC will have expanded authority to suspend the registration of agencies that consistently produce ratings without integrity. The SEC will also have more authority to sanction ratings agencies that violate the law, including managers who fail to supervise employees.

Credit rating agencies will have to comply with tough new requirements. Rating agency boards will be subject to new rules for independence. Rating analysts must work separately from those who sell the firm's services. Agencies must publicly disclose when they materially change their procedures or methodologies or make significant errors, and update their credit ratings accordingly. Agencies must establish strong internal controls for following procedures and methodologies and have these attested to by their CEO. The agencies must establish hotlines for whistleblowers and retain complaints about the firm's work for regulators to examine. Agency compliance officers must report annually to the SEC. Agencies must consider credible information they receive from sources other than the issuers in making the ratings, rather than relying only on the issuer's representations.

Investors will be empowered. Agencies must disclose their track record of ratings in a way that is comparable so that users can compare ratings for accuracy across different agencies. The agencies must disclose more about their ratings assumptions, limitations, risks, historic accuracy and factors that might lead to changes in ratings. Investors will also have access to due diligence reports prepared at the request of underwriters on asset backed securities, as well as have the benefit of having a new pleading standard when they need to file suit.

The recommendations and ideas underlying these provisions have been considered by the Banking Committee over the course of more than 3 years. The committee held hearings and received analyses from countless experts, regulators, ratings agencies, investors and other users. The provisions in this bill have been extensively vetted, improved and refined.

Regarding conflicts of interest, when I served as ranking member of the Securities Subcommittee, I worked with then-Banking Committee Chairman Shelby and others to enact legislation to control or eliminate credit rating agency conflicts of interest. Through the Credit Rating Agency Reform Act of 2006, we added section 15E to the Securities Exchange Act of 1934 so that they are controlled or eliminated if they cannot be effectively managed. It gave to the SEC the power:

to prohibit, or require the management and disclosure of, any

conflicts of interest relating to the issuance of credit

ratings by a nationally recognized statistical rating

organization, including, without limitation, conflicts of

interest relating to--

(A) the manner in which a nationally recognized statistical

rating organization is compensated by the obligor, or any

affiliate of the obligor, for issuing credit ratings or

providing related services;

(B) the provision of consulting, advisory, or other

services by a nationally recognized statistical rating

organization, or any person associated with such nationally

recognized statistical rating organization, to the obligor,

or any affiliate of the obligor;

(C) business relationships, ownership interests, or any

other financial or personal interests between a nationally

recognized statistical rating organization, or any person

associated with such nationally recognized statistical rating

organization, and the obligor, or any affiliate of the

obligor;

(D) any affiliation of a nationally recognized statistical

rating organization, or any person associated with such

nationally recognized statistical rating organization, with

any person that underwrites the securities or money market

instruments that are the subject of a credit rating; and

(E) any other potential conflict of interest, as the

Commission deems necessary or appropriate in the public

interest or for the protection of investors.

The SEC has adopted several rules under the act to address NRSRO conflicts of interest, amending those rules twice since they took effect in 2007. The first set of amendments took effect in 2009, and the second set of amendments will go live in a few weeks. Among other things, in addition to prohibiting certain conflicts of interest outright, these rules require each NRSRO--issuer-pay and subscriber- pay--to publicly disclose certain additional conflicts, as well as the policies and procedures it has adopted to address those conflicts. Pursuant to these rules, NRSROs must separate their business activities from their rating activities, so that the analysts, who operate in teams, to reduce the influence of any one person, do not negotiate, arrange or discuss fees. Commission rules designed to address the issuer-pay conflict include prohibitions on issuing credit ratings in certain circumstances, such as when: the NRSRO has received 10 percent or more of its revenue from an issuer or underwriter; the NRSRO makes recommendations on how to structure an instrument; the analyst has participated in fee negotiations with the issuer; or the analyst has received gifts from the issuer. There also is a new requirement that information provided to a hired NRSRO to rate a structured finance product be made available to any other NRSRO to allow the other NRSRO to determine an unsolicited--i.e., non-issuer-paid--credit rating.

Since these rules have been in effect for only a short time, we have yet to see their full benefits. And if more regulation is needed, the SEC has authority to go farther under the 2006 law.

During the consideration of S. 3217, amendment No. 3808 was introduced and passed to direct the SEC to set up a new credit rating agency board, which prohibits the private selection by issuers of rating agencies for initial asset-backed securities ratings and creates a system in which the board makes semi-random ratings assignments to nationally recognized statistical ratings organizations that it deems to be qualified. The intention is to eliminate negative effects of conflicts of interest in the issuer pay business model.

I applaud my colleague's goal of developing a solution to this problem of poor credit ratings. And I appreciate his devoting a tremendous amount of effort in a short period of time to craft his solution.

However, this novel approach raises many questions which have yet to be answered. While I support Senator Franken's goal, I could not vote for this amendment while many questions and uncertainties remained about the impact of this new type of ``self-regulatory organization.''

Credit ratings have a tremendous impact on the credit markets nationally and internationally. Any significant change in their preparation should be the subject of full examination before enactment. Unresolved questions raise the potential for unintended or unforeseen consequences. In addition to my own concerns, I have received communications from many interested parties, such as a letter from the Investment Company Institute that I will ask to be printed in the Record.

Let me identify some of the questions that, it seems to me, exist with respect to the board and its operations:

Will the board's semi-random assignment of ratings work cause the rating agencies to lose their incentive to do a superior job, which otherwise might get them more initial ratings business?

Will the ``reasonable'' fees that the legislation directs the SEC to set for QNRSROs to charge issuers generate sufficient revenues for rating agencies of different types of securities to perform the quality of ratings they would like? In this connection, a technical question, what standards should the SEC use to determine the fees--a ``reasonable'' return on capital? prices comparable to other ratings agencies? sufficient to hire staff at compensation levels comparable to other businesses or to Federal regulatory agencies?

How many of the 10 nationally recognized statistical rating agencies are expected to register as ``qualified nationally recognized statistical ratings organizations''? Will the registrants be sufficient to make the board meaningful? Will some ratings agencies choose not to register with the board, to avoid board assessments, costs, regulatory burden or for other reasons, and would this affect the quality of ratings? Will some smaller rating agencies not register because they are unable to meet the board's qualification standards? I understand that after the passage of the amendment, one of the NRSROs has deregistered from providing ratings on asset-backed securities.

The amendment uses an issuer-pay business model. How would the amendment affect the rating agencies that use a different business model, such as a subscriber pay model, and want to provide ratings on asset backed securities?

What will be the costs of operating the new board? The legislation authorizes the board to assess QNRSROs, and how much is the board expected to assess the QNRSROs to cover its budget? How much would it add to the current cost of ratings? What is the expected budget of a board that must hire financial experts who evaluate rating agencies' qualities, institutional and technical capacity and performance and implement systems that can make ratings assignments to QNRSROs on potentially hundreds of thousands of securities in a timely fashion?

How many different categories of securities are expected to be rated and how many rating agencies are expected to be qualified to rate each type? If only two agencies have the capacity or experience to rate some complex types of securities, and an issuer wants two ratings, what will be the purpose of the SRO randomly choosing a rating agency?

How will the board attract, afford and retain top experts who would be needed to perform its statutory mandates to assess the effectiveness of ratings methodologies and assess the accuracy of ratings?

The board would be given substantial powers such as rulemaking authority over NRSROs, allocating business to NRSROs or rejecting an NRSRO's ability to obtain business. Is it certain that the board's establishment and exercise of authority are consistent with the Constitution?

The legislation states that the board will be a ``self-regulatory organization.'' What will be the impact on the new board on the numerous statutory and regulatory restrictions and obligations in the Securities Exchange Act of 1934 affecting ``self-regulatory organizations''?

What will be the interaction of the legislation's mandate that the board assess the accuracy of the credit ratings provided by QNRSROs and the ``effectiveness of the methodologies used by'' QNRSROs and the existing Federal law that states the SEC may not ``regulate the substance of credit ratings or the procedures and methodologies by

which any nationally recognized statistical rating organization determines credit ratings''?

In this legislation, the Federal Government will obligate one private party to deal with another private party of the government's choosing in a private business transaction. Does this raise any potential legal questions?

It is my understanding that beginning in June, all NRSROs will also have to publish a history of their rating actions since the NRSRO regulatory regime was instituted in June of 2007. When enough data becomes available, issuers can see which NRSRO's ratings were more reliable. Would the board be expected to be better able to identify better QNRSROs than issuers who examine this data on their own?

These are some of the questions that existed at the time of the vote. While I am sure these questions will be fully addressed in the months and years ahead, and hope that the board is successful, these questions are significant and created uncertainty, with the potential for significant unintended consequences. Accordingly, I felt it inappropriate as chairman of the Banking Committee to support the amendment.

Amendment No. 3774, which the Senate passed, removes provisions in banking and securities statutes that use credit ratings of NRSROs to distinguish the creditworthiness of obligors or debt instruments and would replace these provisions with standards promulgated by banking agencies--in the case of the banking statutes--and the SEC--in the case of securities statutes.

I agree with the intent of the provision to reduce investor reliance on NRSRO ratings in making investment decisions. However, I feel that it is unwise to eliminate all of these statutory requirements without a prior study of the consequences. Therefore, I voted against this provision.

I think it more prudent to carefully study this matter and remove ratings that are found to be unnecessary. This is why I included in S. 3217 passed by the Banking Committee a required 2-year GAO study to examine the scope of provisions in Federal and State law as to the necessity and purposes of NRSRO ratings requirement; which requirements could be removed with minimal disruption to the financial markets; the potential impacts on the financial markets and on investors if the rating requirements were rescinded; and whether the financial markets and investors could benefit from the removal of such requirements. This would be followed by reviews by the Federal financial regulators of all regulations requiring the use of an assessment of a security, requirements related to credit ratings and alternative standards of creditworthiness that are based on market-generated indicators. The bill required each agency to modify references to credit ratings in their regulations and, when removed, to use an appropriate standard of creditworthiness not related to credit ratings, if possible and consistent with the statute or the public interest. This seems to me the more appropriate way to improve the ratings situation while taking appropriate steps to avoid unforeseen and unintended consequences.

Mr. President, I ask unanimous consent to have printed in the Record the letter from the Investment Company Institute to which I referred.

Mr. President, I appreciate the distinguished majority whip. I voted with him last week on the interchange fees on debit cards. I thought it was a good amendment. But I have to take issue. Don't generically accuse those of us in this body of stonewalling a bill or more or less being interested in looking out for Wall Street or anybody else.

A little history lesson is due. First, what brought us into this recession was the subprime market, which the distinguished Senator mentioned, and the housing market. It happened because Members of this body and the body down the way, 13 years ago, began to direct Fannie Mae and Freddie Mac to include in their portfolios a portion of affordable housing loans which were the words for what became subprime loans.

Freddie Mac and Fannie Mae created the market that allowed Wall Street to go find capital and collect that capital, put a high premium on the capital, high interest rate, maybe 200 basis points over the going rate, but then make it a higher credit risk to lenders because that is the way credit works. What happened is, those loans became popular, and because of a government-sponsored entity that began the consumption of those loans, they proliferated. Those securities were sold around the world. When they collapsed, and we went all through that, it was a terrible collapse. But the root of this problem is that Freddie Mac and Fannie Mae were under the direction of the Congress as to what they should do in terms of the securities they owned. I am saying the Congress of the United States, not pointing fingers at any particular party.

With that being true--and I don't think anybody can dispute it--we have a financial reform bill before us that exempts Freddie Mac and Fannie Mae from reform. That doesn't make any sense. If you listen to the arguments to why they weren't there, it is because it was too hard.

These are hard times. Americans are having hard times. It is time we did the hard things. It is time we not try and politically label Members as friends of Wall Street or friends of Main Street. We are all Americans. It is our economy. It is not just part of the economy. I take issue with the labeling that takes place sometimes. Let's talk about the facts that are there, one way or another. Let's let the facts determine what we do.

I didn't vote for cloture because I don't think it is right to leave Freddie Mac and Fannie Mae outside the equation and incorporate every other business on Main Street and on Wall Street to the extent we have. It is right for us to take some of the blame in the Congress. A lot of this wouldn't have happened had we not directed the government- sponsored entities with which we had influence, and the implied full faith and credit of the taxpayers would be the consumers that would create the liquidity for subprime loans.

My only statement to the majority whip is this: I understand facts. The facts are that Freddie Mac and Fannie Mae started this. They are exempt from this piece of legislation. I, for one, take issue with that. We cannot reform and address the concerns that happened if we don't address the root of the problem.

I yield the floor.

I am happy to.

Will the Senator yield?

I appreciate his comment. That was my point. When I was listening to the Senator's speech, I got a little irritated. Then I realized I have probably done the same thing before too. I leaped over some facts that belong in the debate. The fact that the Congress directed Freddie and Fannie to own a percentage of their portfolio in subprime loans was the source of the capital that bought the first securities that created the subprime securities. I do not argue that there are not good things in this bill.

In fact, when the Senator was referring to the liar loans, it was the Isakson-Landrieu amendment that we

successfully added to this bill that defined that a qualified loan is to be exempt from risk potential because it requires income verification, requires an employer statement that the employee is hired, and it requires an income ratio that is sufficient to retire debt that is borrowed. I agree with the Senator.

My point was that when all of us make these remarks of what bills are and they are not, we ought to include all of the facts that are in there, not just a select few. I appreciate the Senator's comments. I was proud to be a part of his amendment.

The Senator and I might differ on points, but I defer to the Senator. I wish I had the control to control votes, but I don't. There were two on his side and two on ours. There are people with higher pay grades who were responsible for that. I wanted to make the point about what is, to me, a serious issue with regard to the bill and something that should be considered in the debate.

Mr. President, will the Senator yield for one comment?

First of all, my comments were directed specifically to the speech of the Senator from Illinois.

They were not a criticism of the chairman, first of all. I think the ranking member would certainly agree with that.

Second of all, there is some good news that was received today, thanks to the Senator's help, because I could not have done it if it were not for him. We had the tax credit we extended and ultimately passed, which terminated April 30. As to the numbers from the most recent month: the average sales price in the 20 top markets in America, for the first time in 36 months, went up by six-tenths of 1 percent. So the distinguished chairman deserves a lot of credit for that contribution as well.

I was just making sure there was a voice over here that reminded everybody of what got us in this to begin with in the context of the speech of the Senator from Illinois. It was never a criticism of the chairman of the committee.

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

Mr. President, I understand the body may, in a little bit, take up the Whitehouse amendment, and out of an abundance of caution, to be sure my statement is in the Record, I want to speak to that amendment for a second.

I have the greatest respect for the Senator from Rhode Island, Mr. Whitehouse, and all of his work. But the amendment he has proposed basically says that the usury rate to apply to any loan shall be the usury rate in the State, which will take us back to a period of time post 1982 or 1983, when interest rates went to 16 and three-quarters percent. And because usury rates in the United States were 8, 9, or 10 percent in most of the States, there was no money. Usury rates are the maximum ceiling that a loan can do.

Now we have South Dakota and Delaware where there are no usury rates. Most banks are chartered there and, therefore, interest rates on loans are negotiable and competitive. There are a lot of people in public life who think: Well, if you put a ceiling on interest rates, you are guaranteeing the consumer that they are not going to pay a high rate. What you are usually guaranteeing the consumer is, they are going to pay a fixed rate, which is whatever the government says is the usury rate. Floors set by government become ceilings, and ceilings by government become rates.

So I want to caution the body, in considering the Whitehouse amendment, to be very careful what you ask for. Because what you will do is you will put an end to credit in the housing business and in many other types of instruments in the United States, and you will have 50 different usury regimens in 50 different States. You will create a fixed-rate environment by the government, not by competition. What effectively happens is a rise in the cost of credit, a rise in the cost to the consumer, and in the end what I am sure is intended to be beneficial to the consumer will, in fact, cost the consumer more money and be disastrous to the expansion of credit in a time where there is very little credit as it is.

I would respectfully ask the body to consider what we went through in the mid-1980s and early 1980s with interest rates. We hope they will not go up again, but if they do, credit is more important than no credit at all, and usury rates can assure you have no credit at all and end up having the unintended consequence of having a negative impact on the economy.

I would oppose the Whitehouse amendment, should it come up tonight, and I hope the Members of the body will consider the history lesson from the early 1980s.

Mr. President, I yield back and suggest the absence of a quorum.

Mr. President, I wish to spend a few minutes talking about our previous vote this evening.

I know many of my colleagues worked hard on regulatory reform legislation, but I also think it is important that we keep our eye on a very critical part of solving this problem. I know many of my colleagues, particularly on the Banking Committee, have had a long history with banking issues and may see things a little differently from the context of the issues they have been dealing with in the committee.

It has been clear to me for a long time that the deregulation of the derivatives market in 2000 led to a very unfortunate situation. Before deregulation, we actually had transparent trades in reporting to the CFTC. We had capital requirements. We had speculation limits. We had antifraud and antimanipulation. We had trader licensing and registration. And we had public exchange trading.

The reason I bring that up is because to me, if the derivative crisis brought on basically a world economic implosion, then the principles of this underlying bill ought to adhere to the principles that have been laid out by the White House and others on what would help us fix this problem.

We know it was deregulated, and we know these things were eliminated. But I take the Treasury Secretary at his word when he wrote earlier this year:

To contain systemic risks, the CEA and the securities laws

should be amended to require clearing of all standardized

derivatives through regulated central counterparties.

The reason I bring that up is because the underlying bill before us-- even though the Agriculture Committee corrected this--the language coming from the Banking Committee created a loophole and basically says that if you go to a clearinghouse and they say you do not need to be cleared, don't worry about it, you don't need to be cleared.

It should be no surprise to anybody that the swaps dealers are the people who own the clearinghouses. In that context, a fundamental tenet of derivative regulatory reform, exchange trading, clearing, aggregate position limits, and transparency, one of those pillars is missing from this bill.

Look at what happened because of this deregulation in 1999. There was less than $100 billion in the derivatives market, and today we are at a $600 trillion derivatives market--$600 trillion. Before deregulation it was a very small amount of money, and now we have this incredible market.

The question is whether we are going to regulate it to have the basic tenets of true competition, which means there is some oversight and some transparency to make sure that there are not manipulative devices or contrivances in this legislation.

The good news is we have tried to say that of these principal tenets of exchange trading, we have to have transparency, real-time monitoring--all these things should be in there. But you also have to have capital behind the trades. That means we have to have a clearinghouse to make sure this type of activity is being cleared.

There were many times before the Senate Finance Committee where the Treasury Secretary said:

I'm fully supportive of moving the standard part of those

markets onto central clearinghouses and exchanges . . . We

want to make sure that the standardized part of those markets

moves into central clearinghouses and onto exchanges as

quickly as possible . . .

That was in January.

We had another time where the administration said:

. . . we need to establish a comprehensive framework of

oversight, protections and disclosure for the OTC derivatives

market, moving the standardized parts of those markets to

central clearinghouses, and encouraging further use of

exchange-traded instruments.

That was in March.

I don't know why we are still having this debate as to whether we are going to have clearing of these derivatives. To me it is critical.

I know there are other good parts of this legislation about which people care deeply. But if we have this $600 trillion market and we are not truly going to have exchange trading and clearing and aggregate position limits across all exchanges, we are not going to rein in the derivatives problem. We are not.

I hope my colleagues will take these words from the Treasury Secretary and from the White House and hopefully get a piece of legislation on this floor that will take care of this clearinghouse loophole.

I know my colleagues think we can talk about building a dam against this wall of dark derivatives. But even something such as Hoover Dam, with all the great concrete and all the great engineering and all the great things that make that structure work, still has a problem if somebody drills a hole in the bottom of it. Over time, that is where all the water will flow, and that is where this derivative market is, too. If we do not have a regime of exchange trading and clearing, we will have money seeping into a continuation of a dark market.

Would I like other amendments, would I like a vote on an amendment by my colleague from Arizona and me that is the reinstatement of Glass- Steagall? Sure, I would. Sure, I would like to have many other amendments that my colleagues have been talking about, and hopefully they will get votes on them, whether it is Merkley-Levin or other pieces of legislation people have been offering. But this issue is a fundamental one. We will not have reform if we do not have exchange trading and clearing, if we do not bring derivatives onto the same kind of mechanisms we have for other products in the financial markets. If we do not do that, then I don't know what we are doing out here in the context of what brought us to this crisis.

Trading of dark market derivatives is what has brought this challenge to our U.S. economy. Let's bring some transparency into that market. Let's adhere to these words and actually implement this so we can move on with this legislation.

I yield the floor.

Mr. President, I am pleased to be an original cosponsor of two amendments to the Restoring American Financial Stability Act that seek to ensure there is greater transparency around how international companies are addressing issues of foreign corruption and violent conflict that relate to their business. Creating these mechanisms to enhance transparency will help the United States and our allies more effectively deal with these complex problems, at the same time that they will also help American consumers and investors make more informed decisions.

Mr. President, I am very pleased that my colleagues agreed yesterday to accept the first amendment, sponsored by Senator Brownback. This amendment specifically responds to the continued crisis in the eastern region of the Democratic Republic of Congo. Despite efforts to curb the violence, mass atrocities and widespread sexual violence and rape continue at an alarming rate. Some have justifiably labeled eastern Congo as ``the worst place in the world to be female.'' Several of us in this body, including Senators Brownback and Durbin and I, have traveled to this region and seen first-hand the tragedy of this relentless crisis. Increasingly, American citizens are also learning of the devastating situation in eastern Congo and are actively engaged to bring about policy changes. I am pleased to see Americans so engaged on this issue.

One of the underlying reasons this crisis persists is the exploitation and illicit trade in natural resources, specifically cassiterite, columbite-tantalite, wolframite and gold. The United Nations Group of Experts has reported for years how parties to the conflict in eastern Congo continue to benefit and finance themselves by controlling mines or taxing trading routes for these minerals. In response to these reports, the U.N. Security Council adopted Resolution 1857, 2008, encouraging Member States ``to ensure that companies handling minerals from the DRC exercise due diligence on their suppliers.'' Over a year ago, Senator Brownback, Senator Durbin, and I teamed up to author legislation that would do just that: the Congo Conflict Minerals Act, S. 891.

Senator Brownback's amendment is taken from that bill, but includes modifications based on discussions with representatives from industry, U.S. Government agencies, and the Banking Committee. The amendment applies to companies on the U.S. stock exchanges for which these minerals constitute a necessary part of a product they manufacture. It will require those companies to make public and disclose annually to the Securities and Exchange Commission if the minerals in their products originated or may have originated in Congo or a neighboring country. Furthermore, it will require those companies to provide information on measures they have taken to exercise due diligence on the source and chain of custody to ensure activities involving such minerals did not finance or benefit armed groups.

I recognize that this conflict minerals problem is a complex one, given the importance of this trade to the local economy in eastern Congo and given the extensive supply chains and processing stages between the source and end use of these minerals. The Brownback amendment was narrowly crafted in consideration of those challenges, and it includes waivers and a sunset clause after 5 years. However, I believe strongly that the status quo in eastern Congo is unacceptable to the people there and it should be to us as well. We have put financial resources toward mitigating this crisis, but we need to get serious about addressing the underlying causes of conflict. The Brownback amendment is a significant, practical step toward doing that, and I thank my colleagues for their support of it. I thank Senator Brownback for his longstanding leadership on these important humanitarian issues.

The second amendment, led by Senator Cardin and Senator Lugar, is different than the Congo amendment but would complement it. This amendment would require companies listed on U.S. stock exchanges to disclose in their SEC filings extractive payments made to foreign governments for oil, gas, and mining. This information would then be made public, empowering citizens in resource-rich countries in their efforts to combat corruption and hold their governments accountable. In far too many countries, natural resource wealth has fueled corruption and conflict rather than growth and development. This so-called ``resource curse'' is especially problematic in Africa, and in 2008, I chaired a subcommittee hearing on this very topic. I said then that we must look for ways that the United States can use our leverage to push for greater corporate transparency in Africa's extractive industries.

In addition to helping countries combat the ``resources curse,'' it is also in our national interest to improve transparency in the extractive industries. The amendment was drawn from an important piece of legislation, the Energy Security through Transparency Act, S. 1700. The bill was given this title because enhancing transparency in the extractive industries can have real benefits for U.S. energy security. This will ultimately create a more open investment environment and increase the reliability of commodity supplies. Energy security is a topic that Senator Lugar and his staff have worked on for years, and we all know how central it is to our national security. I thank Senator Lugar and Senator Cardin for their work on this important amendment, and I urge my colleagues to support it.