Floor Statements

Mr. President, all men are created equal. Our Nation's greatest leaders, like Thomas Jefferson, Susan B. Anthony, and Martin Luther King, Jr. have shaped the course of our history by furthering our understanding of this principle. It is because of their struggle to illuminate it that we now live under a system of laws that provides equal protection to Americans, regardless of their race, gender, or religion. It is because of their chutzpah that I, a Jew, can stand before you today as a United States Senator.

But there is one group for whom our realization of that principle has not advanced quickly enough. Gay Americans continue to be treated as second-class citizens in our society and under our laws. Nowhere is the unequal treatment of gay Americans more destructive than in our nation's public schools.

Currently, Federal law provides no explicit protection to gay students against discrimination and harassment. While Federal civil rights statutes prohibit discrimination and harassment against students based on race, sex, religion, and national origin, these laws do not explicitly address sexual orientation or gender identity.

To remedy this injustice, I and 22 of my Senate colleagues are introducing the Student Non-Discrimination Act today. This legislation will prohibit schools from discriminating against or ignoring the harassment of students based on their sexual orientation or gender identity. The bill would also provide meaningful remedies for such discrimination, modeled on Title IX.

These protections are sorely needed. Let me tell you a sad fact-- nearly nine out of ten LGBT students are harassed in school. This harassment deprives them of an equal education. Rochelle, a gay high school student from California who was harassed in school, explains why with a simple question. She asks, ``How was I supposed to learn when I was constantly scared?'' For students like Rochelle, school is not a place to learn. Rather it is a place to be bullied, beaten down, and humiliated. It is no wonder that gay students who are harassed in school are more likely to skip school, underachieve, and eventually drop out.

In its worst form, the harassment of LGBT students can lead to life- threatening violence and suicide. We have

seen this in all too many high-profile cases in recent years, such as that of Carl Walker Hoover, an 11-year-old boy from Massachusetts who hung himself last April. Before he committed suicide, Carl was taunted by his classmates on a daily basis for allegedly being gay despite his mother's weekly pleas to his school to address the problem. Carl's death came only about a year after Lawrence King, an eighth grader in California, was shot and killed by a classmate for allegedly being gay.

To be clear, it is not simply students who are to blame for the harassment of their gay classmates. Students who harass their gay peers have often internalized the anti-gay bias of the adults around them. Sometimes their bullying is even condoned by adults at school--through the silence of school staff who witness the bullying or through their encouragement of the behavior.

This was certainly the case for Alex, a 16-year-old boy from Anoka, MN, whose teachers mocked him in front of his classmates for allegedly being gay. When Alex mentioned Benjamin Franklin in a paper, his social studies teacher taunted him for ``having a thing for older men.'' A second teacher who taught a course on law enforcement volunteered Alex for a student fashion show, joking that Alex ``loves to dress in women's clothes.'' Alex's peers soon caught on to the joke, and began taunting him too. The harassment grew so severe that Alex eventually switched schools.

Because Alex lives in Minnesota--one of 14 States that prohibit discrimination based on sexual orientation in school--Alex and his family were able to hold his school district accountable. They filed a complaint with the Minnesota Department of Human Rights. After the Department found that Alex had been subjected to ``severe and pervasive'' harassment, the school district settled the case. The district provided Alex and his family financial compensation, and adopted new rules to prevent the harassment of LGBT students.

Minnesota's law is effective not only because it holds school districts accountable for discrimination, but also because it provides a powerful incentive for districts to adopt policies to prevent discrimination from occurring in the first place.

It is time that we extend the equal rights afforded to Minnesota students to students all across the country. No student should be subjected to the ridicule and physical violence that LGBT students so often experience in school. I urge my colleagues to join me today in supporting the Student Non-Discrimination Act. It is time we demanded equal treatment for all of our children under the law.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

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

Mr. President, I rise today to clarify some confusion regarding two amendments adopted by the

Senate last week to the Wall Street reform bill. Some in the media have characterized the two amendments as conflicting, incompatible, or rendering one another moot, and I wish to put a quick end to that misunderstanding.

To draw these conclusions means you think there is only one problem with the credit rating industry. In fact, there have been many problems with the credit rating industry, and the two amendments passed last week tackle two different problems. In the end, these two amendments can be implemented concurrently and effectively.

My colleague from Florida offered an amendment that he stated ``writes NRSROs out of the law.'' NRSROs are a select group of credit rating agencies recognized by the SEC. But in fact his amendment does not get rid of credit rating agencies and it does not get rid of the category of NRSROs. This is based on our reading of the text in our office, the Senate legislative counsel's office has confirmed this, and several academics in the field have further confirmed it. The amendment simply does not eliminate NRSROs. Instead, the LeMieux amendment eliminates provisions in Federal laws that require reliance upon ratings from NRSROs.

For example, this amendment eliminates a provision that requires certain State-chartered banks to only buy securities with top NRSRO ratings. It replaces this provision with a requirement that banks may only acquire securities which meet ``creditworthiness standards'' established by the FDIC.

The amendment also changes a provision in which the Director of the Federal Housing Finance Agency may hire an NRSRO to conduct a review of Fannie Mae, Freddie Mac, or the Federal Home Loan Bank. Under Senator LeMieux's amendment, the reviewer need not be an NRSRO. So while the amendment eliminates reliance upon NRSROs, it does not eliminate the NRSRO designation or eliminate credit rating agencies.

One can argue that there are benefits to reducing overreliance on NRSROs. Regulators gave little thought to the types of debt held by banks because they were rated AAA. Perhaps the regulators should have looked at factors other than the AAA rating before waving through these volatile securities. This is all true, and the LeMieux amendment seeks to address it.

But here is the problem. Here is the problem. Eliminating federally mandated reliance on NRSRO credit ratings doesn't change the fact that State laws, pension fund policies, and other private market actors will still explicitly rely on NRSRO ratings. Eliminating blind overreliance on NRSRO ratings is a respectable goal, but the amendment will not eliminate reliance on credit ratings entirely, nor should it.

For example, at least 5 of the 10 largest pension funds--California Public Employees, California State Teachers, Texas Teachers, Wisconsin Investment Board, and New Jersey Retirement funds--are required by State law or internal policy to use NRSRO ratings. These are funds totaling over $\1/2\ trillion--and that is just the top 10. In fact, in my colleague's home State of Florida, the Local Government Surplus Funds Trust Fund controls $6 billion in assets from 954 local governments and school districts, and the fund explicitly conditions purchases of asset-backed securities on NRSRO credit ratings.

In fact, 42 States, plus the District of Columbia, incorporate NRSRO ratings into their State laws. So NRSRO ratings are not going anywhere. The LeMieux amendment has absolutely no effect on those requirements. The simple fact is that credit rating agencies have a place in the market and they perform a needed function.

Most institutional investors simply lack the capacity to perform the analysis that credit rating agencies perform. For many small institutional investors, such as a school district's pension fund, researching its own investments would be cost prohibitive. It needs to rely at least in part on credit ratings issued by a rating agency.

Let's say we want the LeMieux amendment implemented into law as has been passed. After its implementation we still have the issue of States and pension funds and other investors relying on NRSRO ratings.

I should say, the amendment wasn't passed into law, but it was passed as an amendment to this bill. So we still will have to rely on NRSRO ratings. But not only that, it is also very likely that Federal regulators will continue to use credit ratings as part of their new creditworthiness standards. So it is safe to say that the credit rating agencies will still be very much a part of the market. What is being done to ensure the accuracy of these ratings?

That is where my amendment comes in. Eliminating government-mandated reliance on NRSRO ratings is one thing, but actually changing the way they play the game to eliminate conflicts of interest is entirely another. My amendment gets to the heart of how they play the game.

Right now, credit rating agencies have incentives to hand out top AAA ratings to every product because they need to maintain their business. If they hand out low ratings, issuers of financial products can go shop around for a higher rating from a different rating agency. My amendment finally puts a stop to the rating shopping process and implements a system that would finally reward accuracy instead of grade inflation.

The board created by my amendment--and contrary to some claims, this board will be a self-regulatory organization, not a part of the government--will create a process to assign a credit rating agency to provide a product's initial rating. This will eliminate the rating shopping process and the conflict of interest it creates. The board can take past performance into account in handing out further assignments and finally incentivize accuracy in the market.

The amendment offered by my colleague from Florida has an admirable goal--to eliminate blind overreliance on credit ratings. But it does not go far enough and does not get to the heart of the problem. The heart of the problem is that the current market incentivizes inaccurate ratings, which contributed to the financial crisis--which was a huge part of the financial crisis.

Alone, my colleague's amendment doesn't respond to the reality that the market will still demand credit ratings, whether the Federal Government mandates it or not. State laws, pension fund policies, and private investors will continue to exist and continue to need the expertise credit rating agencies can supply, if given proper incentives.

Our amendments each tackle a different part of the problem, and there is nothing about them that would prevent them from both being implemented. That is why this body passed both of them. Together, these two amendments will both reduce the blind overreliance on credit ratings and ensure that the ratings demanded by the marketplace will finally be accurate.

Any assertion implying that these two amendments cannot be reconciled or are contradictory is ill-informed. In fact, these amendments will go a long way in addressing the multiple problems plaguing the credit rating industry. Together, they will create more stability and certainty in our economy.

Mr. President, I yield the floor.

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

Madam President, let me say how thankful I am that Senator Dodd has worked with us to get my amendment to a vote. I know how hard he has been working on this bill and how precious floor time is during this debate.

Last week I proposed an amendment with Senator Schumer and Senator Bill Nelson to reform our Nation's credit rating industry. Today I am thrilled to announce that Senators Grassley, Kaufman, Durbin, Harkin, Klobuchar, Levin, Wyden, and Begich have joined as cosponsors. Senator Grassley, of course, is the ranking member of the Finance Committee and a senior member of the Budget Committee. Senator Levin led the Permanent Subcommittee on Investigations which revealed some of the credit rating industry's worst abuses. Senator Kaufman has also been a leading critic of the rating agencies, pointing out how these agencies kept AAA ratings ``rolling off the assembly,'' despite consistent and increasing indications that they were totally unwarranted. Senators Durbin, Harkin, and Klobuchar have long established themselves as strong voices on behalf of consumers.

Over 20 of my colleagues have now cosponsored my amendment, including senior members of the Senate Finance and Banking Committees. Since I have filed this amendment, I have come to the floor several times to explain the different aspects of it. Now that this amendment will be up for a vote, I wish to step back and summarize. To underscore the scope of this problem, I want to explain how this amendment is a simple investor-based solution to the problem. Here it is in a nutshell.

There is a staggering conflict of interest affecting the credit rating industry. The way it works now, issuers of securities are paying for the credit ratings. They shop around for their ratings, selecting those agencies that tend to offer them the best ratings and threatening to stay away from rating agencies that are too tough on them. Because of this, the credit rating agencies are issuing ratings that are orders of magnitude higher than they should be. We know this from the record. We know from the PSI release of e-mails that this was the case. This conflict of interest has cost American investors and pensioners billions of dollars because supposedly risk-free investments have failed or been downgraded to junk status.

My amendment will correct that conflict of interest by having an independent third party assign the credit rating agency that conducts the initial rating for newly issued complex financial problems. My amendment puts investors in charge, not the government.

Let's take this from the top. Right now, when a bank issues a product, it gets a credit rating--it gets a couple credit ratings before they will sell their product. But the problem is, they don't get their rating from an independent agency. They don't get it from someone who has a real interest in being accurate. Rather, issuing banks currently get their credit ratings from rating agencies they hire, and they pay them upwards of $1 million per transaction.

Now, you do not have to be Adam Smith to guess what has happened. As with any other financial transaction, the issuers--the buyers of credit ratings--shopped around for ratings. When they would go to a credit rating agency, and the credit rating agency did not give them the rating they wanted, they would not hire them the next time. So the credit rating agencies responded in kind. They changed their algorithms for rating the products when the ratings they produced were too low, and, thus, they repeatedly overrated terrible securities.

This is not a hypothetical. The Permanent Subcommittee on Investigations, Senator Levin's committee, uncovered pages upon pages of e-mails confirming this is exactly what happens. But I think the numbers explain it the best, and we know this. Of all the subprime mortgage-backed securities issued in 2006 and 2007 that received a AAA rating, over 90 percent have since been downgraded to junk status.

Credit rating agencies will counter that the downgrading of AAA bonds to junk status occurred because of the unpredictable collapse of the housing market. Two points here: The e-mails that were released in the investigation by the Permanent Subcommittee on Investigations showed that the credit rating agency knew what was happening. Here is an e- mail from 2006. This is from one of the Standard & Poor's executives:

[T]his is like another banking crisis potentially looming!!

There was an executive who said they wished they could go public with the loss figures they were seeing--this is in 2006--but that ``may be too much of a powder keg.'' And there are e-mails where they were saying: We better increase the ratings so we keep getting business.

These were the guys who got it. Admittedly, there were guys who did not get it in the credit rating agencies. But there is an old Upton Sinclair quote, which is: You can't get a man to understand something that his salary depends on him not understanding.

So there is this inherent conflict of interest, which is, if I give a good rating to these subprime mortgage-backed securities, I am going to make a lot of money; there is a lot of money here; my salary depends on my not getting what is happening. That all emanates from the conflict of interest. That is what I am going after. That is why they either ignored what they were seeing in 2006, or, if they got it, they did not say anything about it. So some were maybe less than completely getting it, and others who got it were corrupt. It was all for the same reason: because of this conflict of interest.

These downgrades did not just result in major losses to Wall Street. They resulted in multibillion-dollar losses to millions of Americans, especially pension holders. CalPERS, which 1\1/2\ million Californians rely on for their pensions and health benefits, lost $1 billion. Pensioners in Ohio lost $\1/2\ billion. The same story is repeated all across the country.

This was people's retirement money. This was not people buying yachts. This was not people staying a night at the Waldorf. This was their retirement money. So this was the problem, the conflict of interest.

Let me tell you how our amendment addresses this problem. My amendment would call for a new clearinghouse, regulated by the SEC, to assign issuers to a credit rating agency that will give them their first rating on complex financial products. They would be assigned. That means an issuer will no longer be able to shop around for a rating. They will not be able to pressure a rating agency into giving a good score in exchange for future business. Over time, the clearinghouse will monitor the ratings these agencies give out and refine its method of assignments. It can reward agencies that are more accurate and give fewer assignments to those that are less accurate. It will incentivize accuracy. Imagine that. In doing so, it will give smaller agencies a chance to get into the action.

Standard & Poor's and Moody's and Fitch do about, what, 94 percent of the business. The other agencies will get a chance because what will be rewarded is accuracy.

By making these simple changes--and it is a very simple change; it is a third party--the amendment will eliminate the fundamental conflict of interest at the core--at the core--of this problem.

Some people are going to tell you this is a government takeover of the credit rating industry. That is patently, 100 percent false. The clearinghouse will not issue a single rating. The clearinghouse is not going to tell credit rating agencies how to determine their ratings. In fact, every single rating an agency gives after being assigned a security will have a disclaimer that says, ``This is not a government- approved rating.''

Moreover, the clearinghouse will be run by investors such as managers of pension funds and managers of university endowments. OK. There is not a single seat on this board that would be reserved for a government official. Moreover, while the initial board members are to be named by the SEC, after the initial appointments, the board itself will choose its future members. There will be a representative from the rating agencies, there will be a representative from the banks, but a majority will be investors. This makes sense. We will be putting people in charge who are the people who are actually buying the securities, and who pay the price when the securities prove to be significantly overrated.

So let me repeat that. We are putting the buyers of securities--not the government--in charge. OK.

The clearinghouse will be an independent, self-regulatory organization that operates with oversight from the SEC, just like the Financial Industry Regulatory Authority or FINRA.

Finally, this board will not act as an intermediary for every credit rating issued. It will only assign an agency to do the initial rating-- the first rating an issuer receives. The issuer is then free to seek as many other credit ratings as it wants from whomever it wants, as most issuers currently do.

I am merely proposing that at least one rating--the initial rating-- from an issuer be free from the conflicts of interest inherent in an issuer-pays system. This initial rating will then serve as a check against any possible inflation in subsequent ratings.

You may also have heard there are alternative proposals that would eliminate any requirement of reliance upon a credit rating issued by an NRSRO. Senator LeMieux, my good colleague from Florida, will be offering a side-by-side to this amendment. Now, my only problem with this is, this approach ignores the reality that ratings will, by necessity, continue and will always play a role in our economy. Investors will still rely on them even if the statutes do not mandate it.

I believe Senator LeMieux's approach does absolutely nothing to tackle the conflicts of interest or address the current oligopoly, both of which would surely persist under this approach, especially the conflicts of interest.

There is nothing in Senator LeMieux's approach that I understand is contradictory at all to what I am doing. So if a Member would like to vote for Senator LeMieux's side-by-side, it would be fine. You have to determine for yourself the value of that. I am just saying it does not get at the heart of the matter, which is the conflict of interest: the issuer actually paying the rating agency for the rating.

With the help of Senators Schumer and Nelson, I have crafted a measure that is not liberal or conservative. It is not moderate. It is not on any spectrum. It just makes sense. It is common sense. This is like the solving of forum shopping in courts. It is an elegant solution. I can say that because I did not think of it. Some professors in academia thought of it, and I guess the chief economist at Patton Boggs. It is just a simple, elegant idea. So it is not conservative; it is not liberal. It is just common sense.

That is why Senator Wicker has embraced this amendment. Senator Grassley has embraced this amendment. It is just plain common sense. That is why Senators Levin, Johnson, Murray, Durbin, Whitehouse, Brown, Merkley, Bingaman, Lautenberg, Shaheen, Casey, Sanders, Kaufman, Harkin, Klobuchar, Wyden, and Begich also support the amendment.

That is why Americans for Financial Reform support it. That is why the Consumers Union supports it; the Teamsters, the National Association of Consumer Advocates, Public Citizen, SEIU, and a number of other national organizations stand behind this amendment.

That is why, as I said, leading economists in academia and private industry support this amendment. In fact, as I was saying, the chief economist at Patton Boggs, Dr. David Raboy, who first developed a similar proposal, is squarely behind this amendment. Of course he would be; he developed it.

That is why independent, smaller rating agencies have come out in support of this amendment. That is why this amendment cannot wait.

I urge colleagues on both sides of the aisle to vote in favor of this amendment.

I thank you, Madam President.

I believe my good colleague from Florida has a side-by-side which, as I say, in no way conflicts--I do not believe--with this amendment. I yield the floor.

I thank Senator Bayh. I also speak today in strong support of S. 3295, the Democracy Is Strengthened by Casting Light on Spending in Elections, also known as the DISCLOSE Act. In particular, I want to talk about the provisions in title III that will create much needed transparency and accountability in our elections system in response to the Citizens United decision. That decision is widely expected to trigger a new flood of campaign-related funds from corporations, unions, trade associations, and nonprofit organizations.

In that ruling, the Supreme Court drastically changed our election laws to allow unlimited corporate election spending from company treasury funds. It did not, unfortunately, require those corporations to disclose--to their shareholders, members, or the American public-- either where the money came from or how it was spent.

Title II of this bill makes sure American voters know who is behind the election ads they see. Title III of the bill makes sure that the people that paid for those ads--like shareholders and union members-- know how their money was spent.

After Citizens United, massive corporate campaign spending could be funneled through innocent-sounding front organizations like Citizens for the American Dream. That company's shareholders would never realize that the spending occurred or was going to support causes or organizations that they may not support. In short, Citizens United will allow these corporations to avoid accountability for their campaign expenditures from shareholders, voters, and the American public.

That is why title III of the DISCLOSE Act imposes disclosure requirements on all campaign-related contributions made by a corporation, union, or nonprofit--even contributions to another organization. Under title III, whenever one of these organizations makes a campaign expenditure, it will have to disclose that expenditure on that organization's Web site within 24 hours of reporting it to the Federal Elections Commission. It will also have to disclose that expenditure to its shareholders, donors, or members in regular periodic reports.

These disclosure requirements will allow shareholders and citizens alike to make informed decisions about corporate campaign expenditures. As the Supreme Court even noted in its Citizens United decision, ``the prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.''

The Supreme Court rightfully noted that if corporations were to be free to make campaign expenditures, shareholders must be able to know where the corporation's money--their money--is going.

Citizens also have a strong interest in knowing which of their elected officials or candidates for office is supported by corporate interests. As the Supreme Court concluded, ``[t]he First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way.'' This necessary transparency--the ability to know who is spending money to influence elections and to respond accordingly--can only be protected through the robust disclosure requirements of title III.

I want to underscore that nothing in title III is an attempt to squelch or limit the court-protected speech of corporations or other organizations. Transparency and accountability are necessary elements of our marketplace of ideas. Citizens in a democracy need to know who is supporting the ideas and causes before them. In Citizens United, the Supreme Court made this point exactly, stating that the transparency created by disclosure regimes ``enables the electorate to make informed decisions and give proper weight to different speakers and messages.''

I believe that the disclosure requirements in title III will increase political speech because they allow shareholders and citizens to know more about the political process and engage those political actors who would otherwise be unknown.

During the recent hearings on the DISCLOSE Act in the House of Representatives, witnesses testified that the disclosure requirements would be ``onerous'' for corporations that wish to spend corporate treasury dollars to influence elections. One witness alleged that the disclosure requirements would do little but inconvenience, burden, and silence groups that would otherwise participate. They are saying that this makes the DISCLOSE Act unconstitutional.

How onerous could it possibly be to disclose expenditures on your Web site? If a corporation wanted to spend money in an election, why would a simple reporting requirement stop them in their tracks? This just doesn't make sense to me.

The government chills speech when it imposes penalties or limits on speech that deter people from speaking. But the first amendment isn't violated just because someone doesn't speak for fear of public scrutiny.

Campaign disclosure rules have always had bipartisan support in this Chamber. Full and timely disclosure of campaign expenditures should be an ideal that all of us share, regardless of our disagreements over other areas of campaign finance reform. American voters deserve and need to know who is making campaign expenditures, and shareholders and member of unions, trade associations, and nonprofits deserve and need to know what is being spent on their behalf. Therefore I strongly support the DISCLOSE Act, and title III in particular.

I thank the Chair. I now yield for my friend from Colorado, Senator Bennet.

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

Mr. President, I rise to speak again on the problem of credit rating agencies and the inherent conflicts of interest that drive the industry. The underlying Wall Street reform bill takes some steps in the right direction, but I believe we can go much further in addressing the fundamental problem--the opportunity to shop around for the highest rating.

Currently, a bank that issues a security can shop its product around to one of the three biggest credit rating agencies--all three of them-- seeking out the highest possible rating. The credit rating agency promising the highest rating will get hired. This process ensures that the credit rating agency will not just be evaluating the risk of the financial product, it will be weighing its own business interests when offering up a rating. If the agency hands out a AAA rating, the customer will come back again; the banks will come back again. That incentive affects the ultimate rating the product receives. This ratings shopping leads to major conflicts of interest, and it was one of the major causes of the financial meltdown.

You have probably heard of something in our court system called forum shopping. It is when an attorney seeks out the judge who will be most sympathetic to the case. If a prosecutor is bringing a case against a defendant for drunk driving, that prosecutor might negotiate with the court clerk to get the judge known for being tough on drunk drivers. You can imagine the problems forum shopping has created and the corruption it has bred.

The courts have identified forum shopping as a practice that manipulates outcomes and undermines public confidence in the courts. Given these problems, the courts have sought out ways to reduce forum shopping. In fact, the majority of Federal courts now use some variation of a random drawing to match cases with judges, though each district court has discretion to make its own specific rules. Accommodations can be made for particular circumstances. For example, a subset of qualified judges can be set aside for particularly complex criminal cases, and the caseload of each judge can be taken into account. But overall, the primary selection method in most Federal courts is a rotating assignment system.

This rotating assignment system is used in my home State of Minnesota. New York, the home State of Senator Schumer, who is joining me on this amendment, also uses a rotating system. The use of a rotating assignment system limits opportunities for forum shopping, increases public confidence in the court system, and reduces corruption.

Let's return to the problem of credit rating agencies. I have filed an amendment that seeks to reduce the conflicts of interest inherent in the issuer-pays model. In this model, issuers of financial products have incentives to shop around for the best ratings possible. In order to retain business, credit rating agencies will issue ratings high enough to keep issuers coming back, as I said. The system incentivizes high ratings, not accurate ratings.

The same solution used to address forum shopping in the courts can also be applied to reduce ratings shopping in the credit rating industries. My amendment allows for the same types of discretion awarded to individual district courts.

A court can develop special provisions for the assignment of particularly complex cases. My amendment would allow a new credit rating agency board to designate certain ratings agencies as being qualified to rate the most complex products. A court can take into account the existing caseload of a particular judge. My amendment allows the board to take into account the institutional and technical capacity of credit raters.

The rotating assignment model used in the court system can be used in the rating system. It hasn't eliminated every problem, but it has gone a long way to reduce the corruption and conflicts of interest in selecting judges for particular cases.

My amendment will not eliminate every problem facing the credit rating agency industry, but it will go a long way toward reducing ratings shopping. Ratings shopping is the root of the problem, and it is what allows issuers to bargain with credit raters. If a credit ratee knows the issuer cannot simply walk away and turn to another rating agency, there is no pressure to issue a high rating just to retain the business transaction.

My amendment will not reduce competition, nor does it seek to put any rating agency out of business--quite the opposite. My amendment actually will increase and incentivize true competition. By allowing a board to assign more work to credit raters producing accurate ratings and assign less work to those producing inaccurate ratings, the market will finally reward accuracy and no longer reward ratings inflation, which was the case during this whole fiasco and what led to it. It is only by limiting ratings shopping and adjusting the market's incentives that we will finally have credit rating agencies in which the public can have faith.

The Wall Street reform bill includes many important provisions addressing the credit rating agency problem, such as increased disclosures and improved postrating surveillance, but I believe it doesn't get to the root of the problem. When the stability of such a significant

part of our economy is based, for better or worse, on the accuracy of these ratings, we can't take any more chances.

I thank Senator Schumer and Senator Nelson for helping me lead this reform and Senator Wicker, who has recently joined our effort. I also appreciate that Senators Johnson, Whitehouse, Brown, Murray, Merkley, Bingaman, Lautenberg, Shaheen, Casey, and Sanders support this approach and have joined as cosponsors. I look forward to other colleagues joining us, and, ultimately, I hope this bipartisan amendment will be taken up and passed by the Senate.

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

Mr. President, I rise to speak about an issue of great importance, the foreclosure crisis, and the fears and frustrations of American families who are at risk of losing their homes. Wherever I go in Minnesota, people tell me horror stories about losing their homes to foreclosure. I am sure the same is true of the Presiding Officer when he goes home to Virginia.

The foreclosure crisis strikes at the heart of the American dream, threatening Americans' life savings, family lives, and what they have achieved. The President took a big step in addressing this crisis when he created the HAMP program which encourages mortgage servicers to modify home loans to help people avoid foreclosure. But it is often difficult to implement complex programs and HAMP is no exception. When HAMP works, it can be great. It can literally save people's homes. But too often homeowners who try to use the HAMP program find themselves involved in a bureaucratic process that is riddled with errors. These are errors that have serious consequences for people's lives.

Take a woman named Tecora who is a homeowner from south Minneapolis. Incidentally, she is someone who actually would have been helped by a Consumer Financial Protection Bureau. Several years ago, she bought a house with an option ARM or adjustable rate mortgage, where the mortgage payments increased dramatically over the years. Someone should have told her that the teaser rate her lender offered her might be misleading. Someone should have told her she might not be able to afford her mortgage payments in the future. But no one did.

A few years ago, Tecora's payments went up, and she fell behind on her mortgage. She entered HAMP hoping to save her home. But 7 months later, she was told by her mortgage servicer that her file was closed because she had ``declined a final modification of her mortgage.'' Here is the only problem: She hadn't. And her mortgage servicer had no record of a conversation or correspondence with her. They had simply marked the file as closed.

Tecora is lucky enough to be working with a wonderful nonprofit in Minneapolis, Twin Cities Habitat for Humanity. They are helping her to fight this mistake. But they have been working on this since March, and the government resources that are available are not very helpful. In the meantime, Tecora is constantly worried that she may lose her home because her mortgage servicer made a mistake.

Or take Barbara, a homeowner from Minneapolis who fell behind on her mortgage payments because her husband was laid off and her son got cancer, racking up huge medical bills. Talk about someone who might lose their home through no fault of her own. Her mortgage servicer claimed she was not eligible for final mortgage modification, using incorrect information about her financial situation. When she pointed out there was a problem, her servicer told her there was nothing they could do because ``once you have been denied for HAMP, you can't be eligible again.''

Barbara is fighting this, but someone from the government should have her back.

Yesterday I filed an amendment with Senator Snowe and seven other colleagues to fix the HAMP appeals process. People at risk of losing their homes are going through enough already. They should not be stuck fighting over mistakes with their servicers without a guarantee that someone will be on their side. Our amendment would create an office of the homeowner advocate, modeled after the very successful Office of the Taxpayer Advocate within the IRS. The advocate's office would be an independent unit within Treasury, charged with helping homeowners, their housing lawyers, and their housing counselors to resolve problems with HAMP. The office would be temporary, lasting only as long as HAMP does. But while it exists, it would have a lot of authority to help homeowners and families around the country. For the first time, homeowners would be able to call an office in the government and know that someone with the authority to fix a problem is actually fighting for them.

Staff of this new advocate's office would be able to make sure that servicers obey the rules of HAMP or risk suffering consequences. Perhaps more importantly, opening a case with the advocate's office would delay a servicer's ability to sell a person's house, giving the office time to resolve the problem before it is too late. The director of the advocate's office would be someone who can truly fight for the rights of homeowners. He or she must have a background as an advocate for

homeowners and cannot have worked for either a mortgage servicer or the Treasury Department in the last 4 years. The director will also be able to help those of us in Congress understand what is going on in HAMP. Because the office can collect data about the kinds of complaints and appeals that come in, the director will be in a good place to know what kinds of changes, both administrative and legislative, need to be made to the program and can describe them to the Treasury Department and to Congress.

Once a year the director will issue a formal report laying out in detail all the problems people have had with HAMP and how they can be resolved and the way such problems could be prevented or better resolved in the future.

I know many of my colleagues on both sides of the aisle are understandably worried about the deficit. I want to be clear about one thing: This amendment includes no new appropriations. The advocate's office will be funded with existing money that is set aside for HAMP administrative costs.

I am pleased to say that our amendment is supported by the Treasury Department itself. In fact, yesterday it was featured on the White House's blog as one of ``The Good Guys,'' 10 simple, straightforward amendments that would strengthen the already good Wall Street reform bill. It is a good guy, this thing.

My amendment is also supported by a large number of groups, including Americans for Financial Reform, the Center for Responsible Lending, National Consumer Law Center, the Leadership Conference on Civil and Human Rights, Consumers Union, Consumer Federation of America, the Service Employees International Union, and National Council of La Raza. I am particularly pleased to say that the amendment is also supported by several of the most important housing groups in my home State of Minnesota.

The idea behind the advocate's office is simple, but the impact could be huge for all the people whom we are here to represent. Please join me in helping to ensure that HAMP actually works for families around the country. We owe it to Tecora and Barbara and to all the working families in our States and around the country.

I also rise to talk briefly about another amendment I am proposing to reform the credit rating industry. This industry is fraught with bad practices and perverse incentives. These incentives have produced inflated ratings which resulted in dangerous junk bonds getting AAA ratings and thus being eligible for public pension funds. In fact, the court ruled last week that a suit on this issue brought by CalPERS, the California public employee pension system, can now move forward. CalPERS represents nearly 1.5 million California public employees, including thousands of teachers and public safety officers. CalPERS has brought suit against the three biggest credit rating agencies--Moody's, Standard and Poor's, and Fitch. CalPERS states that the big three provided ``wildly inaccurate and unreasonably high'' ratings to products that ended up in their investment fund. When these structured finance products, including securitized subprime mortgages, tanked, CalPERS pension fund lost almost $1 billion. That is a loss of $1 billion for California teachers, police officers, firefighters, and public servants from their health benefits and retirement plans.

CalPERS is not the only group to take action. Private suits have been filed in New York and the attorneys general of Connecticut and Ohio have brought suit against the rating agencies on behalf of the people of their States. Ohio Attorney General Richard Cordray filed suit last fall on behalf of five Ohio public employee retirement and pension funds. Cordray said:

The rating agencies assured our employee public pension

funds that many of these mortgage-backed securities had the

highest ratings and the lowest risk. But they sold their

professional objectivity and integrity to the highest bidder.

The rating agencies' total disregard for the life's work of

ordinary Ohioans caused the collapse of our housing and

credit markets and is at the heart of what is wrong with Wall

Street today. The inflated ratings cost middle class families

in Ohio nearly half a billion dollars in retirement funds.

But this problem is not limited to California and Ohio and New York. It has affected my home State of Minnesota. It has affected the Presiding Officer's home State of Virginia. It has affected every State in this Nation.

By now, I hope colleagues have heard the details of my amendment to reform the credit rating system. It would limit the pay-to-play model currently used in the credit rating industry. The amendment calls for an independent board to develop an assignment system to match the issuers of complex financial products with a qualified rating agency to provide the product's initial rating. This system would apply only to initial ratings. Issuers could seek a second or third rating from whichever credit rater they prefer. But the initial rating would put a check on any subsequent rater which would be disinclined to provide an inflated pie-in-the-sky rating to a junk product.

By providing for an assignment process, the conflicts of interest driving the system will be eliminated, and the assignment process will allow smaller rating agencies that are performing well to get more business and rating agencies performing poorly to get less. This will hold rating agencies accountable for their work. It will incentivize accuracy and increase competition.

I know many of you agree with me, and the list of cosponsors on this amendment is growing. Most recently, I was particularly pleased to have Senator Wicker join our effort. Of course, I am deeply grateful for the leadership of Senators Schumer and Nelson and the support of Senators Whitehouse, Brown, Murray, Bingaman, Merkley, Lautenberg, Shaheen, and Casey. Restoring integrity to the credit rating system will provide real protection for working Americans.

Working people such as Tecora and Barbara are still reeling from the effects of this recession. Our unemployment rate still hangs near 10 percent. Working Americans together have lost nearly $4 trillion in the value of their homes and about $3 trillion in the loss of their retirement savings during this economic crisis.

The Wall Street reform bill before us goes a long way to prevent this from ever happening again. But there are a few places where it can be improved. I hope my amendment creating the Office of the Homeowner Advocate will help struggling Americans keep their homes. My amendment calling for an overhaul of the credit rating agency industry will protect millions of Americans from unprecedented losses in their supposedly safe retirement investments. I ask my colleagues for their support on both of these critical amendments.

Mr. President, I yield the floor.

Madam President, I rise to speak about the need to further address the problems of the credit rating agency industry. Senator Dodd has presented us with a very good bill that takes major strides in addressing many of the problems that brought our economy to the brink of collapse. It reins in too big to fail, brings derivatives out of the shadows, and creates a new consumer watchdog that will prioritize consumer protection over Wall Street profits.

Senator Dodd's bill includes several provisions on credit rating agencies. It holds rating agencies accountable in court for being reckless in their duties, it requires increased disclosure, creates new complaint systems, and requires raters to use information beyond what is provided by issuers.

These are a few of the many provisions the Dodd bill includes to begin to address issues with credit rating agencies, and they are all good. But one thing it doesn't do is get at the underlying problem--the conflict of interest inherent in the issuer-pays model, where the issuer pays the rating agency.

To root out conflicts of interest completely, we must change the vested interests of each of the players. The central conflict of interest can be boiled down to this: The issuer has an interest in obtaining a high rating so it can sell its product. The credit rating agency has an interest in giving out a high rating so it can sell its service. Tom Toles, of the Washington Post, depicts the problem quite well in this comical cartoon.

Here we see the rating agencies--he labels them that so you know it is them--giving three 10s to a figure skater--labeled Wall Street, and he is kind of fat there. You see he says: ``I pay their salaries.'' That is why he is getting three 10s--or a AAA--and yet he is a figure skater and he is dumping trash. We see an apple core, there is a fish head, skeleton, a banana. You don't want those on the ice. You just don't want that. That is bad. Then there is a little figure here, the little garbageman. It says: ``Somebody else pays to clean the ice.'' That, of course, is us--the taxpayers.

I think after seeing this cartoon, if there is anyone who doesn't support my amendment, I don't know what to do. Anyway, this actually makes the point very well that the issuer is paying the rating agency and, hence, the AAA.

However, the credit rating agency should have an interest in providing accurate ratings--unlike the triple 10s in this cartoon--so investors are provided with the accurate information they need to make investment decisions. But for the reasons I just described, there are very few incentives to provide accurate ratings. The market simply doesn't reward accurate ratings.

The best way to fix this problem is to change the way the market works so it rewards accurate ratings. Once we start getting accurate ratings, investors can make better decisions about the products they are selecting for inclusion into pension funds. Having safe products in pension funds protects the retirement security of hard-working Americans.

Let me give you an example of the perverse incentives that have been driving the credit rating agency industry thus far. My friend and colleague Senator Levin recently held a hearing in the Permanent Subcommittee on Investigations. His investigators released many e-mails from the industry that reflect the conflicts of interest that drove the system.

Here is a good example. There is a rating agency employee writing to his own rating agency people about a group of theirs, a group within his rating agency.

We are meeting with your group this week to discuss

adjusting criteria for rating CDO's of real estate assets

this week because of the ongoing threat of losing deals. Lose

the CDO and lose the base business.

So here the credit rating agency is proposing to change its rating criteria to avoid losing business. This is exactly what was at the root of all these AAA-rated, subprime, mortgage-backed securities that were leveraged and had the CDOs on them--these exotic instruments that were rated AAA--and what created this entire mess. It is clear the incentives are to keep customers coming back, to make sure accurate ratings aren't driving customers into the arms of other rating agencies--don't want to let accuracy get in the way of more business.

We need to change the incentives. I believe my amendment, No. 3808, will do that. The amendment tasks a board--a self-regulatory organization--with selecting a pool of qualified credit rating agencies. The board would then choose a system to assign, one at a time, one of these qualified credit rating agencies to each request for an initial credit rating. Issuers could no longer shop around for the best rating. They could, however, get a second, third or fourth rating from any agency they choose. But the first assigned rating would provide a check against the next agency inflating its rating.

The amendment would require the board to consider a rating agency's past performance and could adjust the number of rating assignments based upon demonstrated accuracy. If a small rating agency began performing extremely well, the board could start giving it more assignments, breaking the oligopoly of the big three raters, which served us very poorly, or maybe the big three would get their act together under this new system.

The point is, when the agencies are finally operating in a market in which accuracy is valued, they will compete on the basis of accuracy. When accuracy is driving growth, not preexisting relationships or sweetheart deals, smaller rating agencies will have an opportunity to compete and grow, making the industry more robust.

So properly addressing conflicts of interest in the credit rating agency industry necessitates realigning the interests of rating agencies with the interests of investors. The way to do that is by promoting and rewarding accuracy. My amendment will create these incentives, increase accuracy, promote competition and stability, and restore integrity to the credit rating industry system.

I thank my colleagues, Senator Schumer and Senator Nelson, for helping me lead this effort and Senators Whitehouse, Brown, Murray, Merkley, and Bingaman for joining us.

I yield the floor.

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

Mr. President, I would like to talk a little further about the problems with credit rating agencies. Yesterday, I filed an amendment to the Wall Street reform bill that would create a Credit Rating Agency Board and help encourage competition and, most importantly, accuracy in the credit rating system.

The major role the credit rating agencies played in the recent financial crisis has been largely overlooked. Most of the blame has been directed at Wall Street's oversized banks and the investment firms that were securitizing any kind of debt they could get their hands on. Ultimately, these firms got their hands on quite a lot, and one of their favorite products became mortgage-backed securities.

Investment banks and hedge funds realized there was a lot of money to be made--there is about $9 trillion worth of mortgage-backed securities in the market right now. So they securitized every mortgage they could find, and once this happened, this source of easy profits dried up. So Wall Street demanded more, and mortgage lenders all too happily lowered their lending standards and delivered a new fleet of subprime mortgages for Wall Street to securitize.

As we all know, subprime mortgages are riskier than regular mortgages. That is why they are called subprime. Borrowers are more likely to default. Yet when these risky mortgages were packaged, firms were able to sell them easily.

One of their biggest selling points? Well, they came with a nice big ``AAA'' stamped on them--three letters that say: This product is safe. This product belongs as part of a pension fund, a retirement account or an educational endowment.

So that is where many of these risky subprime mortgage-backed securities ended up. When they failed, they ended up costing working Americans billions and billions of dollars in losses to their savings. But much of this could have been prevented, if only the ratings for these exotic securities had reflected their true risk.

We need to reform the way credit rating agencies do business. Right now, there is nothing to compel them to produce ratings that reflect a product's real risk. Quite the contrary, they are incentivized to provide highly inflated ratings so they can keep getting repeat business.

That is why I have filed an amendment to change the incentives in the industry. My amendment, No. 3808, which I have crafted with Senators Schumer and Nelson, would finally encourage competition and accuracy in an industry that has little of either.

To stop the jockeying by raters to get repeat business, my amendment would create a clearinghouse--a clearinghouse--to assign a rating agency to a product issuer for the purpose of an initial rating. The clearinghouse--which will be a self-regulatory organization called the Credit Rating Agency Board--will set up its own rules on how this assignment will work. It could be random, it could be formula based, just as long as the issuer does not choose which agency rates its product. This will eliminate the incentive for the rater to give an inflated rating in the hopes of getting that repeat business.

The Credit Rating Agency Board would be comprised of industry experts: investors, issuers, raters, and, of course, independents. A majority of its members would be investors, including institutional investors who have experience managing pension funds and university endowments. They would have a vested interest in accurate credit ratings because they depend on them when making investments.

Another key element of my amendment is that the Board will regularly evaluate the performance of the credit rating agencies, and they would have to take that performance into account in coming up with an assignment mechanism. In my mind, there is no better way to get accurate ratings than giving more initial rating jobs to the most accurate raters--and fewer jobs to those that repeatedly do a sloppy job.

Finally, the Board will be able to prevent raters from charging unreasonable fees. This will strike at the heart of sweetheart deals, in which a rater asks for more money for a better rating. Make no mistake, that is what has been happening. Just last week, Chairman Levin held a hearing in the Permanent Subcommittee on Investigations. His team revealed many e-mail exchanges between issuers and credit rating agencies that exposed how they did business.

Here is one e-mail from Moody's to Merrill Lynch, and I quote:

We have spent significant amount of resources on this deal

and it will be difficult for us to continue with this process

if we do not have an agreement on the fee issue. . . . We are

agreeing to this under the assumption that this will not be a

precedent for any future deals and that you work with us

further on this transaction to try to get to some middle

ground with respect to the ratings.

Does this sound like Moody's was objectively evaluating the value and risk of Merrill's product? It doesn't sound like that to me.

I am confident the assignment process under my amendment will result in increased competition in the credit rating industry and provide incentives to produce accurate ratings. The amendment allows issuers to go to whichever rating agency they choose for second or third ratings, but these followup ratings will more likely be accurate because raters know they will be compared to the initial rating. More accurate ratings will mean safer products that end up in pension funds and in retirement accounts. Safer products mean more retirement security for working Americans.

So, once again, this all boils down to security and stability in our financial system. The greed and recklessness driving Wall Street over the past decade has wreaked havoc on our economy, and we need to take bold action to rein it in.

Ignoring the magnitude of this problem will only come back to haunt us. We simply can't let that happen. We must take action to fundamentally change the way the system works by putting accuracy first in these ratings.

I call on my colleagues to join me and Senators Schumer, Nelson, Brown, Whitehouse, and Murray in supporting this essential reform to restore integrity to the credit rating agency system.

Thank you, Mr. President. I yield the floor, and I note the absence of a quorum.

Mr. President, I rise today to discuss an amendment that I have just filed. But before I begin, I would like to thank Chairman Dodd for his exemplary work on this Wall Street reform bill. It is the result of months of tireless work and many hours of negotiation by Chairman Dodd and his staff.

This Wall Street reform bill will vastly improve the regulatory structure currently on the books. It creates a strong consumer watchdog within the Fed--a bureau that will put consumers first, ahead of Wall Street profits. This bill also brings derivatives out of the shadows and onto exchanges so that Wall Street's bets upon bets never again threaten to bring down our entire economy. This bill accomplishes many things and brings us a long way toward robust reform.

But there is one area we need to make stronger. We need to go further in addressing the rampant problems plaguing the credit rating industry. That is why I intend to introduce an amendment to change the way the initial credit ratings are assigned and encourage competition within the credit rating industry.

Currently, Wall Street firms that issue complex securities request and purchase ratings from nationally recognized statistical rating organizations--or NRSROs. I am sure all of you are familiar with them-- Moody's, Standard & Poor's, and Fitch. What you may not know is that there are actually a handful of other credit rating agencies doing the same work. But the big three agencies have effectively shut all others out of the market. It is easy to see how.

In the current system, the issuer of the bond pays the credit rating agency. So there is an incentive to rate every product that comes across your desk as AAA. If you give a risky product a low rating, the issuer can just go to one of the other agencies and shop around for a better rating. Guess which agency that issuer is going to go back to the next time? Of course, the agency that gave them the higher rating. Does anyone see a problem? I do.

Well, the problem is that the entire credit rating structure is basically one enormous conflict of interest. Issuers want high ratings, and raters want business. The market offers incentives for inflated ratings not accurate ratings. These perverse incentives have driven the behavior of all participants. Any rating agency looking to enter the market with better methods or any rating agency that refuses to inflate its ratings will never be able to compete.

My friend and colleague, Senator Levin, held a hearing not long ago in the Permanent Subcommittee on Investigations. His PSI investigative team unearthed some very unsavory e-mail exchanges between issuers and raters--e-mails which implied that an issuer could obtain a higher rating if he paid more money. And money--money--is what drove this industry not performance. As an example, the New York Times reported Sunday that 93 percent of AAA-rated subprime mortgage-backed securities issued in 2006 have since been downgraded to junk status.

This might be easy to dismiss if these junk bonds simply cost some Wall Street speculators a few bucks here and there. But, in fact, these junk securities permeated the entire market. These junk securities were in older workers' pension funds and working peoples' retirement funds. These junk bonds contributed to the loss of $3.4 trillion in retirement savings during this crisis.

To me, it is obvious we need an entirely different model. My amendment, which I am introducing with Senators Schumer and Nelson, would finally encourage competition and--get this--accuracy, in an industry that has little of either. Specifically, my amendment creates a credit rating agency board--a self-regulatory organization--tasked with developing a system in which the board assigns a rating agency to provide a product's initial rating. Requiring an initial rating by an agency not of the issuer's choosing will put a check on the accuracy of ratings. Simple.

My amendment leaves flexibility to the board to determine assignment process. But the board will be inclined to make the process one that incentivizes accuracy because the representatives of the investor community will make up a majority of the board--for example, pension fund managers and endowment directors; folks who have a vested interest in the AAA bonds they have selected actually performing as AAA bonds. The board gets to design the assignment process it sees fit. It can be random, it can be based on a formula, just as long as the issuer doesn't get to choose the rating agency.

The board will select a subset of qualified credit rating agencies to be

eligible for the assignment pool. The board will be required to monitor the performance of the agencies in the pool. If the board so chooses, it can reward good performance with more rating assignments. It can recognize poor performance with fewer rating assignments. If the rater is bad enough, that might even be zero assignments.

My amendment gives the SEC a year and a half to carefully implement this new system with input from the board members. The result will be increased competition among the credit raters, generally, and incentives to produce accurate ratings, not inflated ratings. The amendment does not prohibit an issuer from then seeking a second or a third or a fourth rating from an agency of its choice.

But rating agencies will be disinclined to give inflated ratings to a product if the initial rating reflects its true value. Some smaller credit rating agencies, which haven't taken part in the inflated ratings game, would finally have a chance to compete. An assignment mechanism for initial ratings will break up today's credit rating oligopoly, promote real competition, and produce more accurate ratings. More accurate ratings will decrease risk and create more stability in our financial system. And that is what this is all about.

Now, Wall Street lobbyists may claim this issue is too complex for Congress to address, but imagine that your child came home from school one day saying their chemistry teacher was offering an A to anyone who wanted to skip the final exam and instead pay $100.

You don't need to know anything about chemistry to understand that this system of rewards is harmful. Not only is the teacher making easy money, but nobody is holding the student accountable for doing good work.

Now I don't know any teachers that corrupt. But the credit rating agencies have demonstrated that they have blindly followed the perverse incentives of the current market. Congress should not sit idly by and let the credit rating industry continue to expose our economy to great risk just because Wall Street insists the problem doesn't have an easy solution. Now, my amendment may not fix the entire system, but it will provide checks, encourage accuracy, and increase competition.

And there is no need to take my word for it--the idea in my amendment was actually first proposed by several well-respected academics. Matthew Richardson, a leading expert and professor of applied financial economics at NYU's Stern School of Business, supports this proposal, and has been integral in the development of my amendment, and I would like to thank him for his assistance.

Economist Paul Krugman has suggested this model as a step toward improvement. And so has economist Dean Baker. Americans for Financial Reform, which includes the Nation's most prominent consumer groups, supports it.

I would like to thank my colleagues, Senator Schumer and Senator Nelson, for their leadership on this issue and for their expertise in helping me craft this amendment. I also thank my colleagues, Senators Brown, Whitehouse, and Murray for joining us in cosponsoring it.

Going forward, I hope that more of my colleagues will join with us in taking action to restore integrity to the credit rating industry.

I yield the floor.

Madam President, I ask unanimous consent that the Senate proceed to a period of morning business, with Senators permitted to speak for up to 10 minutes each.

Madam President, I rise to support the Democracy Is Strengthened by Casting Light On Spending in Elections Act, or the DISCLOSE Act, Senator Schumer's bill to fight the effects of the Citizens United decision.

I want to tell Minnesotans listening at home why I support this bill. I want to talk about the problem this bill addresses and how this bill fixes that problem. I also want to talk about a part of this legislation that came from a bill I introduced earlier this year.

A lot of people don't follow the Supreme Court very closely, so I would like to summarize what the Citizens United decision does. In a nutshell, it allows corporations to spend as much money as they want, whenever they want, in any election in this country. It lets corporations spend their shareholder money to do this. What is worse, it will allow foreign subsidiaries, wholly owned by foreign governments, to spend just as much money as their American competitors.

This decision changed our election laws in a radical way. In a single decision, the Supreme Court reversed a century-old legal standard, 2 Federal laws, 24 State laws, including a 20-year-old Minnesota law, and 2 of its own decisions, one of which it handed down just 6 years ago. I am not a lawyer and I don't speak Latin, but unless the term ``stare decisis'' means ``overrule stuff,'' I think we have an activist court on our hands.

But I don't want to talk about legal precedent; I want to talk about how this decision will affect people's everyday lives. I want to talk about the crisis Citizens United has created for communities: for the safety of our communities and for our ability to run them without a permission slip from big business.

Let me give a couple of examples of policies that might never have been enacted if Citizens United had been the law of the land.

As of 1965, when America's population was about half as large as it is today, 50,000 people died every year from car accidents. Believe it or not, the auto industry knew full well it could prevent a large portion of highway deaths just by installing seatbelts in every car they sold. But as late as the early 1960s, they refused to do that. They said: ``Safety doesn't sell.'' They lobbied against legislation to require seatbelts.

Fortunately for all of us, in 1966 Congress passed a law requiring all passenger cars to have seatbelts. By the year 2000, the fatality rate from car accidents had dropped by 71 percent.

Here is another story. In the 1920s, oil companies started adding lead to gasoline. They did this even though they knew that lead was a poison. In fact, 80 percent of the workers at Standard Oil's very first lead gas plant died of or got lead poisoning. This didn't stop oil company representatives from testifying before this very body repeatedly that leaded gasoline and lead pollution in the air were totally safe. That is what they said.

But Congress didn't take the bait. In 1970, Congress passed the Clean Air Act and phased out leaded gasoline over the next two decades. By 1995, the percentage of children with elevated levels of lead in their blood had dropped by 84 percent. By 2000, the level of ambient lead in the air had dropped 98 percent.

A lot of people know that the National Traffic and Motor Vehicle Safety Act and the Clean Air Act of 1970 are two of the pillars of modern consumer and environmental safety laws. Here is another thing they have in common: They were both passed about 60 days before midterm elections.

Do you think the seatbelt bill would have been as strong if GM could have run $1 million in attack ads against vulnerable Congressmen, by name, in the last months before those elections?

Do you think the Clean Air Act would have been so aggressive on lead if Standard Oil could have spent $10 million against lawmakers in Texas? These kinds of corporate expenditures would have been made possible by Citizens United, and this is what the DISCLOSE bill will fight.

Here is my point. At the end of the day, this bill is not about election law. It's not about campaign finance. It's about seatbelts. It's about clean air. It's about protecting our right to improve our lives without some corporation saying: No, you can't do that.

I want to talk a little about how the DISCLOSE Act is going to temper the effects of Citizens United.

First, the bill will make sure voters know who is really behind any advocacy group's election ad. Both the head of the advocacy group and its top contributors will have to appear in and approve every ad. These groups will also have to disclose their top donors to the Federal Election Commission.

Secondly, the DISCLOSE Act will enhance accountability to shareholders. Corporations will have to disclose their political expenditures in periodic reports. They will have to post this information on their Web sites. I have worked with Senator Schumer on getting strong disclosure provisions, so I am particularly pleased to see these provisions in place.

Thirdly, under the DISCLOSE Act, government contractors receiving more than $50,000 will be banned from spending money on our elections. The same goes for recipients of TARP funds who have yet to pay taxpayers back. This makes sense. If companies are getting taxpayers' money, they should not be able to turn around and spend that same money to tell taxpayers how to vote.

I want to talk about a fourth part of the bill which I think is crucial. As President Obama said in his State of the Union Address in January, the Citizens United decision won't just open the floodgates for special interests; it is going to open the floodgates for foreign interests. Under Citizens United, foreign companies with subsidiaries in the United States will be able to use those companies to spend without limit in American elections. As President Obama said, American elections should not be bankrolled by foreign entities. Can't we all agree on that?

That is why that day, a few hours before President Obama stood before the combined Houses of Congress, I introduced the American Elections Act, a bill that would close loopholes in our current laws that allow foreign companies to spend freely in our elections.

I am thrilled to say that the DISCLOSE Act contains three of the core provisions of my legislation. I am so thankful to Senator Schumer for reaching out to work together to include them and for his remarks this morning. He has been a true champion on this issue.

Let me summarize these provisions. First, the DISCLOSE Act bars election spending by companies in which a foreign national controls political decisionmaking or the company's operations. This effectively codifies an existing regulation. Secondly, it bars election spending by companies in which foreign nationals make up a majority of the board of directors. Finally, it bars election spending by companies in which a foreign entity owns a controlling share of stock, defined by the leading Delaware standard for a controlling share, which is 20 percent stock ownership. This may seem low, but, in fact, 31 out of the 32 States that define a controlling share with a number define it as 20 percent or less. Actually, almost all of them define it as 10 percent, including Minnesota.

They all boil down to this: If a foreign individual, foreign company, or foreign government controls your company, your company should not be spending freely in American elections. American elections should be controlled by Americans.

My Republican colleagues are saying that we are fighting a paper tiger here, that we should not be concerned about foreign influence in our elections because the law already prohibits it. The day after President Obama delivered his State of the Union, Minority Leader McConnell came to the floor to talk about this, and said that President Obama was wrong and that the law was actually ``crystal clear'' on foreign spending. He said:

[C]ontrary to what the President and some of his surrogates

in Congress say, foreign persons, corporations, partnerships,

associations, organizations or other combination of persons

are strictly prohibited from any participation in U.S.

elections, just as they were prohibited before the Supreme

Court's Citizens United decision.

``Strictly prohibited from any participation''? Yet, in fact, because our current laws are vague and out of date, even CITGO, a wholly owned subsidiary of the Government of Venezuela, could easily spend freely in our elections before Citizens United.

Current Federal law has three main provisions against Federal influence:

First, companies must be incorporated and have their principal place of business in the United States.

CITGO's parent company is located in Venezuela, but CITGO itself is organized under the laws of Delaware, with its principal place of business in Texas. CITGO passes that test.

Second, the Federal Elections Commission requires that any political spending by foreign subsidiaries be drawn from profits made in America.

No problem for CITGO. The latest SEC 10-K filing we could obtain showed $625 million in annual profits here in the United States. CITGO passes that test. But it can only spend $625 million on American elections.

Finally, current regulations require that all political decisionmaking for a company be made by Americans, not foreign nationals.

You would think that because CITGO's board of directors has no Americans--it is just four Venezuelan citizens--it couldn't pass this test. But believe it or not, a July 2000 decision from the Federal Elections Commission said that even this would not disqualify a company. As long as a board of directors formed an elections committee with only American members, that company can still spend on elections, even with 100 percent foreign board membership.

So there you have it. If our current laws can't stop Hugo Chavez, whom can they stop?

Far from expanding the rights of American companies and leaving foreign ones behind a legal firewall, Citizens United has expanded the existing rights of American companies and foreign subsidiaries equally. Both American companies and foreign subsidiaries can now spend as much money as they want whenever they want in our elections.

We need to act now to protect our elections against foreign governments. We need to act now to protect our consumer safety and our environmental laws against a corporate veto. We need to act now to pass the DISCLOSE Act, which I am proud to join as an original cosponsor.

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

Mr. President, I rise this evening to talk about how we can take a big step toward holding Wall Street accountable and stopping it from lining its own pockets at the expense of America's families.

Last month, as part of the health care reconciliation bill, the Senate also passed student loan reform that ended a longtime corporate welfare program. Our reforms halted the enormous subsidies the Federal Government paid to lenders in the student loan market, replacing it with a program called Direct Lending that slashes $61 billion--$61 billion--in cost to the taxpayers by cutting out the middleman and lending to students directly. The money saved will go toward Pell grants, helping kids from working families go to college.

Today, as we debate Wall Street reform, we continue that fight to end the stranglehold big banks have on our economy and, by extension, on the everyday life of the American people.

Over the past year and a half, we have seen, in stark reality, the devastating impact Wall Street can have on our economy when it is left to its own devices. Fueled by unbridled greed, a love of risk--well, the love of risking other people's money--and an obsession with profit at all costs, banks bought up toxic mortgages by the thousands, driving the subprime lending market in the process. Credit rating agencies, conveniently funded by the same institutions they were rating--that is a bad idea--gave the resulting securities their highest AAA rating, and the initial ingredients of the financial crisis were born. Incidentally, today Paul Krugman wrote in the New York Times that 93 percent of these AAA-rated subprime mortgage-backed securities have since been downgraded to junk status--93 percent. That is hard to do on anything.

Several bank failures and a $700 billion-plus bailout later, the American people were left paying the price. By October of 2009, unemployment had jumped to 10.1 percent and even today it remains at 9.7 percent. By contrast, just 10 years ago, in October of 2000, the unemployment rate was 3.9 percent. Americans have lost $11.7 trillion-- $11.7 trillion--in personal wealth since the financial crisis, and housing values have fallen 15 percent in just the past year. We have seen our retirement accounts shrink and our plans for the future delayed, sometimes indefinitely--and all because of Wall Street's incessant need to rack up enormous profits.

Over the past few decades, Wall Street's profits have gone through the roof. In 1987, the financial industry represented only 19 percent of all domestic corporate profits. By 2009, that number was almost 32 percent. Thirty-two percent of all the Nation's corporate profits went to the financial industry.

The dramatic growth of the financial services industry would be fine if Wall Street was actually adding value--helping to invest in our economy in constructive ways and to create jobs. But, instead, they have been making bets on bets on bets on bets. It is one thing to have a commodities futures market that provides the resources for farmers to put crops in the ground, but it is another thing altogether when Wall Street is just gambling in areas where they have no real productive interest. Let's put Wall Street back to work investing in America, not gambling with its future.

The bill we are discussing tonight would ensure that Wall Street can never again bilk the American people in the same way. It would create a Consumer Financial Protection Bureau--a true cornerstone of this bill. The bureau would be an independent watchdog for consumers housed inside the Federal Reserve. The bureau would force big banks and credit card companies to offer clear terms to families on credit cards, student loans, on retirement financial products. Just as importantly, it would make sure mortgage companies cannot sell misleading loans and mortgages to consumers so we avoid the kinds of problems that led to this crisis in the first place.

For the first time, the bill would set up a council of regulators that would oversee the financial system as a whole. This council would monitor risk across the entire system and ensure that industries and companies do not fall through the cracks between regulatory agencies. This bill also includes a tough section on derivatives to ensure greater transparency and tighten their regulation.

It ends taxpayer bailouts by forcing banks to pony up $50 billion to pay for their own funeral if they fail. This is not a taxpayer-funded bailout, and let me tell you why. First, it is not a bailout. The bank would get liquidated. Secondly, it is not taxpayer funded because taxpayers do not fund it. The banks do. I do not know how to make this any clearer to my colleagues across the aisle. Yet tonight we find ourselves where we are.

Let me be clear: We cannot afford not to pass this bill. Americans are demanding we act to hold Wall Street accountable. Without further protections, it would be easy to have another crisis such as the one we have just been through. Yet tonight, despite the urgency and the importance of this bill, my colleagues across the aisle are filibustering our attempt to reform Wall Street and not just the bill itself. They have blocked us from even starting debate on the bill by filibustering the motion to proceed. They have done this despite the fact that many of them actually agree with substantial portions of the bill. They are doing this because they want to stop government from actually being able to accomplish anything.

I have said it before, and I will say it again. This is a perversion of the filibuster and a perversion of the Senate. Let's turn our attention back to legislating, which is the reason voters put us in this august body in the first place.

I urge my colleagues to support the Wall Street reform bill. We often talk on the Senate floor about wanting to make sure American families are protected. Now we have a chance to actually do something about it. America cannot afford another financial crisis. That is now in our hands in this body, and it is one of our greatest responsibilities.

I thank the Presiding Officer. I yield the floor.

I kind of came from telecom.

Madam President, I am going to tie together judicial nominees and administrative nominees. You heard from my colleague, Senator Klobuchar from Minnesota. She talked about how President Bush had, during his first two years in office, about 100 judicial nominees confirmed, and it is 18 judges so far for President Obama. The district court nominees who have been reported out of committee are waiting almost twice as long to be confirmed as during the Bush administration, and circuit court nominees are waiting five times longer. I have heard my colleagues from the other side say, well, the President isn't nominating judges as fast as President Bush did. First, you would think if that were the case, they would have to wait less time because there are fewer of them. The reason he has been nominating fewer is because they are holding up Christopher Schroeder, from the Office of Legal Policy at DOJ. He is the guy who vets nominees for judgeships. He was reported out of the Judiciary Committee in July of 2009. We could not get him a vote on the floor. Then he wasn't carried over. The Republicans objected, so now he has been renominated earlier this year and reported out again. We cannot get a vote on him. He is the guy who helps the President vet the people for the judgeships.

I don't want to hear complaints from my friends on the other side about the pace of the judgeships being nominated, when they are holding up the guy who helps the President vet the judgeships.

This is a perversion of the filibuster. The whole point of the filibuster was that our Founders said the Senate was the saucer to cool the passions of the House of Representatives, right? We wanted to prevent the tyranny of the majority. This isn't about that--not when you are holding somebody up, and then when you have the vote, it is 99 to 0. That has nothing to do with what the purpose of the filibuster is. Do you know what this is? This is running out the clock. This is used to stop business before the Senate.

The American people ought to be incensed about this, because what this is doing is slowing down anything from getting done on jobs, on Wall Street reform, and on energy. That is what this is about. This is about not letting this President and this Congress achieve anything. This is about obstructionism.

I yield back to the Senator from Virginia.