Floor Statements

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

I note the absence of a quorum.

Mr. President, for the Committee on Armed Services I report favorably the following nomination lists which were printed in the Record on the dates indicated, and ask unanimous consent, to save the expense of reprinting on the Executive Calendar that these nominations lie at the Secretary's desk for the information of Senators.

Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on May 6, 2009, at 9:30 a.m., to conduct a hearing entitled ``Regulating and Resolving Institutions Considered `Too Big to Fail'.''

Mr. President, I ask unanimous consent that the Committee on Energy and Natural Resources be authorized to meet during the session of the Senate on Wednesday, May 6, 2009, at 10 a.m., in room SD-366 of the Dirksen Senate office building.

Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Wednesday, May 6, 2009, at 9:30 a.m., to hold a hearing entitled ``Engaging Iran: Obstacles and Opportunities.''

Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Wednesday, May 6, 2009, at 2:30 p.m., to hold a subcommittee hearing entitled ``NATO Post-60: Institutional Challenges Moving Forward.''

Mr. President, I ask unanimous consent that the Senate Committee on the Judiciary be authorized to meet during the session of the Senate, to conduct a hearing entitled ``Oversight of the Department of Homeland Security,'' on Wednesday, May 6, 2009, at 10 a.m., in room SD-224 of the Dirksen Senate office building.

Mr. President, I ask unanimous consent that the Committee on Veterans' Affairs be authorized to meet during the session of the Senate on Wednesday, May 6, 2009, at 9 a.m. The Committee will meet in room 418 of the Russell Senate office building beginning at 9:30 a.m.

Mr. President, I ask unanimous consent that the Subcommittee on Communications, Technology, and the Internet of the Committee on Commerce, Science, and Transportation be authorized to meet during the session of the Senate on Wednesday, May 6, 2009, at 2:30 p.m., in room 253 of the Russell Senate office building.

Mr. President, I ask unanimous consent that the Subcommittee on Strategic Forces of the Committee on Armed Services be authorized to meet during the session of the Senate on Wednesday, May 6, 2009, at 2:15 p.m.

Mr. President, I ask unanimous consent that the Special Committee on Aging be authorized to meet during the session of the Senate, on May 6, 2009, from 2 p.m.--4 p.m. in Hart 216 for the purpose of conducting a hearing.

Mr. President, I am introducing legislation today, along with Senator Collins, to strengthen the transparency, accountability, and stability of a key aspect of our nation's financial system. Right now, trillions of dollars in complex financial transactions known as swap agreements are being marketed, traded, and implemented by financial institutions operating in the U.S. without adequate oversight or regulation.

Swaps are typically an agreement between two parties placing a bet on future cash flows. Some swaps bet on whether a stock price, interest rate, commodity price, or currency value will rise or fall; others bet on whether a company will default on payment of a bond. Stock price bets are referred to as equity swaps; bets on whether companies will be unable to pay their debts are referred to as credit default swaps.

As of June 2008, according to data compiled by the Bank of International Settlements, worldwide swaps markets included credit default swaps with a total notional value of $57 trillion; commodity swaps with a notional value of $13 trillion; equity swaps with a notional value of $10 trillion; foreign currency swaps with a notional value of $62 trillion; and interest rate swaps with a notional value of $458 trillion. These multi-trillion-dollar swap transactions are going on full bore, without appropriate U.S. disclosure requirements, clearing requirements, capital or liquidity safeguards, or other measures to protect the U.S. financial system against systemic risk.

Why? Because current law prohibits key Federal financial regulators-- including the Securities and Exchange Commission, SEC, and the Commodities Futures Trading Commission, CFTC--from exercising oversight or issuing regulations to ensure the safety and soundness of swap transactions. That prohibition has been in place for nearly 10 years now, since the year 2000; it has never made any sense; it helped cause the financial crisis that is engulfing the American economy; and it ought to be eliminated immediately.

The bill we are introducing today, the Authorizing the Regulation of Swaps Act, would do just that. It would immediately repeal the statutory prohibition on the SEC and CFTC from regulating swaps. In addition, the bill would give authority to federal financial regulators, including bank, securities, and commodities regulators, to oversee and regulate all types of swap agreements, whether traded on an exchange or over-the-counter, including credit default, commodity, equity, foreign currency, and interest rate swaps. The bill would enable financial regulators, for the first time since 2000, to exercise oversight of the now largely hidden and unregulated swaps markets.

To understand why this legislation is needed and should be enacted promptly without waiting for the larger financial reform bill that's coming, I want to review some history. Twelve years ago, in 1997, Brooksley Born, then the head of the CFTC, raised a red flag about the growing use of over-the-counter swaps and other derivatives that were being traded outside of regulated exchanges and outside of normal federal oversight. She called for a study of those over-the-counter transactions and for comments on whether they should be subject to some type of regulation.

Her effort was immediately met with resistance, however, from not only the financial industry that profited from swaps trading, but also other Federal regulators then in office. For example, then Federal Reserve Chairman Alan Greenspan, then Treasury Secretary Robert Rubin, and then SEC Chairman Arthur Levitt all opposed her effort to even examine over-the-counter swap agreements. The dominant view at the time was that regulation was unnecessary and would only slow down a booming market.

In 1998, at the urging of then Chairman Greenspan, Secretary Rubin, Chairman Levitt, and others, Congress enacted legislation which actually barred the CFTC from conducting the study that Chairman Born wanted and from developing any regulatory alternatives for over-the- counter swaps.

In 2000, Congress went farther. In late December, during the final days of the 106th Congress, legislation affecting a range of financial issues was slipped without notice into a conference report of an omnibus appropriations bill. That legislation, called the Commodity Futures Modernization Act, included provisions which together created a flat out prohibition on the regulation of every kind of swap the authors could

think of, including credit default, commodity, equity, foreign currency, interest rate, and even weather swaps. That type of sweeping statutory prohibition had never been included in any bill voted on by the Senate before being inserted into a must-pass appropriations bill in December 2000. That omnibus appropriations bill was approved by the Senate on a voice vote.

Today we are living with the disastrous consequences of that ill- conceived prohibition on the regulation of swaps.

One example says it all: AIG. AIG is a financial holding company that, all by itself, has cost taxpayers more than $150 billion so far. Over a period of years, AIG had issued more than $400 billion in credit default swaps without setting aside sufficient capital or liquidity reserves. After its swaps began losing value, AIG's counterparties required AIG to post multi-billion-dollar collateral to secure payment on those swaps, and a credit rating downgrade threatened to increase its collateral calls, AIG came pleading for a taxpayer bailout. The $150 billion in taxpayer dollars was needed not only to keep AIG afloat, but also to bail out a dozen other large financial institutions that had purchased credit protection from AIG, including Goldman Sachs, Merrill Lynch, and Bank of America.

Apparently, none of those credit default swap exposures had been known to Federal regulators until AIG informed the Federal Reserve on a Friday that it was likely to go out of business the following week unless provided billions in taxpayer support. When regulators understood how far in the hole AIG had fallen and how many financial institutions would be affected by its financial collapse, they determined that they had no choice but to prop up the whole mess with taxpayer dollars.

AIG is not the only financial institution with risky credit default swaps. But even if federal regulators know of other high-risk problems, the law has tied their hands in terms of what steps can be taken in response. Even measures that most experts believe would reduce systemic risks, such as requiring companies to use credit default swap clearinghouses or requiring traders to disclose all credit default swap transactions, cannot be fully implemented, because Federal agencies lack the authority to regulate swaps.

Seven months ago, during a Senate hearing in September 2008, Christopher Cox, then chairman of the SEC, testified that the credit default swap market was ``completely lacking in transparency'' and ``ripe for fraud and manipulation.'' A few days later he called on Congress to take ``swift action'' to give regulators the authority to oversee credit default swaps. But the statutory barriers prohibiting swaps regulation have remained in place.

Giving the regulators what they have asked for is long overdue. It does not make sense for Federal regulators to be statutorily barred from requiring disclosure of swap transactions, mandating use of clearinghouses, or imposing other safeguards particularly in light of the size of the swaps market with trillions of dollars in credit default swap, interest rate, commodity, equity, foreign currency, and other swaps.

Even some past opponents of swaps regulation have rethought their opposition.

Alan Greenspan acknowledged last October that there are ``serious problems'' associated with credit default swaps.

Robert Rubin recently acknowledged that derivatives, which include swaps, ``create systemic risk.''

Arthur Levitt said it was a mistake not to have regulated swap agreements.

Top financial officials in the Obama Administration, including Treasury Secretary Tim Geithner, National Economic Council Chairman Larry Summers, SEC Chair Mary Schapiro, and CFTC nominee Gary Gensler have all called publicly for stronger regulation of over-the-counter transactions, including swap agreements.

Congress and the Administration are now engaged in an effort to enact comprehensive financial reforms to safeguard our economy. While some of those reforms require a lot of time and deliberation to get right, others can--and should--be implemented more quickly. Removing the prohibition on regulating swaps is one of those reforms that can and should be done now, so our regulators can begin, without the hindrance of ill-conceived statutory barriers, to design a sensible regulatory framework for swaps.

Here is what my bill would do. First, it would repeal about a dozen provisions in the Commodity Futures Modernization Act and other laws that prevent federal financial regulators from overseeing and regulating swap agreements. Second, it would give Federal financial regulators, including bank, securities, and commodity regulators, immediate authority to oversee and regulate swaps involving the financial institutions and exchanges that they already regulate. To ensure regulators have sufficient authority, the bill would use the same comprehensive definition of swap agreement that is used in current law to prohibit swaps regulation.

These measures would give regulators immediate authority to acquire swap-related data. That would allow them to evaluate swap risks at specific companies as well as across the financial system. Regulators could then use this data to look into what additional safeguards are needed and what abuses need to be stopped.

One thing the bill would not do is require federal financial regulators to regulate swaps or tell them how to regulate swaps if they decide to do so. That is left for the larger regulatory reform bill coming later this year. The only instruction provided in this bill is that, if any regulator decides to act, it must consult, work, and cooperate with all of the other federal financial regulators to ensure swaps are treated in a consistent way.

I see this bill as a necessary first step to eliminate harmful statutory barriers that tie regulators' hands, impede oversight of the multi-trillion-dollar swaps markets, and create systemic risk. The bill does not take the needed second step of laying out ways to regulate swaps. It does not, for example, specify swaps recordkeeping, disclosure requirements, clearing requirements, capital or liquidity safeguards, or other measures. Senator Collins has another bill that, in part, addresses credit default swaps clearinghouses; I have a separate bill that specifies safeguards in the area of commodity swaps. Other colleagues have introduced bills that address a variety of swaps issues. The legislation we are introducing today does not contradict or preclude any of those other approaches it is an interim measure that would clear the way for more specific swaps requirements in subsequent reform legislation.

The Levin-Collins bill offers a limited, commonsense way to restore immediate federal authority over a high-risk, high-dollar financial sector that has operated for too long in the shadows, and whose failure has cost us hundreds of billions of dollars so far. Due to the trillions of dollars and financial risk involved, I urge the Senate to act on this bill as soon as possible.

I would also like to take a moment to extend my thanks and appreciation to the SEC, CFTC, and Treasury officials who took the time to provide technical assistance in drafting this legislation. I hope those agencies, and the Obama Administration as a whole, will announce their support for the bill and work for its enactment.

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

Mr. President, I am introducing legislation today, along with Senator Collins, to strengthen the transparency, accountability, and stability of a key aspect of our nation's financial system. Right now, trillions of dollars in complex financial transactions known as swap agreements are being marketed, traded, and implemented by financial institutions operating in the U.S. without adequate oversight or regulation.

Swaps are typically an agreement between two parties placing a bet on future cash flows. Some swaps bet on whether a stock price, interest rate, commodity price, or currency value will rise or fall; others bet on whether a company will default on payment of a bond. Stock price bets are referred to as equity swaps; bets on whether companies will be unable to pay their debts are referred to as credit default swaps.

As of June 2008, according to data compiled by the Bank of International Settlements, worldwide swaps markets included credit default swaps with a total notional value of $57 trillion; commodity swaps with a notional value of $13 trillion; equity swaps with a notional value of $10 trillion; foreign currency swaps with a notional value of $62 trillion; and interest rate swaps with a notional value of $458 trillion. These multi-trillion-dollar swap transactions are going on full bore, without appropriate U.S. disclosure requirements, clearing requirements, capital or liquidity safeguards, or other measures to protect the U.S. financial system against systemic risk.

Why? Because current law prohibits key Federal financial regulators-- including the Securities and Exchange Commission, SEC, and the Commodities Futures Trading Commission, CFTC--from exercising oversight or issuing regulations to ensure the safety and soundness of swap transactions. That prohibition has been in place for nearly 10 years now, since the year 2000; it has never made any sense; it helped cause the financial crisis that is engulfing the American economy; and it ought to be eliminated immediately.

The bill we are introducing today, the Authorizing the Regulation of Swaps Act, would do just that. It would immediately repeal the statutory prohibition on the SEC and CFTC from regulating swaps. In addition, the bill would give authority to federal financial regulators, including bank, securities, and commodities regulators, to oversee and regulate all types of swap agreements, whether traded on an exchange or over-the-counter, including credit default, commodity, equity, foreign currency, and interest rate swaps. The bill would enable financial regulators, for the first time since 2000, to exercise oversight of the now largely hidden and unregulated swaps markets.

To understand why this legislation is needed and should be enacted promptly without waiting for the larger financial reform bill that's coming, I want to review some history. Twelve years ago, in 1997, Brooksley Born, then the head of the CFTC, raised a red flag about the growing use of over-the-counter swaps and other derivatives that were being traded outside of regulated exchanges and outside of normal federal oversight. She called for a study of those over-the-counter transactions and for comments on whether they should be subject to some type of regulation.

Her effort was immediately met with resistance, however, from not only the financial industry that profited from swaps trading, but also other Federal regulators then in office. For example, then Federal Reserve Chairman Alan Greenspan, then Treasury Secretary Robert Rubin, and then SEC Chairman Arthur Levitt all opposed her effort to even examine over-the-counter swap agreements. The dominant view at the time was that regulation was unnecessary and would only slow down a booming market.

In 1998, at the urging of then Chairman Greenspan, Secretary Rubin, Chairman Levitt, and others, Congress enacted legislation which actually barred the CFTC from conducting the study that Chairman Born wanted and from developing any regulatory alternatives for over-the- counter swaps.

In 2000, Congress went farther. In late December, during the final days of the 106th Congress, legislation affecting a range of financial issues was slipped without notice into a conference report of an omnibus appropriations bill. That legislation, called the Commodity Futures Modernization Act, included provisions which together created a flat out prohibition on the regulation of every kind of swap the authors could

think of, including credit default, commodity, equity, foreign currency, interest rate, and even weather swaps. That type of sweeping statutory prohibition had never been included in any bill voted on by the Senate before being inserted into a must-pass appropriations bill in December 2000. That omnibus appropriations bill was approved by the Senate on a voice vote.

Today we are living with the disastrous consequences of that ill- conceived prohibition on the regulation of swaps.

One example says it all: AIG. AIG is a financial holding company that, all by itself, has cost taxpayers more than $150 billion so far. Over a period of years, AIG had issued more than $400 billion in credit default swaps without setting aside sufficient capital or liquidity reserves. After its swaps began losing value, AIG's counterparties required AIG to post multi-billion-dollar collateral to secure payment on those swaps, and a credit rating downgrade threatened to increase its collateral calls, AIG came pleading for a taxpayer bailout. The $150 billion in taxpayer dollars was needed not only to keep AIG afloat, but also to bail out a dozen other large financial institutions that had purchased credit protection from AIG, including Goldman Sachs, Merrill Lynch, and Bank of America.

Apparently, none of those credit default swap exposures had been known to Federal regulators until AIG informed the Federal Reserve on a Friday that it was likely to go out of business the following week unless provided billions in taxpayer support. When regulators understood how far in the hole AIG had fallen and how many financial institutions would be affected by its financial collapse, they determined that they had no choice but to prop up the whole mess with taxpayer dollars.

AIG is not the only financial institution with risky credit default swaps. But even if federal regulators know of other high-risk problems, the law has tied their hands in terms of what steps can be taken in response. Even measures that most experts believe would reduce systemic risks, such as requiring companies to use credit default swap clearinghouses or requiring traders to disclose all credit default swap transactions, cannot be fully implemented, because Federal agencies lack the authority to regulate swaps.

Seven months ago, during a Senate hearing in September 2008, Christopher Cox, then chairman of the SEC, testified that the credit default swap market was ``completely lacking in transparency'' and ``ripe for fraud and manipulation.'' A few days later he called on Congress to take ``swift action'' to give regulators the authority to oversee credit default swaps. But the statutory barriers prohibiting swaps regulation have remained in place.

Giving the regulators what they have asked for is long overdue. It does not make sense for Federal regulators to be statutorily barred from requiring disclosure of swap transactions, mandating use of clearinghouses, or imposing other safeguards particularly in light of the size of the swaps market with trillions of dollars in credit default swap, interest rate, commodity, equity, foreign currency, and other swaps.

Even some past opponents of swaps regulation have rethought their opposition.

Alan Greenspan acknowledged last October that there are ``serious problems'' associated with credit default swaps.

Robert Rubin recently acknowledged that derivatives, which include swaps, ``create systemic risk.''

Arthur Levitt said it was a mistake not to have regulated swap agreements.

Top financial officials in the Obama Administration, including Treasury Secretary Tim Geithner, National Economic Council Chairman Larry Summers, SEC Chair Mary Schapiro, and CFTC nominee Gary Gensler have all called publicly for stronger regulation of over-the-counter transactions, including swap agreements.

Congress and the Administration are now engaged in an effort to enact comprehensive financial reforms to safeguard our economy. While some of those reforms require a lot of time and deliberation to get right, others can--and should--be implemented more quickly. Removing the prohibition on regulating swaps is one of those reforms that can and should be done now, so our regulators can begin, without the hindrance of ill-conceived statutory barriers, to design a sensible regulatory framework for swaps.

Here is what my bill would do. First, it would repeal about a dozen provisions in the Commodity Futures Modernization Act and other laws that prevent federal financial regulators from overseeing and regulating swap agreements. Second, it would give Federal financial regulators, including bank, securities, and commodity regulators, immediate authority to oversee and regulate swaps involving the financial institutions and exchanges that they already regulate. To ensure regulators have sufficient authority, the bill would use the same comprehensive definition of swap agreement that is used in current law to prohibit swaps regulation.

These measures would give regulators immediate authority to acquire swap-related data. That would allow them to evaluate swap risks at specific companies as well as across the financial system. Regulators could then use this data to look into what additional safeguards are needed and what abuses need to be stopped.

One thing the bill would not do is require federal financial regulators to regulate swaps or tell them how to regulate swaps if they decide to do so. That is left for the larger regulatory reform bill coming later this year. The only instruction provided in this bill is that, if any regulator decides to act, it must consult, work, and cooperate with all of the other federal financial regulators to ensure swaps are treated in a consistent way.

I see this bill as a necessary first step to eliminate harmful statutory barriers that tie regulators' hands, impede oversight of the multi-trillion-dollar swaps markets, and create systemic risk. The bill does not take the needed second step of laying out ways to regulate swaps. It does not, for example, specify swaps recordkeeping, disclosure requirements, clearing requirements, capital or liquidity safeguards, or other measures. Senator Collins has another bill that, in part, addresses credit default swaps clearinghouses; I have a separate bill that specifies safeguards in the area of commodity swaps. Other colleagues have introduced bills that address a variety of swaps issues. The legislation we are introducing today does not contradict or preclude any of those other approaches it is an interim measure that would clear the way for more specific swaps requirements in subsequent reform legislation.

The Levin-Collins bill offers a limited, commonsense way to restore immediate federal authority over a high-risk, high-dollar financial sector that has operated for too long in the shadows, and whose failure has cost us hundreds of billions of dollars so far. Due to the trillions of dollars and financial risk involved, I urge the Senate to act on this bill as soon as possible.

I would also like to take a moment to extend my thanks and appreciation to the SEC, CFTC, and Treasury officials who took the time to provide technical assistance in drafting this legislation. I hope those agencies, and the Obama Administration as a whole, will announce their support for the bill and work for its enactment.

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

Mr. President, last Monday marked the tenth anniversary of the tragic shooting at Columbine High School. The prior Thursday was the second anniversary of the tragic shooting at Virginia Tech. These horrific anniversaries have become far too common. Since the shooting at Columbine, I have spoken regularly on the Senate floor about the pressing need for common sense gun safety legislation. Unfortunately, Congress has failed to act.

Even a decade later, the very mention of Columbine High School strikes a nerve with those who hear it. Many of us can still recall with eerie detail the chaotic scenes of hundreds of terrified children running from their school as SWAT-teams descended on the building, searching for two adolescents who, before taking their own lives, murdered 12 innocent students, a teacher, and wounded two dozen others.

In the years that have followed, those closest to the event have recounted how they are constantly reminded of that day by the fragments of ammunition in their bodies or the physical scars from wounds suffered that day. Many victims have described shuddering at the sight of a trench coat or being instantly transported back to the incident from the sound or smell of fireworks. The physical and emotional pain these victims have endured should be intolerable to us. Yet

Congress has refused to take the necessary steps to prevent it.

Our Nation suffers from a horrific epidemic of gun violence. Over 30,000 Americans die from firearms every year, nearly 12,000 of which are homicides. That is an average of 32 gun murders every day, the same number killed at Virginia Tech. While we all hope and pray that these types of public tragedies do not happen again, the truth is that the threat of gun violence has not diminished.

Gun violence is preventable, however, it requires action. Without action, gun violence will continue to be found in our high schools, universities, religious institutions and our homes. For too long, victims and their families, educators and police officials around this country have cried out for sensible gun legislation that would keep guns out of the wrong hands, close the gun show loophole, reauthorize the assault weapons ban and aid law enforcement agencies in tracking gun traffickers. Passage of such legislation would serve as monumental steps toward ensuring these types of tragedies do not continue. Congress must do everything possible to reduce the level of gun violence in America.

Mr. President, I am a cosponsor of the Fraud Enforcement and Recovery Act of 2009, and today I vote for its enactment into law. In these difficult economic times, this bill is needed to strengthen the Federal Government's ability to combat mortgage, securities, and other types of financial fraud.

This act would put more fraud investigators, regulators, and prosecutors on the beat. It would authorize increased funding to the Department of Justice, the Federal Bureau of Investigation, the Securities and Exchange Commission, the U.S. Postal Service, the HUD inspector general, and the Secret Service. It would also ensure that the public will be able to see the results of these investments by requiring the agencies to submit a joint report to Congress on amounts spent on fraud investigations, as well as amounts recovered.

This act would also make clear that Federal mortgage fraud laws cover mortgage brokers and their agents--some of whom have wreaked a terrible toll in my State of Michigan and the country. Their misconduct has included misrepresenting mortgage terms to borrowers, convincing families to refinance their homes with mortgages that would leave them worse off financially, reaping hidden fees, and even obtaining fraudulent mortgages and stealing the funds. It is long past time to clarify and strengthen the laws that punish such wrongdoing.

The act would strengthen taxpayer protections by ensuring that moneys expended through the Troubled Assets Relief Program, TARP, are protected by the Federal fraud statute. In addition, it would expand securities antifraud provisions to cover fraud involving options and futures contracts for commodities.

The act would strengthen our antimoney laundering regime. The current money laundering statute outlaws financial transactions using the proceeds from certain listed unlawful activities. This act would add tax evasion to that list. The threat of criminal liability for money laundering is a powerful tool for prosecutors to use in their battles with those who dodge their tax obligations.

Additionally, recent court decisions have misdefined the term ``proceeds'' from the money laundering statute to mean only the net receipts from unlawful activities. By defining that term so narrowly, these court decisions have reduced the efficacy of the statute: preventing prosecutions for numerous crimes. This act will fix these decisions and explicitly define ``proceeds'' to include not only net but gross receipts from unlawful activities. This small modification will restore the money laundering statute to its rightful place as a critical tool in the battles against fraud and illicit activity.

These provisions are useful additions to Federal antimoney laundering statutes, but we should not stop here. We should also make sure that our antimoney laundering laws apply to all of the entities that may be involved in money laundering. I look forward to working with the Senate to update our antimoney laundering requirements, and continue the efforts to stop fraud, illicit activity, and tax evasion.

This act will make an important contribution to ongoing efforts to root out fraud--against individuals and against our Government. It is an important part of the effort to help put our country back on solid economic footing, and I commend the bill sponsors for their work on this legislation.

Mr. President, I ask the Senator from North Dakota, is it true that when a reconciliation bill comes to the floor, it must meet the requirements of the Byrd rule or be subject to a 60-vote point of order?

Is it true that a provision in a reconciliation bill is subject to a Byrd rule point of order if it produces a change in outlays or revenues that is merely incidental to the non-budgetary, i.e., policy, components of a provision?

Mr. President, as chairman of the Permanent Subcommittee on Investigations, I have conducted a series of hearings and issued reports on various issues pertaining to money-laundering and tax havens, and I appreciate the benefit of the Banking Committee chairman's insight on these matters.

The Fraud Enforcement and Recovery Act of 2009 before us importantly modifies the money laundering statute to include tax evasion. I believe that we should also expand anti-money laundering laws to apply to other entities involved in financial transactions.

In particular, hedge funds, other private investment vehicles, and company formation agents are not subject to the same anti-money laundering regulations as others who play roles in the financial services world. Currently, unregistered investment companies, such as hedge funds and private equity funds, have limited responsibilities under the Bank Secrecy Act. For example, hedge funds themselves are not required to establish Know Your Customer programs or file suspicious activity reports. Suspicious activity and tax evasion by clients may go unnoticed by appropriate authorities. Indeed, offshore tax abuses cost the U.S. Treasury an estimated $100 billion each year.

Complicating the Government's ability to establish and enforce AML regulations for this industry is the fact that many private investment funds and company formation agents have largely escaped general regulatory oversight. For example, when the Securities and Exchange Commission attempted to require hedge funds to register, the Court of Appeals for the District of Columbia Circuit found that

the SEC, lacked the appropriate authority. I believe that the SEC's attempts were well-intentioned, but the court's findings indicate that clearer authority must be established for key sectors of the financial services industry, including hedge funds and company formation agents.

Because hedge funds, private equity funds, and company formation agents are as vulnerable as other financial institutions to money launderers seeking entry into the U.S. financial system, there is no reason why they should continue to serve as pathways into the U.S. financial system for substantial funds of unknown origin. We need to establish a clear statutory mandate for these entities to implement sound anti-money laundering programs and to report on suspicious activities.

Madam President, today we are releasing the declassified report of the Senate Armed Services Committee's investigation into the treatment of detainees in U.S. custody. The report was approved by the committee on November 20, 2008, and has, in the intervening period, been under review at the Department of Defense for declassification.

In my judgment, the report represents a condemnation of both the Bush administration's interrogation policies and of senior administration officials who attempted to shift the blame for abuse--such as that seen at Abu Ghraib, Guantanamo Bay, and Afghanistan--to low ranking soldiers. Claims, such as that made by former Deputy Secretary of Defense Paul Wolfowitz that detainee abuses could be chalked up to the unauthorized acts of a ``few bad apples,'' were simply false.

The truth is that, early on, it was senior civilian leaders who set the tone. On September 16, 2001, Vice President Dick Cheney suggested that the United States turn to the ``dark side'' in our response to 9/ 11. Not long after that, after White House Counsel Alberto Gonzales called parts of the Geneva Conventions ``quaint,'' President Bush determined that provisions of the Geneva Conventions did not apply to certain detainees. Other senior officials followed the President and Vice President's lead, authorizing policies that included harsh and abusive interrogation techniques.

The record established by the committee's investigation shows that senior officials sought out information on, were aware of training in, and authorized the use of abusive interrogation techniques. Those senior officials bear significant responsibility for creating the legal and operational framework for the abuses. As the committee report concluded, authorizations of aggressive interrogation techniques by senior officials resulted in abuse and conveyed the message that physical pressures and degradation were appropriate treatment for detainees in U.S. military custody.

In a May 10, 2007, letter to his troops, GEN David Petraeus said that ``what sets us apart from our enemies in this fight . . . is how we behave. In everything we do, we must observe the standards and values that dictate that we treat noncombatants and detainees with dignity and respect. While we are warriors, we are also all human beings.'' With last week's release of the Department of Justice Office of Legal Counsel, OLC, opinions, it is now widely known that Bush administration officials distorted Survival Evasion Resistance and Escape ``SERE'' training--a legitimate program used by the military to train our troops to resist abusive enemy interrogations--by authorizing abusive techniques from SERE for use in detainee interrogations. Those decisions conveyed the message that abusive treatment was appropriate for detainees in U.S. custody. They were also an affront to the values articulated by General Petraeus.

In SERE training, U.S. troops are briefly exposed, in a highly controlled setting, to abusive interrogation techniques used by enemies that refuse to follow the Geneva Conventions. The techniques are based on tactics used by Chinese Communists against American soldiers during the Korean war for the purpose of eliciting false confessions for propaganda purposes. Techniques used in SERE training include stripping trainees of their clothing, placing them in stress positions, putting hoods over their heads, subjecting them to face and body slaps, depriving them of sleep, throwing them up against a wall, confining them in a small box, treating them like animals, subjecting them to loud music and flashing lights, and exposing them to extreme temperatures. Until recently, the Navy SERE school also used waterboarding. The purpose of the SERE program is to provide U.S. troops who might be captured a taste of the treatment they might face so that they might have a better chance of surviving captivity and resisting abusive and coercive interrogations.

SERE training techniques were never intended to be used in the interrogation of detainees in U.S. custody. The committee's report, however, reveals troubling new details of how SERE techniques came to be used in interrogations of detainees in U.S. custody.

The committee's investigation uncovered new details about the influence of SERE techniques on military interrogations at Guantanamo Bay, Cuba--GTMO. According to newly released testimony from a military behavioral scientist who worked with interrogators at GTMO, ``By early October [2002] there was increasing pressure to get `tougher' with detainee interrogations'' at GTMO. (p. 50). As a result, on October 2, 2002, 2 weeks after attending interrogation training led by SERE instructors from the Joint Personnel Recovery Agency, JPRA, the DOD agency that oversees SERE training, the behavioral scientist and a colleague drafted a memo proposing the use of aggressive interrogation techniques at GTMO. The behavioral scientist said he was told by GTMO's intelligence chief that the interrogation memo needed to contain coercive techniques or it ``wasn't going to go very far.'' (p. 50). Declassified excerpts from that memo indicate that it included stress positions, food deprivation, forced grooming, hooding, removal of clothing, exposure to cold weather or water, and scenarios designed to convince a detainee that ``he might experience a painful or fatal outcome.'' On October 11, 2002, MG Michael Dunlavey, the Commander of JTF-170 at GTMO, requested authority to use aggressive techniques. Major General Dunlavey's request was based on the memo produced by the behavioral scientists.

Major General Dunlavey's request eventually made its way to Department of Defense, DoD, General Counsel Jim Haynes' desk. Notwithstanding serious legal concerns raised by the military service lawyers, Haynes recommended that Secretary of Defense Donald Rumsfeld approve 15 of the interrogation techniques requested by GTMO. On December 2, 2002, Secretary Rumsfeld approved Haynes' recommendation, authorizing such techniques as stress positions, removal of clothing, use of phobias--such as fear of dogs--and deprivation of light and auditory stimuli.

The committee's investigation revealed that, following Secretary Rumsfeld's authorization, senior staff at GTMO drafted a standard operating procedure--SOP--for the use of SERE techniques, including stress positions, forcibly stripping detainees, slapping, and ``walling'' them. That SOP stated that ``The premise behind this is that the interrogation tactics used at U.S. military SERE schools are appropriate for use in real-world interrogations.'' Weeks later, in January 2003, trainers from the Navy SERE school travelled to GTMO and provided training to interrogators on the use of SERE techniques on detainees. (pp. 98-104).

The influence of Secretary Rumsfeld's December 2, 2002, authorization was not limited to interrogations at GTMO. Newly declassified excerpts from a January 11, 2003, legal review by a special mission unit, SMU, Task Force lawyer in Afghanistan state that ``SECDEF's approval of these techniques provides us the most persuasive argument for use of `advanced techniques' as we capture possible [high value targets] . . . the fact that SECDEF approved the use of the . . . techniques at GTMO, [which is] subject to the same laws, provides an analogy and basis for use of these techniques [in accordance with] international and U.S. law.'' (p. 154).

The committee's report also includes a summary of a July 15, 2004, interview with CENTCOM's then-Deputy Staff Judge Advocate, SJA, about Secretary Rumsfeld's authorization and its impact in Afghanistan. The Deputy SJA said: ``the methodologies approved for GTMO would appear to me to be legal interrogation processes. [The Secretary of Defense] had approved them. The General Counsel had approved them . . . I believe it is fair to say the procedures approved for Guantanamo were legal for Afghanistan.'' (p. 156).

The committee's report provides extensive details about how the aggressive techniques made their way from Afghanistan to Iraq. In February 2003, an SMU Task Force designated for operations in Iraq obtained a copy of the SMU interrogation policy from Afghanistan that included aggressive techniques, changed the letterhead, and adopted the policy verbatim. (p. 158). Months later, the Interrogation Officer in Charge at Abu Ghraib obtained a copy of the SMU interrogation policy and submitted it, virtually unchanged, through her chain of command to Combined Joint Task Force 7--CJTF-7--led at the time by Lieutenant General Ricardo Sanchez. On September 14, 2003, Lieutenant General Sanchez issued an interrogation policy for CJTF-7 that authorized interrogators to use stress positions, environmental manipulation, sleep management, and military working dogs to exploit detainees' fears in their interrogations of detainees.

The committee's investigation uncovered documents indicating that, almost immediately after Lieutenant General Sanchez issued his September 14, 2003, policy, CENTCOM lawyers raised concerns about its legality. One newly declassified email from a CENTCOM lawyer to the Staff Judge Advocate at CJTF-7--sent just three days after the policy was issued--warned that ``Many of the techniques [in the CJTF-7 policy] appear to violate [Geneva Convention] III and IV and should not be used . . .'' (p. 203). Even though the Bush administration acknowledged that the Geneva Conventions applied in Iraq, it was not until nearly a month later that CJTF-7 revised that policy.

Not only did SERE techniques make their way to Iraq, but SERE instructors did as well. In September 2003, JPRA sent a team to Iraq to provide assistance to interrogation operations at an SMU Task Force. The Chief of Human Intelligence and Counterintelligence at the Task Force testified to the Committee in February 2008 that JPRA personnel demonstrated SERE techniques to SMU personnel including so-called ``walling'' and striking a detainee as they do in SERE school. (p. 175). As we heard at our September 2008 hearing, JPRA personnel were present during abusive interrogations during that same trip, including one where a detainee was placed on his knees in a stress position and was repeatedly slapped by an interrogator. (p. 176). JPRA personnel even participated in an interrogation, taking physical control of a detainee, forcibly stripping him naked, and giving orders for him to be kept in a stress position for 12 hours. In August 3, 2007, testimony to the committee, one of the JPRA team members said that, with respect to stripping the detainee, ``we [had] done this 100 times, 1000 times with our [SERE school] students.'' The committee's investigation revealed that forced nudity continued to be used in interrogations at the SMU Task Force for months after the JPRA visit. (pp. 181-182).

Over the course of the investigation, the committee obtained the statements and interviews of scores of military personnel at Abu Ghraib. These statements reveal that the interrogation techniques authorized by Secretary Rumsfeld in December 2002 for use at GTMO-- including stress positions, forced nudity, and military working dogs-- were used by military intelligence personnel responsible for interrogations.

The Interrogation Officer in Charge in Abu Ghraib in the fall of 2003 acknowledged that stress positions were used in interrogations at Abu Ghraib. (p. 212).

An Army dog handler at Abu Ghraib told military investigators in February 2004 that ``someone from [military intelligence] gave me a list of cells, for me to go see, and pretty much have my dog bark at them. . . . Having the dogs bark at detainees was psychologically breaking them down for interrogation purposes.'' (p. 209).

An intelligence analyst at Abu Ghraib told military investigators in May 2004 that it was ``common that the detainees on [military intelligence] hold in the hard site were initially kept naked and given clothing as an incentive to cooperate with us.'' (p. 212).

An interrogator told military investigators in May 2004 that it was ``common to see detainees in cells without clothes or naked'' and says it was ``one of our approaches.'' (p. 213).

The investigation also revealed that interrogation policies authorizing aggressive techniques were approved months after the CJTF-7 policy was revised to exclude the techniques, and

even after the investigation into detainee abuses at Abu Ghraib had already begun. For example, an interrogation policy approved in February 2004 in Iraq included techniques such as use of military working dogs and stress positions. (p. 220).

A policy approved for CJTF-7 units in Iraq in March 2004 also included aggressive techniques. While much of the March 2004 policy remains classified, newly declassified excerpts indicate that it warned that interrogators ``should consider the fact that some interrogation techniques are viewed as inhumane or otherwise inconsistent with international law before applying each technique. These techniques are labeled with a [CAUTION].'' Among the techniques labeled as such were a technique involving power tools, stress positions, and the presence of military working dogs. (pp. 220-221).

Some have asked why, if it is okay for our own U.S. personnel to be subjected to physical and psychological pressures in SERE school, what is wrong with using those SERE training techniques on detainees? The committee's investigation answered that question.

On October 2, 2002, LTC Morgan Banks, the senior Army SERE psychologist warned against using SERE training techniques during interrogations in an email to personnel at GTMO, writing that:

[T]he use of physical pressures brings with it a large

number of potential negative side effects . . . When

individuals are gradually exposed to increasing levels of

discomfort, it is more common for them to resist harder . . .

If individuals are put under enough discomfort, i.e. pain,

they will eventually do whatever it takes to stop the pain.

This will increase the amount of information they tell the

interrogator, but it does not mean the information is

accurate. In fact, it usually decreases the reliability of

the information because the person will say whatever he

believes will stop the pain . . . Bottom line: the likelihood

that the use of physical pressures will increase the delivery

of accurate information from a detainee is very low. The

likelihood that the use of physical pressures will increase

the level of resistance in a detainee is very high . . . (p.

53).

Likewise, the Deputy Commander of DOD's Criminal Investigative Task Force at GTMO told the committee in 2006 that CITF ``was troubled with the rationale that techniques used to harden resistance to interrogations would be the basis for the utilization of techniques to obtain information.'' (p. 69).

Other newly declassified emails reveal additional warnings. In June 2004, after many SERE techniques had been authorized in interrogations and JPRA was considering sending its SERE trainers to interrogation facilities in Afghanistan, another SERE psychologist warned: ``[W]e need to really stress the difference between what instructors do at SERE school (done to INCREASE RESISTANCE capability in students) versus what is taught at interrogator school (done to gather information). What is done by SERE instructors is by definition ineffective interrogator conduct . . . Simply stated, SERE school does not train you on how to interrogate, and things you `learn' there by osmosis about interrogation are probably wrong if copied by interrogators.'' (p. 229).

If we are to retain our status as a leader in the world, we must acknowledge and confront the abuse of detainees in our custody. The committee's report and investigation makes significant progress toward that goal. There is still the question, however, of whether high level officials who approved and authorized those policies should be held accountable. I have recommended to Attorney General Holder that he select a distinguished individual or individuals--either inside or outside the Justice Department, such as retired federal judges--to look at the volumes of evidence relating to treatment of detainees, including evidence in the Senate Armed Services Committee's report, and to recommend what steps, if any, should be taken to establish accountability of high-level officials--including lawyers.

Mr. President, I will vote for this budget resolution. It rightfully recognizes that our way through these difficult times is by investing in our future, with significant funding for infrastructure, energy independence and programs that ensure the safety, health, and education of our Nation's children. This budget resolution makes clear that we cannot continue to cut taxes for a handful of wealthy individuals, at the expense of the many and hope that someday the benefits will trickle down. That course of action would lead to deeper and deeper deficits.

The prior administration's fiscal policies failed. They left us in difficult and uncertain times. Unemployment in my state of Michigan and across the country is sky high. The financial markets are in turmoil, and millions of hard-working Americans that still have jobs are not only concerned about their depleted savings and retirement accounts, but making their mortgage payments. And now, some of the greatest companies in our country are under great duress.

Our shared ability to navigate these troubled waters will depend upon our willingness to come together. Through this budget resolution, the Senate will set the blueprint for its work to help reverse the past administration's failed fiscal policies that have been so damaging to our economy.

The Budget Committee includes in this resolution deficit-neutral reserve funds to promote economic recovery and growth, investments in infrastructure, and a long overdue commitment to the health of Americans. With adequate funds, we can modernize the health care system by continuing to progress towards health information technology. With additional dollars to help support and strengthen the health care workforce, we are making a firm statement that we will no longer shirk our responsibilities and will continue to fight for the 45.7 million uninsured individuals who have not had access to health care.

This budget will help reduce our dependence on foreign oil. It allows us to improve our educational system. And it provides tax relief to millions of middle-income Americans, including providing much-needed relief from the alternative minimum tax. Congress, and our citizens, have long known that this tax was never intended to hit middle-class families.

I am also pleased that this budget paves the way for using our committed resources to restore our financial system, while providing critical transparency and accountability for taxpayers. While I was pleased to support the economic stimulus packages, they only provided a partial solution to fixing our economy's problems. We cannot stop now. Although we have already taken unprecedented efforts to stimulate and revive our economy, there is more work ahead. While hard-working families struggle to make ends meet, we owe it to them to continue to invest in their futures.

I am pleased that this budget resolution includes my proposal to establish a deficit-neutral reserve fund to promote American manufacturing. Congress needs to take bold, decisive action to revitalize our domestic manufacturing sector. The U.S. has lost more than 4.1 million manufacturing jobs since January 2001 and over 300,000 manufacturing jobs in Michigan since January 2001. It is important that we revitalize and maintain a strong manufacturing base in the U.S. The manufacturing industry faces pressure from international corporations that are strongly supported by their respective governments; our own government needs to lend similar support to keep American manufacturing companies competitive in the global marketplace.

The deficit-neutral reserve fund included in this budget lays the groundwork for legislation to address important initiatives to boost American manufacturing. I look forward to continuing to work with my colleagues to stimulate the manufacturing sector in a meaningful way, and make a wise investment in the long-term growth, health, and stability of the manufacturing industry.

The budget wisely includes a deficit-neutral reserve fund to accommodate legislation that would provide investments in clean energy and reduce greenhouse gas emissions, leaving the details of the legislation to the appropriate committees of jurisdiction. The threat of climate change is real and its impacts could be catastrophic if we do not act quickly. Clean energy and advanced technologies hold the promise for making real progress on reducing harmful greenhouse gases.

While swift action is needed to confront the daunting challenges of global climate change, I oppose misusing the budget reconciliation process in the consideration of climate legislation. That legislation would influence every sector of the U.S. economy and could have far- reaching impacts across the globe. For this reason, I supported an amendment offered by Senator Johanns that would prohibit the use of reconciliation for climate legislation. I voted in support of the Johanns amendment to reaffirm my opposition to an extremely truncated process for climate legislation, which would make a deliberative approach impossible. Taking action on climate change legislation to protect public health, the economy, and natural security should be done in a thoughtful way and not rushed through Congress.

I was pleased to join Senator Dorgan in proposing an amendment to provide an increase of $10 million for organ donation activities at the Health Resources Services Administration. This modest amendment is aimed at fulfilling the promise of the Organ Donation and Recovery Improvement Act of 2004, to increase the number of organ donations. Currently, over 100,000 individuals are on the organ transplant waiting list, and more than 83,000 of those are in need of a kidney transplant. On average, patients wait 4 years before receiving a kidney transplant. Medicare spends about $55,000 per patient per year for dialysis. This means that every kidney donation has the potential to save Medicare as much as $220,000. Unfortunately, nearly 6,000 people die every year while waiting for a transplant. By doing more to educate people about donation and developing programs to encourage donation, we can take steps to reduce that number.

Mr. President, this budget will continue the job of getting our great Nation back on track, and it deserves to pass.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, I had the intent, when we got to executive session, of asking unanimous consent that Calendar item No. 47, Ashton Carter's nomination, be agreed to by unanimous consent. There is a hold on this nomination. The two Senators who have that hold have indicated to me their reasons for it. One of those Senators--and I have talked to Senator Shelby; there is no objection to my identifying him this way-- has not had the opportunity that he seeks to talk to Mr. Carter. He has made a commitment that he will do so as quickly as he possibly can after the recess so we can hopefully get to this nomination very promptly. It is essential this be taken up.

So in light of the assurance I have received from Senator Shelby particularly, and I have talked also to Senator Sessions about this matter, I am not going to make that unanimous consent request tonight.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Amendment No. 844

Mr. President, for the Committee on Armed Services I report favorably the following nomination lists which were printed in the Records on the dates indicated, and ask unanimous consent, to save the expense of reprinting on the Executive Calendar that these nominations lie at the Secretary's desk for the information of Senators.

Mr. President, earlier this month, the Brady Center to Prevent Gun Violence released a report, ``Exporting Gun Violence,'' that documents how Mexican drug gangs are exploiting weak U.S. gun laws and corrupt gun sellers in the U.S. to amass arsenals of high powered guns. These guns have been used to kill thousands in Mexico and pose an increasingly grave security threat to both Mexico and the United States.

Mexican law enforcement officials are increasingly being outgunned by

drug gangs bearing military-style assault weapons, .50 caliber sniper rifles and other high powered weapons that originate from the United States. According to the Bureau of Alcohol, Tobacco, Firearms and Explosives, ATF, more than 7,770 guns recovered from crime scenes in Mexico were traced back to gun dealers in the U.S. during 2008, up from 3,300 in 2007. The ATF has warned that an ``iron river of guns is streaming across the border at such a pace that some are being recovered in Mexico within days after their purchase in the U.S.''

According to the U.S. Department of State's latest International Narcotics Control Strategy report, ``U.S.-purchased or stolen firearms account for an estimated 95 percent of Mexico's drug related killings.'' Unlike Mexico's tougher gun laws, unlicensed sellers in the U.S. are allowed to sell guns without a background check, civilians are permitted to purchase military-style assault weapons, and there are no limits on the quantity of guns that can be sold at any given time. In the U.S., a trafficker can purchase as many guns they want from an unlicensed seller, no questions asked.

On March 17, 2009, both ADM James Stavridis, commander of the U.S. Southern Command, and GEN Gene Renaurt, commander of the U.S. Northern Command, testified during a Senate Armed Services Committee hearing, which I chaired, that the large flow of guns into Mexico and Central America from the U.S. is having a destabilizing impact in those countries. Many believe this destabilization could pose a significant national security threat to the U.S. According to the report, Mexican Attorney General Medina Mora has stated that, before the assault weapons ban in the U.S. was allowed to expire, only 21 percent of the weapons seized from traffickers were assault rifles, while today, it is more than half.

President Obama has called for a comprehensive approach to the growing level of violence in Mexico. However, unless existing gun laws are strengthened, drug cartels and criminals in Mexico and the United States will continue to build their arsenals. We must act to close the gun show loophole, reinstate the assault weapons ban and enact other commonsense gun safety legislation.