Floor Statements

Mr. President, I ask unanimous consent that the following be the next amendments in order: Bennet of Colorado amendment No. 3928; Corker amendment No. 3955; Merkley-Klobuchar amendment No. 3962, a side-by-side to the Corker amendment; that the Senate resume consideration of S. 3217; that Senator Bennet of Colorado be recognized to call up his amendment; that after his statement, the amendment be set aside and Senator Corker be recognized to call up his amendment; that immediately after the amendment is reported by number it be temporarily set aside and Senators Merkley and Klobuchar be recognized to call up their side-by-side amendment.

After the side-by-side on Senators Corker and Merkley-- after that, I would be happy to set a time and either debate this evening and vote in the morning, however the Senators want to do it.

I am worried about an obligation that we all have this evening. We are getting pressed. I want to be careful about asking Members to hang around when we all have an obligation--100 of us. I suggest that we enter into an agreement if we can. I am hopeful this can be worked out. There may be a side-by-side. I would be agreeable to setting a time certain tonight--preferably tomorrow, with debate tonight and a vote in the morning--maybe an hour after we come in, or a half hour after we come in. We will have to make sure the leadership is fine with that.

We will work this out. Let's get the vote here.

Mr. President, very briefly, I commend our colleague from Colorado for reaching out on this. The amendment is authored by the Senator from Colorado, and he has attracted good bipartisan support from Senators Tester, Isakson, Klobuchar, Begich, LeMieux, Mark Udall, and Brown of Massachusetts on how this ought to be done. The substance of the amendment is critically important. He worked with Treasury to ensure that we are responsibly winding down the TARP and getting the government out of the business of owning businesses. We can all agree with that, and I commend him for that amendment. It also ensures that unused TARP funds are used to pay down the deficit. We have heard a lot of talk about fiscal responsibility and watching what is happening in Europe and other countries and knowing the fiscal problems of those nations are the root cause of a lot of the problems they are going through today.

This amendment actually dedicates these resources to deficit reduction. I think all of us applaud his leadership on it.

There are signs our economy is recovering. In the last 3 months of 2010, our economy added roughly 187,000 jobs a month. Last year, it was 290,000 jobs, which is the largest number in over 4 years. Compare that to the first 3 months of 2009 when we were losing 750,000 jobs a month. In the first quarter, the economy grew 3.2 percent, a swing upwards of nearly 10 percent in 1 year, something many economists say is largely due to the Recovery Act. Just over a year ago, the economy was shrinking about 6 percent on an annual basis.

This amendment is tremendously valuable to this bill. We have all had discussions about it--our colleague from Georgia, Senator Isakson, Senator LeMieux, and Senator Tester. Because of the leadership of Mike Bennet, he has brought us to this point. I thank him immensely. I thank all of our colleagues.

I am prepared to do a voice vote, unless someone objects to a voice vote on the Bennet amendment, so we can move to finalize how we deal with the Corker amendment and the other issues before us.

Mr. President, I move to reconsider the vote, and I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Technically, there is no time agreement.

If a Member on this side somewhere in the midst of this can be heard as well----

That was not a sophisticated request.

Move along.

Mr. President, first let me thank my colleague from Oregon and my colleague from Minnesota as well for their contribution. While he has left the floor, I would be remiss if I did not express my gratitude to Bob Corker from Tennessee. Putting aside whatever differences we may have on this amendment, he has been a very valuable member of our committee.

This bill that is right here, all 1400 pages of it--substantial parts of this bill can be attributed to the work of Bob Corker of Tennessee. I want my colleagues to know how grateful I am to him, to his staff, and others for some valuable ideas and thoughts. While not every one was included in the bill, he played a consistent role, showing up every time there was a meeting or gathering on this legislation. He spent a lot of hours with our colleague from Virginia, Mark Warner, particularly on titles I and II of this bill. I will say more about Senator Corker's contribution during debate on this bill, but I wanted at least at the outset of this debate and discussion to thank him for his wonderful efforts on this legislation.

Let me begin and thank, of course, Senator Merkley and Senator Klobuchar, as well as their other cosponsors of this, for the bipartisan support for their amendment. I will ask to have printed in the Record some correspondence. I have a letter we sent out in 2006. It will give you an idea--it was 4 years ago. It was signed by myself, Wayne Allard, who is no longer with us, of Colorado, Senator Sarbanes, Jim Bunning of Kentucky, Jack Reed of Rhode Island, and Chuck Schumer.

The letter was pushing the regulators to establish some underwriting guidance for subprime mortgages. That is in 2006 that we sent that first letter. We were in the minority, we Democrats.

In April of 2007 we sent another letter to Chairman Bernanke. Here we said that our committee had held two hearings this year on the problem in subprime mortgage rates. This was in February and March of 2007, 3 years ago.

At the hearings, a number of committee members raised

concerns that the regulators have not kept pace with

deteriorating credit standards on the growth of abusive,

unfair and deceptive lending practices. In addition, we are

concerned that the Federal Reserve Board has not exercised

its obligations under the Home Ownership and Equity

Protection Act of 1994 to issue regulations that address the

problems of predatory lending.

The letter goes on for two or three pages. That was signed by myself, Senator Reed, Senator Schumer, Senator Bayh, Senator Carper, Senator Menendez, Senator Akaka, Senator Sherrod Brown, Senator Bob Casey, and Senator Tester.

In December of 2007 we sent another letter to Chairman Bernanke.

In light of the deepening crisis in the mortgage markets, a

crisis you correctly attribute to abusive practices and lax

underwriting standards in the subprime market, we want to

reiterate to you the importance of acting forcefully to

protect consumers in the rulemaking the Federal Reserve Board

is currently undertaking under the Homeowners Equity

Protection Act.

We go on for two or three pages. Again, I say respectfully, but not a single member of our committee from the other side signed that letter or the one in April of 2007. This letter was signed by myself, Senator Johnson, Senator Reed, Senator Schumer, Senator Bayh, Senator Carper, Senator Menendez, Senator Akaka, Senator Brown, Senator Casey, Senator Tester, and Senator John Kerry of Massachusetts.

Those are just three pieces of correspondence going back years ago, trying to get some attention to the predatory lending practices that were going on. Had we acted in 2006 or even in 2007, we would not even be close to the disastrous effects that have occurred with 7 million homes lost, 4 million today underwater in the country--in danger of falling into foreclosure, 250,000. A

quarter of a million homes this year have been seized in foreclosure proceedings. Here were three pieces of lengthy correspondence signed, in one case on a bipartisan basis in 2006; in 2007 unfortunately on a partisan basis--not because we didn't seek additional signatures on the letter--to highlight the importance of underwriting standards and the need to step up.

I also want to add at this point a letter from the National Association of REALTORS, expressing strong opposition to the Corker- Gregg amendment. In their letter to the Senate--to all Senators, this letter went--they say the following.

The Corker-Gregg-Isakson amendment replaces the risk

retention provisions . . . of the credit risk retention with

a study on a feasibility of risk retention requirements for

financial institutions and implements the residential

mortgage underwriting standards that include a mandatory 5

percent downpayment for all mortgages. As our Nation

continues to recover from the worst economic downturn since

the Great Depression, REALTORS are cognizant that lax

underwriting standards brought us to this point. It must be

curtailed. However we caution that swinging the pendulum too

far in the opposite direction may reverse the fragile

recovery.

Based on data from the National Association of REALTORS, of

home buyers and sellers, 11 percent of all home purchasers

surveyed had downpayments of 5 percent or less. When

considering only first-time home buyers, the percentage

utilizing a downpayment of under 5 percent increases to 18

percent of all purchases. Improving underwriting to ensure

that the consumer has the ability to pay their obligation is

in the best interests of everyone, but eliminating the

possibility for some creditworthy customers to buy a home

will have significant detrimental ramifications for American

families, the housing sector, and those businesses that

support it.

Let me take a couple of minutes. I know my colleague from Texas is here, and others, but this is important, that people understand what happened. Because 5 percent sounds pretty reasonable. Why not 5 percent? Let me explain why that provision poses some risk to all of us. The Senator's amendment as offered has two parts to it. They almost kind of run into each other in a way.

The first half of the amendment strikes the government-imposed risk retention requirements in the underlying bill. These requirements, as explained before, and I will in a second again, would result in strong market-based underwriting standards in the residential mortgage market.

Then in the second half of the amendment, the amendment puts in government-dictated, hard-wired underwriting standards that would have very serious consequences, as the National Association of Realtors points out, for first-time home buyers, minority home buyers, and others who are seeking to attain the American dream of home ownership.

Like the earlier debates we have had, it does this at a time, as we all know, that the housing markets are just starting to recover, potentially putting that recovery at risk.

Let me start by discussing the first part of this amendment. The bill, section 941 of our bill, requires securitizers to retain an economic interest in the material portion of the credit risk for any asset that securitizers transfer, sell, or convey to a third party. What does this mean? Very simply put, it is skin in the game. Skin in the game--a skin-in-the game requirement that creates incentives that encourage sound lending practices, restores investor confidence, and permits securitization markets to resume their important role as a source of credit for households and businesses.

Excesses and abuses in the securitization process played a very major role in this crisis under what is called the ``originate to distribute'' model. Loans were made expressly to be sold into the securitization pools, which meant the lenders did not expect to bear the credit risk of borrower default.

What does that mean? Well, if you are the broker out cutting the deal, what was the first piece of advice on their Web page to the brokers, the unregulated brokers? The first piece of advice to them was, from their association: Convince the borrower. Convince the borrower you are their financial adviser.

Well, of course, they were anything but their financial adviser. Their job was, of course, to get people to sign up and commit to these mortgages, which they knew, in too many cases, could never, ever be met; that is, they, the borrower, would never possibly meet it.

If you had some skin in the game if you are the broker, you may be a little more careful about that. But, of course, the broker was acting on behalf of the lending institutions. Now you think, well, the lending institution is going to care about this. You know, when I bought my first home back X numbers of years ago, my mortgage stayed at the Old Stone Bank. I signed those papers. I could go down every day and I could pull out that drawer, wherever it was, and look at my mortgage. It did not leave the Old Stone Bank. It stayed right there.

Let me tell you, that fellow at the Old Stone Bank wanted to make darn sure that this young lawyer in Connecticut was going to meet his financial obligations. So they had underwriting standards for me. It did not cost me a lot on a downpayment. I was a new buyer, first-time home buyer. I had just gotten licensed to practice law in Connecticut, so they had a little confidence I might be able to meet my obligations. So they had underwriting standards.

Today it is vastly different. That fellow, a young lawyer today, who goes and gets that mortgage, the lending institution frankly could care less whether you have the underwriting standards. Why? Because it is going to sell that mortgage. That is what securitization is: I am going to sell it. On average they hold your mortgage 8 to 10 weeks. Then they sell it. It goes right out the door. So the broker could care less. He got me to sign up with a deal I could not afford. The old bank does not care anymore, because they are selling it, and bundling them together and shipping them out the door, and some unwitting investor may be purchasing these. Because they have been branded by the rating agencies as AAA or AA, they think they are pretty good.

So why am I putting skin in the game? Because if you do not have skin in the game, if you do not have a vested interest financially in the outcome, you do not care what happens, unfortunately, in too many cases. You have been paid. You have got out your dollar. You have been compensated as the broker; you have been compensated as the lending institution; you wash your hands of the whole thing.

That is what created this domino effect, because there were not people watching and caring what went on. So in my bill I said: Well, why not keep a little skin in the game or drop the skin in the game but write underwriting standards. You make the choice. But if you have got skin in the game, I suspect you are going to be careful about underwriting standards. If you write the underwriting standards, I do not want to take a pound of your flesh from the lending institution, if you are going to meet those obligations.

That is exactly what Senator Merkley and our colleague from Minnesota and others are suggesting here: Let's get good underwriting standards here. That is why I support what they are talking about. So I apologize for going into all of that ``originate to distribute,'' but originate the mortgage to distribute it. That is exactly what it means.

This led to significant, of course, deterioration in credit and loan underwriting standards, particularly in residential mortgages. With the onset of the crisis, there was widespread uncertainty regarding the true financial condition of holders of asset-backed securities, for obvious reasons, freezing interbank lending, constricting the general flow of credit. Complexity and opacity in the securitization markets prolonged and deepened the crisis, and it made recovery efforts that much more difficult.

My proposal in the bill has a measured approach which requires, of course, separate rulemaking requirements for different assets. I will not bother you with all of that.

A lot of people support this, by the way, including the Consumer Federation of America, the Investors Working Group, the America Securitization Forum, CalPERS, the Group of 30, even a former Republican Secretary of the Treasury, John Snow. And he says:

Because of the lack of participant accountability, the

originate-to-distribute model of mortgage finance, with its

once great promise of managing risk, became itself a massive

generator of risk.

A study is not a credible response. I say that respectfully of the amendment of the Senator from Tennessee. He calls for a study in all of this. Our bill provides for comprehensive regulation of securitization markets, to prevent excesses and eliminate a potential source of financial instability.

Let me add quickly, I am a strong supporter of securitization. That has provided liquidity, which has made home ownership more available to more people. But you have got to do it carefully. If you are packaging these mortgages with no regard to whether they are available, and sending them out the door to be sold off, then you jeopardize securitization. If you get good underwriting standards, as the Senator from Oregon and Minnesota are requiring, then you are going to build in some safeguards; then securitization, with proper branding of what they are worth, and you are back on track again, and we can start to see housing improve for everybody.

The Corker amendment also requires, of course, here a 5-percent downpayment for all loans, no matter what the circumstance. That is a government-mandated requirement in a sense in this amendment. Even with FHA loans, hardwiring in statutes that as a requirement is very ill- considered, I would say.

The key cause of the crisis, as I have said many times over the past almost 4 years on the floor of this body, was the unscrupulous mortgage brokers and mortgage lenders who sold unaffordable mortgages to people who could not pay those mortgages.

In the majority of the cases, those loans were refinance loans, they were not even original mortgages. It was refinancing. No downpayments are required in refinancing at all. Downpayments did not even come up or come into play for these borrowers. But the mortgages were still outrageous and unaffordable. They still led to the foreclosures and contributed to the economic crisis we are in.

Why was this? Well, it was because the brokers and bankers had no skin in the game. So they not only did not pay attention, in too many cases they did not even care whether the borrowers had the ability to pay back those loans. The Merkley-Klobuchar amendment specifically addresses this problem, by specifically requiring that lenders take into account the borrower's ability to pay, and laying out important criteria for determining that.

It will end the steering payments that caused so much of the trouble in the first place. And while the 5-percent downpayment may sound reasonable, and in some cases it is, there are many lending programs out there that allow for downpayments that are lower than 5 percent: FHA, which is struggling now, has traditionally allowed for downpayments less than 5 percent. FHA has been a path to home ownership, as we know, for millions of our fellow citizens. Many nonprofits such as Habitat for Humanity, the Enterprise Foundation, church-related housing groups--in fact, I have a letter signed by a number of these nonprofit organizations in opposition to the Corker amendment. I ask unanimous consent that all these letters I have referred to be printed in the Record.

These are groups, it appears that, in fact, I should say in fairness to Senator Corker, in the latest version of his amendment, that allows for some exceptions on a case-by-case basis of these nonprofits, where each individual nonprofit has to go to the regulators for such an exemption. But they simply may not get it. They get to apply. It is optional to give that.

Many insured depositors, of course, have mortgage programs that require less than 5-percent downpayments. They are performing well, and have done so in the past. And we want low- and moderate-income families to go to banks and get loans, qualified low- and moderate-income people to have to meet those standards. We do not want to simply shut them off to nonprofits. We want to get them into the financial mainstream.

The Corker amendment would create a new barrier to accomplishing that goal. But the Merkley-Klobuchar amendment provides for those underwriting safeguards, does not put such tight restrictions, even on FHA mortgages, that would make it impossible for an awful lot of people.

I thank my colleagues. I have spoken a long time here. I apologize. But I think it is important to know the history of how we got into the mess and what happened out there that led us to these difficulties, why underwriting is important.

What Senator Merkley and Senator Klobuchar have offered is to get back to that sensible requirement here without writing these stringent requirements in this legislation that would be so difficult. So I urge my colleagues to support the Merkley-Klobuchar amendment and respectfully oppose the Corker amendment.

By the way, their amendment is endorsed by a number of our colleagues on both sides of the aisle. I thank Senator Scott Brown of Massachusetts, who is involved with this amendment, by Senator Merkley and others. I commend him for it. It is a good proposal.

The PRESIDING OFFICER (Mr. Udall of Colorado.) The Senator from Rhode Island.

First of all, let me just say regarding the Merkley- Klobuchar amendment to the Corker--not amendment to it, but the side- by-side--I wish to thank Senator Scott Brown of Massachusetts and Olympia Snowe of Maine for cosponsoring that amendment on the underwriting standards. I appreciate that very much.

Let me say to both of my colleagues, Senator Hutchison and Senator Klobuchar, as my colleagues know, I started out many months ago with the idea of trying to come down to a single prudential regulator as one of the reforms in this bill. One of my concerns, as my colleagues know, was we had some nine agencies. It was an alphabet soup out there with a lot of overlap in terms of actually who is responsible, who is going to be accountable for things that occur. Obviously, we want to have a dual banking system, the State banks and so forth, that don't want to be drawn into a Federal system unnecessarily. So it began to break down from a single prudential regulator to maybe two.

I say this with great respect, but I would point out that the Federal Reserve Board, of course, never implemented the requirements on mortgage lending that passed in 1994. A lot of the major financial institutions were basically unregulated institutions. My concern has been that the Fed did not exactly live up to its reputation during this period of time and contributed in major ways to the problems we are in today.

So I have great respect for their monetary function, which is the core function; the payment system, which is their core function; their primarily monetary function, determining the credibility of our currency. We had an earlier debate today on that very issue. The system was established in 1914, 1917, almost 100 years ago.

At some point down the road we are going to need to think about the Federal Reserve System. We have two Federal Reserve regional banks in the State of Missouri. The next one is in San Francisco. So I think the idea of thinking through how to make it more relevant is a legitimate issue. Obviously, we are not going to deal with

that in this bill. We will leave that for a later Congress to work on those issues.

I appreciate what my colleagues are trying to do, and I recognize the importance at these regional levels that want to maintain some involvement in all of this for the reasons that Senator Klobuchar and Senator Hutchison have identified. Again, I know how we have been talking about how to work on this a bit. Let me just make one plea. One of the major concerns that happened with this proliferation of regulators--it happened with AIG classically and in other cases; it happened back in the thrift crisis days as well--is that industries go out and shop and they look for the regulator of least resistance, the ones they can get away the most with. That was one of the major problems that happened here.

So I want to avoid wherever possible this, what they call regulatory arbitrage; that is, the shopping that goes on: Let me find the regulator that will let me get away with the most. Of course, the Federal Reserve has a lot to demonstrate in the years ahead that they got the message, as they didn't do a very good job when they had the responsibility.

So coming Congresses will have to keep an eye on this to make sure they are going to not only want the job, but also to assume the responsibility in doing this so we don't end up with problems running haywire again. It is true, small banks didn't create a problem. Only about 800 out of the 8,000 are regulated by the Federal Reserve. The overwhelming majority, of course, are not regulated by the Federal Reserve. And, of course, they didn't do much in it because they didn't get involved in subprime lending. So it wasn't a problem. There was a reason they didn't get involved in subprime lending, which is for another day, but nonetheless I understand they got in trouble with commercial loans which was their major problem.

So I hope on the arbitrage issue that we try to create as much of a level playing field as possible so we don't find institutions shopping around because of assessment costs or other matters which can once again find this migration into an area, not because it is a right place to be but because it is where you would prefer to be. The decision by institutions as to where they want to be ought not be the criteria by which we determine regulation. We have to have a better set of rules than that or we end up back where we were before.

My colleagues have done a great job. They have been faithful in reaching out and trying to find accommodation where they can. So I am very grateful to both of my colleagues and their cosponsors. We look forward to tomorrow having a vote. In the meantime, I have made an appeal to work on a couple of pieces of this thing. We would not go into that right now. I thank them both and I thank my colleagues. It has been a long day. We covered a lot of ground today--some major amendments. We will vote tomorrow and move along.

Again, I make the point that this almost seems like a throwback. When I arrived some 30 years ago, this was the way we did things. We haven't had a single tabling motion. We haven't had a single filibuster. I would argue maybe this is one of the top two pieces of legislation to be considered in this Congress on regulatory reform. It is a major undertaking. The patience and the involvement of my colleagues has been terrific, and I wish to thank them as well.

I thank you both.

Mr. President, there is no more debate this evening.

Mr. President, I ask unanimous consent that on Wednesday, May 12, following any leader time, the Senate then resume consideration of S. 3217, and that the time until 10 a.m. be for debate with respect to the following three amendments, with the time equally divided and controlled between the leaders or their designees; that at 10 a.m., the Senate proceed to vote in relation to the amendments in the order listed, with no amendments in order to the amendments prior to a vote, with 2 minutes of debate prior to the succeeding votes and with the succeeding votes limited to 10 minutes: Merkley amendment No. 3962, Corker amendment No 3955, Hutchison-Klobuchar amendment No. 3759, as modified; provided further, that the next two amendments in order would be the Landrieu-Isakson amendment regarding risk retention and the Snowe-Landrieu amendment No. 3918.

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

Mr. President, I ask unanimous consent that the Committee on Energy and Natural Resources be authorized to meet during the session of the Senate to conduct a hearing on May 11, 2010, at 10 a.m., in room SR-325 of the Russell Senate Office Building.

Mr. President, I ask unanimous consent that the Committee on Environment and Public Works be authorized to meet during the session of the Senate on Tuesday, May 11, 2010, at 2:30 p.m. in room 406 of the Dirksen Office Building.

Mr. President, I ask unanimous consent that the Committee on Finance be authorized to meet during the session of the Senate on May 11, 2010, at 10 a.m., in room 215 of the Dirksen Senate Office Building, to conduct a hearing entitled ``The President's Proposed Fee on Financial Institutions Regarding TARP: Part 3''.

Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet during the session of the Senate to conduct a hearing entitled ``Safe Patient Handling & Lifting Standards for a Safer American Workforce'' on May 11, 2010. The hearing will commence at 2:30 p.m. in room 430 of the Dirksen Senate Office Building.

Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate on May 11, 2010, at 10 a.m., in room SD-226 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Oversight of U.S. Citizenship and Immigration Services.''

Mr. President, I ask unanimous consent that the Subcommittee on Oversight and the Subcommittee on Water and Wildlife be authorized to meet during the session of the Senate on May 11, 2010, at 10 a.m., in room 406 of the Dirksen Office Building.

Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on May 11, 2010, at 2:30 p.m.

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 370, S. Res. 511.

Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motions to reconsider be laid upon the table, with no intervening action or debate, and that any statements related to the resolution be printed in the Record, as if read.

Mr. President, I understand there is a bill at the desk, and I ask for its first reading.

Mr. President, I now ask for its second reading, and in order to place the bill on the calendar under provisions of rule XIV, I object to my own request.

Mr. President, I ask unanimous consent that when the Senate completes its business today, it adjourn until 9:30 a.m. on Wednesday, May 12; that following the prayer and pledge, the Journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two

leaders be reserved for their use later in the day, and the Senate resume consideration of S. 3217, Wall Street reform, as provided for under the previous order.

Mr. President, there will be three rollcall votes beginning at 10 a.m. Those votes will be in relation to the Merkley amendment No. 3962, the Corker amendment No. 3955, and then the Hutchison and Klobuchar amendment No. 3759, as modified.

Mr. President, if there is no further business to come before the Senate, I ask unanimous consent that it adjourn under the previous order.

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

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

Mr. President, I want to share a few thoughts, if I may, for a minute or so on the pending matter before us. But before I do that--and at a later time I will speak at greater length about this--I want to express my regrets over the decision made in Utah over the weekend regarding Bob Bennett, our colleague.

I have served with Bob for 18 years. We have been on the Banking Committee together during that time. Obviously, we have differences of opinion on a lot of policy questions. In fact, the majority of policy questions we have had our differences on. But at critical moments, Bob Bennett was always someone you could talk to, someone you could approach with an idea or an issue.

He went through a tough battle over the last number of weeks and did not prevail in his convention over the weekend in Utah. But I want to express to him and Joyce how much this institution will miss them in the coming year. He is a thoughtful, considerate individual. He is deliberate in his views and accessible when it comes to others' ideas. In my view, it will be a loss for the institution that he will not be back. That is coming from a Democrat on this side of the aisle.

I realize there is a contest coming up, but I didn't want the day to begin or end without expressing my disappointment over the results in Utah. I know that is probably not appropriate for Democrats, making comments about Republican races, but Bob Bennett is one fine U.S. Senator, and he has played an invaluable role, a critical role at critical junctures over the last number of years that I have served with him.

Now, Mr. President, I want to make some comments about the bill before us. It has been nearly 7 weeks since the Banking Committee approved legislation to reform Wall Street. It has been more than 3 years since our committee began work on this very important topic. It was in January or early February of 2007 that I became chairman of the Banking Committee for the first time, and, obviously, the news even at that early date was about the mortgage foreclosure issue.

A lot of work has gone on in the Banking Committee. We have literally had dozens and dozens of hearings and meetings with people on how best to

address this economic decline that we have suffered--with 8\1/2\ million jobs being lost and 7 million homes in foreclosure. In fact, over the weekend there was a report that nearly 4 million households are severely delinquent on their mortgages, and 250,000 homes have been seized--are in foreclosure--since the first 3 months of this.

Even though we have 4 million homes delinquent on their mortgages, which is the largest backlog since the crisis began, there is some positive news on job creation--290,000 jobs in the month of April, which is 121,000 more jobs created in the first few months of the year than were anticipated. We are clearly seeing an economy that seems to be improving. But when we have 4 million homes that are underwater, we also realize we are far from out of this difficulty, particularly if you are a working family.

We also, of course, saw last Thursday a market decline of 1,000 points in almost 17 minutes. The Presiding Officer and I, in fact, talked about this over the weekend, and I appreciate his insights and observations on the matter as someone who spent time working in this field before getting involved in public life. There are a number of ideas emerging as to how this happened, and my hope is that as early as next week our Banking Committee will have an informal meeting with people from the Securities and Exchange Commission and the Commodity Futures Trading Commission, as well as others, to hear what they think happened and what steps they are taking to minimize that event from occurring again.

Then, of course, over the weekend we had the stories emerging about Europe and the Euro and what was occurring in Greece and other nations in danger of going to default because of the huge debt problems that exist. Tomorrow morning, our committee will be briefed by the Federal Reserve as well as the Secretary of the Treasury on exactly what plans have been put in place in Europe.

I do not want to dwell on either of those points at this juncture except to make this point. Here we have an event totally unrelated to mismanagement of investment banks or financial institutions in the case of a market decline as precipitous as we saw Thursday and events that are beyond the borders of our own nation that will have an impact at home. We are told this is not going to have any kind of severe impact-- at least we don't believe it will at this juncture. But we do live in a highly sophisticated, computerized world with this flash trading, as it is called--``high frequency trading,'' as it is referred to--where literally within microseconds buyers and sellers are matched up. What the system doesn't accommodate for is panic, unfortunately, and apparently the circuit breakers necessary in market-wide exchanges to minimize these kinds of events when they occur and also events that occur in a small country in the Mediterranean--such as Greece or Portugal or Spain or other countries--where their debt situations pose risks globally.

So what is critically important, in my view, is, while our legislation before us it not going to stop crises from occurring, what we try to do is provide our government with the necessary tools so we can respond when crises occur. No one can stop the rain from coming. It will happen. It will happen again and again. What you can do, however, is make sure the roof is going to be solid enough so it doesn't leak or that you are not going to be in a situation where, when things break down in the next crisis, no matter how modest it may be, it endangers the job creation as we saw in this country--as we are today seeing massive losses occurring, retirement accounts declining. The value of homes has gone down some 30 percent in the last several years. Again, there are some indications that things are improving here at home, and we welcome that news. But if you are one of those 8.5 million who lost a job or home or if you are a retiree who watched your savings disappear overnight, as many did in this country, then this positive news, while it is welcome, is hardly any relief to you.

So it is critically important because we are in no better shape today despite advances and the progress we have made on this bill. If something were to happen tonight or tomorrow in our own country or something happened elsewhere that would have the contagion effect, it is called, to spread here or elsewhere, we have not yet passed this legislation. We don't have any more provisions in place than we did in the fall of 2008 when the problems exploded. While we have written strong provisions in this bill that never would allow an institution to become too big to fail, the fact is that has only been adopted in a bill that has yet to be passed in this body, yet to be reconciled with the language from the other Chamber in this Congress and to be signed into law by the President.

It is important that we get this job done. We have had a good debate up until now. With the guidance of our leadership, we will begin tomorrow to consider some amendments, allowing for some adequate debate--hopefully not too long on each of these ideas. And there are a lot of ideas we have, both Democrats and Republicans. We can have our votes on these matters and either include them or exclude them on the legislation. But we need to get this job done, I hope this week--at the very latest, the end of this week--so we can work with the other body and resolve the differences and get this legislation to the President.

I would be the last one to suggest that what we have written here takes care of every imaginable situation. It doesn't at all. What it does is it ends too big to fail and puts in place a consumer protection bureau that has never existed before in our Nation so that average citizens might have some redress when a mortgage broker or company takes advantage of them. We try to put in place an early warning system so when matters like those that happened in Europe or other places occur, we can respond to them early and adequately so they don't explode and expand to affect everyone else in economy. We also deal with some of these exotic instruments that were totally unregulated and operated in the shadow economy of our Nation.

There are other provisions in the bill, but those are the four at least major goals. As I said a moment ago, I know there are other circumstances people wanted to accommodate in this legislation. But, as my colleague from New Hampshire pointed out the other day, some of these other issues are so complex, they will need adequate study, and trying to sort of hurl them into this bill or eliminate things without any alternative being proposed is not exactly the wise way to be dealing with matters as important as the financial sector of our Nation.

I am grateful to our colleagues for what they have done already. As many have pointed out, this has been a worthwhile process. It has taken a long time considering the implications--none of us, obviously, want to have the so-called unintended consequences. No matter how good we think our ideas are, we need to make sure what we are doing is not going to provoke its own set of difficulties.

We have to finish our work on this legislation, not just in recognition of what has happened but in preparation for what may happen next. As we have seen in recent days, the shocks to our system are as inevitable as rainfall. Throughout Europe, as we have seen, countries are bracing for the effects of the Greek crisis, effects which respect no boundaries and offer no safe haven for anyone. Right here at home, our market stumbled, as we saw last week with our stock market tumbling hundreds of points before righting itself.

Again, as I made reference to a moment ago, the rain is coming, but we need to fix our roof so we don't all suffer as a result of the inevitability of rain. The issues raised by the crisis in Greece and last week's stock market scare require our attention--and they have it.

I have asked Senator Jack Reed of Rhode Island, who chairs the subcommittee dealing with the Securities and Exchange Commission, to prepare for hearings on the stock market issue so we can get to the bottom of what happened.

As I mentioned, our staff is working to ensure our government does its part to help contain the crisis in Europe--at least to watch it and determine whether there are any spillover effects. But these events are reminders that our work on this legislation must look through the windshield at the crises to come, not just in the rearview mirror at the one from which we are now just

emerging. They are a further reminder that our work does not end with this legislation.

I urge my colleagues to join us in making a final push to get this bill done so we can move on to those other emerging issues. When we do, we can face these challenges with the knowledge that we have strengthened our financial system; that although we cannot prevent crises from occurring, we can prepare for them so their effects are not felt by ordinary Americans to the extent they have been in the last number of years. That is all we are really trying to do. I always get uneasy when I hear authors of bills claim they are going to solve every problem known to mankind in that issue area. We are not, unfortunately. We do the best we can under the circumstances.

Again, last Thursday's and the weekend's events are a constant reminder that we live in an ever-shrinking world and we are affected by events far beyond our shores. It is not just because some company did something wrong. It can happen far away and yet have implications here. But we need to make sure the next generation will have tools on hand so they can spot problems early on and take steps to minimize their effects here at home when they occur. That is the goal of this bill. It is not an insignificant one; it is an important one.

I thank my colleagues. They have been extremely constructive and thoughtful over the last week or so. We had a good weekend. A lot of people stepped forward, and we were able to work out some language that I think will allow various provisions to be adopted. More work needs to be done, but I am confident we can achieve that goal.

I would be remiss if I didn't acknowledge once again my thanks to the Presiding Officer, a new Member of this body and the banking committee but he has made invaluable contributions to this product. While not a chairman of even a subcommittee yet, he has acted as a very senior Member in many ways because of the knowledge he has brought to this discussion and debate. That has been, as I said, invaluable to this chairman of the committee, and I thank him personally for his efforts in that regard.

I see my friend and colleague from Maine, and I yield the floor.

Before my friend and fellow New Englander leaves the floor, let me thank her for her comments, but also let me thank her for this whole notion of leverage and capital standards as well. It is something we feel equally strongly about.

We have provisions in the bill, but anything can be strengthened. We are very interested in the idea that the Senator from Maine and Senator Shaheen have brought to the table, and invite, at this moment, their staff and others to get with ours and take a look and see if we cannot--and I will talk to Senator Shelby as well because it is important.

There has been some debate, and I go back and forth in this regard. I have always resisted the idea that the Senate should set accounting standards. We have had some times in the past on stock options--I recall a few years ago the debate was whether we would set the accounting standard on stock options.

I thought there was a very persuasive argument made by the industry that pointed out that we should probably consider them as a tool to attract, particularly, startup companies. But as attracted as I was to their ideas, I did not want to open the box of beginning to set accounting standards in Congress. We have competency here, but sometimes we get beyond our competency.

The issue was sort of the same on capital leverage, that we have to have stronger leverage and capital standards. The debate is, should we actually set the leverage here or do we say we want strong standards and defer to our regulators to determine exactly what that standard ought to be? Clearly, we need to have better leverage and better capital standards. If we do not, these large institutions--my colleague from Maine is absolutely correct in this regard, that we will end up then having these institutions that are interconnected. If we do not demand greater accountability through that requirement, then we expose ourselves to the very kinds of things we are seeing elsewhere.

So I thank her for this, and over the next day or so let's see if we can take a look at the Senator's amendment and adopt it as well. I thank her for her ideas as well on the oversight council we have crafted. Actually, many of us

like the idea of having an independent chair. We had this debate.

The Secretary of the Treasury was not my first choice, the independent chair--but as my colleague from Maine knows, having chaired committees, when you are trying to get a committee to agree on something, the idea is the one that prevailed--having the Secretary of the Treasury was the one that prevailed, as the Presiding Officer will recall in those discussions. But, clearly, as to the idea of having the credit unions, the Senator makes a lot of sense. It is a major part of our economy, and having the State regulators at least represented at that table makes sense to me as well.

So maybe before this is over we can accommodate some of those additional ideas. But I thank the Senator immensely for her contribution, and I appreciate, as well, that she understands how long and arduous this has been to get to the best we can. When we have 100 of us here dealing with something of this magnitude, it is harder to put that together. But we are getting there. And I agree with her that we ought to be able to finish. It does not mean we are going to satisfy everyone, and it cannot go on forever, but we certainly ought to accommodate as many different ideas as we can and make our judgments on them to include them in the bill.

I thank her immensely for her contribution.

I suggest the absence of a quorum.

Mr. President, I wish to take a few minutes, if I may. I listened with some interest this afternoon, as I did last week, to my colleague and friend from Arizona talk about his amendment regarding government-sponsored enterprises, specifically Fannie and Freddie. I wish to respond to some of those comments and some comments today about these two agencies and their value, their present condition, and what needs to be done.

First, there is a little revisionist history in all of this that seems to be important. In 2005, the House Financial Services Committee, under the leadership of Mike Oxley, a Republican from Ohio, chairman of the committee, passed bipartisan legislation dealing with Fannie Mae and Freddie Mac. Senate Democrats picked up that proposal. It stalled in the committee over here despite support for it. The Republican- controlled committee then passed a bill. They never filed it, never brought it up for a vote on the floor of the Senate in 2005.

I became chairman of the Banking Committee in 2007. As the Presiding Officer will recall, when he arrived in 2008, we had a significant number of hearings and discussions about Fannie and Freddie. In the summer of 2008, the Banking Committee passed a comprehensive overhaul of the regulations of Fannie and Freddie, including establishment of a tough new regulator, the FHFA, limited portfolio holdings of Fannie and Freddie, and we increased their capital requirements. The authority to put Fannie and Freddie into receivership was also adopted. We required internal controls and risk management and reviving and approving new products.

The committee voted 19 to 2 on a very strong bipartisan basis in the summer of 2008, and overwhelmingly on the floor, this body supported those efforts by a vote of 72 to 13. That was in the summer and fall of 2008.

When I hear the comments being made that nothing has been done about Fannie and Freddie--Mike Oxley tried and failed. I cannot repeat on the floor of the Chamber the words Mike Oxley used to describe the minority's handling of reform when he was accused later of not having an effective reform package. The Republican chairman of that committee had very strong language to describe the failure of our Republican friends to pick up his efforts, his bipartisan efforts, in 2005. As I say, in 2008, by a vote of 72 to 13, this body adopted the committee's recommendations--adopted 19 to 2 in the Banking Committee--to put strong regulations over Fannie and Freddie. So that is as a backdrop.

I will be the first to recognize that more needs to be done, clearly, in terms of coming up with a whole new financing structure for the housing market. There is no doubt about that. But as my colleague from New Hampshire has pointed out--and while it wasn't part of the whole reform package included in this 1,400-page bill because it probably would have doubled the size of this legislation--the issue is far too complex at this juncture to include those kinds of reforms in this bill. That is not to suggest they do not need to be done, but it will take a separate undertaking, it seems to me and most who have looked at it, to decide what is that alternative idea.

So when we have the McCain amendment, as in the Ensign amendment the other night, I would urge my colleagues to vote against it. All their amendments do is to get rid of Fannie and Freddie. There is no alternative idea here. The McCain amendment says that in 24 months you have to get rid of Fannie and Freddie. Well, that is a nice idea, but what are the implications if we get rid of it?

Today, 97 percent of all mortgages are backed by Fannie and Freddie. If you want to see interest rates go up, if you get rid of the only entity that is purchasing these mortgages today--and that is Fannie and Freddie, by and large--who will purchase them? If they are not purchased, what happens to interest rates and home values? If you think the market took a plunge last Thursday, adopt the McCain amendment. It is a reckless amendment. There is no alternative whatsoever included in that proposal.

Let me identify the three major problems with it, aside from the fact it doesn't offer any alternative whatsoever as to how we end up with a financing mechanism for housing in this country. Remember, we are the only Nation on the face of the planet today that provides a 30-year, fixed-rate mortgage for homeowners. It is the reason why we have had a relatively high percentage of our population in home ownership. It also is the single largest wealth creator for most families--home ownership--not to mention the value it is to a family, a neighborhood, a community.

When people have an equity interest--when they can accrue equity over time--it leads to long-term financial security, retirement security, and it has made a difference in how middle-income families have been able to afford a higher education for their children. All these benefits accrue. No other Nation on Earth provides that kind of stability and long-term security that we have in the housing market, and it doesn't happen miraculously. It happens because we have had a financing mechanism that has provided for that kind of assurance at a relatively low cost.

So when you look at the amendment, it severs all Federal involvement with these mortgage securitization, government-sponsored enterprises within 24 months. That is the McCain amendment. Before people jump on board with what a great idea this is, consider the implications and then be prepared to explain them when they happen. There is no reform here. It just gets rids of something without replacing it with anything, except somehow the private market is going to pick up. There is no private market for that today, and we need an alternative idea. Some have mentioned a public utility concept, others have mentioned various other ideas, all of which we have listened to. But, frankly, there is a lot of debate about what that alternative ought to be.

So to draft a bill to take in all these other ideas for housing, frankly, as the Senator from New Hampshire has said, was far too complex, given all the other challenges we are faced with in this legislation, to try to deal with too big to fail, consumer protection, finally getting some clarity and regulation over exotic instruments, providing some long-term radar system, as we describe it, to identify problems as they emerge, whether in Greece or someplace else, not to mention all the other provisions, dealing with underwriting standards, capital requirements, leverage, and all the rest. This bill is 1,400 pages, not to mention the bill passed out of the Agriculture Committee, which adds, of course, a whole other title VII to the bill.

So when you consider what is in here, I hope my colleagues will be careful before they jump on what is a politically charged issue and understand what the implications may be if it is adopted. The McCain amendment, as I said, is reckless, it is poorly thought out, it poses significant risk to the housing markets that have only recently begun to stabilize, by the way. We are seeing just in the last few weeks that finally prices are beginning to move up in the housing area, new stakeholders are occurring, and things are beginning to move in the right direction.

You can say a lot of things, but if you don't have stability in the housing market, this recovery will not occur. It is a critical component of recovery and to pull the rug out from underneath this particular effort right now would be a major blow to our economy and I think would set us back on our heels at the worst possible moment. As I said earlier, major reforms to the housing financing system are clearly necessary. I will be the first to acknowledge that--all should. As we can't go back to the system of the past and the status quo of the GSEs under Federal conservatorship--by the way, Fannie and Freddie are under conservatorship because of our 2008 legislation--it is untenable. We can't continue with that, and we need to replace it, but such changes must be thoughtful and deliberate.

In the near term, we must ensure that changes affecting the Federal role in Fannie and Freddie do not jeopardize the fragile economic recovery. Over the long term, we must be careful in structuring the housing financing system in a way that guarantees continued mortgage liquidity with minimum economic disruptions.

The McCain amendment falls short in several respects. First of all, it imposes significant risk to our economic recovery. Some 95 to 97 percent of mortgage originations are currently backed by the Federal Government--95 to 97 percent, the vast majority of this coming through Fannie and Freddie. The McCain amendment would cause significant uncertainty among investors and GSE-issued mortgage-backed securities, threatening the primary source of mortgage credit that we have at this time. Pull away the credit we have, what replaces it? In this amendment, nothing, without offering any alternative sources of liquidity. Such a precipitous drop in mortgage liquidity could severely threaten this fragile recovery we are presently feeling.

Second, the McCain amendment fails to ensure sufficient mortgage credit would be available in the future. Private securitization of the GSEs account for, as I said, some $9 trillion of the $14 trillion in total outstanding mortgages in the United States today. With the future of private securitization highly uncertain--in fact, that is a mild statement given the present economic circumstances--policymakers seeking to reform the housing financing system must ensure that the system of the future will provide sufficient liquidity to meet the mortgage needs of all Americans. The McCain amendment would eliminate existing sources of mortgage liquidity while remaining silent on the more difficult question of how to replace them.

So you may not like what you have here, but you are replacing it with nothing. What are the alternatives to go to in the housing market?

Thirdly, the McCain amendment neglects to replace the public purposes served by GSEs. The GSEs were poorly run, but they clearly served a number of public purposes, such as making the 30-year fixed-rate mortgage broadly available for American home buyers. This does not go to the question of the underwriting standards. That was a disaster with unregulated brokers and mortgage companies. But putting aside that question, which we address--and there are other ideas on how to further address the underwriting requirements--there is the idea that the average family in this country could purchase and have a chance to get in that starter home, to put them on the pathway to home ownership and all that means to families--what it has meant to our country to make that available, not just to the affluent and the well-heeled but to families even at the lower end of the economic spectrum--to have that kind of job that could provide that income to support a mortgage; what it means to be able to say to your family: We own our home. This is where we live. We have a vested interest in our community, in our neighborhood.

You can talk to anyone about social policy and home equity interest in a neighborhood, and it changes a neighborhood. It makes a difference. So when you start stripping away, pulling out the rug from underneath the financing scheme for doing this today, the mechanism for doing it, then you undermine the very ability to have that long-term, stable mortgage that a family can count on. Watching their equity grow, under normal circumstances, makes such a difference. It is why this economic disaster we have been through over the last couple years is so harmful.

I said earlier there are 4 million homes today that are underwater--4 million of them underwater--and 250,000 homes in the first 3 months of this year have been seized because of the economic conditions. So housing is critical. It is where this crisis began because of the shoddy underwriting requirements that are out there and luring people into subprime mortgages. By the way, that is the alternative. When you strip away the financing mechanism, what you are left with is subprime lending. That is what goes on, luring people into those circumstances.

So, Mr. President, you are entitled to your own opinion but not your own facts in this debate. The fact is, there was an effort in 2005, led by a Republican chairman in the housing committee in the House, and he has some very choice words for those who suggest that effort wasn't real to make a change here. I regret deeply that Mr.

Oxley didn't prevail in his ideas here in the Senate. He passed it in the House, but it was squashed over here.

Then, in 2008, as I said, by votes of 19 to 2 and 72 to 13 on the floor of this Chamber, we did pass legislation that provided for a comprehensive overhaul of the regulation of Fannie and Freddie. It made a substantial change, but far more needs to be done. I acknowledge that, clearly. But let's not, in the face of that acknowledgment, strip away that ability in this bill, within 24 months, without replacing it with anything, putting our economic recovery at great risk. I predict to you, as certain as I am standing here, if the McCain amendment were to pass, that is the outcome, count on it, in my view.

So I caution my colleagues, despite the political mantra associated with all this, we are in a very delicate time. It is very important that we use our heads and carefully deliberate on how we are moving. By a vote of 59 to 35, we rejected the Ensign amendment last week. It was the right outcome. If we reverse that vote tomorrow or in the next day--whenever the McCain amendment comes up--and we will have a side- by-side amendment, by the way, to explain what the committee is doing further and what needs to be done to get us on the right track so people can be supportive of some alternative ideas here--then I think we will set ourselves back.

In light of what has happened in Europe over the weekend, still may unfold here, right now we don't need to be sending messages to the markets without any alternative ideas in place as to how to come up with a housing finance system that is as worthy of the very people who counted on that ability to have that fixed-rate mortgage, to watch their family prosper and grow and become stable, as this has over the years.

I know others want to be heard on probably other matters, but this is a very important issue, and my hope is my colleagues will pay careful attention to this and not succumb to the temporary temptation to follow because there are some groups out there that have never liked this anyway. They have never liked the idea of this program. Clearly, as I say, reforms are needed.

With that, I yield the floor.

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

Madam President, I ask unanimous consent that on Tuesday, May 11, after any leader time, the Senate resume consideration of S. 3217, and debate concurrently the pending Sanders amendment No. 3738 and the Vitter amendment No. 3760; that prior to a vote in relation to each amendment, there be a total debate limit of 80 minutes, with 20 minutes each under the control of Senators Sanders, Vitter, Shelby, and Dodd, or their designees; that upon the use or yielding back of all time, the Senate proceed to a vote in relation to the Sanders amendment, followed by a vote in relation to the Vitter amendment, with no amendment in order to either amendment.

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

Madam President, I ask unanimous consent that S.J. Res. 29 be discharged from the Committee on Foreign Relations and be referred to the Committee on Finance.

Madam President, I ask unanimous consent that the Senate proceed to the immediate consideration of S. Res. 520, which was submitted earlier today.

Madam President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motions to reconsider be laid upon the table, all without intervening action or debate, and that any statements relating to the resolution be printed in the Record.

Madam President, I ask unanimous consent that when the Senate completes its business today, it adjourn until 10 a.m. Tuesday, May 11; that following the prayer and pledge, the Journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved for their use later in the day, the Senate resume consideration of S. 3217, Wall Street reform, as provided for under the previous order; and finally I ask unanimous consent that the Senate recess from 12:30 until 2:15 p.m. to allow for the weekly caucus luncheons.

Madam President, Senators should expect two rollcall votes to begin at approximately 11:30 a.m. tomorrow. The votes will be in relation to the Sanders and Vitter amendments to the Wall Street reform bill.

Madam President, if there is no further business to come before the Senate, I ask unanimous consent that the Senate stand adjourned under the previous order.