Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. Mr. President, I wish to take a few minutes to lay out where we are on this effort to do reform of the financial structures of our economy. It has been…
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
Mr. President, I wish to take a few minutes to lay out where we are on this effort to do reform of the financial structures of our economy. It has been a long undertaking and I will not take a lot of time and I will not go into great detail. But I thought it might be helpful for my colleagues and others to get some sense or a feel of how things are progressing. So I wish to share some thoughts on some major issues we are grappling with.
I wish to begin by thanking the 22 other members of the Banking Committee. About one-quarter of the Senate is seated at that table in our Banking Committee hearing room. I wish to thank every member for their work. We have been deeply involved now for well over a year--more than a year; a year and a half--on the issue of how we should shape the regulatory structure of reform. This year we have had somewhere around 80 hearings, listening to a broad range of experts and others who have brought their thoughts and ideas, not to mention the informal meetings that occur outside of the normal hearing process.
It has been a very long undertaking, and worthwhile. We have been trying to examine the causes of this problem that has been so devastating to our country and to others outside of our country--the economic near collapse--and then, from that experience, trying to shape and set up policies that will fill in those gaps that led us to this problem.
Secondly, we are trying to take steps so that we are prepared to deal, as we will at some point in the future have to, with another economic crisis as it comes along, and to have what I call an architecture or a structure that will allow our system to be able to respond far more prudently than it was able to during the last couple of years.
I should add as well a third goal, and that is to create a structure to not only grapple with the crisis, but also be a source of innovation and creativity for wealth creation and job creation that our financial services sector had a reputation of accomplishing, or at least helping to accomplish over the years. Those are not inconsistent goals. It is a challenge to balance them. It is never perfectly right. But our responsibility--both as legislators in this Chamber and the other body, as well as the role of regulators and, obviously, those in the private sector and public sector--is to try and strike that balance between protecting the public and consumers who use financial services, as well as to be able to provide a level of confidence to those who use them, that the system is going to be safe.
It doesn't mean you are going to get a guaranteed return when you buy a stock, but you ought to feel confident when you deposit your paycheck that the institution is going to be there, or you are going to be protected from losing those resources.
So I wish to take a few minutes and share some thoughts on where we are. I will quickly add, as well, I wish to pay particular thanks to the members of the committee. As many people are aware, Senator Shelby and I, my ranking member, have worked closely together over the last 3 years that I have been chairman of this committee on a wide range of issues, and I am grateful to him for his efforts. He is, obviously, significantly involved in this debate. I wish to thank Bob Corker, the Senator from Tennessee. He is a new Member of this Chamber, but has performed, I think, a tremendous task of trying to sit down and work out the differences, and they are complex and they are difficult. Nonetheless, he has rolled up his sleeves and demonstrated a level of maturity and interest far beyond the years of his service. All of us-- and I, certainly--wish to thank him publicly as well for his efforts, and that of his staff, trying to help us get there.
Other members of the committee, including Jack Reed of Rhode Island, Chuck Schumer, Mark Warner, have taken on particular heavy lifts, and I will talk about them in a minute as I discuss what is going on, along with Judd Gregg of New Hampshire and Mike Crapo of Idaho. So there have been a lot of people involved in this as we go forward. I would be remiss if I didn't acknowledge their hard work and that of their staffs over these many months.
We are still not there yet. I am not here to announce an agreement or to tell my colleagues we have reached a consensus. We are trying to get there, but we are not there yet. We are making an effort to see if we can't develop a set of proposals that will enjoy broad support in this institution as we go forward.
So we have all seen, of course, the devastating consequences. I hardly need to spend much time enumerating them here. People are living them every day, and they don't necessarily need to hear them outlined. However, I will just share again what all of us are painfully aware of.
Mr. President, 8.4 million jobs have been lost since December of 2007. The unemployment rate is currently at 9.7 percent. It has been obviously far too high. I think all of us know, as the Presiding Officer does, that there are pockets in our country where that 9.7 is maybe half the unemployment rate in certain areas of rural America and urban America. An astonishing 6.1 million Americans have been without a job for half a year or more in our Nation. Millions of our fellow citizens who did nothing wrong have nonetheless lost homes, their retirement security, their jobs, their health care. Small businesses have been unable to access credit and have been forced to lay off workers, reduce production, or even have
had to shut their doors. Working class families in our country have seen their wealth decline significantly, and, worst of all, today we remain entirely vulnerable to yet another crisis.
We haven't finished this work, and if something were to happen again tomorrow, as much as we have been working on this issue, we haven't passed the necessary legislation to minimize a crisis bringing us close to the brink of financial collapse as the one we are presently in did.
So, obviously, the status quo--I am getting kind of tired of using those words; business as usual, whatever words you want to use to describe it--cannot persist. Congress, in my view, must pass comprehensive, meaningful reform of our financial system. My hope and intention is to do everything I can in the waning days of my service after 30 years here to achieve that goal.
We have to correct the failures that allowed us to get into this mess, but we must also develop a regulatory system that is prepared for the next one, and one that is going to invite, as well, the kind of creativity and innovation that allow for job creation and wealth creation that our system has in the past provided.
Over a year ago, the Banking Committee, as I pointed out earlier, set out to investigate the causes of financial crises and the vulnerabilities that lie in our financial regulatory structure. Over the last year or more, we have held literally dozens and dozens of gatherings, hearings, informal and formal meetings. We have listened to hundreds of experts in a wide variety of fields who have been either affected by, or who have offered some ideas as to how we can create this architecture about which I have spoken. We have examined and reexamined all sets of proposals sent to us by the White House, the Treasury, the Federal Reserve, the FDIC, and others.
In November of last year, I offered my colleagues a discussion draft of where I was. I didn't suggest it had cosponsors or backers, but I thought people ought to know where the chairman of the committee was, so I laid out a broad proposal in these areas. It certainly produced a discussion, I can tell my colleagues. Not always a welcome one from certain corners, but I thought people ought to know at least where I stood on these issues. If I were going to write this alone and I didn't want anyone else to offer their ideas and suggestions, I had some pretty strong and sound ideas as to where we ought to be. I then asked my fellow committee members, Democrats and Republicans, to work on major parts of the bill. It is so complex and so big and broad, the subject matter, that I didn't think any one member, even a chairman and a ranking member, could necessarily put their arms around all of it. So I asked various members who expressed an interest in various subject matters if they would take on the responsibility, a Democrat and a Republican working together, to see if they could come up with some ideas that would be sound, intelligent reforms of the financial system.
It has been an enormous task. As I said a moment ago, these are incredibly complex issues, but with the good work done by so many on the committee, I believe we are well on our way to producing a very strong bill. The problems with our economy run system-wide, and while there is the temptation by some to address only one or two issues and claim victory and call it a day, we are working in our committee on a bill that will attack these problems and vulnerabilities in a rather comprehensive way, one that we believe will make a difference.
The bill as we fashion it is designed to achieve four major accomplishments: No. 1--and the first priority, I would argue, if I had to prioritize whether the others fall into this category--is ending too-big-to-fail bailouts. That, to me, is the most important thing we can achieve here.
Never, ever again should the American taxpayer of this country be forced to write a check, which they did, because there is an implicit guarantee that the Federal Government of the United States will bail out a company lest it threaten the stability of the economy as a whole. It will make it so undesirable for a company to get too big or too complex with new capital, new leverage requirements, supervisory requirements, and set up a mechanism so large, complex companies can be shut down through bankruptcy or resolution in a way that does not threaten the economy or expose the American taxpayers, as they have been. It is a resolution, it is a bankruptcy, it is a receivership, and it is painful to creditors, to shareholders, and to the management who bear the burden but not taxpayers.
We are very close to achieving that. Again, I thank Mark Warner of Virginia and Bob Corker of Tennessee who dealt with this issue, this and systemic risk, which I will mention in a minute. They worked I don't know how many hours sitting down trying to fashion this resolution mechanism. But the idea that we would watch the American taxpayer write out a check for $700 billion, knowing the reaction of the American public--by the way, in the absence of what we are trying to do here, I think we did the right thing. Had we not done it, the financial problem would have been a lot worse. We never again ought to be put in that position, where that is the only alternative we have. This bill will address that issue.
Secondly, we create an early warning system in the economy so somebody is looking out for the next big problem. The bill would create what we call a systemic risk council--that is our goal--that will have the job of looking across the economy to identify unsafe products, activities, institutions that could threaten the economy as a whole in the future. We cannot afford to be caught off guard again by obvious weaknesses in our system because no one is responsible for taking a broad view.
Again, it is not going to stop everything, but we did not have this ability in the past. Again, Mark Warner and Bob Corker have worked very hard on a resolution mechanism and systemic risk and all of us owe them a debt of gratitude for their efforts.
Third, we bring transparency and accountability to the exotic instruments, such as derivatives and credit default swaps, things that are rather arcane to most Americans, to put it mildly, but have been lurking too long in the dark and were able to cause untold damage to our economy because they lacked transparency and regulation. We change that in this bill. That is our hope anyway, if we get to the conclusion of it.
We have to regulate these activities that left investors and our economy open to the tremendous risks they did not even know existed. Literally, billions of dollars being traded--frankly, gambled--behind closed doors drove our economy to the verge of collapse. Senator Jack Reed of Rhode Island, Senator Judd Gregg of New Hampshire, and their staffs have been working on this issue over many weeks to try and come up with an intelligent, thoughtful, well-drafted set of proposals on these exotic instruments, particularly derivatives. I thank them for the job they have done, and I am confident when our colleagues have had a chance to be briefed about their efforts, there will be broad-based support for what is included in our bill.
We have to rein in these crazy compensation packages that have outraged the public and hurt companies by rewarding short-term profits and wild risk-taking. Senator Chuck Schumer of New York, Senator Mike Crapo of Idaho, and their staffs have been working on governance issues. More work needs to be done on this issue. I thank both our colleagues, again a Democrat and Republican, for trying to come up with ideas on governance issues that will avoid some of the problems with which we are all too familiar.
We create--and one that has attracted the most attention because of the issues involved--a strong and independent consumer protection watchdog, one that has never existed but has come to financial services. It is somewhat ironic we have a Consumer Product Safety Commission, so if we buy a toy for our children or a product or an appliance and it does not work or it causes us great harm or danger, there is a place called the Consumer Product Safety Commission which will protect us from these hazardous appliances.
Yet when it comes to financial services, we have had no place to go to get a similar kind of protection. That analogy has been drawn by others in the past, and I think it is an appropriate one.
We have undertaken this effort. It is controversial because I think there are a lot of fears people have about what we are trying to achieve with all this. Yet if you look back and you watch what has unfolded over the last couple years, and particularly where you see some of these barons of the financial services sector reaping millions of dollars in bonuses after their companies have been shored up through taxpayer efforts, and yet the very people who had their homes, their jobs, their retirement, their health care, their life savings put at risk, what do they get, having come up with the tax dollars to protect these industries? We want to see to it that we never have again the consumer of financial products be unprotected when we start examining these issues.
We are working on this issue to put together what I set out as principles that should be included in a consumer protection watchdog. The failure to protect consumers, as I think most people know, led to some of the dangerous practices we saw and put our economy at so much risk. People were given mortgages they did not understand and could not afford. To ensure strong consumer protection, the real question is: Will this office have the independence and the authority it needs to get the job done to take care of consumers?
I focused on four principles from the very beginning of this debate involving this consumer protection idea we hope to produce. One, that it have an independent head appointed by the President of the United States and confirmed by this body, the Senate; second, that it have an independent budget so the office will have the resources it needs to do the job; third, that it have the autonomy to craft rules to protect consumers; and fourth, an ability to enforce those rules as well.
With these features, the office, I think, can act to protect consumers from the kinds of abuses we have seen, such as skyrocketing credit card interest rates, an explosion in checking account fees or predatory lending by the mortgage industry. Where rent space is less important--not unimportant, less important--what power and authority it has is the critical question.
Obviously, we want to do this in a way that does not jeopardize the safety and soundness of institutions. I do not believe there necessarily is any conflict, although some suggest there may be.
We are trying to provide, as well, a mechanism to resolve when, in fact, we have some conflict between safety and soundness and consumer protection. I understand that concern. We are trying to accommodate that while simultaneously maintaining the independence and autonomy of this agency.
Our goal is to end the status quo, as I said earlier--words I am getting tired of using, but doing nothing is unacceptable--and to create a system where honest businesses, large and small, can thrive on a level playing field, where middle-class families can find work, invest with confidence, and achieve the dreams they have for themselves and their children.
Today, I am pleased to report that good work has been done by Democrats and Republicans both on the Banking Committee to put financial reform in a strong position. While we do not have a bipartisan agreement yet at all, we are trying to. I don't know if it will happen. I am optimistic it can happen. I have been around here long enough to know these things can fall apart easily. It is fragile. Complex issues you think you resolved can produce unintended consequences. Most importantly, getting it right--while I would like to get it done soon, I want to make sure we do it correctly and properly.
This is one of the hardest tasks I have been asked to undertake in my years here, to try and fashion these proposals in a way that can bring broad support in this institution. We do not have an agreement yet, but because I have colleagues, such as the ones I mentioned on the Democratic side, such as Jack Reed, Mark Warner, Chuck Schumer, Tim Johnson--I can go down the list of those who worked on the issues--and I also have colleagues such as Bob Corker, Dick Shelby, Judd Gregg, and others to make an effort on that side to see if we can make agreements.
I know everything we are hearing about Congress these days, that nothing seems to be working here, but we are making an effort to come up with a proposal that will achieve those goals, a good, strong bill and one that will enjoy good, strong support in this institution.
I hope I have not talked too long, but I wished to give at least a flavor of where things are today. As I said, we are not done yet. We are in a pretty strong position to achieve a good, strong bill and one we can be proud of in this institution.
I yield the floor and suggest the absence of a quorum.