Floor Statements

Mr. President, I am here today to speak in support of Solicitor General Elena Kagan's nomination to be an Associate Justice of the Supreme Court of the United States. Solicitor General Kagan's background

demonstrates that she is an extremely well-qualified nominee and has a brilliant legal mind. She has the utmost respect for precedent and believes in fidelity to the law. I believe she will make our Nation proud as a Justice on the Supreme Court.

I have always said I do not believe there should be any one litmus test for judicial nominees. We have to look at a nominee's record in its entirety. Solicitor General Kagan's record is nothing short of remarkable. With over 20 years of legal experience and government service, she has distinguished herself throughout her career with the highest integrity and sound judgment.

In the 220-year history of the Supreme Court, 111 Justices have served on the bench. Yet only three have been women. It took almost two centuries--close to 200 years--before the first woman, Justice Sandra Day O'Connor, was confirmed to the Supreme Court.

Solicitor General Kagan's professional achievements are clear. Let me highlight a few of her triumphs that hold historical significance as well as personal significance for me and many women across America. She was the first woman to serve as dean of Harvard Law School. She was the first woman to be appointed as U.S. Solicitor General. When confirmed, she will become, as Senator Klobuchar just said, the fourth woman to serve as an Associate Justice on the U.S. Supreme Court. For the first time in history, the Supreme Court will have three women serving at the same time. Women in America can take pride in Solicitor General Kagan's achievements, learn from them, and set their goals just as high.

Elena Kagan has a compelling personal story. She was born into a family of Russian-Jewish immigrants. Her mother was a public school teacher, and her father was a tenants' lawyer. She inherited a strong work ethic and a focus on education. She graduated summa cum laude from Princeton University and received a master's degree in philosophy from Oxford University's Worcester College and a law degree from Harvard Law School, where she was supervising editor of the Harvard Law Review.

She went on to clerk for Judge Abner Mikva on the U.S. Court of Appeals for the District of Columbia and then for Justice Thurgood Marshall on the Supreme Court. She also became active in her community, demonstrating her strong desire to serve others.

In the years following her time as a clerk, Solicitor General Kagan practiced law and began her long career in academia as a professor of law and later as a dean. In addition, she worked under two Presidents-- first under President Clinton as an Associate Counsel and as a Deputy Assistant for Domestic Policy and now under President Obama as Solicitor General of the United States.

Her confirmation hearings were a testament to her overwhelming qualifications to serve on the Supreme Court. I believe members of the Judiciary Committee saw in Solicitor General Kagan the same qualities President Obama saw: fairness of mind, supreme intellect, and an unsurpassed devotion to the law and to our system of government.

Some opponents have sought to stir up controversy by quoting Solicitor General Kagan out of context, trying to suggest she will not be impartial. However, she has made it clear that her background does not influence her interpretation of the law.

If Senators are not persuaded by her statements to the Judiciary Committee, then they should be by her remarkable, impartial, 24-year legal career.

As Solicitor General Elena Kagan has said:

I think a judge should try, to the greatest extent

possible, to separate constitutional interpretation from his

or her own values and beliefs. In order to accomplish this

result, the judge should look to constitutional text,

history, structure, and precedent.

With respect to the military, let me say I am proud to represent the most military-friendly State in the Nation, and I have the fullest confidence in Solicitor General Kagan's respect and admiration for our men and women in uniform.

She has said that she respects and, indeed, reveres the military. Her father was a veteran. One of the great privileges of her time at Harvard Law School was dealing with the wonderful students there who had served in the military and students who wanted to go into the military. She always tried to make sure she conveyed her honor for the military, and she always tried to make sure the military had excellent access to their students.

Veterans at Harvard Law wrote:

Kagan has created an environment that is highly supportive

of students who have served in the military . . . and under

her leadership, Harvard Law School has gone out of its way to

highlight our military service.

Solicitor General Kagan's sensible attitude toward following the law and her ability to objectively evaluate all angles of the Constitution has resulted in high ratings and endorsements by numerous organizations. The American Bar Association unanimously found Solicitor General Kagan to be well qualified, which is the highest rating the ABA gives to judicial nominees.

Solicitor General Kagan has an impressive list of law organization endorsements and supporters, including the National Association of Women Judges, the Women's Bar Association of the District of Columbia, the National Minority Law Group, the Constitutional Accountability Center, the Hispanic National Bar Association, the Leadership Conference on Civil and Human Rights, and the National Association for the Advancement of Colored People.

Solicitor General Kagan has also been endorsed by a group of law school deans, who stated:

Her knowledge of law and skills in legal analysis are first

rate. Her writings in constitutional and administrative law

are highly respected and widely cited. She is an incisive and

astute analyst of law; with a deep understanding of both

doctrine and policy . . . Elena Kagan has, over the course of

her career, consistently exhibited patience, a willingness to

listen, and an ability to lead, alongside enormous

intelligence.

Former Solicitors General recently wrote a letter, including North Carolinian Walter Dellinger. In it they said:

Elena Kagan would bring to the Supreme Court a breadth of

experience and a history of great accomplishment in the law .

. . The Constitution gives the President broad leeway in

fulfilling the enormously important responsibility of

determining who to nominate for a seat on the Supreme Court

of the United States. In that spirit, we support the

nomination of Elena Kagan to be Associate Justice and believe

that, if confirmed, she will serve on the Court with the

distinction.

I thank and congratulate the members of the Judiciary Committee for holding an extraordinarily civil and open Supreme Court nomination process. I commend President Obama for selecting an extremely well- qualified nominee who will serve this country with distinction. Based on my conversations with the nominee, her statements at her confirmation hearings, and my review of her record, I intend to support her confirmation when it is voted on, hopefully later this week. I urge my colleagues to do the same.

I yield the floor.

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

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

I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 4380, which was received from the House and is at the desk.

I ask unanimous consent that the bill be read three times and passed, the motion to reconsider be laid upon the table, with no intervening action or debate, and any statements related to the bill be printed in the Record.

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 5849, received from the House and at the desk.

I ask unanimous consent that the bill be read three times, passed, and the motion to reconsider be laid upon the table, and that any statements relating thereto be printed in the Record.

Mr. President, I ask unanimous consent that the Senate proceed to the consideration of S. Res. 595.

I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, and the motion to reconsider be laid upon the table.

Mr. President, I understand that S. 3657, introduced earlier today by Senator Wyden, is at the desk, and I ask for its first reading.

Mr. President, I now ask for its second reading and 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, July 28; 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; that following any leader remarks, the Senate proceed to a period of morning business for 1 hour, with Senators permitted to speak therein for up to 10 minutes each, with the time equally divided and controlled between the two leaders or their designees, with the Republicans controlling the first half and the majority controlling the final half; that following morning business, the Senate resume consideration of H.R. 5297, the small business jobs bill.

Mr. President, tonight cloture was filed on the small business jobs bill. As a result, the filing deadline for first-degree amendments is 1 p.m. tomorrow. Senators should expect rollcall votes to occur throughout the day in relation to amendments to the bill, if an agreement can be reached to consider amendments.

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

I yield the floor.

Mr. President, I applaud the Senator from Louisiana for putting forward this amendment with the Senator from Florida. I think banks would be interested in lending this money. I think small local, community banks know their client base, know their customers. They are the ones to which these funds are going to be made available. It is not going to be the big banks. This is going to go to banks with $10 billion assets or less. There is nothing forcing these banks to take this money.

I highly recommend we move forward with this bill. I echo so much what Senator Landrieu has been talking about on the floor today. The small business lending fund is an absolutely critical component of the small business package we are moving through the Senate. Small businesses are the backbone of our economy and, in particular, in the State of North Carolina. In fact, small businesses represent over 98 percent of the State's employers in North Carolina and close to 50 percent of the private sector jobs.

Having spent the last year and a half meeting with small business owners all across North Carolina, I have seen firsthand the power of their determination and innovation. I know that the small businesses will be the catalyst that we need right now for our economic recovery.

In North Carolina, we have over 455,000 people unemployed--455,000. We need to be doing all we can in Congress to help this recovery. Small businesses cannot begin to grow and expand and hire until they have access to credit and capital to invest. The small business lending fund does a lot to address that problem by giving banks a powerful incentive to increase lending to small businesses.

I have heard my colleagues in South Dakota and Alabama speak today about this bill, comparing it to TARP, implying that banks will not participate because the fund too closely resembles TARP. Nobody is making a bank participate. This is totally voluntary. The small business lending fund is not another TARP. It is not another bailout. This fund goes to Main Street banks, our local community banks, not the big ones, not the ones with $10 billion assets or larger.

These are provisions targeted at providing money to the banks that are the healthiest and most capable of increasing lending. In fact, the measure contains provisions to ensure that the funds only go to the banks that are healthy and viable.

In North Carolina, which is one of the biggest banking States in the country, our bankers have offered their endorsement of this proposal.

I am focused on creating a better climate for businesses to add jobs in North Carolina and across the country. I think this is a sensible proposal that will help small businesses to hire and grow.

I thank the Senator from Louisiana, as well as the Senator from Florida, for putting forth this amendment.

Madam President, I rise today to discuss the conference agreement on financial services regulatory reform and specifically an issue in section 619 of title VI, known as the Volcker rule. The section's limitations on financial organizations that own a depository institution from investing or sponsoring in hedge funds or investments in private equity to 3 percent of an organization's assets, in the aggregate, references ``tier 1 capital.''

The term ``tier 1 capital'' is a concept currently applied strictly to banks and bank holding companies and consists of core capital, which includes equity capital and disclosed reserves. However, there are financial organizations subject to the Volcker rule's investment constraints that do not have a principal regulator that utilizes tier 1 capital measurements to determine an entity's financial strength. In order to ensure a level playing field with traditional banks, I would hope the appropriate regulators would determine a suitable equivalent of tier 1 capital to determine the investment limit, while still satisfying the intent of the Volcker rule.

I ask the regulators to make certain that these types of financial organizations will be subject to the Volcker rule in a manner that takes into account their unique structure.

In addition, I am pleased that as part of the conference report that the Volcker language was modified to permit a banking entity to engage in a certain level of traditional asset management business, including the ability to sponsor and offer hedge and private equity funds. With that in mind, I wanted to clarify certain details around this authority.

First, I was pleased to see that the Volcker Rule, as modified, will permit banking entities several years to bring their full range of activities into conformance with the new rule. In particular, section 619(c)(2) ensures that the new investment restrictions under section 619(d)(1)(G)(iii) and section 619(d)(4)--including the numerical limitations under section 619(d)(4)(B)(ii)--will only apply to a banking entity at the end of the period that is 2 years after the section's effective date. This date for the regulators to begin applying the new rules can also be extended into the future for up to three 1-year periods under section 619(c)(2) and can also separately be extended for illiquid funds with contractual commitments as of May 1, 2010, under section 619(c)(3), on a one-time basis for up to 5 years. Only after all of these time periods and extensions have run will any of the limitations under section 619(d)(1)(G) and section 619(d)(4) be applied by regulators.

Second, as an added protection, section 619(f) applies sections 23A and 23B of the Federal Reserve Act to transactions between all of a banking entity's affiliates and hedge or private equity funds where the banking entity organizes, offers, serves as an investment manager, investment adviser, or sponsor of such funds under section 619(d). These restrictions are also applied to transactions between a banking entity's affiliates and other funds that are ``controlled'' by a hedge or private equity fund permitted for the banking entity under 619(d). Importantly, these 23A and 23B restrictions do not apply to funds not ``controlled'' by funds permitted for the banking entity under section 619(d), and it should also be clear that under section 619 there are no new restrictions or limitations of any type placed on the portfolio investments of any hedge or private equity fund permitted for a banking entity under section 619.

Third, as a condition of sponsorship, section 619(d)(1)(G)(v) requires that a banking entity does not, directly or indirectly, guarantee or assume or otherwise insure the obligations or performance of any sponsored hedge or private equity fund or of any other hedge or private equity fund in which the sponsored fund invests. While this restricts guarantees by the banking entity as well as the insuring of obligation or performance, it does not limit other normal banking relations with funds merely due to a noncontrol investment by a fund sponsored by the banking entity. As described above, section 619(f) limits transactions under 23A and 23B of the Federal Reserve Act with a fund ``controlled'' by the banking entity or a fund sponsored by the banking entity. However, 619(f) does not limit in any manner transactions and normal banking relationships with a fund not ``controlled'' by the banking entity or a fund sponsored by the banking entity.

Finally, section 619(d)(4)(I) permits certain banking entities to operate hedge and private equity funds outside of the United States provided that no ownership interest in any hedge or private equity fund is offered for sale or sold to a U.S. resident. For consistency's sake, I would expect that, apart from the U.S. marketing restrictions, these provisions will be applied by the

regulators in conformity with and incorporating the Federal Reserve's current precedents, rulings, positions, and practices under sections 4(c)(9) and 4(c)(13) of the Bank Holding Company Act so as to provide greater certainty and utilize the established legal framework for funds operated by bank holding companies outside of the United States.

Mr. President, I would like to engage Senator Lincoln, chairman of the Agriculture, Nutrition and Forestry Committee, in a colloquy.

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Chairman Lincoln was the primary architect of, creates a new regulatory framework for the over-the-counter derivatives market. It will require a significant portion of derivatives trades to be cleared through a centralized clearinghouse and traded on an exchange, and it will also increase reporting and capital and margin requirements on significant players in the market. The new regulatory framework will help improve transparency and disclosure within the derivatives market for the benefit of all investors.

Under the bill, the Commodity Futures Trading Commission, CFTC, and the Securities and Exchange Commission, SEC, are instructed to further define the terms ``major swap participant'' and ``major security-based swap participant.'' The definitions of major swap participant and major security-based swap participant included in the bill require the CFTC and the SEC to determine whether a person dealing in swaps maintains a ``substantial position'' in swaps, as well as whether such outstanding swaps create ``substantial counterparty exposure'' that could have ``serious adverse effects on the financial stability of the United States banking system or financial markets.'' The definition also encompasses ``financial entities'' that are highly leveraged relative to the amount of capital it holds, are not already subject to capital requirements set by a Federal banking regulator, and maintain a substantial position in outstanding swaps.

I understand when the CFTC and SEC are making the determination as to whether a person dealing in swaps is a major swap participant or major security-based swap participant, it is the intent of the conference committee that both the CFTC and the SEC focus on risk factors that contributed to the recent financial crisis, such as excessive leverage, under-collateralization of swap positions, and a lack of information about the aggregate size of positions. Is this correct?

I thank the Senator. If I may, I have one additional question. When considering whether an entity maintains a substantial position in swaps, should the CFTC and the SEC look at the aggregate positions of funds managed by asset managers or at the individual fund level?

Mr. President, today I am proud to introduce the Culture of Safety Hospital Accountability Act. This bill will test alternatives to the current, inflexible system to ensure that hospitals are meeting the highest health and safety standards for their patients.

Under the current system, the Centers for Medicare and Medicaid, or CMS, requires hospitals participating in Medicare and Medicaid to comply with Conditions of Participation--health and safety standards established by CMS for the protection of Medicare and Medicaid beneficiaries. CMS contracts with State agencies to perform inspections of hospitals, nursing homes, and other health care facilities to ensure compliance.

However, there are significant deficiencies in the current system. A major concern among hospitals is CMS' assignment of Immediate Jeopardy, which puts hospitals on a 23-day fast-track to losing their Medicare and Medicaid funding. Right now, the only remedy that CMS has when a hospital receives a citation is termination. There is no flexibility to consider the incident on a case-by-case basis--or even to consider whether the hospital self-reported and immediately corrected the incident. Moreover, current procedures fail to consider the substantial resources and efforts that hospitals are already investing in quality improvement and patient safety.

Take, for example, a hospital in my State, which last year got a 23- day termination notice after they self-reported that one of their nurses had H1N1. The hospital immediately sent the nurse home and, as I mentioned, immediately reported the incident to CMS. Nevertheless, the hospital was required to undergo an inspection and submit the requisite plan of correction to CMS. The agency was not able to process the paperwork until day 22 of the 23-day notice, causing undue stress for the community as they wondered whether the hospital was going to be forced to close its doors.

In addition to the uncertainty for the hospital, the human resources required and costs incurred to implement this inflexible system are enormous. Once a hospital is cited as out of compliance with their Condition of Participation, the State CMS inspectors are required to survey the entire hospital and any other hospitals under the same CMS provider number. In the case of the hospital I just mentioned, it took State inspectors an entire week with 17 staff to survey their hospital system.

To address this inflexibility in the current system, I am introducing the Culture of Safety Hospital Accountability Act. This bill would do three things:

First, it would require the Secretary of Health and Human Services to study

existing quality assurance and patient safety activities within hospitals and identify best practices that should be replicated.

Second, it would create a demonstration program among hospitals, State health care agencies, and HHS to promote and implement best practices for improving patient safety and quality of care. HHS would identify up to 6 States and not more than 24 hospitals to participate in a 3-year demonstration program.

Finally, the bill would authorize the Secretary of HHS to promulgate regulations modifying termination agreements regarding health and safety requirements with hospitals and critical access hospitals to better ensure compliance, prevent recurrence of violations, and improve internal structures and processes that address patient quality and safety.

Patient safety must be first and foremost, and it is not the intent of the demonstration project to keep CMS or State inspectors out of hospitals, nor to impair the remedies CMS needs to address quality issues. Instead, the bill will help to explore how CMS, State regulatory authorities, and hospitals can work collaboratively to address quality and safety issues in ways that will ensure the best quality of care for patients.

Mr. President, today I am proud to introduce the Culture of Safety Hospital Accountability Act. This bill will test alternatives to the current, inflexible system to ensure that hospitals are meeting the highest health and safety standards for their patients.

Under the current system, the Centers for Medicare and Medicaid, or CMS, requires hospitals participating in Medicare and Medicaid to comply with Conditions of Participation--health and safety standards established by CMS for the protection of Medicare and Medicaid beneficiaries. CMS contracts with State agencies to perform inspections of hospitals, nursing homes, and other health care facilities to ensure compliance.

However, there are significant deficiencies in the current system. A major concern among hospitals is CMS' assignment of Immediate Jeopardy, which puts hospitals on a 23-day fast-track to losing their Medicare and Medicaid funding. Right now, the only remedy that CMS has when a hospital receives a citation is termination. There is no flexibility to consider the incident on a case-by-case basis--or even to consider whether the hospital self-reported and immediately corrected the incident. Moreover, current procedures fail to consider the substantial resources and efforts that hospitals are already investing in quality improvement and patient safety.

Take, for example, a hospital in my State, which last year got a 23- day termination notice after they self-reported that one of their nurses had H1N1. The hospital immediately sent the nurse home and, as I mentioned, immediately reported the incident to CMS. Nevertheless, the hospital was required to undergo an inspection and submit the requisite plan of correction to CMS. The agency was not able to process the paperwork until day 22 of the 23-day notice, causing undue stress for the community as they wondered whether the hospital was going to be forced to close its doors.

In addition to the uncertainty for the hospital, the human resources required and costs incurred to implement this inflexible system are enormous. Once a hospital is cited as out of compliance with their Condition of Participation, the State CMS inspectors are required to survey the entire hospital and any other hospitals under the same CMS provider number. In the case of the hospital I just mentioned, it took State inspectors an entire week with 17 staff to survey their hospital system.

To address this inflexibility in the current system, I am introducing the Culture of Safety Hospital Accountability Act. This bill would do three things:

First, it would require the Secretary of Health and Human Services to study

existing quality assurance and patient safety activities within hospitals and identify best practices that should be replicated.

Second, it would create a demonstration program among hospitals, State health care agencies, and HHS to promote and implement best practices for improving patient safety and quality of care. HHS would identify up to 6 States and not more than 24 hospitals to participate in a 3-year demonstration program.

Finally, the bill would authorize the Secretary of HHS to promulgate regulations modifying termination agreements regarding health and safety requirements with hospitals and critical access hospitals to better ensure compliance, prevent recurrence of violations, and improve internal structures and processes that address patient quality and safety.

Patient safety must be first and foremost, and it is not the intent of the demonstration project to keep CMS or State inspectors out of hospitals, nor to impair the remedies CMS needs to address quality issues. Instead, the bill will help to explore how CMS, State regulatory authorities, and hospitals can work collaboratively to address quality and safety issues in ways that will ensure the best quality of care for patients.