Floor Statements

Mr. President, I yield myself 5 minutes.

I rise today to support the Sanders amendment to bring transparency to the Federal Reserve. I believe this amendment is needed because the Federal Reserve has abused its independence. The Federal Reserve has repeatedly assumed and exercised vast fiscal powers under the guise of ``monetary policy.'' It has sought to escape accountability for these actions by claiming that its independence places it beyond the scope of congressional oversight. To allow any agency, including the Federal Reserve, to exercise the immense powers now wielded by the Fed with so little accountability is simply incompatible with our constitutional system of government.

Congress granted the Federal Reserve independence with respect to monetary policy on grounds that ``monetary policy'' was a technical, nonpolitical task that did not put taxpayers at risk. Unfortunately, the Fed has failed to stay within the limits envisioned by Congress. Over the past 3 years, the Federal Reserve's balance sheet has exploded to more than $2.3 trillion, with much of the increase related to actions that had little to do with monetary policy and more to do with bailouts, fiscal policy, and plain politics.

Although the Fed likes to pretend it is independent and removed from politics, the reality here is that the Board of Governors of the Federal Reserve is one of the biggest political players in town.

Ironically, while the Fed is fighting this amendment, the Fed remains silent about other measures that would compromise its independence. Why? The answer is politics. When it serves its politics, the Fed is happy to selectively sacrifice its independence. For example, the Dodd bill compromises the Fed's independence by having the Fed directly fund the Democrats' new consumer bureaucracy. This establishes a dangerous precedent. Anytime Congress needs a funding source, it can now go outside the budget process and have the Fed print money. Yet the Fed has remained remarkably quiet. Why? Again, politics. The Fed's silence should come as no surprise given the close political ties between the Board of Governors of the Federal Reserve and the Obama administration. The Board of Governors has clearly decided to help the Obama administration advance its legislative goals.

The Fed cannot have its cake and eat it too. If the Fed wants to be independent, it should defend its independence consistently but otherwise should stay out of politics. On the other hand, if the Federal Reserve wants to be political, it should not expect Congress to treat it as a so-called independent, nor should the Fed expect that its nonmonetary policy actions are exempt from congressional oversight. These activities, even when conducted by FOMC, are fiscal or regulatory actions that involve taxpayer dollars and policy judgments. They are no different from other policy decisions made by the executive branch.

Accordingly, I believe Congress has a constitutional duty to oversee these activities. Unfortunately, the Fed often acts as if Congress should be kept in the dark. It uses this independence as a shield to hide its actions from congressional oversight, including its bailouts of AIG and Bear Sterns. No agency should have the fiscal and regulatory powers exercised by the Fed and not think it has to be fully accountable to Congress. It should.

It is my hope this amendment will be the first step in moving the Fed back to its more limited and traditional role in our regulatory and constitutional systems.

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

Mr. President, I ask unanimous consent that after the McCain amendment is disposed of, the next amendment in order be the Corker amendment--the next Republican amendment--dealing with underwriting.

Mr. President, I ask for the yeas and nays.

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

Madam President, as part of the debate on the McCain- Shelby-Gregg amendment, I wish to take this opportunity this afternoon to discuss the history of Fannie Mae and Freddie Mac from my perspective. By doing this, I want to emphasize past Republican attempts at regulating and reforming these institutions, while also discussing their role in the financial crisis.

The government-sponsored enterprises that we call Fannie Mae and Freddie Mac were key players in the collapse of the U.S. housing market. Their multitrillion dollar portfolios gave them the purchasing power to drive markets. In addition, false presumptions about their housing finance expertise and their connections to the government gave them further power to influence the housing market. And let us not forget the GSEs' nationwide lobbying and public affairs apparatus that was designed to keep reformers at bay and their supporters flush with cash.

When the GSEs began to buy subprime securities, other firms, including most of the Wall Street banks, took this as a signal that subprime mortgage securities were safe and worthwhile investments. In effect, Fannie Mae and Freddie Mac placed the Good Housekeeping ``Seal of Approval'' on these risky instruments. As a result, the rest of the market engaged in this practice, and the race to the bottom began. Ultimately, the GSEs' collapse lit a wildfire that burned throughout the financial markets.

Due to their miscalculations, Fannie Mae and Freddie Mac have been placed in conservatorship and have already cost the taxpayers well over $100 billion. Just last week, we learned that the GSEs will need another $20 billion in taxpayer assistance for their losses during the previous quarter.

This did not have to happen. For years, the warning signs were flashing, and Republicans made multiple attempts to adopt the necessary reforms. Unfortunately, those efforts were opposed by Democrats in the Senate Banking Committee and ultimately caused the many efforts put forth by Republicans to stall in the Senate.

In 2003, as chairman of the Banking Committee at that time, I held multiple hearings on proposals for improving the regulation of the GSEs. I wish to read a portion of my opening statement from one of those hearings. I quote from that time:

The enterprises are large institutions. Collectively,

Fannie Mae and Freddie Mac carry $1.6 trillion in assets on

their balance sheets and have outstanding debt of almost $1.5

trillion. The Federal Home Loan Bank System is not far

behind, with combined assets of over $780 billion and

outstanding advances to member institutions of $495 billion.

Due to the importance of the housing GSEs' mission, and the

size of their assets, I believe that the enterprises require

a strong, credible regulator.

I further read from the statement then:

I remain concerned that the current regulatory structure

for housing the GSEs is neither strong nor credible.

At this same hearing, it became apparent that the two parties had very different perspectives regarding the need for reform. One of my Democratic colleagues noted--and it is in the record:

There is an old expression, if it ain't broke, don't fix

it. I think some of us here in the Senate believe that when

we try to fix things that aren't really broken, we can end up

doing more harm than good.

Notwithstanding the mindset on the other side of the aisle, my Republican colleagues and I persevered, and we remained engaged in the effort to reform the GSEs by holding numerous hearings and closely tracking the GSEs' activities at that time.

We decided those who believed ``things aren't really broken'' were wrong. In the face of strong Democratic opposition and a relentless lobbying campaign by the GSEs and their supporters, we proceeded with a markup of the Federal Housing Enterprise Regulatory Reform Act of 2004.

I wish to again read portions of my brief opening statement from that markup which lays out the issues and the responses we crafted to address the problems of the GSEs then:

This afternoon the committee will consider S. 1508, a bill

to address regulation of the housing GSEs.

Today, we are faced with the most important decisions

considered by this committee in years--determining the

strength, independence and credibility of regulation of our

nation's Government Sponsored Housing Enterprises. The

strength, independence and credibility of this regulatory

system have tremendous implications for the future health and

vitality of our housing markets, our capital markets, and the

economy as a whole.

I continue to quote the statement:

Freddie Mac and Fannie Mae currently have $1.7 billion debt

outstanding. To provide some perspective, our nation's

Treasury debt in the hands of the public stands at just over

$4 trillion. The Federal Home Loan Bank System has also grown

significantly since the 1990s and has a vastly expanded

membership base.

Its current regulator is not up to the task of providing

adequate oversight of its significant role.

My statement continued:

Fannie Mae is the second largest financial institution in

the United States. Freddie Mac is fourth. Their debt is held

by foreign central banks, insurance companies, money center

banks and community banks. Because of the interest rate risk

these GSEs must manage, they have an extensive network of

derivative contracts. Should one of these institutions

encounter significant financial difficulty it could make the

S&L crisis pale by comparison.

I was here speaking as an early member of the Banking Committee, as was Senator Dodd, during the bailout of the S&Ls. And it was no pretty matter. It ended up costing the taxpayers at least $130 billion.

I continue:

This experience has only reaffirmed my resolve to ensure

such a debacle never revisits the taxpayer. And, quite

simply, the real truth is we cannot afford a crisis of the

magnitude a failing GSE would pose.

I approach this markup today with a firm appreciation of

the gravity and relevance of what we do here today. I state

again, as I have before--I support the housing missions of

the GSEs. Home ownership is the primary source of wealth for

many Americans. It fosters strong communities and promotes

stability for children and families.

But, and I believe there is consensus in this Committee on

this one point at least, they are not well-regulated and,

therefore, pose significant risk to the taxpayer and the

markets they serve.

To be clear: they are not well-regulated because the

regulatory structures and authorities that Congress created

are insufficient and weak by design.

And that is what the draft before us is all about.

Reaffirming the important mission of GSEs, creating a

regulator that has all the tools and independence that other

first class financial regulators require, and protecting the

taxpayer. These are the guiding principles that animate the

draft that I have put forth before the Banking Committee

today.

Unfortunately for the taxpayers of this country, politics got in the way of advancing credible public policy then. Apparently, the Democrats felt it was better to block necessary change, adhere to the status quo, and ignore the risk to the financial system, all while leaving the taxpayers fully exposed.

We, the same Republicans who have been characterized by Democrats as being pro-Wall Street and antiregulation throughout this process, were trying to create a stronger regulator, raise capital standards, reduce risk taking, and put in place a resolution regime that would limit taxpayer exposure in the event of a firm failure.

That was a number of years back. I wish to revisit the words of one of my then-Democratic colleagues who made the following statement--and it is in the record--as we debated the merits of the Republican GSE reform bill at that time:

Lord only knows where the economy would be today if it were

not for the stability of the housing market in the midst of

so much turbulence and the ability of Americans to draw down

some of their home equity to engage in consumer purchases.

Then, as we stood on the precipice of a housing and financial meltdown, my Democratic colleagues were opposing more regulation and promoting more consumer spending. As if that were not bad enough, we were encouraging homeowners to raid the home's equity to finance their purchases. And look where it brought us.

Another Democrat took issue with the fact that we attempted to give the regulator the power to place a GSE into receivership:

Receivership, first, it does not have to be in the bill,

but, second, to allow a regulator who may not like this

institution to then sort of dole out little pieces of it one

way or another and weaken the fundamental structure of Fannie

and Freddie easily leads to its demise.

I am not sure whether my colleagues then understood the basic concept behind establishing an orderly resolution process, but I hope the lesson has now been learned. Ironically, Democratic opposition to strong reform actually produced the exact outcome my colleague feared. When reform stalled in the face of Democratic objections, investors once again viewed Fannie Mae and Freddie Mac as ``too big to fail.'' They were confident that Congress and the U.S. Government would never allow them to go under. This, of course, gave the GSEs a significant financing cost advantage which led to their explosive growth and excessive risk taking.

Finally, and most telling, one of my Democratic colleagues was concerned about how Wall Street might interpret the regulatory changes that Republicans were advocating, stating:

It is a fact that just mere speculation about the prospects

of some provisions in the bill is sending shock waves through

Wall Street.

Really?

When Wall Street became concerned that our legislation at that time would provide a stronger regulator, require higher capital standards, mandate less risk taking, and establish a well-designed resolution regime, the Democrats came to Wall Street's rescue, not the Republicans.

When the choice was between Main Street and Wall Street, the Democrats made it absolutely clear whose side they were on. They chose Wall Street, and Wall Street ultimately paved the road that led to this collapse.

I ask unanimous consent to have printed in the Record a copy of the recorded vote of the proceedings of that day in the Senate Banking Committee. That result was a party-line vote with all 12 Republicans voting for GSE reform and all Democrats opposing it.

Madam President, that was not the end of the story, though. More than 1 year later, we tried again to pass these important reforms. The Banking Committee held more hearings leading to the markup of S. 190, the Federal Housing Enterprise Regulatory Reform Act of 2005. I will not read my entire statement from this markup, but I will read a part of it that describes the commonsense steps that we were attempting to take with our newest effort to pass then GSE reform. I quote from that markup:

My legislation creates a new regulator with combined

oversight for both the safety and soundness and the housing

mission of Fannie Mae, Freddie Mac, and the Federal Home Loan

Bank System.

The new regulator will have general regulatory authority

over all housing GSEs, including enhanced authority over

capital requirements, and enforcement and prompt corrective

action authorities that are comparable to those of the bank

regulatory agencies.

Among other enhanced regulatory authorities, the bill we

will consider today includes clear direction on portfolio

review for compliance with safety and soundness, mission and

systemic risk.

Under this proposal, the enterprises are permitted to hold

those assets which promote the enterprises' mission in the

housing market.

The bill also transfers the product review function from

HUD to the new regulator and creates a two-tier approval

process through which the enterprises must receive approval

prior to offering any new product.

The bill also establishes new criteria for approval of a

product that will ensure the enterprises remain focused on

their statutory mission of facilitating a secondary mortgage

market.

The new regulator will also have the power to conduct an

orderly resolution of a failing or insolvent GSE through a

receivership process. This clear and definitive process for

dealing with a troubled enterprise is a critical tool for the

credibility and strength of a new regulator.

Madam President, unfortunately, the Democrats did not share my view of increasing regulations on the GSEs, and their comments during the second attempt to pass meaningful reforms are telling. One of my Democratic colleagues stated then, ``When the sink is leaking, you do not tear down the house, especially if the house has served you well.'' Another recalled a critique he read of the bill before the markup, which claimed, ``It is like trying to cure the common cold with chemotherapy.''

In fact, at one hearing, one of my Democratic colleagues expressed an interest in hearing how the roles of the GSEs might be increased, when he explained:

I am not only interested in hearing about the role GSEs

currently play in the mortgage market, I am also interested

in how their commitment to home ownership and affordable

housing can be expanded.

In the end, the result of our 2005 markup was the same as our 2004 markup--a strict party-line vote with all 11 Republicans supporting the reforms and all 9 Democrats opposing them. Unfortunately, the Democrats once again sided with Wall Street and the special interests by rejecting GSE reform and any attempt to move the legislation beyond the Banking Committee.

Madam President, I ask unanimous consent to have printed in the Record a copy of that recorded vote in the Banking Committee.

I would like to point out another bit of irony right now. Many of my colleagues who recently complained about the process regarding consideration of this bill were some of the same people who took every measure to block all consideration of GSE reform. Actions have consequences, and in this particular instance, they were almost immediate. As soon as it was apparent that GSE reform was dead, Fannie Mae and Freddie Mac took steps to dramatically increase their risk.

The Government Accountability Office, GAO, detailed this in a September 2009 report. The GAO discovered that in 2004 and 2005, the enterprises:

. . . embarked on aggressive strategies to purchase

mortgages and mortgage assets with questionable underwriting

standards. For example, they purchased a large volume of what

are known as Alt-A mortgages, which typically did not have

documentation of borrowers' incomes and had higher loan-to-

value ratios or debt-to-income ratios.

Furthermore, purchases of private-label MBS increased

rapidly as a percentage of retained mortgage portfolios from

2003 to 2006. By the end of 2007, the enterprises

collectively held more than $313 billion in private-label

mortgage-backed securities, of which $94 billion was held by

Fannie Mae and $218.9 billion held by Freddie Mac.

Recently, Daniel Mudd, Fannie Mae's former chief operating officer and chief executive officer, testified:

While the market was changing, Fannie Mae struggled to meet

aggressively increasing HUD goals. The goals were extremely

challenging, increased significantly every year, and

permitted no leeway to account for the challenging lending

environment. Certain mortgages that may not have met our

traditional standards could not be ignored.

While Mr. Mudd may be correct that these mortgages aided their ability to meet their HUD goals, it also should be

noted that the GAO in this same report did not see these purchases as a benefit to their mission, stating:

The rapid increase in the enterprises' mortgage portfolios

and the associated interest-rate risk did not result in a

corresponding benefit to the achievement of their housing

mission.

Ultimately, this increased risk played a significant role in the demise of Fannie Mae and Freddie Mac.

I would like to read one final section of that 2009 GAO report here this afternoon.

According to the Federal Housing Finance Administration,

while these questionable mortgage assets accounted for less

than 20 percent of the enterprises' total assets, they

represented a disproportionate share of credit-related losses

in 2007 and 2008.

For example, by the end of 2008, Fannie Mae held

approximately $295 billion in Alt-A loans, which accounted

for about 10 percent of the total single-family mortgage book

of business. Similarly, Alt-A mortgages accounted for nearly

half of Fannie Mae's $27.1 billion in credit losses of its

single-family guarantee book of business in 2008.

At a June 2009 congressional hearing, former OFHEO Director

James Lockhart said that 60 percent of the triple-A rated

private label MBS purchased by the enterprises had since been

downgraded to below investment grade. He also stated that

investor concerns about the extent of the enterprises'

holdings of such assets and the potential associated losses

compromised their capacity to raise needed capital and issue

debt at acceptable rates.

Madam President, we all know what happened once they were unable to raise capital, but let's also remember the consequences that followed our failure to properly regulate Fannie Mae and Freddie Mac.

Charles Duhigg of the New York Times, part of a group of journalists who produced ``The Reckoning,'' a series that explored the roots of the financial crisis, wrote in 2008 that:

The ripple effect of Fannie's plunge into riskier lending

was profound. Fannie's stamp of approval made shunned

borrowers and complex loans more acceptable to other lenders,

particularly small and less sophisticated banks.

James Lockhart supported this conclusion in his testimony before the Financial Crisis Inquiry Commission on April 9 of this year when he observed that the GSEs:

. . . indirectly encouraged lower standards by purchasing

private label securities. They also encouraged lower

standards by not aggressively pursuing the obligations to

repurchase mortgages if they did not comply with the

enterprises' underwriting requirements.

Madam President, during the debate on this bill before us, we have heard numerous times that we need to have a tighter grip on Wall Street to prevent those large Wall Street firms from harming small businesses on Main Street.

If only my Democratic colleagues had been less concerned with Wall Street's reaction in 2004 and 2005, perhaps we could have protected not only those less sophisticated smaller banks on Main Street but also the millions of consumers caught up in the resulting inflated housing market and the millions of taxpayers who have had to foot the bill for the resulting debacle. Instead, the stalling of this legislation by Democrats at that time ended any attempts of meaningful GSE reform until mid-2008, when Fannie Mae and Freddie Mac were already in serious trouble.

The simple truth is that we didn't act when we could have effected real change. Republicans were ready to enact real reform and-- unfortunately for the taxpayer--Democrats were not. Let's not make the same mistake again here today.

The McCain-Shelby-Gregg GSE amendment takes several important steps to reform the GSEs. It provides transparency to the conservatorships of the GSEs by establishing much needed investigative oversight. It also requires Fannie Mae and Freddie Mac to be included in the Federal budget as long as they are in conservatorship or receivership status. It reestablishes taxpayer protections that were abolished by the Obama administration last Christmas Eve, and it requires that Congress be involved in any decision to spend additional resources to stabilize the housing markets. Finally, it establishes a definite end to the ongoing conservatorships of Fannie Mae and Freddie Mac and paves a responsible path forward by refocusing their efforts, installing proper safeguards, and untangling the U.S. taxpayer from this mess.

I urge my Democratic colleagues to ignore Wall Street and the special interests lobbying against this amendment. Join the Republicans in doing something good for the American taxpayer--support the McCain- Shelby-Gregg amendment.

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

Mr. President, how much time is remaining?

Mr. President, earlier today in the Senate I spoke about the past actions or, rather, inactions of this body that led us to the current situation with Fannie Mae and Freddie Mac. I now will take just a few minutes to discuss the current status of these institutions as Senator McCain has mentioned. I will also explain the specifics of the McCain-Shelby-Gregg amendment and why I believe we must adopt it.

Since September of 2008, we have had to spend more than $150 billion to bail out these GSEs. By some estimates, this amount exceeds the total cost of the savings and loan bailouts that occurred in the late 1980s and early 1990s. Let me repeat that. Bailing out the GSEs has now cost as much or more than the entire savings and loan crisis, and it is continuing.

Having spent such considerable amounts of taxpayer dollars, one would think that the GSEs would be topic No. 1 as we consider financial reform. Unfortunately, that is not the case. As recently reported by Gretchen Morgenson, a Pulitzer Prize writer of the New York Times:

Freddie [has] warned that its credit losses were likely to

continue rising throughout 2010.

Even more troubling, while the GSEs have considerable legacy problems associated with the older loans in their portfolios, they are being used by the Obama Administration to take on additional risks.

On Christmas Day of last year, the Obama administration announced it would relax important taxpayer protections at GSEs, and it would prop them up with unlimited taxpayer funding. That is exactly what they are doing today.

The administration took this step so it would have the flexibility to continue its efforts to support the housing market. Some now are questioning those efforts. In the New York Times piece I mentioned, Ms. Morgenson quotes Dean Baker, codirector of the Center for Economic and Policy Research, who noted:

I do not understand why people are not talking about it

[referring to Freddie's losses] . . . it seems to me the most

fundamental question is, have they on an ongoing basis been

paying too much for loans ever since they went into

conservatorship?

This begs the question of why the GSEs would overpay at this point. What is to be gained? Ms. Morgenson posits a rather compelling theory:

Mr. Baker's concern that Freddie may be racking up losses

by overpaying for mortgages derives from his suspicion that

the government might be encouraging it to do so as a way to

bolster the operations of mortgage lenders.

I hope not. In the past, those huge piles of money that have consistently been spent found their way into the pockets of Democratic operatives such as Frank Raines, Jim Johnson, Jamie Gorelick, Tim Howard, and President Obama's Chief of Staff, Rahm Emanuel. Now similar piles are floating around, not necessarily to Democrats but certainly on behalf of their pet initiatives.

The only constant in either scenario has been the taxpayer has been stuck with footing the bill. I believe this afternoon this must end. It is finally time to protect the taxpayer. The McCain-Shelby-Gregg amendment will do that.

Mr. President, reserving the right to object, I ask the chairman, after the Corker amendment is disposed of, is it possible to bring up the Klobuchar-Hutchison amendment and have a debate and vote tomorrow?

Can we agree on that, to have a vote at what time in the morning?

Can they have a vote tonight?

We have no objection to the Bennet amendment.

Mr. President, I rise specifically to support the important steps the Corker amendment takes to establish sound underwriting standards for mortgages. If there is any clear message from the crisis we have been through, it is that much of what went wrong began when loans were made to individuals who couldn't repay them.

The Corker amendment makes commonsense changes. It requires minimum downpayments on mortgages, which makes it more likely that borrowers remain committed to paying their mortgages. It requires, among other things, that lenders verify a borrower's income and their ability to repay these loans. These might sound simple, but remarkably they have been overlooked by the Dodd bill. In the past, they have worked. We used to not have these kinds of problems. The Corker amendment, if we adopt this--and I urge my colleagues to vote for it--will go a long way in taking the right steps to bring common sense to our mortgage market.

Madam President, I rise today to discuss the amendment that Senate Republicans are offering to greatly improve consumer financial protection.

This amendment recognizes that our existing financial regulatory system fails to adequately provide consumer protection. Our system is broke, and it needs fixing.

The recent financial crisis has revealed that our financial regulators were asleep at the switch and had neglected to uphold their basic responsibilities for consumer protection.

Far too often, our regulators were more concerned about pleasing the entities they regulated than looking out for consumers. It is clear that we need to refocus the priorities of our financial regulators and ensure that consumer protection gets the attention it deserves.

Make no mistake. Republicans want to strengthen consumer protection.

We need to make sure that consumers get clear and understandable disclosure so that they can make good decisions.

We need to make sure that regulators have sufficient authority to combat fraudulent practices.

We also need to make sure that our consumer protection laws and regulations keep up with changes in our dynamic and innovative marketplace.

Any changes to consumer protection, however, need to reflect that consumer protection does not stand in isolation. It is inherently linked with safety and soundness regulation.

This is most dramatically illustrated by the fact that an ill- conceived consumer protection law, such as allowing for no down payments, could cause banks to fail.

Given that taxpayers are ultimately on the hook for bank failures, it would be irresponsible not to require regulators to consider the impact proposed consumer protections could have on the deposit insurance fund.

After all, one of the most important consumer protections is a healthy financial system, where financial institutions are able to keep long-term commitments to consumers, like annuities, insurance, and retirement funds.

The amendment we are proposing embodies this approach. It would put the FDIC in charge of writing consumer protection regulations. That responsibility currently rests with the Fed.

As a prudential regulator, the FDIC has the experience necessary to ensure that the right balance is struck between consumer protection and safety and soundness.

To raise the status of consumer protection, a new division will be established at the FDIC. The division will be led by a Presidentially appointed and Senate-confirmed director.

The director will serve a term of 4 years and will be required to testify before Congress at least twice a year. This will help ensure that regulators are held accountable for their actions on consumer protection.

In addition, this amendment does not disrupt the century and a half of precedent on preemption with respect to national banks.

We should be very cautious about allowing national banks to be regulated by 50 different States and opening up the door to needless state litigation that only enriches trial lawyers and raises costs to consumers.

The Republican amendment also grants the FDIC primary supervision and enforcement authority over large nonbank mortgage originators, and other financial services providers that have violated consumer protection statutes.

This will give the FDIC broad authority to clamp down on the worst offenders of our consumer protection laws without needlessly subjecting law-abiding businesses to expensive regulation.

The Republican approach to consumer protection sharply contrasts with the approach of the Dodd bill.

Under the Dodd bill, the Consumer Financial Protection Bureau would issue rules without considering their impact on the safety and soundness of financial institutions.

Need I remind my colleagues that this is the same regulatory model that produced the fiascos at Fannie and Freddie. In that case, HUD wrote rules on their housing goals and underwriting standards, while OFHEO regulated them for safety and soundness.

Do we need a better example of the foolishness of divorcing consumer protection from safety and soundness?

How did that regulatory model help consumers? It certainly left them with a huge tax bill to cover the government bailout.

An examination of the powers and size of the bureau established by the Dodd bill shows further how the Republican approach differs from the approach advocated by the Obama administration and the Democrats.

They start with the assumption that small busiesses are, in President Obama's words, ``bilking people'' and that heavyhanded regulations and an extensive bureaucracy are the only ways to ensure that small businesses do not take advantage of their consumers.

I do not believe that the tens of thousands of small businesses--the florists, the retailers, the dentists, the auto dealers--that fall within the regulatory reach of their new bureaucracy are ``bilking'' people. I also know that these entities had nothing to do with the financial crisis.

Unfortunately, the Dodd bill would create a massive new bureaucracy with unprecedented powers to regulate small businesses and consumers.

The Consumer Financial Protection Bureau could dictate exactly what forms business must use, who they provide services to, and how they sell their products.

Control over American businesses would shift further from entrepreneurs to bureaucrats in Washington.

Perhaps the most troubling aspect of their approach is that it assumes that consumers need benevolent bureaucrats to make decisions for them. In order to make that happen, the Dodd bill authorizes the new consumer agency to collect any information it desires.

Small businesses across this country fear the massive and potentially very intrusive new bureaucracy created under the rubric of consumer protection. They have every right to be afraid.

This massive new government bureaucracy has the power to place individuals under oath and demand information about their personal financial affairs.

The new bureaucracy is also required to report to the IRS any information it gets that it believes may be evidence of tax evasion.

Why does their new bureaucracy need these incredible powers? Because their bill envisions the bureau analyzing and monitoring Americans' behavior and then issuing regulations to stop them from doing things the bureaucrats deem ``irrational'' or ``inappropriate.''

Just read the writings of the Assistant Secretary of Treasury for Financial Institutions, one of the chief architects of this expansive new bureaucracy. He has written how ``regulating . . . appropriately is difficult and requires substantial sophistication by

regulators, including psychological insight.''

Let me translate this academic jargon.

He is saying that all-knowing regulators should be empowered to make decisions for consumers because benevolent regulators are the only ones who possess the right ``psychological'' mind set to do things ``appropriately.''

Think about it a minute.

Regulators are wise and should be heeded; consumers are foolish and should do as they are told. That is what we are talking about here.

The architects of this massive new bureaucracy have long argued for a consumer bureaucracy with the right ``culture.''

Whether that ``culture'' focuses on consumer protection and a safe and sound banking system or it becomes a way for community organizers and groups like ACORN to grab Federal resources is left wide open.

One of the strongest proponents for the new consumer bureaucracy has been Treasury's Assistant Secretary for Financial Institutions, as I said.

Allow me to read into the Record a couple of quotes from a paper entitled ``Behaviorally Informed Financial Services Regulation'' coauthored by the Assistant Secretary Barr in October of 2008.

The Secretary writes, ``Because people are fallible and easily misled, transparency does not always pay off. . . .''

He writes that: ``. . . regulatory choice ought to be analyzed according to the market's stance towards human fallibility.''

On regulation, he writes that: ``Product regulation would also reduce cognitive and emotional pressures related to potentially bad decisionmaking by reducing the number of choices. . . .''

He is talking about choices in the market place. Yes, the administration's chief advocate believes that benevolent regulators need to reduce choices for the consumer so that they can be protected from bad decision making and their own inherent fallibility.

He also opines on the topic of disclosures where he states that:

[D]isclosures are geared towards influencing the intention

of the borrower to change his behavior; however, even if the

disclosure succeeds in changing the borrower's intentions, we

know that there is often a large gap between intention and

action.

I believe that regulators need to ensure that consumers have the information they need to make their own decisions based on their needs and circumstances.

The proponents of behavioral economics believe, however, that regulators need to influence peoples' intentions and change their behavior so that they make decisions that the regulator deems appropriate for them. As I have said before, this is the nanny state at its worst.

Finally, he writes of a proposal on late fees charged by financial service providers.

He writes:

Under [his] proposal, firms could deter consumers from

paying late or going over their credit card limits with

whatever fees they deemed appropriate, but the bulk of such

fees would be placed in a public trust to be used for

financial education and assistance to troubled borrowers.

The translation is that behavioral economists not only believe that they are best positioned to make decisions for us, but they are also best positioned to decide how private companies spend their money.

Needless to say, this is a disturbing perspective, but it does reveal just how much the Obama administration wants to empower bureaucrats.

We should remember that the failure of our existing regulators, primarily the Federal Reserve, to properly enforce consumer protections helped cause the crisis. Yet the Dodd bill's response is to create a bigger bureaucracy and hire more bureaucrats at the Fed.

In contrast, the Republican amendment would make the changes and improvements that we all can agree need to be done, but would do so in a more focused and prudent manner.

The expansive reach of the Dodd bill means that the new bureau is going to be expensive. The budget for the bureau is approximately $650 million in new taxpayer costs, funded Argentina-style by tapping the central bank's money-printing powers.

In comparison, the budget for the Office of the Comptroller of the Currency, our national bank regulator, is currently $750 million, and that agency does both consumer protection and prudential supervision.

Under the Republican plan, industry, not taxpayers, would pay the costs of consumer protection.

Despite giving the bureau a huge budget and vast powers, the Dodd bill fails to take any reasonable steps to hold the bureau accountable.

The bureau receives all of its funding from the Federal Reserve, beyond both congressional and executive oversight.

The bureau has complete discretion on how it spends its budget, allowing it to devise programs for backdoor funding of special interest groups like ACORN and other liberal activist groups.

The more we learn about the Dodd bill's approach to consumer protection, the more I believe the Republican approach makes more sense and strikes the right balance.

The Republican amendment wisely places consumer protection in a financial regulator, the FDIC, but enhances the status of consumer protection by creating a new division of consumer protection.

It holds regulators accountable and ensures that repeat violators of consumer protection laws face stiffer penalties and regulation.

The Republican amendment avoids creating costly new bureaucracies and imposing unnecessary costs on small businesses that had nothing to do with the crisis.

We all agree that consumer protection needs to be modernized and given more attention by our regulators.

I believe the Republican approach does this. And it does so without building the expansive and expensive bureaucracy contained in the Dodd bill.

Most importantly, the Republican approach ensures that consumers are protected, but that they, not bureaucrats, are ultimately the ones making decisions for themselves.

I have heard from productive American companies--from tractor manufacturers to beer brewers--from motorcycle manufacturers to public utilities that provide heating fuel to your home--and they strongly oppose this bill because it will increase their operational and risk management.

I have heard small responsible business owners, who offer their customers the convenience of installment payments, express serious concerns about the potential for an out-of-control consumer bureaucracy that the Dodd bill creates.

Although the bill's supporters have and will argue that the fears are unfounded because the bill says that merchants not engaged ``significantly'' in offering consumer financial services are excluded from the new consumer regulatory bureaucracy.

The bill does not, however, define what the word ``significantly'' means--leaving that to the discretion of the benevolent bureaucrats.

The supporters of this massive new government agency trust the bureaucrats. I trust American small business owners.

Mr. President, it is my understanding that Chairman Dodd has asserted that the Shelby consumer protection substitute would lead to additional assessments on community banks. I want to make it clear for the record that this is not true.

But before doing so, I do want to highlight that the basic thrust of Chairman Dodd's assertion is based on the belief that placing the taxpayer on the hook for the costs of regulating Goldman Sachs, Citigroup, and J.P. Morgan is the preferential way of proceeding.

Again, Chairman Dodd believes that taxpayers paying the freight for Goldman is the way to go.

But I want to set the record straight about my amendment. First, my provision ensures that any nonbanks that are subject to regulation pay the full cost of that regulation themselves. They get no handouts from the taxpayer.

Secondly, community banks are not presently assessed by the FDIC for the cost of regulation, and my amendment does not provide the FDIC with any new authority to make such assessments.

Funding for the new division will be provided by assessments on nonbank mortgage originators, the other nonbank entities that are subject to regulation and large banking institutions. I would point out that the assessments on large banks will increase considerably following passage of the Tester amendment, which Chairman Dodd supported.

Finally, in an effort to protect deposit insurance, my amendment creates a separate consumer financial protection fund which will ensure that funds for deposit insurance and consumer protection are never comingled.

Mr. President, let's be clear about the differences in the funding sources in the two bills. The Dodd bill uses taxpayer funds to give a free ride to Goldman Sachs and the other big Wall Street Banks while my amendment makes big banks and bad actors cover their own costs.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

It is on GSE. It will take a while.

Mr. President, we are making progress. We might not be making progress as quickly as some people would like. Maybe we did spend a lot of time on this amendment, but it is very important. We have debated it. I guess it has been disposed of, at least that part of it, now. But there are a lot of other important amendments coming up. We can work together and work through some of them because a lot are duplications to some degree, and some of them we can take. Senator Dodd and I can help our staffs on that. Remember, this affects all of our economy--everything.

Mr. President, as drafted, the bill we are considering this week allows for bailouts. As a result, what my friends on the other side like to call Wall Street reform is actually a Wall Street dream and a Main Street nightmare for all of us.

Over the last several weeks, I have clearly articulated what needs to be changed in the underlying bill because

we must do everything we can to create a credible resolution regime that protects not only our financial system but, more importantly, the American taxpayer.

Fortunately, the chairman of the Banking Committee, Senator Chris Dodd, and I have worked through a number of issues and resolved to my satisfaction the concerns that some of us have expressed about government bailouts.

I believe it is simply unacceptable to expose innocent taxpaying American families to the excessively risky practices of Wall Street gamblers who are happy to enjoy the upside but want to socialize the downside.

Mr. President, taxpayers should not incur losses from the bad outcome of private risks they did not undertake. In order to achieve this, the Dodd-Shelby amendment that we will offer eliminates the $50 billion bailout fund--some people have called it the ``honey pot.'' It would significantly tighten up language in the bill dealing with the Federal Reserve's ability to provide liquidity to the financial system in times of severe market distress. It requires the approval of the Treasury Secretary before the Federal Reserve can undertake any emergency lending. It also establishes strict solvency and collateral requirements for any emergency Fed lending. It establishes strict accountability standards for any emergency Federal lending.

All of this is something we didn't have 18 months ago when the financial crisis came upon us. Together, we have tightened the resolution language to ensure that the creditors of failing firms will receive bankruptcy-like treatment.

A resolution regime for large failing financial institutions is simply not credible unless we make clear in language that backdoor bailouts are impossible. In this amendment we will be offering, we have significantly tightened up language in the bill dealing with the provision of debt guarantees by the FDIC and the Treasury. Any such guarantee will now require prior congressional approval.

We have also clarified and tightened the language in the bill regarding resolution and the powers of the Fed, Federal Deposit Insurance Corporation, the Treasury, and others to prevent bailouts. We have included provisions requiring postresolution reviews to determine whether regulators did all they were supposed to do to prevent the failure of a systemically significant institution. Such a review, I believe, is essential to hold regulators accountable for their actions, or inaction, as the case may be.

I believe we must put an end to the ad hoc responses of the Federal Government, which only lead to fear and panic. I believe these changes will help us do that.

I thank the committee chairman, Senator Chris Dodd, for working with me to tighten the language in this part of the bill. I also thank our respective staffs who have worked day and night and weekend after weekend to get us where we are this afternoon.

All of these changes are important and necessary to make bailouts a thing of the past. With these changes, I believe we have done what Congress can do to prevent any future bailouts. It will now be up to the regulators to follow the law and do what we expect them to do.

I strongly support these changes, and I urge my colleagues to support them as well. However, I don't want to leave the impression that I support the entire bill at this time because we are making these necessary changes. We are not there yet.

Beyond resolution and government powers in a crisis, this over 1,500- page bill contains a broad reach into the global financial system and the American economy. Now that we are over this particular hurdle, we will be addressing many additional concerns we have in the coming days. For now, this afternoon, I am pleased to join with Chairman Dodd in supporting this amendment.

Mr. President, I yield back the time and ask for the yeas and nays.

Mr. President, I call up my amendment, which is at the desk.

Mr. President, I yield back my time. I think we have debated this quite a while this afternoon. Most people know about it.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Amendments Nos. 3755 and 3757, En Bloc

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, I rise to bring up amendment No. 3826, the Republican consumer protection alternative. This amendment has been cosponsored by 14 of my colleagues. It is amendment No. 3826.

Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. President, I join my colleague from Connecticut. We have had a burst of activity this afternoon. I think we are off to a good start. We have to remember that this bill is

about 1,500 pages. This doesn't only affect a little bit of our economy, it affects all of our economy in one way or the other.

I have just laid down an amendment--the Republican alternative to the consumer products--and a lot of people are going to want to debate it on both sides. We are not here to delay this bill in any way. I think it is so important and it is so comprehensive that we are going to have a healthy debate. I appreciate the remarks of the Senator from Connecticut. I believe he understands that very well.

The Senator can call it up.

Mr. President, before proceeding to my remarks on the bill, I want to thank Senator McConnell, the Republican leader, for his leadership, and also the members of the Banking Committee on both sides of the aisle for their hard work and dedication which has brought us this far.

Also, I want to thank my colleague and the committee's chairman, my friend, Senator Chris Dodd. Over the years, as he has said, we have worked together on a number of bills and quite often found a way to compromise, to work forward on some very difficult and complex issues. Unfortunately, thus far, compromise has alluded us on this particular piece of legislation, at least some of it.

Throughout our discussions, we shared roughly, I believe, the same goals. Where we have differed, however, is how to achieve those goals. My goal during consideration of this legislation here will be to reshape this bill so that it actually ends bailouts, protects consumers without jeopardizing our small community banks, and brings transparency, as Senator Dodd mentioned, to the world of derivatives, without sacrificing economic growth and job creation, which we desperately need in this country.

I, along with many of my colleagues on both sides of the aisle-- Democrats and Republicans--will seek to remove dozens of provisions that unnecessarily expand the reach of the Federal Government into the private affairs of Americans and potentially endanger our civil liberties. As always, I will try to focus on policy and not politics.

Unfortunately, over the last several days, debate has become tainted by accusations and misrepresentations. This is nothing new here. The process has already become overly political with allegations that Republicans are blindly following the advice of a pollster's political memo.

I wish to say for the record here that I voted against the Chrysler bailout in 1979, I believe it was, when this particular pollster they are talking about was still in high school. So I have a long record of fighting against bailouts and trying to protect the taxpayer.

Also, I advanced the toughest piece of legislation that would have reined in Fannie Mae and Freddie Mac years ago. But that was opposed unanimously by the Democrats in the Banking Committee.

I was the only Senator criticizing the SEC's lack of supervision of the Nation's largest investment banks while some of my Democratic colleagues, including then-Senator Obama, were endorsing it.

I also opposed the imposition of the Basel II capital accords that would have left our banks in far worse shape than they were when the crisis hit.

I was questioning regulators about the growing housing bubble and the stability of our housing market years before the collapse.

As chairman of the Banking Committee before Senator Dodd, I authored and passed, with the help of the Senator, the only attempt to address the lack of competition in the credit rating industry, once again over a lot of opposition.

Finally, when Congress repealed the restrictions put in place by Glass-Steagall, I was the only Republican on the Banking Committee to vote no. So if any of my colleagues wish to discuss my motivation and my record, I am standing here on the floor right now.

As I have stated, there are a number of changes I believe need to be made to this bill before I can consider supporting it. I think we should begin by listening to the people who will be negatively affected by this bill if it were to become law.

If a small business owner from my hometown in Tuscaloosa, AL, tells me that he fears an out-of-control consumer regulator, I listen. If an orthodontist from Mobile, AL, fears regulatory burdens because she offers installment payments, I listen. If the makers of Mars candy bars fear massive cost increases from this legislation that will threaten American jobs and prices, I listen.

There are others we should be listening to as well. For example, large financial firms such as Goldman Sachs and Citigroup are in favor of this bill. Why is that? The answer is, as now written, they know that the bill will bring them and Wall Street firms like them under the Federal safety net where they will get preferential treatment, just as Goldman Sachs got in the AIG bailout.

Yes, the bill, as written, will guarantee that Goldman Sachs could again be paid 100 cents on the dollar if its bets go bad. That is a huge benefit for Wall Street firms at the expense of others--mainly the taxpayers.

The resolution authority established by this bill at the moment will ensure that the politically influential investors in these firms, such as foreign governments and sovereign wealth funds, will get special taxpayer bailouts not available to creditors of small financial companies. This will give these firms a permanent funding advantage over smaller competitors on Main Street.

Make no mistake, this bill will help the big banks get bigger, as it is written today, and further tilt the competitive playing field against small and less politically connected firms.

The legislation that we are about to consider will help the likes of Goldman Sachs but harm the American people. It will lead to job losses, lost opportunities for businesses to productively invest in the future, and it will ensure future bailouts, which Senator Dodd and I both want to prevent.

Chairman Dodd has assured me that he will address a number of concerns I have expressed with respect to bailouts. We have talked about this at length. I appreciate his assurances and take him at his word, but I am concerned that there appear to be no substantive changes in the relevant sections of the bill that would reflect such assurances yet. Therefore, at the conclusion of my remarks, and picking up on what we talked about earlier, I wish to hear how the chairman intends to address the following: the removal of the $50 million bailout fund, which some people call the honey pot; not allowing the government to pay creditors and shareholders of a failed firm more than they would be entitled to in bankruptcy; not allowing the FDIC to prop up failing firms with government and debt guarantees--meaning the taxpayer; not allowing the Federal Reserve to lend broadly on bad collateral; holding the FDIC accountable if it fails to properly conduct resolutions or uses the resolution authority to provide bailouts; and not allowing the government to deem any nonbank financial company as systemically important and worthy of taxpayer funds at the Fed's discount window.

As many of my colleagues are beginning to realize, it doesn't matter what we say. What matters is what is in the bill's language. And the language in this bill right now would allow for bailouts. I urge my colleagues to read the language carefully.

I have been assured that the bailout provisions will be addressed. However, they have not been addressed yet in the chairman's substitute language. We need to see language from the majority that clearly addresses the issues I have set forth. My hope is that by Tuesday this can be resolved quickly, with both of us offering a joint amendment.

Nevertheless, we are still left with a bill this afternoon that will create massive and intrusive new government bureaucracies, damage job creation, reduce private investment in productive projects, make risk management more difficult, and threaten our economy.

The bill before us now establishes overarching bureaucracies without any meaningful protections for our financial privacy rights. Also, the bureaucracies have been designed to address many issues that have little or no bearing on the recent crisis or any financial crisis. It is a power grab that can reach into virtually every aspect of our economy, and it needs to be restrained.

I wonder how any crisis will be prevented through data collection from banks about deposit accounts of their customers to identify community development opportunities as found in section 1071 of this bill.

Small businesses across this country fear the massive and potentially very intrusive new bureaucracy created under the rubric of consumer protection. And they have every right to be afraid. The massive new government bureaucracy called for in this bill has authorities and powers to call you forward and ask you, under oath, about your personal financial affairs. The fact so many are looking the other way on this serious threat to our civil liberties is troubling. But as this debate goes on, I think America is going to start focusing on the deep aspects of this bill.

The architects of this massive new bureaucracy have long argued for a consumer bureau with the right culture, they call it. Whether that culture focuses on consumer protection and a safe and sound banking system or it becomes a way for community organizers and groups such as ACORN to grab Federal resources is left wide open here.

This massive new bureaucracy will be funded by over $600 million taken directly from the Federal Reserve, outside of the congressional oversight or appropriations process. Tapping the central bank to pay for political initiatives is a very disturbing and dangerous precedent. They did that in Argentina to the utter dismay of the global community and to Argentina itself. It shows a complete lack of understanding of the importance of an independent central bank. For us to follow Argentina's lead and tap the Fed for new government programs is not only shortsighted but signals to the rest of the world the failure of this country to act in a fiscally responsible manner.

In addition to the new Fed consumer protection bureaucracy, this bill envisions a massive new potentially $\1/2\ billion per year Federal bureaucracy called the Office of Financial Research, designed to collect granular financial data and to construct complex financial models. Did you hear that? This new bureaucracy is given unprecedented authority, including abilities to obtain virtually any type of data it wants from financial companies, to the level of detail of what you buy on your credit card.

This new bureaucracy is also designed to gather data, process it, and then is required to make it available to Wall Street firms so they can cut their costs. So who is for Wall Street now?

This bill also threatens our economy, as Senator Dodd mentioned, by its treatment of derivatives. Greater transparency in all derivative markets is a good thing. But this bill, at this juncture, under the guise of promoting transparency, I believe, threatens Main Street companies and their customers for no good reason. The end-user exemptions put Main Street companies through almost endless and unworkable hoops that will ensure higher costs, lower growth, fewer jobs, and diminished economic opportunity.

In addition, by seeking to concentrate all manner of risky products into clearinghouses, the bill threatens to concentrate risk to the point of becoming systemically large, which, as we all know, leads to government or taxpayer bailouts. This bill could actually increase risk in our financial system, as it is written, and decrease economic output at a time when we need it the most.

Finally, while concentrating risks in America, this bill will shift derivative

trades offshore to places where we have no oversight or regulatory abilities to act.

Proponents of this bill also argue that regulatory gaps are being closed and that the bill somehow simplifies and rationalizes the regulatory framework. Yet the Kansas City Fed President has said:

This bill actually increases the complexity of the

regulatory structure . . . as well as creating unnecessary

costs.

As is often the case with this bill, claims about what it does do not match the language itself. They claim it is regulatory simplicity; the language means that there will be increased complexity.

I have highlighted here this afternoon some of the major problems in this bill. It will not end taxpayer-funded bailouts as it is written; it provides for a drastic expansion and overreach of government into the economy and every aspect of our personal financial lives; it also raises the cost of risk management and threatens the abilities of companies to manage risk using derivatives while potentially accumulating risk to systemic proportions; and it makes an already complex regulatory maze even more complex.

I welcome the opportunity to debate the bill before us and to offer amendments and work with Senator Dodd, the chairman, to improve the deficiencies and strengthen this bill's shortcomings. I hope we are going to be able to do this in a spirit of cooperation in the days ahead.

I will be brief.

First, I thank the Republican leader Senator McConnell for his kind words. Also I thank my friend, the majority leader, Senator Reid, for helping bring us where we are today.

But more than that, I commend Senator Dodd, the chairman of the Banking Committee, with whom I have worked for years and years. We have worked exceedingly closely on many issues dealing with the Banking Committee. What we are bringing to the floor now is something very complex, very far reaching. The idea that something should be too big to fail is very important to me. Nothing should be too big to fail, in my judgment, in this country.

I commend Senator Dodd. In our negotiations, they haven't been all loss--we have reached some assurances in that. He and his staff have made some recommendations that we like. We made some they liked. I think we have made real progress. I know we have to seal it all, but I think Senator Dodd is working in good faith on that.

But we have the derivatives title and we have the consumer products deal. We have not been able to resolve those yet. I hope we will on the floor of the Senate. We have moved to a new forum and it is going to be a very important debate in the weeks ahead here because this is very important to the American people.

Mr. President, first, I thank Senator Dodd for his leadership on the Banking Committee. I worked with him, as he said, day-in and day-out, and this is the fourth year of his chairmanship. We have achieved a lot together in a bipartisan way.

Both sides of the aisle are working together for a common goal. We share a lot of these goals. What are some of the goals?

Ending bailouts. Senator Dodd and I both believe that nothing should be too big to fail--financial institutions and, I believe, manufacturing and anything else. Nothing should be too big to fail. We are working toward that end.

Protecting consumers. We are very interested in a consumer agency. We want to balance that, while protecting the deposit insurance fund and so forth.

Regulating derivatives. Let's be honest, they played a big role--a lot of them in the closet, unknown, and so forth--in our financial debacle. Derivatives are used every day legitimately by so many of our businesses, not only in America but all over the world. So we need to regulate derivatives while protecting jobs and our economic growth. It is a common desire. Details matter here. The Presiding Officer understands that. Senator Dodd understands it very well.

As we are moving down the road in the process, we are continuing to negotiate and to do it in good faith, trying to reach a common goal. Who knows what will happen between now and Monday or next Tuesday or Wednesday or Thursday. I hope it is a bipartisan bill and that we can gather a lot of people on both sides of the aisle to support it. I think that is one of our goals.

What is the main goal? To do it right. Don't just do it, but do it right. Will it be perfect? Nothing is perfect, as Senator Dodd talks about. But if we work in good faith, as we are trying to while the process is going forward, I think we can make some real progress toward the common goal--to have a strong financial system that is well regulated, to have derivatives that are brought out of the closet to work, and to have a consumer agency that will work for all of us. There are many other things, but that is my goal, and I share that with Senator Dodd.

I yield the floor.

I object.

Mr. President, I know we are getting close to the end of the debate, and we will soon be voting on cloture. I wish to take a few moments to read a few excerpts from editorials that ran in, of all publications, the Wall Street Journal, dealing with Chairman Bernanke, his tenure in office, his misdeeds, and so forth. I also ask unanimous consent at this time that the full text of the editorials, dated January 25, 2010, December 3, 2009, and June 23, 2009, be printed in the Record.

Mr. President, the first point the Wall Street Journal editorial highlights dealing with Chairman Bernanke's overt political activities states:

Whether or not Mr. Bernanke is confirmed, the lesson we

draw--

This is the Journal editorial staff--

is that overly political Central bankers will eventually be

undone by politics.

They always are.

The Wall Street Journal goes on to conclude:

Our own view is that Mr. Bernanke is already far too

susceptible to political pressure. As a Fed governor, he was

Alan Greenspan's intellectual copilot last decade when their

easy money policies created the housing mania.

On Mr. Bernanke's loose money record, the Journal noted in these editorials:

Mr. Bernanke was the intellectual architect of the decision

to keep monetary policy exceptionally easy for far too long .

. . He imagined a deflation that never occurred, ignored the

asset bubbles in commodities and housing, dismissed concerns

about dollar weakness and in the process, stoked the credit

mania that led us to where we are today in the financial

panic.

Finally, the Wall Street Journal points out in regard to Chairman Bernanke:

The Fed Chairman has shown he knows how to ease money . . .

But, that is the easy part of his job. The hard part, the

time when Central bankers earn their fame, is when they have

to take the money away. We see little at this point in the

Chairman's policy history or guideposts to suggest he will be

willing to endure the criticism that will come with

tightening money amid a lackluster recovery, if that is what

is required to protect the dollar or prevent an inflation

outbreak.

For these and other reasons, the Wall Street Journal, one of the most widely recognized business publications in the world, opposes the nomination, as I do, of Chairman Bernanke.

I yield the floor.

We are checking to see.

Mr. President, I rise today in disbelief. The American public is searching for commonsense answers from its leaders on health care, and yet they are poised to receive an expensive, wholly inadequate, and simply illogical so-called solution.

After weeks behind closed doors--including now--the majority has produced a bill thus far that raises taxes, makes drastic cuts in Medicare, and increases premiums to create a new government program, the so-called public option.

I believe the public option is nothing more than socialized medicine and expanded government disguised as greater choice. Thus, I am adamantly opposed to this bill as it is written.

I believe any legislation seeking to effectively address health care reform should have as its dual aims cutting costs and increasing access to quality care. But, amazingly, this bill just does the opposite on both counts.

This proposed legislation is not going to solve our Nation's health care problems and yet likely will exacerbate them. The administration, it seems to me, seems to be determined to force the health care bill on the American people, which the majority of citizens do not want or need.

I believe we have the best health care system in the world in the United States of America. While many have scoffed at such a suggestion, the United States, as we know, has the finest doctors, first-rate treatments, cutting-edge innovation, and low wait times.

Think about it. People come from all over the world to take advantage of our revolutionary medicine and state-of-the-art treatments. The United States develops new drugs and medical devices years before the rest of the world, and American doctors are usually pioneers of new techniques in surgery and anesthesia.

As a cancer survivor myself, I am especially proud of the great strides the United States has made in screening and treating cancer. The United States has one of the highest survival rates for cancer in the world and dwarfs survival statistics in Europe. In 2007, U.S. cancer survival was 66.3 percent, while Europe's was 47.3 percent. I believe the answer as to where to receive treatment in the world is clear: the United States of America.

However, our current system, I would admit, is not perfect, and I have never said it was. But I believe we must seek to build upon rather than tear down these strengths we have. We need a bill that reduces costs and improves quality and level of care for the American people.

Here, I believe, we get the exact opposite: a bill that grows big government by creating a costly new entitlement program, drives up private health care costs, and subsequently lowers overall quality and access to care.

According to the Congressional Budget Office's Long Term Budget Outlook, the coming tsunami of Social Security, Medicare, and Medicaid costs is projected to push the Federal public debt to 320 percent of GDP by 2050 and over 750 percent by 2083.

Does anyone truly believe this new legislation will not further add to our Nation's debt? When has history proven that our government can regulate more effectively than private industry or the marketplace, much less doing so without adding to the deficit? The reason: we simply overspend and overpromise.

The Congressional Budget Office estimates that the Senate Democrats' health care proposal, as now written, will cost $849 billion over 10 years.

While Americans will be hit immediately with new taxes and government mandates, the actual services and coverage promised in this legislation will not be implemented until 2014--a clear attempt to mask the true cost of reform. The proposal before us delays government subsidies for yet an additional year to hide the real cost of the bill and show so- called additional savings.

Stalling implementation on a program set to run for an indefinite time horizon and calling it ``savings'' is nothing more than fiscal sleight of hand. Therefore, the Senate Budget Committee estimates the true 10-year cost of the proposal to be $2.5 trillion once fully implemented--$2.5 trillion once fully implemented. Let me say that again: $2.5 trillion--a lot of money.

To pay for this $2.5 trillion worth of legislation, the government, I believe, will have no choice but to raise taxes to European welfare state levels or impose drastic restrictions on patient care or, most likely, both.

The bill includes over $493 billion in new tax increases, as written, and probably another $464 billion in Medicare cuts, placing the burden of reform squarely on the shoulders of the middle class, small businesses, and the elderly.

For the middle class, the proposal is a direct hit. The Joint Committee on Taxation estimates that in 2019, 73 percent of the so- called wealthy taxpayers paying the proposed excise tax on high premiums will earn less than $200,000 a year. I think the time is now to stop heaping debt obligations on the backs of the able bodied.

The proposed tax on the so-called Cadillac plans--plans with high annual premiums--will not only be passed on to the consumer through higher premiums but will creep its way into the lives of many middle- class Americans.

I have a little story. Mrs. Melanie Howard, of Pelham, AL, raised this point when discussing the idea of who actually receives Cadillac health care. Mrs. Howard spoke to me of the small nonprofit where she worked, which had to raise premium prices to offset a few workers who were battling cancer. In effect, she was paying for a Cadillac but still just getting a basic car. Because the tax is based on cost of coverage and not quality and breadth of coverage, many Americans could fall into this category.

I believe it is a simple actuarial fact that smaller risk pools result in higher premiums. Thus, small businesses, such as Mrs. Howard's employer, are naturally going to bear the brunt of this ill- conceived Cadillac health insurance tax.

As taxes increase to pay for the public option, so does the cost of premiums on health care plans. The Congressional Budget Office analysis on premium impacts estimates that family premiums would increase 28 percent--from $11,000 per family to over $14,000 per family by 2019. This is more than a $3,000 increase per family.

The bill also imposes $28 billion in new taxes on employers who do not provide government-approved health plans, and it charges a penalty of $750 per uninsured individual--a form of double taxation.

Furthermore, any opportunity to allow individuals to self-manage their care and plan for future health care costs has been eradicated from this proposal as now written. Flexible spending accounts help individuals and families pay for out-of-pocket medical expenses that are not covered by their health insurance plans with tax-free dollars. These are particularly important for individuals and families who have high medical expenses, such as seniors and those with chronic health conditions or disabilities.

The current proposal before us will not only limit allowable flexible spending account contributions, but the limit is not indexed for inflation, which means the inflation-adjusted or real value of a flexible spending account will decline steadily over time until virtually worthless.

What is also truly concerning about the current legislation is a massive reduction in care our seniors will face under this legislation. The proposal includes $120 billion in cuts to Medicare Advantage, nearly $135 billion in Medicare cuts for hospitals that care for seniors, more than $42 billion in cuts from home health agencies, and nearly $8 billion in cuts from hospices, of all places. I believe this nearly $\1/2\ trillion in Medicare reductions simply must result--has to result--in vast reductions in the quality of our seniors' care.

I do not believe massive tax increases, a rise in the cost of health care premiums, reduced flexibility in self-management of care, and cuts to seniors' health care is what the American people have in mind as a way to improve access and create affordable quality health care.

We have already seen how this legislation will significantly increase costs and reduce coverage of care. But let's, for a minute, turn our attention to the quality of care because there is, indeed, a big difference between government-run health care coverage and actual access to medical care.

As Margaret Thatcher once said:

The problem with socialism is that eventually you run out

of other people's money to spend.

Medical rationing is inevitable under government-run health care. It has to be. Supporters of government-run medicine often cite Canada or Great Britain as models for the United States to follow. Yet medical rationing, such as is common in those countries, is inevitable under a government-run health care system as now proposed. These countries are forced to ration care or, in the alternative, have long waiting lists for medical treatments that lead to the same result.

More than 750,000 Britons are currently awaiting admission to the National Health Service hospitals. Last year, over half of Britons were forced to wait more than 18 weeks for care or treatment. The Fraser Institute, an independent Canadian research organization, reported in 2008 that the average wait time for a Canadian awaiting surgery or other medical treatment was 17 weeks, an increase of 86 percent since 1983.

Access to a waiting list is not access to health care.

A study by the Organization for Economic Co-Operation and Development showed that the number of CT scanners per million in population was 7.5 in Britain, 11.2 in Canada, and 32.2 in the United States.

For magnetic resonance imaging--MRIs--there was an average of 5.4 MRI machines per million in population in Britain, 5.5 in Canada, and 26.6 in the United States.

Government-run health care will undermine patients' choice of care.

Citizens in those countries are told by government bureaucrats what health care treatments they are eligible to receive and when they can receive them. I believe Americans need to understand that all countries with socialized medicine ration health care by forcing their citizens to wait in lines to receive scarce treatments. Simply put, government financing means government control, and government control means less personal freedom.

While we need to enact reforms to our health care system that will reduce cost and improve access, our Nation cannot withstand the deep deficits this colossal health care entitlement program, I believe, would create. Instead, we need a system that restores the patients and doctors as the center of every health care decision, rather than the government and insurance companies.

By making insurance portable, expanding health care savings accounts, reducing frivolous lawsuits, emphasizing preventive care, reducing administrative costs, and making insurance

more affordable to small business and individuals, I believe we can efficiently decrease the costs that currently burden Americans while expanding coverage. The result would be improved quality and affordable care.

It appears that no matter how many thousands of letters my office receives in the Senate asking Congress to stop this legislation, this administration is determined to pass something--anything--no matter what the cost or how damaging the result. The latest CNN poll shows 64 percent of Americans oppose this health care reform as now written. The Associated Press reports that over 60 percent of Americans are against this type of reform.

It has been said we would be committing Senatorial malpractice to pass legislation such as this. I agree. I simply do not believe the American people desire or deserve what government-run health care would result in: higher taxes, larger deficits, and rationed lower quality care.

While we need to enact reforms to our health care system that will reduce costs and improve access to all Americans, our Nation cannot withstand the massive cost this colossal health care entitlement program will create.

The health of this Nation will not be helped by risking our Nation's financial well-being. It has been said if you think health care is expensive now, wait until it is free.

I yield the floor.

Mr. President, I pay tribute to Pierre Pelham, a former colleague of mine in the Alabama State Senate, who recently passed away. He was a personal friend and, along with his family, I mourn his passing.

A native of Chatom, AL, and a resident of Mobile, AL, Pierre was born on July 20, 1929, to Judge and Mrs. Joe M. Pelham, Jr. An incredibly bright student, he graduated Phi Beta Kappa from the University of Alabama and received his J.D. cum laude from Harvard Law School. During the Korean war, Pierre served as a captain in the Army and received both the Combat Infantryman Badge and Expert Infantryman Badge.

After his service in the Army, Pierre returned to Alabama and began to practice law. Described by many as brilliant, Pierre often took on cases that other lawyers did not want. One of his more interesting cases involved representing Aristotle Onassis' wife in her divorce from the wealthy shipping magnate.

In the 1960s, Pierre began to pursue his interest in politics. He served as the national campaign coordinator for Governor George Wallace and later as a delegate to the Democratic National Convention from Alabama's 1st Congressional District in 1960 and 1964. In 1966, Pierre was elected to serve in the Alabama State Senate. It was there that I had the distinct pleasure of working with him.

In 1970, Pierre was elected to serve as president pro tempore of the Senate. Pierre was renowned by our colleagues as an excellent orator and an exceptionally persuasive State senator. When word would spread around the State capitol that Pierre was speaking on the senate floor, it was not uncommon for the gallery to fill with spectators and for members of the House to cross over to the Senate to watch what would surely be an extraordinary speech. His articulation and command of the English language were simply captivating.

Although Pierre eventually retired from public life, as a fellow of Harvard's Kennedy Institute of Politics, he remained interested in national, State, and local affairs his entire life. Most people in Mobile will remember Pierre for his many contributions as a State senator to South Alabama, most notably his support for the creation of the University of South Alabama College of Medicine. I knew him to be honest, hardworking, and a committed State senator. He remained dedicated to his family and the people of Alabama throughout his life.

Pierre is loved and respected and will be missed by his wife Eva Pelham; his sons Marc Pelham and Joseph Pelham, IV; his daughters Pierrette Prestridge and Patrice Pelham; and 12 grandchildren. I ask the entire Senate to join me in recognizing and honoring the life of my friend, Pierre Pelham.

Mr. President, it is an honor to recognize Dr. William McCorkle, who after 52 years of extraordinary service to our Nation, is retiring from Redstone Arsenal in Huntsville, AL.

In the words of Napoleon Bonaparte, ``Victory belongs to the most persevering.''

Dr. McCorkle is a person who has used his perseverance, determination, and forthrightness not only to personally succeed in the Army but more importantly to do what is best for our warfighters.

A 1950 graduate of the University of Richmond with a bachelor of science degree in Physics and a Ph.D. in Physics from the University of Tennessee in 1956, Dr. McCorkle came to Redstone in 1957 from a position at Tulane University.

Not since Dr. Wernher von Braun has one man done more to promote rocket development at Redstone than Dr. McCorkle. Since he joined the Aviation and Missile Command, Dr. McCorkle has been a pillar in the aviation and missile research and development fields.

As director of the Aviation and Missile Research, Development, and Engineering Center, Dr. McCorkle is an internationally recognized leader in aviation and missile technology, and has been involved in virtually every Army rocket and missile development program since 1956. He helped build the very foundation that has made the U.S. Army's aviation and missile programs so successful.

Dr. McCorkle's efforts have been instrumental in taking engineering ideas and transforming them into weapon systems. Dr. McCorkle was key in the development of the Prototype Integration Facility which has transformed the Army's rapid response capability to meet the needs of the soldier in the battlefield.

This facility is on the forefront of providing our servicemembers with quick solutions to critical problems they currently face in combat. Dr. McCorkle's work on this initiative has led to the building of a world-class research program at Redstone Arsenal valued at over $1.2 billion.

More importantly, he has dramatically increased rapid prototyping efforts that have led to significant advancements to unmanned aerial vehicles at use today in combat.

Dr. McCorkle has effectively championed the use and growth of unmanned aerial vehicles and the new capabilities that have increased their value in combat. In conjunction with the Air Force, Dr. McCorkle's team led the development of advanced technology to arm predator unmanned aerial vehicles with Hellfire missiles. This program is now one of the most successful weapon systems being used today in Afghanistan and Iraq.

Under Dr. McCorkle's guidance, aviation research has also flourished. The Aviation and Missile Research, Development, and Engineering Center is heavily involved in the research and development initiatives behind many of the most utilized Army helicopter programs, including those on the Apache, Black Hawk, and Chinook helicopters.

After the rapid development of blue force tracking, a new capability that tracks the location of friendly and hostile military forces, units overseas were able to install this technology directly in the field.

Continuously, throughout Operation Iraqi Freedom, it was reported that blue force tracking systems were working flawlessly, even allowing troops to fly in formation during sandstorms and brown-out conditions. This is an invaluable advancement for our soldiers and Dr. McCorkle ensured it was delivered to our servicemembers in the field at a critical time.

Dr. McCorkle's work has significantly improved technology development and reduced the time to field equipment, ensuring our warfighters are the best equipped fighting force in the world. His work has also reduced the cost of these programs for the taxpayer.

Under his direction, the Aviation and Missile Research, Development, and Engineering Center developed the Department of Defense's Best Value Engineering Program, which has consistently achieved 70 percent of the Army Materiel Command's total savings and 30 percent of the Department's total savings. His Service Life Prediction Program has achieved over $8 billion in cost avoidance.

Dr. McCorkle has been on the forefront of new technology to provide our warfighters with the best equipment and our nation the best defense from those who wish to threaten us.

Under his guidance and leadership, the Aviation and Missile Research, Development, and Engineering Center was consistently recognized as an Army Materiel Command Laboratory of Excellence and formally recognized as the Army's best laboratory eight times.

I thank Dr. McCorkle for his years of service to our Nation, the Army and, most importantly, the warfighter. He has been a genuine asset to both the Service and the warfighter.

In everything he did, Dr. McCorkle strove for excellence in himself and sought to inspire the same in those around him.

His leadership, experience, and expertise have advanced our rocket, missile, and aviation programs beyond what was ever imagined when he first came to work for the Army. I am proud to have worked with Dr. McCorkle for over 30 years, but I am even more honored to call him my friend.

Dr. McCorkle, I wish you and your wife Nancy the very best as you enjoy your well-deserved retirement.

Mr. President, I rise in opposition to the Ensign amendment. The State Criminal Alien Assistance Program, a program that was not requested by this nor the previous administration, is currently overfunded in this bill at $228 million. With the Ensign amendment, we are being asked to add $172 million to a program that barely touches most of our States. Since 2004, five States have received 71 percent of the $2.1 billion in funding for this program.

Let me say that again, 71 percent, or $1.5 billion of the amount for this program since 2004, has gone to five States. This can hardly be called a national program.

In 2008, during the CJS Senate floor debate a year ago, this amendment was tabled and rejected by a vote of 68 to 25. I strongly oppose this amendment and urge my colleagues to vote against this amendment.