Floor Statements

I object.

Mr. President, I raise a point of order it violates the Budget Act.

I yield back the remaining time.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, I rise in support of the Dodd-Shelby substitute amendment.

Nearly every adult American has at least one credit card. They provide convenience, access, and service. They have become an essential tool for conducting financial transactions in this country and all over the world.

The existing rules governing credit cards, however, no longer strike the right balance between the interests of credit card companies and the consumer.

Credit card contracts are unclear at best, and thoroughly confusing at worst. Card issuers raise rates for unclear reasons, use billing methods that consumers do not understand, and assign fees and charges without warning. The bill seeks to remedy this by providing consumers with greater transparency, fairer terms, and more certainty in their dealings with the card issuers.

During the committee markup before the Banking Committee, I made it clear that I shared many of Chairman Dodd's goals with respect to this issue. For example, I supported prohibiting double-cycle billing, banning the practice of universal default, limiting certain fees, and placing some restrictions on credit cards issued to young adults in this country.

I also thought consumers deserved more and clearer disclosure regarding the terms of their agreements. Finally, I expressed to Senator Dodd the view that we should codify the Federal Reserve rules in a statute to ensure that they become permanent and not subject to the whims of future regulators.

At the markup before the Banking Committee, however, I indicated there were some areas where Chairman Dodd and I disagreed at that point. Most notably, the original draft would have prohibited card issuers from using risk-based pricing for existing cardholders, both retrospectively and prospectively. I did not think it was wise to abandon the concept of risk-based pricing.

Without the means to price for risk, the credit card companies would be forced to impose significant costs to all--all--users of credit because they would be unable to account for the particular risk of an individual borrower. It would also be much more difficult for card issuers to innovate and create new products and services.

I believe credit should be priced according to the risk profile of each individual. Consumers who prudently manage their use of credit deserve to be rewarded with lower prices and better terms. Moreover, they should not be forced to subsidize the bad habits of others. I also believe markets must have the freedom to adapt to new circumstances and consumer demands.

In the weeks that followed the Banking Committee markup, I worked with Senator Dodd to craft a compromise that allowed for the use of risk-based pricing. The Dodd-Shelby amendment before us allows card issuers to price risk but requires that they consider both positive and negative changes in the consumer's risk profile when setting rates and terms. This means that consumers will pay more when their credit risk goes up and can have their rates reduced when it comes down.

In total, the Dodd-Shelby substitute amendment reflects a broad, bipartisan compromise on many of the issues I raised in the committee. It prohibits double-cycle billing, the practice of universal default, and places restrictions on credit cards issued to young adults. It limits certain fees, provides more robust disclosure, and provides consumers with statutory certainty. It also preserves the fundamental concept of risk-based pricing, which is vital to the ongoing function of the credit card market.

I am hopeful this legislation has struck a better balance between the needs of consumers and the credit card companies. I am also hopeful this balance in design ultimately results in a balance in fact. To ensure this, I asked that we include a provision in this substitute we have offered that requires the Federal Reserve to track the impact this legislation has on the cost and the availability of credit and to report its findings to the Congress. Over time, if the Federal Reserve finds we have not achieved that balance, in fact, we will be made aware and we should not then hesitate to make the necessary changes.

This legislation addresses some practices that are simply unnecessary. It gives consumers the chance to have a more equitable relationship with the credit card companies. It also preserves the basic framework necessary to maintain the function of a very important marketplace.

I look forward to working with Senator Dodd, the chairman of the committee, on the floor of the Senate on this bill, and I urge my colleagues on both sides of the aisle to support the substitute amendment offered by Senator Dodd and myself.

I yield the floor.

Mr. President, I believe this is not a good proposal. This changes the law, as we understand it. It has been working a long time. It will cause all kinds of problems. Once a property is foreclosed, what do you do with it next? It delays it.

I ask my colleagues to oppose the Kerry amendment.

I ask for the yeas and nays.

Mr. President, today I pay tribute to John A. Garrett, an honorable Alabamian and a good friend of mine. On Sunday, May 10, 2009, John A. will celebrate his 100th birthday.

John A. was born in 1909 in Bay Minnette, AL. He graduated from Alabama Polytechnic Institute, now known as Auburn University, in 1936, the same year that he married the love of his life, Katherine Virginia Stowers, at the Snowdoun United Methodist Church in Montgomery. Together, they have two daughters, Kitty Walter Dawson and Mary John, a son-in-law Sim Byrd, three grandchildren, and five great-grandchildren.

Most people in Alabama know John A. for his many contributions to Alabama's agriculture industry. During the 1950s, he served as the State director of commodity services for the Alabama Farm Bureau. Later, he would go on to own and operate Cherokee Builders, an industrial and commercial construction business.

In 1969, he was appointed by President Nixon to serve as the director of the Alabama Farmer's Home Administration, a position he would hold until 1977. In the early 1970s, John A. became a nationally recognized leader on agricultural and water issues. Later, at the age of 68, John A. established the Alabama Rural Water Association, an organization of which he served as executive director for 17 years.

An avid leader, John A. is the recipient of many honors and awards. In 1970, John A. was designated an Honorary State Farmer by the Future Farmers of America. Two years later, he relieved the ACTION Federal Employee Distinguished Voluntary Service Award for his extraordinary volunteer service. In 1985, Auburn University honored John A. for his outstanding services on the Montgomery County Auburn Committee. He was named Alabama Arthritis Foundation Humanitarian of the Year in 1989 and was inducted into the Alabama Senior Citizens Hall of Fame in 1991.

John A. is also known for his wit and wisdom. In addition to authoring numerous poems, John A. penned the secrets to a wonderful life: a positive attitude and thinking, clean living, and ``Toddy Time'' every afternoon. Indeed, Congress should live by his rules.

Today, John A. remains very active in his community. He attends the monthly meetings of the Snowdoun community, Snowdoun Volunteer Fire Department, Montgomery County Alfa, and the Alabama Cattlemen's Association. John A. can also frequently be found greeting the visitors at his gift shop on Mulberry Street or riding on his farm and tending to his cattle.

On the day of his 100th birthday, John A. will be celebrated by his friends and family, and honored for his dedication and many contributions to Alabama. I wish him much luck in his future endeavors, and I ask this entire Senate to join me in recognizing and honoring the life of my good friend John A. Garrett.

Madam President, I share Senator Sander's concern regarding the transparency of these programs. We all do. We just voted on the Dodd-Shelby amendment--96 to 2, it passed, I believe.

As Senator Dodd has pointed out, however, disclosing the names of the companies may create financial instability by unnecessarily raising concerns about institutions that accessed these facilities, something we should try to avoid. I believe the Senate has already spoken, and we certainly do not need this amendment.

Mr. President, I rise today with great concern regarding the nomination of Mr. David Ogden to serve as the Deputy Attorney General of the United States. There is no doubt that Mr. Ogden has a long record of legal experience. He also, however, brings a long history of representation of the pornography industry and the opposition to laws designed to protect children from sexual exploitation.

He opposed the Children's Internet Protection Act of 2000 that would restrict children's exposure to explicit online content. Mr. Ogden filed an amicus brief supporting the American Library Association in a case that challenged mandatory anti-obscenity Internet filters in public libraries. He treated pornography like informative data, writing that the ``imposition of mandatory filtering on public libraries impairs the ability of librarians to fulfill the purposes of public libraries--namely, assisting library patrons in their quest for information. . . .''

Mr. Ogden also argued against laws requiring pornography producers to verify that models were over 18 at the time their materials were made. Think of that. He challenged the Child Protection and Obscenity Enforcement Act of 1988 and a companion law adopted in 1990, the Child Protection Restoration and Penalties Enhancement Act. Mr. Ogden argued that requiring pornography producers to personally verify that their models were over age 18 would ``burden too heavily and infringe too deeply on the right to produce First Amendment-protected material.''

Among the many cases in which Mr. Ogden has advocated interests of the pornography industry, none is more egregious than the position he took in Knox v. the United States.

The facts in the next case are straightforward. Steven Knox was convicted of receiving and possessing child pornography under the Child Protection Act after the U.S. Customs Service found in Mr. Knox's apartment several videotapes of partially clothed girls, some as young as age 10, posing suggestively. Serving as counsel on an ACLU effort, Mr. Ogden argued to strike down the 1992 conviction of Mr. Knox. On behalf of the ACLU and other clients, Mr. Ogden submitted a Supreme Court brief advocating the same statutory and constitutional positions as the Clinton Justice Department. Mr. Ogden's arguments stated that while nudity was a requirement for prosecution, nudity alone was insufficient for prosecutions under child pornography statutes. Put simply, Mr. Ogden argued that the defendant had been improperly convicted because the materials in his possession would only qualify as child pornography if children's body parts were indecently exposed.

In response, on November 3, 1993, the Senate, right here, passed a resolution by a vote of 100 to 0 condemning this interpretation of the law by Mr. Ogden. President Clinton then publicly rebuked the Solicitor General, and Attorney General Reno overturned his position. Now the Senate is being asked to confirm as Deputy Attorney General someone who advocated the same extreme position on a Federal child pornography statute that the Senate unanimously repudiated 16 years ago.

The Supreme Court has ``recognized that there is a compelling interest in protecting the physical and psychological well-being of minors. This interest extends to shielding minors from the influence of literature that is not obscene by adult standards.'' Pornography should not be regarded as immune from regulation simply because it is deemed ``free speech.''

Furthermore, child pornography in any form should not be tolerated. How can Mr. Ogden's clear position on the right to unfettered access to pornography not interfere with the Justice Department's responsibility to protect children from obscene material and exploitation?

When asked about this very issue at the Senate hearing on his nomination, Mr. Ogden said he hoped he would not be judged by arguments made for clients. If we cannot judge him on his past positions, what can we judge him on? Past performance is a great indicator of future action.

David Ogden is more than just a lawyer who has had a few unsavory clients. He has devoted a substantial part of his career, case after case for 20 years, in defense of pornography. Ogden has profited from representing pornographers and in attacking legislation designed to ban child pornography. Should a man with a long list of pornographers as past clients, with a

record of objection to attempts to regulate this industry in order to protect our children, be confirmed for our Nation's second highest law enforcement position? Is he the best choice to actively identify and prosecute those who seek to harm our children?

Highlights of the Department of Justice's budget request for the year 2010 indicate an increased focus on educating and rehabilitating criminals, while neglecting funding for vital child-safety programs such as the Adam Walsh Act. I believe Mr. Ogden's past positions, coupled with the Department's growing trend to prioritize criminal rehabilitation over child safety, cause me great concern this afternoon.

There is not a quick and easy solution to the problems of child exploitation, but I can state unequivocally that we need a proactive and aggressive Department of Justice to take the steps necessary to attack this problem and demonstrate that protecting our children is a top priority. I am not certain David Ogden will bring that leadership to the Department; therefore, I must oppose this nomination.

This vote is made with the belief that a person's past legal positions do mean a great deal. I think if most Americans knew what this man has worked for and whom he has willingly represented, support for his nomination would disappear. I do not believe his legal philosophy, illustrated in the clients he freely chose to represent, reflects the majority's views on the issue of child exploitation. I know certainly they do not reflect mine.

Mr. President, I want to get into something else you have been reading about what happened in my State of Alabama yesterday. I offer my condolences to the families and friends of the victims killed in Samson, AL.

Yesterday, my State of Alabama suffered the worst mass shooting in our State's history. As this tragedy unfolded, our law enforcement responded bravely. I commend them for their actions and efforts. I also offer my sincere sympathies to the victims, their families, and the community. This is a tragedy that did not have to happen.

I yield the floor.

Mr. President, today I pay tribute to Millard Fuller, a great American entrepreneur who dedicated his life to sheltering the poor. Millard passed away on February 3, 2009. He leaves behind a great legacy of leadership and of service to the world's most vulnerable residents.

Millard was born in 1935 in Lanett, AL. It was in this town that Millard, at only 6 years old, earned his first profit by selling pigs and chickens. His entrepreneurial spirit would certainly carry him far. After some time working as a door-to-door salesman selling silk hosiery and underwear, Millard attended Auburn University to study economics. Following his graduation, Millard attended my alma mater, the University of Alabama School of Law, and it was there that he married his wife Linda.

While a law student at the University of Alabama, Millard expanded his entrepreneurial horizons and began selling Christmas trees and mistletoe with

our fellow student, Morris Dees. Together, they would go on to form a lucrative direct marketing business selling cookbooks and other items. This business would make Millard a millionaire by the time he reached the young age of 29. When his work and devotion to monetary success began to threaten his personal relationships, however, Millard and Linda made the decision to simplify their lives by selling their possessions and dedicating their lives to their Christian values.

In 1965, Millard and Linda moved to Koinonia Farm in south Georgia. It was there that Millard and Linda met and became close friends with the farm's founder, Clarence Jordan. Clarence and Millard had much in common and together they developed the concept of a housing program that would provide no-interest loans to people to build modest homes. This idea eventually grew into Habitat for Humanity.

In 1976, from a tiny house in Americus, GA, Millard and Linda established Habitat for Humanity. Today, the organization has built more than 300,000 houses around the world, providing more than 1.5 million people in more than 3,000 communities with safe, decent, affordable shelter. In April 2009, Habitat for Humanity's Alabama State Support Organization will celebrate the completion of its 1,500th house.

Millard is loved and will be missed by his wife Linda and their four children. He will also be missed by the thousands of volunteers who found inspiration through his dedication. It is because of Millard that thousands of people across the world have a place to call home. I ask this entire Senate to join me in recognizing and honoring the life of Millard Fuller.

Mr. President, during the last 18 months, our economy has been crippled by an unprecedented financial crisis. What began simply as rising defaults on subprime mortgages has rapidly evolved into the greatest economic storm since the Great Depression.

Shackled by mounting losses on mortgage-backed securities and falling home prices, our banking system has retracted from normal lending. Starved of financing, our economy is rapidly deteriorating, while millions of Americans face unemployment.

Unfortunately, we have watched two succeeding administrations--the Bush administration and now, I fear, the Obama administration--propose plans to revitalize our economy that have failed to live up to expectations.

We are now told that the solution to the current crisis lies in this stimulus bill before the Senate. Proponents claim that this bill will jump-start the economy and reinvigorate private commercial activity. I disagree.

This bill has been poorly conceived and hastily crafted. First, the immediate impact of this bill is far too small. According to the Congressional Budget Office, only 12 percent of the discretionary spending in this bill takes place in the year 2009. Secondly, this bill is not targeted to maximize its impact. It simply funds, I believe, a wish list of government programs rather than focusing on creating jobs and bolstering the incomes of all Americans.

Finally, I fear that the supporters of this bill have been resting far too heavily on their Keynesian ideological crutch rather than devising good policy here.

We are told that Professor Keynes said that government spending was the key to restoring long-term economic growth. We need to remember that Professor Keynes' views evolved a great deal over time. He was continually changing his opinions when confronted with new facts and circumstances. His famed ``general theory'' of employment, interest, and money was borne of his concern that the old policy prescriptions were not working.

Because his thinking was always changing, Keynes was often criticized for being inconsistent. He famously replied:

When the facts change, I change my mind. What do you do?

I believe we need a solution that fits the facts and circumstances of our times, just as Keynes sought to provide a solution to address those of the United Kingdom at one time.

Our solution, I believe, needs to focus on restoring our banking system. Unless our banking system is nurtured back to health, our economy will remain crippled, and much of what is in this stimulus bill, I believe, will have been wasted.

It is worth remembering that the first thing Franklin Roosevelt did upon becoming President of the United States was address the Nation's banking crisis, long before he embarked on the New Deal spending programs. Another example I believe we should keep in mind is the experience of Japan during their so-called lost decade. You will recall that during the 1990s, the Japanese experienced a banking crisis as well. Rather than deal with their zombie banks, Japanese policymakers enacted numerous stimulus bills. And despite those spending sprees, the Japanese economy continued to stagnate as they increased Japan's debt- to-GDP ratio from 60 percent to a staggering 180 percent today.

Mr. President, I ask unanimous consent to have printed in the Record a list of economists, including several Nobel Prize winners.

Mr. President, all these economists agree that government spending is not the way to improve economic performance.

Over the past year, I have repeatedly called for an extensive examination of the origins of this economic crisis and of the potential solutions. So far, the majority has refused. In the absence of any analysis or detailed information, they have chosen time and again to solve the crisis by throwing money at it. I believe this is laying the groundwork for a much greater economic catastrophe.

It took until 1982 for our publicly held debt to cross the $1 trillion mark. In the 27 short years since, we have amassed a debt 10 times that amount. Now we are about to vote on a measure that will, in a single year, add to the national debt what it took nearly 200 years to accumulate.

I fear this is a day we will come to regret, not only because I believe the stimulus bill will not work but because it will mark the day when our generation decided we were not capable of enduring the consequences of our own actions, and therefore future generations must shoulder the burden we could not find the courage to bear ourselves.

I yield the floor.

I suggest the absence of a quorum.

Madam President, I rise to support the joint resolution of disapproval which would prevent, as you know, the allocation of another $350 billion to the Treasury's flawed Troubled Asset Relief Program.

The Treasury Department's implementation of TARP has been a bureaucratic fiasco. In the years to come, I believe it will be considered a textbook case in our business schools on how not to conduct fiscal policy.

The Treasury Department has never had a clear plan on how to respond to the financial crisis or how TARP funds could best be utilized. It told Congress just a few months ago that it would spend TARP funds one way and then spent them another. Rather than establish a clear plan and then use TARP funds to implement it, Treasury has recklessly used TARP funds to bail out big Wall Street firms threatened with bankruptcy.

TARP has proven to be helpful for rescuing Wall Street bondholders but has done little for the U.S. economy, small business, and average Americans.

Treasury's approach to TARP has been so undisciplined that its commitments already exceed the $350 billion Congress authorized it to spend.

Further evidence of the erratic implementation of TARP is the fact that Treasury has even failed to comply with the statutory requirements for requesting the additional $350 billion in TARP funds. The statute clearly requires the Treasury Secretary to provide Congress with a detailed plan on how it will spend the additional funds. There is no plan. There is nothing to review. There is no way we can say to the American people this afternoon that we have conducted in the Senate a thoughtful, thorough examination of how this money is going to be spent because there is, quite literally, nothing to examine.

If Congress cannot hold Treasury accountable for providing a simple plan on how it will use an additional $350 billion, why should the American people today have any confidence Congress can hold Treasury accountable on how it will spend it?

As you know, I opposed the original TARP legislation because I did not believe the TARP program was based on a well-thought-out plan. During our consideration of that legislation in the Senate, I pointed out to some of my colleagues some clear and serious problems with purchasing troubled assets as Treasury proposed to do at that time.

The Treasury Department assured us--assured us--told us unequivocally it could address the financial crisis by establishing TARP to purchase troubled assets from banks using a reverse mortgage auction.

Is that what the initial $350 billion was used for? The answer is no. After further examination, the Treasury Secretary decided that purchasing troubled assets was not a feasible plan.

It is now clear the Secretary of the Treasury did not have a real plan when he proposed TARP. Rather, he had a hastily conceived notion that, it turned out, was impossible to implement. Because there was so little thought put into the original plan, we have spent $350 billion and the TARP has failed to stem the economic downturn and hundreds of thousands of people have lost their jobs.

We should not, this afternoon, repeat our mistake--but we will--by granting the Treasury the additional $350 billion without first determining how to best use those funds.

I think it is time the Congress stop and think and take the time to devise an effective solution. First, we should demand that the Treasury Secretary provide a plan on how the $350 billion will be used. That is the least we can do. This is already required, as I said, under the TARP legislation, which directs the Secretary to submit ``a written report detailing the plan of the Secretary.''

What the Secretary has submitted is not only legally insufficient, it is completely devoid of substance. This should not be acceptable to the Senate.

Second, the Banking Committee should hold extensive hearings on TARP and alternative ways of addressing our financial problems. It should also hold hearings on how previously committed TARP funds have been spent, who benefited, who is accountable. The Treasury Secretary, whoever it may be, should appear before Congress and tell us exactly how he wants to use the funds. This is especially important now that a new administration will be responsible for spending it.

Madam President, $350 billion is an enormous amount of money to me. I find it hard to believe we would even consider granting any public official the authority to spend such an amount without, at the very least, requiring him to appear before us and explain how he will use it. If the majority and the new administration wish to demonstrate that there is a new climate of accountability in Washington, this would be an opportune place to start.

I believe the choice is clear. If you support accountability, transparency, the only vote is to support the joint resolution to deny the $350 billion to the Treasury.

The American people, I believe, are rightly outraged at the way Congress and the Treasury have recklessly spent billions of TARP dollars. It is time Congress looks at the financial crisis with the seriousness and diligence the American people demand, expect, and reserve.

The last time we considered how to respond to the financial crisis, we panicked and passed the TARP bill. We now have a second chance-- though I believe we will throw it away--to fulfill our responsibilities to the American people. I hope we will support the motion to disapprove. I urge my colleagues to vote in favor of the joint resolution of disapproval.

I yield the floor.

I would like 3 minutes.

Mr. President, I have a few minutes, but first I wish to commend my colleague and fellow member of the Banking Committee, Senator Corker, for his work in this regard, trying to forge a compromise.

Of course, I think most of you know where I stand on bailouts. I do not think they work. I do not believe this one would ever work. But these companies could be saved. These companies could be saved. I have said I think they are bloated, the management is bloated. These companies either have already failed or are failing. That is a shame. These are not the General Motors, Ford, and Chrysler I knew. But all of us in America will benefit by competition.

I come from the South, where we have a growing automobile industry, but there are 300 million people in this country, the largest automobile market in the world. There is no reason for General Motors, Ford, and Chrysler not to be competitive, but they are not going to be competitive, folks, as long as they are operating under this business model. Whether they get money soon or next year or what, it is going to be probably a lot of money.

But I want to tell the American people tonight, bailouts generally do not work. And this is a huge proposed bailout. I fear it is just the downpayment on more to come next year. So I would vote no on this tonight.

Madam President, I ask unanimous consent to be recognized to speak for up to 15 minutes.

Madam President, I rise today to speak before we take what will be one of the most important votes, unrelated to war, many of us will cast in the U.S. Senate.

The proposal before us provides $700 billion to buy illiquid assets from financial institutions. The stated goal of this scheme is to return confidence and liquidity to our credit markets.

We did not get into this situation in a matter of days, and we are not going to fix it with a piece of legislation quickly cobbled together in back rooms of the U.S. Capitol.

In fact, this crisis has been years in the making. Over the last decade, trillions of dollars were poured into our mortgage finance markets, often at the direction of well-intended, albeit ill-conceived, Government programs.

At first, the money backed conventional mortgages with standard downpayments and properly verified incomes.

Over time, the number of home buyers who met conventional loan requirements dwindled. In order to fuel the upward spiral, mortgage products became more exotic, requiring less of borrowers and involving more risks.

Without regard for fiscal prudence and simple economics, mortgage brokers, realtors, homebuilders, mortgage bankers, and home buyers created the conditions that helped inflate the housing bubble.

At the same time, Wall Street was developing ever more sophisticated finance vehicles to ensure that money continued to flow into the mortgage markets to meet the demand.

Mortgages were pooled, packaged, and rated ``investment grade'' by the credit rating agencies. They were then sold into a market eager to purchase securities with a wide range of risks and yields.

Many purchasers employed massive amounts of leverage, layering risk upon risk in an effort to maximize return. To cover their risks, many of these buyers also bought credit protection from one another, entering into derivatives contracts with nominal values in the hundreds of trillions of dollars.

Eventually, economic reality caught up with us. Housing prices stalled and then began falling.

Many who bought homes with unconventional loans were unable to afford their rising payments. Because home values were dropping, they were unable to refinance and delinquency rates skyrocketed. This trend has not yet abated.

Once homeowners began defaulting, the value of mortgage-backed securities plummeted.

Collateralized debt obligations, or CDOs, that were comprised of the riskiest mortgage-backed securities became worthless. As a result, financial institutions holding securitized assets have suffered enormous losses and have been desperately trying to raise new capital.

I have been a member of the Senate Banking Committee for over 20 years. When I joined the committee, the savings and loan crisis was just beginning to unfold.

Let me remind my colleagues that it took nearly 10 years, five Congresses, and 3 administrations until that smaller, more contained crisis was resolved.

Personally, I learned a few solid lessons from that experience. I came to understand that bank management, bank capital, and sound regulatory policy make a major difference.

What I learned then has guided me ever since.

For example, in 1995, I opposed the expansion of the Community Reinvestment Act. I did not take this position because I am against lending to minorities or low-income individuals. My concerns were based on the simple fact that credit cannot be safely extended on any basis other than risk, and risk cannot be mitigated through social engineering.

The appropriate allocation of credit is not political, it is based on merit. Those with good credit receive the best terms and lowest rates. Those with bad credit receive the worst terms and the highest rates, or in some cases, no credit at all.

The CRA was an attempt to get around this fact and it failed. I remind my colleagues of this as we prepare to buy assets backed by the very same mortgages born of this flawed policy.

I find it ironic that many of those who supported the legislation that upended the basic concept of risk-based lending are now saying that our present circumstances are an indication that the free market failed. Federal policy, not free market decisions, fueled risky loans to unqualified borrowers.

In 1999, I opposed the financial modernization bill. Despite Alan Greenspan's proclamations, I did not think it provided a sufficient regulatory structure to oversee the financial system it created. I was also concerned that it lacked some basic consumer privacy protections. Many are now claiming that deregulatory effort led us directly to where we are today.

In 2001, I became concerned about the banking regulators' effort to modernize bank capital standards through what is known as Basel II. While it was very important to update those standards, it appeared to me that ``modernization'' was focused more on reducing bank capital levels than improving bank capital standards.

During the process, it often seemed that the regulators were more interested in industry priorities than protecting the banking system. I spent nearly 5 years trying to ensure that the regulators produced a balanced rule that focused on safety and soundness.

When I became chairman of the Banking Committee in 2003, I immediately became concerned with the financial health and regulatory structure of the Government sponsored enterprises, Fannie Mae and Freddie Mac.

I did not think the entities had sufficient capital, management controls, or regulatory oversight. I was particularly troubled about their size because their combined portfolios amounted to nearly $2 trillion at that time.

I believed that their operations posed a systemic risk to the financial markets. After each disclosed that they had committed serious accounting fraud, my concerns grew more focused and I stepped up my efforts to pass legislation.

Those efforts were rebuffed by the Democrats on the Banking Committee. And, let us be clear as to what the GSEs were doing at this time.

From 2004, when we began considering GSE legislation, up until very recently, the GSEs went on a nearly trillion dollar sub-prime and Alt-A mortgage-backed security buying spree. Madam President: $1 trillion.

I do not know for sure what motivated them in this effort, but I do know the GSEs were spending hundreds of millions of dollars lobbying Congress in an effort to stave off additional regulation.

Fannie's and Freddie's greatest allies were those that advocated and, at times, demanded that the GSEs continue to facilitate sub-prime and Alt-A borrowing. As long as they complied, real regulation was dead.

This symbiotic relationship, in turn, fueled an already over heated market to grow even hotter.

As the driving force in mortgage finance, this purchasing effort also broke down what scant underwriting standards remained in the market place. Many, if not most, of the toxic assets that this taxpayer-funded bailout is designed to buy were originated in an atmosphere created by the GSEs and facilitated by their supporters here in Congress.

During the securitization boom that took off in the last 5 years, I also became very concerned about the regulatory oversight of the credit rating agencies whose ratings were crucial to getting securities sold.

When I looked at the system in place, I soon realized it was dominated by two companies and that the regulatory structure provided no real oversight and actually prevented competitors from entering the market.

Considering the value that mutual, money market, retirement pension funds, and insurance companies, and other important investors place on the ratings, I recognized that immediate legislative action was necessary to address the shortcomings of the oversight regime. We took that action in the fall of 2006.

Unfortunately, it now appears even that effort came too late. The rating agencies provided investment-grade ratings on securities worth hundreds of billions. A large percentage of those ratings have since been downgraded.

I remind my colleagues that those securities also happen to make up the troubled assets that are now the focus of this bailout.

Finally, in 2007, I publicly questioned the adequacy of the Securities and Exchange Commission's Consolidated Supervised Entities Program.

This nonstatutory program was put in place by the SEC to allow the five big investment banks to meet European regulatory standards without having to submit to Federal Reserve

supervision as provided in the Financial Modernization Act. The program also allowed the investment banks to significantly reduce their capital requirements.

Because I already felt that the 1999 act did not provide adequate supervision, I was troubled that the investment banks continued to chafe even at this minimal supervision.

With their trillions in assets, global operations, and hundreds of thousands of employees, they were content to be ``regulated'' by a program with a staff of less than 20 people, and they vigorously lobbied the Banking Committee to keep it that way.

Needless to say, I had serious concerns about this arrangement.

These concerns crystallized when Chairman Dodd marked up legislation that would not only have codified the SEC's regulatory concoction, but also would have expanded the powers of the investment banks, allowing them access to taxpayer-insured funds through ownership of insured depositories.

I requested that the Banking Committee hold hearings to examine this structure in greater detail before we ratified that which the SEC created through regulatory fiat. Once again, we did not.

Instead, my Democrat colleagues voted not only to codify the CSE program, but also to expand it. My Republican colleagues voted to reject it and argued for additional committee action.

Today, the CSE program is gone because our investment banks have either gone bankrupt, merged, or become that which they fought so hard to avoid: Bank holding companies supervised by the Federal Reserve.

I would also like to point out to my colleagues that a large number of the assets that will be purchased under the Paulson plan were either originated or held by the CSE regulated firms: Bear Stearns, Lehman Brothers, Merrill Lynch, Morgan Stanley, or Goldman Sachs.

We did not get to where we are today by accident, it was a path we chose.

My warnings about the risk of basing credit decisions on well- intended social mandates rather than sound, fact-based underwriting were dismissed.

My concerns about the inadequacy of the regulatory structure put in place in the financial modernization legislation went unacknowledged.

My efforts to ensure that bank capital standards were designed to ensure safety and soundness, rather than industry concerns, were conducted largely alone.

When I urged focus one of the SEC's Consolidated Supervised Entities Program, my Democrat colleagues ignored me and instead voted to ratify and expand the program.

When we attempted to pass meaningful GSE reforms, we were repeatedly stopped.

I commend Senator Dodd, who in the end, worked with me to pass a bill. Unfortunately, that effort came too late because the GSEs had already gorged on billions of dollars of toxic sub prime paper and no longer could function on a stand-alone basis.

As often as I have argued that we needed to address systemic risks in the financial markets, my advice has been dismissed, and my concerns have proven to be fully justified.

I now have serious concerns about the bailout package we are preparing to pass.

My foremost concern relates to the manner in which we are attempting to address the problem.

The Paulson plan focuses on a single problem--illiquid assets held throughout the financial system.

I believe we have a number of interrelated problems that need to be addressed in order of their significance.

First, and most urgent, is liquidity. Then we must address the solvency of our financial institutions and declining home values, not to mention our entire regulatory structure.

I believe Congress can address the liquidity issue by increasing the combined resources of the Federal Reserve System and the Treasury.

By enhancing the Federal Government's existing lending facilities and guarantee programs, we can help stabilize money market funds and provide loans to troubled financial institutions without exposing taxpayers to massive losses. This act alone would allow us some time to consider thoroughly our next steps.

Thereafter, we must determine how to address the troubled assets on the books of financial institutions and continue the process of dealing with declining home values. This will likely be a long and difficult process, a fact that is not being shared with the American people.

As long as we address the immediate liquidity problem by expanding lending facilities using the illiquid securities as collateral, we can then take the necessary time to do our work in a more responsible and thoughtful manner. It appears, however, that we are not going to subject this bill to our normal process.

With that in mind, I would like to take some time to look more closely at what this unprecedented piece of legislation would do.

The Emergency Economic Stabilization Act of 2008 would create the Troubled Asset Relief Program.

It would authorize the Treasury Secretary to purchase up to $700 billion worth of troubled assets from just about any type of institution.

In exercising this authority, the Secretary would be vested with nearly unfettered power.

The Secretary could purchase any financial instrument he deems necessary to promote financial market stability. He could purchase not only mortgage-related assets, but securities based on credit card payments, auto loans, or even common stock.

The Secretary could purchase assets from any institution, not just financial institutions so long as they have ``significant operations in the United States.''

What constitutes ``significant operations'' is left undefined, leaving the Secretary a great deal of latitude in determining which institutions would qualify for the program.

Certainly the Secretary could purchase assets from private equity firms and hedge funds, but also corporations and State governments. Given the lack of standards and the breadth of the Secretary's authority, it should be no surprise if politically connected entities get special treatment under this program.

Under a provision hidden deep in the legislation, the Treasury Secretary also has the authority to purchase troubled assets from foreign central banks and governments.

The Secretary has unlimited authority on how the purchased assets are managed and sold. Treasury could even set up Government-run hedge funds that compete with private companies.

While the Treasury Secretary's authority expires at the end of 2009 and can be extended for only 1 additional year, the Treasury's authority to manage purchased assets is perpetual.

Treasury could also purchase assets after the termination of its authority, if it has entered into agreements to purchase prior to the termination date. This program will be with us for decades to come.

The few restrictions imposed on the Treasury Secretary's authority could undermine the effectiveness of the program. If the Secretary purchases more than $100 million in troubled assets from an institution, he must obtain non-voting common stock or preferred equity in the institution.

To complicate matters further, the bill does not provide clear guidance on how many warrants the Secretary should obtain or what their terms should be.

If the Secretary makes direct purchases of troubled assets, the selling institution must adopt standards on executive compensation and corporate governance.

If the Secretary purchases more than $300 million in troubled assets from an institution, the institution must adopt restrictions on executive pay and golden parachutes for any new senior executives it hires.

The legislation also restricts the amount of executive compensation participating institutions can deduct for tax purposes. While this may make us feel good, these provisions will likely limit the number of institutions that utilize the program.

Not to mention that the compensation restrictions are prospective. In other words, the people who created this mess get to walk away with cash in hand, and the people hired to clean it up get penalized.

This will no doubt undermine their efforts to resolve their financial problems by hindering their ability to hire new management

Upon enactment of the legislation, the Treasury Secretary is authorized to purchase up to $250 billion in troubled assets. This purchase authority can be increased by another $100 billion if the President certifies that such additional authority is needed.

The Secretary's authority can be, and likely will be, increased to $700 billion if the President certifies the need and Congress does not enact a joint resolution of disapproval.

It is extremely difficult to obtain the two-thirds votes in both the House and Senate to override a veto. Therefore, for all intents and purposes, this distribution system is a mirage. It does not effectively limit the Treasury Secretary's ability to spend $700 billion.

The bill would establish a Financial Stability Oversight Board to review and make recommendations on the Secretary's operation of the program. The oversight board is fatally flawed.

First, the Secretary of the Treasury is one of its members. This means that the Treasury Secretary is reviewing his own actions.

Second, the other members of the board include the Chairman of the Fed, the Director of the Federal Home Finance Agency, the Chairman of the SEC, and the Secretary of Housing and Urban Development. I think there is a constitutional question about whether a Secretary can have his actions reviewed by any person other than the President.

Even if the board is constitutional, why is the Chair of the FDIC not a member? After all, the FDIC has the most experience of any Federal agency in buying and selling bank assets. It also is concerned about resolving bank problems with the least cost to the taxpayers.

Regardless of who sits on the board, we will be setting a bad precedent by having heads of agencies oversee our Cabinet Secretaries.

Finally, the oversight board's authorities are not well defined, so it is not clear what happens if the oversight board disagrees with the Treasury Secretary's actions. Can it prevent him from acting? Will disagreements result in litigation? Such bureaucratic infighting could very well undermine the effectiveness of the program, to the extent it can be effective at all.

The bill also establishes a Congressional Oversight Panel, whose members will be selected by the leaders of the House and Senate. The panel is charged with providing reports on the program, the effectiveness of foreclosure mitigation efforts, and the state of our financial regulatory system.

This is work the Senate Banking Committee and House Financial Services Committee should be doing.

The bill also provides for oversight of the program by the Comptroller General, establishes an Office of the Special Inspector General for the program, and subjects the Secretary's actions to judicial review.

While I think it is important to oversee this new entity's activities, this hodgepodge of authority is likely to hamper the program's effectiveness as it struggles to satisfy redundant and time- consuming requests for information.

These oversight bodies might not check the Secretary's authority, but they will ensure that this program generates lots of paper. More importantly, they do nothing to address the fundamental flaws with this plan.

The Secretary is required to issue regulations to address conflicts of interest. Interestingly, the Secretary may start buying assets before these rules are put into place. This is a loophole that could have serious long-term consequences for the program.

The bill does not require that taxpayer losses be repaid by its beneficiaries. It only directs the President to present a legislative proposal to recoup such losses from the financial services industry.

This is something that the President could do even without this legislation. Furthermore, there is no guarantee that the beneficiaries of the program will pay.

Indeed, it is likely that companies that did not participate in the program would end up covering its costs.

The bill would grant the SEC the authority to suspend mark-to-market accounting, establishing a dangerous precedent that could lead to the politicization of our accounting standards, something I have fought for years.

The newest addition to the bill is a precipitous increase in the deposit insurance amount from $100,000 to $250,000. We are about to more than double the exposure of the already depleted deposit insurance fund, and by extension, the American taxpayer, on a whim.

I will remind my colleagues that the track record for overnight increases in deposit insurance is not pretty. In 1980, Congress increased deposit insurance coverage for all accounts from $40,000 to $100,000 without the benefit of hearings or open discussion.

At that time, proponents argued such a change was necessary to stabilize the banking industry. What followed was a massive bailout of the savings and loan industry to the tune of well over $100 billion.

This time around, we are proposing a 150 percent increase when the deposit insurance fund is already stressed and in need of recapitalization.

At a time the FDIC's problem bank list is growing and more failures are anticipated, this higher deposit insurance coverage will increase the FDIC's expected payments for failed insured depositories. Those costs, which would ordinarily be passed on to the banking system in the form of higher premiums, will instead be placed directly on taxpayers.

Let's also be realistic about this. To the extent this measure is intended to address the concerns of those who handle large transaction accounts, such as corporate treasury deposits, those people are not going to be comforted by additional coverage levels.

If they believe a bank is in trouble, they will withdraw their money because deposit insurance does not increase confidence in a failing institution.

Let's also be clear about what this means for taxpayers.

If, on the front end, the $700 billion bailout is not enough to shore things up, rest assured, there will now be more insurance on the back end should banks begin to fail. The American taxpayer will pay, both coming and going.

The bill does do some good things, however. It permits the Federal Reserve to pay interest on reserves, which will improve its ability to conduct monetary policy and serve as a lender of last resort.

The bill does marginally increase the availability of the HOPE for Homeowners program and requires the Secretary to implement a plan to assist homeowners to the extent it acquires mortgages or other assets backed by mortgages.

While I generally do not support bailing out corporations or individuals, if we are going to get into the bailout business, then funds should be directed to individuals as well. The provisions in this bill for individual homeowners, however, are inconsequential compared to the $700 billion going to Wall Street.

As I said, I am no advocate of bailouts. I voted against the Chrysler bailout. I can not say I would have supported a bailout in this instance, but I can say the chances would have been much greater if the underlying plan had been subjected to greater scrutiny and examination. That said, I agree that we need to do something to address the current liquidity crisis in the marketplace.

My greatest concern is that we have not spent any time determining whether we have chosen the best response. There are many well informed people who argue that we have not.

In fact, just this morning, a Nobel prize winning economist indicated that using a reverse auction program to buy distressed assets from financial institutions was not going to be enough to ``revive the operations of the banks.''

I am not sure whether he is right or wrong. I am also not certain whether the Secretary is right or wrong. To the extent other options exist, I believe we failed the American people greatly in not examining them.

Many around here are finding comfort in the notion that ``something is better than nothing.'' I believe that is a false choice. The choice we faced was between pursuing an informed response or panic.

Unfortunately, we chose panic and are now about to spend $700 billion on something we have not examined closely. Yes, in the end, we will have ``done

something.'' At the same time, however, we will have done nothing to determine whether it will accomplish anything at all.

I yield the floor.

Mr. President, today I pay tribute to Bobby Hayes, who has dedicated over 24 years of his life to public service. In October of this year, when Bobby steps down as mayor of the city of Pelham, AL, he will leave behind a legacy of leadership and service to his community.

For 24 years, Bobby has served as the mayor of Pelham. Over those years, Bobby has overseen many changes to the city. As a retired field commander of the tactical operations unit of the Birmingham Police Department, it was critical to Bobby that he provide local law enforcement with the tools needed to do their jobs effectively. Bobby successfully expanded the Pelham Police Department, adding a traffic unit, tactical operation unit, school resource officers and installing computers in all patrol cars.

It was also under his direction that Pelham erected four new fire stations and a new public safety building to house the police department and the municipal court. During his tenure, Mayor Hayes also was instrumental in the building of the Pelham Civic Complex and Pelham Senior Center. Bobby also ensured that the Pelham sewer system and new sewer plant were completed and increased the city's water supply and storage facilities.

A strong supporter of education and academics, Bobby oversaw the expansion and renovation of the Pelham Public Library. Since then, it has become one of only four public libraries in the State the Alabama Library Association recognized for excellence in library service. In 2005, the library became the recipient of prestigious Blue Ribbon Library status.

While many people think that the service Bobby contributes each day as mayor of Pelham is enough, he thinks otherwise. An avid leader, Bobby has been involved in many State committees and one national committee. In 2004, he was elected vice-president of the Alabama League of Municipalities and in 2005 he rose to serve as president. Bobby also represents the mayors of the 6th Congressional District to the State of Alabama Housing Finance Authority.

Additionally, Bobby has held memberships with organizations such as the Alabama League Committee on State and Federal Legislation, National League of Cities Public Safety and Crime Prevention Policy Committee, the Greater Shelby County Chamber of Commerce, and the Alabama City/ County Management Association.

Bobby is married to Judith Lance Hayes. Together, they have three children and nine grandchildren.

As Bobby embarks on another phase in his life, he will be remembered for his dedication and many contributions to the city of Pelham's ongoing prosperity and advancement. I wish him much luck in his future endeavors, and I ask this entire Senate to join me in recognizing and honoring the life and career of my good friend Bobby Hayes.

Mr. President, I rise to speak in support of the final passage of H.R. 3221, the legislation before us Senator Dodd and others have been talking about. This legislation contains numerous provisions that address a wide variety of issues associated with the housing crisis. Many of them, in fact, were previously considered and passed by the Senate in earlier versions of this bill right here on the floor. I wish to highlight a few of these important provisions now.

As the Presiding Officer well knows, because he is an important player in this and a very important member of the Banking Committee, this final package contains the same mortgage refinance program included in the earlier bills. This is a temporary, voluntary program within the Federal Housing Administration to back FHA-insured mortgages to distressed borrowers. It requires both mortgage lenders and borrowers to give up some of their financial interest in order to participate. The mortgage lender must agree to reduce the principal balance of the loan, which we also call a ``haircut.'' The loan refinancing arrangement must also bring the loan-to-value, LTV, ratio on the new loan to no greater than 90 percent of the property's current appraised value. Borrowers must accept an equity-sharing requirement and forgo a percentage of any future profits on the sale of their homes.

While I would prefer a completely free market solution, at least this program is designed to keep the taxpayer from bearing the cost, something I fought hard for in the Banking Committee. We have included a separate funding stream that carries on in perpetuity to cover any costs that may arise.

This package also includes measures which modernize the FHA program. But by streamlining and expanding it, we hope the program can make safe, fixed-rate mortgages more readily available to home buyers in the United States.

The legislation also includes a first-time home buyer tax credit of $7,500. I believe this should serve as an additional incentive to potential first-time buyers who may be waiting to purchase a home. The tax credit, combined with the greater availability of sustainable mortgages, should encourage buyers and help invigorate the housing market.

While I support this bill, there are a number of provisions in it with which I am very concerned. If it had been my decision alone, I would not have included them. While crafting legislation requires a great deal of give and take, one thing we should not compromise is our obligation to conduct continuing oversight of the programs we enact. Our responsibility to the taxpayers requires that we continue to closely track the funds we are providing. We

should not tolerate the waste or misuse of a single tax dollar. It is my hope that my friends who demanded additional spending are as enthusiastic about accounting for tax dollars as they are about spending them.

The bill coming back to us from the House does contain a set of entirely new and significant provisions. These provisions were added at the request of Treasury Secretary Paulson, who determined that such measures were needed immediately as a result of the rapidly deteriorating financial condition of Fannie Mae and Freddie Mac.

The legislation provides, as the Presiding Officer knows, the Secretary with temporary authority to purchase debt or equity of the GSEs when he, the Secretary, determines that such action is required to stabilize the financial system, protect taxpayers, and prevent disruptions to the mortgage markets.

I recognize the unprecedented nature of the authority this legislation provides to the Secretary of the Treasury. It is not something I agreed to without a great deal of consideration. In my estimation, however, the risks of not providing the authority ultimately outweigh the risks of extending it. I said recently I feared we were sitting on a financial powder keg. I think a lot of people realize that.

Fannie Mae and Freddie Mac, independently and together, represent considerable risks to the financial system. They each hold portfolios in excess of $700 billion. They each guarantee more than $2.5 trillion in mortgages. Their debt is held as regulatory capital by hundreds, if not thousands, of American financial institutions. They serve as counterparties on derivatives contracts with hundreds of firms, located domestically and abroad, in amounts in the trillions of dollars.

For years, I have argued on the Banking Committee that these entities, due to their size and their reach in the financial markets, pose a risk to the global financial system. I have also argued that such systemic risk requires the appropriate regulatory framework to prevent total financial calamity should one of the firms face a crisis.

Unfortunately, over the years, my calls for regulatory change were not only unheeded but were rebuffed. Consequently, we were denied the chance to put a strong regulator in place when it could have made a difference. But we are where we are today.

What has happened in the meantime seems to be the inevitable result of our failure to act. Indeed, when it became clear that both of the GSEs were on dangerous financial ground, it was no surprise to me that the Secretary asked for such a substantial grant of power and authority. Entities of such size and risk can only be helped by the commitment of a massive amount of resources.

Upon the passage of this bill, such resources will be available, if necessary. I hope they will not be necessary.

It is unfortunate it took the near collapse of Fannie Mae and Freddie Mac to convince a number of my colleagues that these entities do indeed pose a systemic risk to the U.S. and global economies. Nevertheless, I am pleased this legislation now acknowledges and addresses that reality in statute by giving the Federal Reserve a role in advising the new regulator on risks to our financial system.

Although the Fed's role, as the Presiding Officer knows, is temporary, it is now well established that the systemic risks the GSEs pose are permanent. That debate is basically over. The only question now is to whom the Congress assigns that responsibility in 18 months.

Since beginning the process of developing this legislation, I have believed the most important aspect of the bill is that it establishes a strong independent regulator for the GSEs. Intervening events have further confirmed my belief.

We have provided this new regulator with enhanced powers and additional authority so it has the tools necessary to ensure the GSEs are properly regulated. In doing so, I believe we are taking a very important step to prevent a repeat of the crises that enveloped Fannie Mae and Freddie Mac.

We find ourselves at the end of a long legislative road. The time for the debate has ended, and it is now time to vote.

Mr. President, I will yield it back.

Madam President, I rise today to pay tribute to my honorable colleague, Senator Jesse Helms. North Carolina's longest serving popularly elected Senator, Jesse was a good friend and a true conservative. I join the entire Nation in mourning his passing.

Jesse was born in Monroe, NC on October 18, 1921. He attended Wingate University and Wake Forest University and had a successful career in newspapers, first as a sports reporter for The Raleigh Times and later as the paper's city news editor. He also served as a recruiter for the U.S. Navy during World War II and worked in radio and television.

In the 1950s, Helms began to pursue his interest in politics, working on Willis Smith's U.S. Senate campaign and later in his Senate office. Helms also worked on Senator Richard Russell's Presidential campaign and I. Beverly Lake, Sr.'s gubernatorial campaign. After these efforts, Jesse went back to journalism serving as the Capitol Broadcasting Company's executive vice president, vice chairman of the board and assistant chief executive officer. From these positions, Jesse gained local celebrity as a conservative commentator on the Raleigh-based television station.

His notoriety in the area led to a 4-year position on the Raleigh City Council. Jesse remained at the Capitol Broadcasting Company until 1972, when he became the first Republican elected to the Senate from North Carolina in the 20th century. Jesse served North Carolina well as a chairman of both the Agriculture and Foreign Relations Committees. While in the Senate, Jesse was a conservative leader who worked tirelessly for small government, sound foreign policy and strong communities.

After serving five terms in the U.S. Senate, Jesse retired and returned to North Carolina, where he wrote and published his memoir, Here's Where I Stand. He also continued his work with the Jesse Helms Center, a nonprofit organization started in 1987 to promote the principles Jesse felt so strongly about--democracy, free enterprise and strong values.

In my time with Jesse in the Senate, I knew him to be honest, hardworking and committed to the people of North Carolina and this Nation. It is fitting that he passed away on Independence Day, as Jesse was certainly an independent man who loved this country and the values for which it stands.

Jesse is loved and will be missed by his wife of 66 years, Dorothy; his son Charles; his two daughters, Jane and Nancy; and seven grandchildren. He was an inspiration to many and will be remembered for his dedication and many contributions to North Carolina and this Nation. I ask the entire Senate to join me in recognizing and honoring the life of Jesse Helms.