Floor Statements

Mr. President, today I introduce the Energy Assistance Fund Act of 2009, legislation which will assist people who want to invest in energy conservation and alternative energy technologies and help set us on a path toward energy independence.

As I visit communities around the State of Maine, I hear time and again that the costs of energy create hardship for many of our citizens. Unpredictable, and often increasing, prices for home heating oil, gasoline and diesel fuel are a huge burden for many families, truckers, and small businesses.

I am concerned that in a difficult economy, investments in energy conservation and alternative energy improvements are simply too costly for many American families and small businesses. For example, under the present code, taxpayers who install energy efficient windows and skylights or solar water heating systems receive a 30 percent tax credit. In both instances, the investment which must be made by the taxpayer far exceeds the credit amount. In the current economic climate, most families and small businesses are already scrimping and saving to make ends meet, and they do not have the money to finance the gap between the tax credit we provide and the cost of the investment.

The legislation I am introducing today calls for additional loan authority to support current Federal programs that help families and small businesses finance energy efficiency improvements. The loan authority I am proposing would expand existing Federal programs that make low-interest loans to individuals and small businesses for energy efficiency improvements. This new loan authority would be made available through a new energy assistance revolving loan fund within the Treasury Department. Individuals who make less than 115 percent of the national average median income would be able to apply for low- interest loans to cover the difference between the tax credits available for energy efficiency improvements and up to 90 percent of the cost of those improvements. The Federal agencies can make these loans through their lender networks.

USDA, HUD, and other Federal agencies already have programs that can make loans of this kind to individuals. Small businesses can seek low- interest loans for energy efficiency improvements under existing loan programs such as the SBA's 7(a) program. The revolving loan fund called for by my bill will enable these agencies to offer more loans to the individuals and small businesses we have asked them to serve.

I urge my colleagues to work together in a bipartisan way so that we can help Americans overcome the challenge of our dependence on foreign oil and restore and strengthen our Nation's economy.

Mr. President, I rise to join with my senior colleague from Maine in sponsoring the Commercial Truck Highway Safety Demonstration Program Act, an important bill that addresses a significant safety problem in our State.

Under current law, trucks weighing 100,000 pounds are allowed to travel on the portion of Interstate 95 designated as the Maine Turnpike, which runs from Maine's border with New Hampshire to Augusta, our capital city. At Augusta, the Turnpike designation ends, but 1-95 proceeds another 200 miles north to Houlton. At Augusta, however, heavy trucks must exit the modern four-lane, limited-access highway and are forced onto smaller, two-lane secondary roads that pass through cities, towns, and villages.

Trucks weighing up to 100,000 pounds are permitted on interstate highways in New Hampshire, Massachusetts, and New York as well as the Canadian provinces of New Brunswick and Quebec. The weight limit disparity on various segments of Maine's Interstate Highway System is a significant impediment to commerce, increases wear-and-tear on our secondary roads, and, most important, puts our people needlessly at risk.

Senator Snowe and I have introduced this legislation several times in recent years. We remain concerned about the safety of our citizens who are needlessly put at risk when heavy trucks are forced off the main interstate and onto secondary roads through our

towns and communities. Unfortunately, Maine has experienced two tragic deaths in the past few years due to accidents involving heavy trucks in this situation.

One of these tragic accidents took the life of Susan Abraham, a bright and talented 17-year-old high-school student from Hampden, Maine, when her car was struck by a heavy truck on Route 9. The truck driver could not see Susan's small car turning onto that two-lane road as he rounded a corner. It was an accident, but one that would have been avoided had the truck remained on the Interstate highway. Interstate 95 runs less than three-quarters of a mile away, but Federal law prevented the truck from using that modern, divided highway, a highway that was designed to provide ample views of the road ahead.

That preventable tragedy took place almost one year to the day after Lena Gray, an 80-year-old resident of Bangor, was struck and killed by a tractor-trailer as she was crossing a downtown street. Again, that accident would not have occurred had that truck been allowed to use I- 95, which runs directly through Bangor.

The problem Maine faces due to the disparity in truck weight limits affects many communities, but it is clearly evident in the eastern Maine cities of Bangor and Brewer. In this region, a two-mile stretch of Interstate 395 connects two major State highways that carry significant truck traffic across Maine. I-395 affords direct and safe access between these major corridors, but because of the existing Federal truck weight limit, many heavy trucks are prohibited from using this multi-lane, limited access highway.

Instead, these trucks, which sometimes carry hazardous materials, are required to maneuver through the downtown portions of Bangor and Brewer on two-lane roadways. Truckers are faced with two options; the first is a 3.5 mile diversion through downtown Bangor that requires several very difficult and dangerous turns. The second route is a 7.5 mile diversion that includes 20 traffic lights and requires travel through portions of downtown Bangor as well. Congestion is a significant issue, and safety is seriously compromised as a result of these required diversions.

In June 2004, Wilbur Smiths Associates, a nationally recognized transportation consulting firm, completed a study to examine the impact a Federal weight exemption on non-exempt portions of Maine's Interstate Highway System would have on safety, pavement, and bridges. The study found that extending the current truck weight exemption on the Maine Turnpike to all interstate highways in Maine would result in a decrease of 3.2 fatal crashes per year. A uniform truck weight limit of 100,000 pounds on Maine's interstate highways would reduce highway miles, as well as the travel times necessary to transport freight through Maine, resulting in safety, economic, and environmental benefits.

Moreover, Maine's extensive network of local roads would be better preserved without the wear and tear of heavy truck traffic.

Most important, however, a uniform truck weight limit will keep trucks on the interstate where they belong, rather than on roads and highways that pass through Maine's cities, towns, and neighborhoods.

In addition to the safety of motorists and pedestrians, there is a homeland security aspect to this as well. An accident or attack involving a heavy truck carrying explosive fuel or a hazardous chemical on a congested city street would have devastating consequences. That risk can be alleviated substantially by allowing those trucks to stay on the open highway.

The legislation that Senator Snowe and I are introducing addresses the safety issues we face in Maine because of the disparities in truck weight limits. The legislation directs the Secretary of Transportation to establish a commercial truck safety pilot program in Maine. Under the pilot program, the truck weight limit on all Maine highways that are part of the Interstate Highway System would be set at 100,000 pounds for three years. During the waiver period, the Secretary would study the impact of the pilot program on safety and would receive the input of a panel on which State officials, and representatives from safety organizations, municipalities, and the commercial trucking industry would serve. The waiver would become permanent if the panel determined that motorists were safer as a result of a uniform truck weight limit on Maine's Interstate Highway System.

Maine's citizens and motorists are needlessly at risk because too many heavy trucks are forced off the interstate and onto local roads. The legislation Senator Snowe and I are introducing is a commonsense approach to a significant safety problem in my State. Our efforts are widely supported by public officials throughout Maine, including the Governor, the Maine Department of Transportation, the Maine Secretary of State, and the Maine State Police. I urge my colleagues to support this important legislation.

Mr. President, today I introduce the Energy Assistance Fund Act of 2009, legislation which will assist people who want to invest in energy conservation and alternative energy technologies and help set us on a path toward energy independence.

As I visit communities around the State of Maine, I hear time and again that the costs of energy create hardship for many of our citizens. Unpredictable, and often increasing, prices for home heating oil, gasoline and diesel fuel are a huge burden for many families, truckers, and small businesses.

I am concerned that in a difficult economy, investments in energy conservation and alternative energy improvements are simply too costly for many American families and small businesses. For example, under the present code, taxpayers who install energy efficient windows and skylights or solar water heating systems receive a 30 percent tax credit. In both instances, the investment which must be made by the taxpayer far exceeds the credit amount. In the current economic climate, most families and small businesses are already scrimping and saving to make ends meet, and they do not have the money to finance the gap between the tax credit we provide and the cost of the investment.

The legislation I am introducing today calls for additional loan authority to support current Federal programs that help families and small businesses finance energy efficiency improvements. The loan authority I am proposing would expand existing Federal programs that make low-interest loans to individuals and small businesses for energy efficiency improvements. This new loan authority would be made available through a new energy assistance revolving loan fund within the Treasury Department. Individuals who make less than 115 percent of the national average median income would be able to apply for low- interest loans to cover the difference between the tax credits available for energy efficiency improvements and up to 90 percent of the cost of those improvements. The Federal agencies can make these loans through their lender networks.

USDA, HUD, and other Federal agencies already have programs that can make loans of this kind to individuals. Small businesses can seek low- interest loans for energy efficiency improvements under existing loan programs such as the SBA's 7(a) program. The revolving loan fund called for by my bill will enable these agencies to offer more loans to the individuals and small businesses we have asked them to serve.

I urge my colleagues to work together in a bipartisan way so that we can help Americans overcome the challenge of our dependence on foreign oil and restore and strengthen our Nation's economy.

Mr. President, I rise to join with my senior colleague from Maine in sponsoring the Commercial Truck Highway Safety Demonstration Program Act, an important bill that addresses a significant safety problem in our State.

Under current law, trucks weighing 100,000 pounds are allowed to travel on the portion of Interstate 95 designated as the Maine Turnpike, which runs from Maine's border with New Hampshire to Augusta, our capital city. At Augusta, the Turnpike designation ends, but 1-95 proceeds another 200 miles north to Houlton. At Augusta, however, heavy trucks must exit the modern four-lane, limited-access highway and are forced onto smaller, two-lane secondary roads that pass through cities, towns, and villages.

Trucks weighing up to 100,000 pounds are permitted on interstate highways in New Hampshire, Massachusetts, and New York as well as the Canadian provinces of New Brunswick and Quebec. The weight limit disparity on various segments of Maine's Interstate Highway System is a significant impediment to commerce, increases wear-and-tear on our secondary roads, and, most important, puts our people needlessly at risk.

Senator Snowe and I have introduced this legislation several times in recent years. We remain concerned about the safety of our citizens who are needlessly put at risk when heavy trucks are forced off the main interstate and onto secondary roads through our

towns and communities. Unfortunately, Maine has experienced two tragic deaths in the past few years due to accidents involving heavy trucks in this situation.

One of these tragic accidents took the life of Susan Abraham, a bright and talented 17-year-old high-school student from Hampden, Maine, when her car was struck by a heavy truck on Route 9. The truck driver could not see Susan's small car turning onto that two-lane road as he rounded a corner. It was an accident, but one that would have been avoided had the truck remained on the Interstate highway. Interstate 95 runs less than three-quarters of a mile away, but Federal law prevented the truck from using that modern, divided highway, a highway that was designed to provide ample views of the road ahead.

That preventable tragedy took place almost one year to the day after Lena Gray, an 80-year-old resident of Bangor, was struck and killed by a tractor-trailer as she was crossing a downtown street. Again, that accident would not have occurred had that truck been allowed to use I- 95, which runs directly through Bangor.

The problem Maine faces due to the disparity in truck weight limits affects many communities, but it is clearly evident in the eastern Maine cities of Bangor and Brewer. In this region, a two-mile stretch of Interstate 395 connects two major State highways that carry significant truck traffic across Maine. I-395 affords direct and safe access between these major corridors, but because of the existing Federal truck weight limit, many heavy trucks are prohibited from using this multi-lane, limited access highway.

Instead, these trucks, which sometimes carry hazardous materials, are required to maneuver through the downtown portions of Bangor and Brewer on two-lane roadways. Truckers are faced with two options; the first is a 3.5 mile diversion through downtown Bangor that requires several very difficult and dangerous turns. The second route is a 7.5 mile diversion that includes 20 traffic lights and requires travel through portions of downtown Bangor as well. Congestion is a significant issue, and safety is seriously compromised as a result of these required diversions.

In June 2004, Wilbur Smiths Associates, a nationally recognized transportation consulting firm, completed a study to examine the impact a Federal weight exemption on non-exempt portions of Maine's Interstate Highway System would have on safety, pavement, and bridges. The study found that extending the current truck weight exemption on the Maine Turnpike to all interstate highways in Maine would result in a decrease of 3.2 fatal crashes per year. A uniform truck weight limit of 100,000 pounds on Maine's interstate highways would reduce highway miles, as well as the travel times necessary to transport freight through Maine, resulting in safety, economic, and environmental benefits.

Moreover, Maine's extensive network of local roads would be better preserved without the wear and tear of heavy truck traffic.

Most important, however, a uniform truck weight limit will keep trucks on the interstate where they belong, rather than on roads and highways that pass through Maine's cities, towns, and neighborhoods.

In addition to the safety of motorists and pedestrians, there is a homeland security aspect to this as well. An accident or attack involving a heavy truck carrying explosive fuel or a hazardous chemical on a congested city street would have devastating consequences. That risk can be alleviated substantially by allowing those trucks to stay on the open highway.

The legislation that Senator Snowe and I are introducing addresses the safety issues we face in Maine because of the disparities in truck weight limits. The legislation directs the Secretary of Transportation to establish a commercial truck safety pilot program in Maine. Under the pilot program, the truck weight limit on all Maine highways that are part of the Interstate Highway System would be set at 100,000 pounds for three years. During the waiver period, the Secretary would study the impact of the pilot program on safety and would receive the input of a panel on which State officials, and representatives from safety organizations, municipalities, and the commercial trucking industry would serve. The waiver would become permanent if the panel determined that motorists were safer as a result of a uniform truck weight limit on Maine's Interstate Highway System.

Maine's citizens and motorists are needlessly at risk because too many heavy trucks are forced off the interstate and onto local roads. The legislation Senator Snowe and I are introducing is a commonsense approach to a significant safety problem in my State. Our efforts are widely supported by public officials throughout Maine, including the Governor, the Maine Department of Transportation, the Maine Secretary of State, and the Maine State Police. I urge my colleagues to support this important legislation.

Mr. President, it is with pride and gratitude that today I commemorate the 150th anniversary of Caribou, ME, which happens to be my hometown.

The early settlers of Caribou were brave, self-reliant pioneers who left the comfort and security of established communities behind to make their own way in the wilderness of northern Maine. I am proud that my ancestors, led by Samuel Wilson Collins, were among that intrepid number, and grateful that for six generations my family has been a part of this wonderful community.

I have great memories of growing up in Caribou, where my parents both served as mayor, and where my brothers now run our fifth generation family lumber business. I remember fondly starting the school year in August so that we could take time off to pick potatoes, working at the public library, and the fun we had going to high school basketball teams, especially during the exciting 1969 State championship season.

But more than anything, I remember what it was like to grow up in a place that had such a strong sense of community. We learned to care for our friends and neighbors and to value our family members. We learned to help those in need. And Caribou's farm and lumber roots taught us the importance of hard work. The lessons I learned growing up in Caribou have stayed with me my entire life and I know many others who would say the same.

This sesquicentennial year is a time to honor those who turned a remote settlement into a center of commerce, education, arts and recreation. It is a time to honor the valiant young men who served in many wars, beginning with the Civil War, and who have risen to our Nation's defense ever since.

It is a time to honor the people of Caribou who celebrate each others' joys and who share each others' burdens.

Mr. President, a couple of years ago, the television host and author Larry King asked me to contribute to a book he was compiling of short essays describing an all-important lesson the contributors learned growing up. I was delighted by the request and had no trouble recalling that defining moment.

One of my earliest childhood memories is of being taken to the Caribou Memorial Day Parade by my Dad. A decorated World War II veteran, with the modesty characteristic of all who serve our Nation in uniform, he would hoist me onto his shoulders so I could better see the parade. And what I was able to see was the entire street lined by the people of Caribou, taking off their hats and putting their hands over their hearts as our flag went by, their eyes shining with pride in their country and with gratitude for those who serve her. A community that joins together to honor its past and to face its

future that is Caribou. That is my hometown.

Mr. President, I am proud of what the people of Caribou, ME, have accomplished in building a great American community. I am deeply grateful for the many blessings that this community has given me, and so many others.

Mr. President, today I wish to commemorate the expedition of ADM Robert Peary and his discovery of the North Pole 100 years ago, on April 6, 1909.

While Robert Peary was born in Pennsylvania, he was educated in the State of Maine, at Bowdoin College in Brunswick. He graduated in 1877. He lived in Portland and Fryeburg, and built a home on Eagle Island, which is now a State park.

A century ago, Admiral Peary and his men set sail for the North Pole in the Maine-built SS Roosevelt. They sailed through the frigid, ice- laden North Atlantic and froze the ship into a bay off northern Ellesmere Island. After more than a month of dog sledging over the moving sea ice covering the Arctic Ocean, Admiral Peary, Matthew Henson, and four Inughuit men stood at the northernmost place on Earth--the sea ice that marked the North Pole.

Peary's success had come after a number of previous failures and lessons learned. Nations had competed to get there; countless men had suffered trying to do so, and some had even perished.

The story of Robert Peary, his expeditions, and his attainment of reaching the North Pole is a celebration of the triumph of leadership, creativity and ingenuity.

Though traveling there has become significantly easier than it was in 1909, the North Pole remains a destination for scientists. The fact is, however, the North Pole of today is not the same North Pole that Admiral Peary discovered. The thick, multiyear sea ice that Admiral Peary encountered has disappeared. In the last 30 years, the Arctic has lost sea ice cover over an area ten times as large as the State of Maine, and at this rate the Arctic Ocean will be ice free by 2050. Global climate change is one of the most significant environmental challenges facing our country, and it has renewed scientific interest in the North Pole.

Today, visitors to the Peary-MacMillan Arctic Museum at Bowdoin College can learn more about Admiral Peary's historic journey to the top of the Earth. In special recognition of the 100th anniversary of the expedition, the museum has brought together an impressive collection of objects that were at the North Pole on April 6, 1909, including an American flag that flew at the pole on that day, a page from his diary where he reflects on his accomplishment, and one of his sledges.

The people of Maine, and especially those at Bowdoin College, are proud of Robert Peary and of all of those involved in his epic journey. I am pleased to honor the anniversary of this historic occasion.

Mr. President, I am pleased to join with my friend and colleague, the distinguished chairman of the Homeland Security Committee, in offering this bipartisan amendment to provide urgently needed resources to confront a major and growing threat to our homeland security.

Since the beginning of 2008, more than 7,000 people have been killed in drug-related violence in Mexico, including 522 military and law enforcement officials. The Mexican drug cartels have become increasingly brazen and violent, targeting police and journalists and using graphic displays of violence to intimidate communities. The drug cartels also have been able to corrupt some local law enforcement officials, who then have turned a blind eye to or are complicit in illegal drug production and trafficking.

Compounding the danger of the situation, Mexico's drug cartels have, in recent years, acquired increasingly sophisticated and powerful weaponry. Smuggling equips the cartels with large numbers of firearms, as well as items such as night vision goggles and electronic intercept and encrypted communications capabilities. Police in Mexico are often ill-equipped to confront such well-armed and trained forces.

This growing violence poses a significant danger to the security of our country, particularly to border States. Drug-related violence has already spilled over our borders. Kidnappings, assaults, murders, and home invasions related to the Mexican drug cartels are on the rise, particularly in the State of Arizona. Tucson and Phoenix have created special task forces to investigate a rash of kidnappings and home invasions directly related to these Mexican drug cartels. Authorities estimate, as the chairman has indicated, that more than 230 cities, as far away as Anchorage, AK, and Boston, MA, have distribution networks related to the Mexican cartels. This number is up from just 100 cities 3 years ago. As the drugs come north from Mexico, these distribution networks use the revenues from their sales to send cash and weapons back to the traffickers in Mexico.

The U.S. Government has invested significant resources in preventing drugs from entering our country. But until very recently, the Federal Government has focused only very limited resources on the supply of money and weapons going south--south to fuel the drug war. In our own country, some local and State law enforcement agencies simply do not have the capabilities to fully counter the increasingly complex operations and sophisticated weapons of the Mexican cartels' distribution networks.

The amendment Senator Lieberman and I are offering would provide absolutely critical resources to supplement those efforts underway on our southwest border to combat drug, gun, and cash smuggling by the drug cartels in Mexico. These resources represent a more substantial commitment to address the threat than the administration announced last week when it moved some personnel from other parts of the country to the southwest border. Those steps were good ones, they are needed, but they simply are not sufficient, and they risk leaving other borders not fully staffed, particularly the northern borders.

Our amendment, as Senator Lieberman has indicated, provides additional funding for Customs and Border Protection to deploy 1,600 additional officers at ports of entry without robbing other ports of entry. It would also provide funding for 400 new canine teams. Many of these new officers and teams will be deployed to the southwest border to conduct inspections, exit inspections of southbound traffic to Mexico so we can interdict the illegal export of weapons and cash that again fuel that cartel-related violence in Mexico.

To investigate and dismantle the networks involved in smuggling the drugs, the weapons, and the cash, our amendment provides $130 million for Immigration and Customs Enforcement to hire and train 350 new investigators. That will help ensure that the number of border enforcement security teams along the southwest border doubles. These teams have been highly successful in coordinating with Mexican officials to combat cross-border smuggling, but they are simply overwhelmed by the extent of the threat.

As Senator Lieberman has described, our amendment also provides $50 million in additional funding to hire, train, and deploy an additional 100 investigators working on Project Gunrunner. This will help expand investigations of armed smuggling.

The amendment sets aside an additional $30 million for a highly successful cooperative program known as Operation Stonegarden. This program has been a big success in my own State, so I know how helpful it can be in combating this emerging and growing threat.

Finally, this amendment provides $40 million for important technology upgrades to make CBP officers and Border Patrol agents along the border, and indeed across the country, more effective in identifying potential smugglers and in communicating with each other and with State and local law enforcement. This will make a real difference.

What we have done is put together a carefully crafted amendment that will help to fill the real gaps that exist at the Federal level and, in cooperation with State and local law enforcement, to help us counter this extraordinary rise in violence that has spilled over the border from Mexico that is threatening the security particularly in those border States, such as Arizona, but also poses a threat to States throughout our country because of these distribution networks the drug cartels are using.

This amendment is essential to the security of our country. The violence the cartels originate in Mexico--and

certainly we have to be concerned about the violence in a neighboring country, but this affects American citizens directly. I am convinced, based on the hearings our committee has held and the investigations we have conducted, that this amendment is essential to countering this growing threat to our homeland security. I urge support for the amendment, and I am very pleased to work with my chairman to bring this issue before the Senate.

Thank you, Mr. President.

Mr. President, today I, along with Senator Udall of Colorado, am introducing legislation that would amend the Energy Independence and Security Act of 2007 to expand on a research, development, and demonstration program, authorized in that bill, to include efforts to make biofuels more compatible with small non-road engines.

The Energy Independence and Security Act of 2007, directed the Secretary of the Department of Energy, DOE, in coordination with the Secretary of the Department of Transportation, DOT, and in consultation with the Administrator of the Environmental Protection Agency, EPA, to carry out a program of research and development regarding the impact that biofuels, like ethanol, may have on existing fuel storage and delivery infrastructure used for petroleum-based fuels. It is critical that these biofuels also are safe to use in operating small non-road engines. My bill requires these agencies to expand their research program to include small engines such as those in snowmobiles, boats, lawnmowers, and chainsaws.

Previous testing done through DOE shows that increased ethanol content in smaller engines creates a leaner burning mixture, which may increase idle speed on some small engines, creating unanticipated clutch engagement on equipment such as chainsaws and handheld trimmers. Also, ethanol is more corrosive and less efficient than traditional gasoline blends. During these difficult economic times, equipment damage due to ethanol-gasoline fuel blends only adds to the many challenges facing Maine's farmers, fishermen, independent woodsmen, and recreational industry.

As we pursue strategies to lessen our dependence on foreign oil, we must also take action to ensure that ethanol fuel blends are safe and efficient for small engines. I urge my colleagues to support this important legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today I, along with Senator Udall of Colorado, am introducing legislation that would amend the Energy Independence and Security Act of 2007 to expand on a research, development, and demonstration program, authorized in that bill, to include efforts to make biofuels more compatible with small non-road engines.

The Energy Independence and Security Act of 2007, directed the Secretary of the Department of Energy, DOE, in coordination with the Secretary of the Department of Transportation, DOT, and in consultation with the Administrator of the Environmental Protection Agency, EPA, to carry out a program of research and development regarding the impact that biofuels, like ethanol, may have on existing fuel storage and delivery infrastructure used for petroleum-based fuels. It is critical that these biofuels also are safe to use in operating small non-road engines. My bill requires these agencies to expand their research program to include small engines such as those in snowmobiles, boats, lawnmowers, and chainsaws.

Previous testing done through DOE shows that increased ethanol content in smaller engines creates a leaner burning mixture, which may increase idle speed on some small engines, creating unanticipated clutch engagement on equipment such as chainsaws and handheld trimmers. Also, ethanol is more corrosive and less efficient than traditional gasoline blends. During these difficult economic times, equipment damage due to ethanol-gasoline fuel blends only adds to the many challenges facing Maine's farmers, fishermen, independent woodsmen, and recreational industry.

As we pursue strategies to lessen our dependence on foreign oil, we must also take action to ensure that ethanol fuel blends are safe and efficient for small engines. I urge my colleagues to support this important legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise to join Senator Wyden in introducing a bill that will ban the sale of certain novelty lighters that children can mistake for toys, often with tragic consequences for themselves and their families.

In Arkansas in 2007, two boys, ages 15 months and 2 years, died when the toddler accidentally started a fire with a lighter shaped like a motorcycle. In Oregon, in 2000, a fire started with a dolphin-shaped lighter left one child dead and another brain-damaged. In North Carolina, a 6-year-old boy was badly burned by a lighter shaped like a cell phone.

Sadly, the U.S. Fire Administration has other stories of the hazards presented by novelty lighters. When you learn that one looks like a rubber duck toy, and actually quacks, you can imagine the potential for harm.

As a co-chair of the Congressional Fire Services Caucus, I am proud to note that last year, my home State of Maine became the first State to outlaw the sale of novelty lighters.

Maine's pioneering law stems from a tragic 2007 incident in a Livermore, Maine, grocery store. While his mother was buying sandwiches, 6-year-old Shane St. Pierre picked up what appeared to be a toy flashlight in the form of a baseball bat. When he flicked the switch, a flame shot out and burned his face. Shane's dad, Norm St. Pierre, a fire chief in nearby West Paris, began advocating for the novelty-lighter ban that became Maine law in March 2008.

The Maine State Fire Marshal's office supported that legislation, and a

national ban has the support of the Congressional Fire Services Institute, the National State Fire Marshals Association, and the National Volunteer Fire Council.

The bill is straightforward. It treats novelty lighters manufactured after January 1, 1980, as banned hazardous substances unless the Consumer Product Safety Commission determines a particular lighter has antique or significant artistic value. Otherwise, sale of lighters with toy-like appearance, special audio or visual features, or other attributes that would appeal to children under 10 would be banned.

The novelty lighters targeted in this legislation serve no functional need. But they are liable to attract the notice and curiosity of children, whose play can too easily turn into a scene of horror and death. The sale of lighters that look like animals, cartoon characters, food, toys, or other objects is simply irresponsible and an invitation to tragedy.

I urge all of my colleagues to join me in supporting this simple measure that can save children from disfigurement and death.

Mr. President, I rise to join Senator Wyden in introducing a bill that will ban the sale of certain novelty lighters that children can mistake for toys, often with tragic consequences for themselves and their families.

In Arkansas in 2007, two boys, ages 15 months and 2 years, died when the toddler accidentally started a fire with a lighter shaped like a motorcycle. In Oregon, in 2000, a fire started with a dolphin-shaped lighter left one child dead and another brain-damaged. In North Carolina, a 6-year-old boy was badly burned by a lighter shaped like a cell phone.

Sadly, the U.S. Fire Administration has other stories of the hazards presented by novelty lighters. When you learn that one looks like a rubber duck toy, and actually quacks, you can imagine the potential for harm.

As a co-chair of the Congressional Fire Services Caucus, I am proud to note that last year, my home State of Maine became the first State to outlaw the sale of novelty lighters.

Maine's pioneering law stems from a tragic 2007 incident in a Livermore, Maine, grocery store. While his mother was buying sandwiches, 6-year-old Shane St. Pierre picked up what appeared to be a toy flashlight in the form of a baseball bat. When he flicked the switch, a flame shot out and burned his face. Shane's dad, Norm St. Pierre, a fire chief in nearby West Paris, began advocating for the novelty-lighter ban that became Maine law in March 2008.

The Maine State Fire Marshal's office supported that legislation, and a

national ban has the support of the Congressional Fire Services Institute, the National State Fire Marshals Association, and the National Volunteer Fire Council.

The bill is straightforward. It treats novelty lighters manufactured after January 1, 1980, as banned hazardous substances unless the Consumer Product Safety Commission determines a particular lighter has antique or significant artistic value. Otherwise, sale of lighters with toy-like appearance, special audio or visual features, or other attributes that would appeal to children under 10 would be banned.

The novelty lighters targeted in this legislation serve no functional need. But they are liable to attract the notice and curiosity of children, whose play can too easily turn into a scene of horror and death. The sale of lighters that look like animals, cartoon characters, food, toys, or other objects is simply irresponsible and an invitation to tragedy.

I urge all of my colleagues to join me in supporting this simple measure that can save children from disfigurement and death.

Mr. President, today I am introducing the Heavy Duty Hybrid Vehicle Research, Development, and Demonstration Act, along with my colleagues from California and Wisconsin, Senator Feinstein and Senator Kohl. This bill will accelerate research of plug-in hybrid technologies for heavy duty trucks.

The Federal Government, through the 21st Century Truck Partnership, has for some years provided funding to conduct research and development for the modernization of this industry, in association with a collection of private industry partners. Despite the significant potential benefits of hybrid trucks, however, research in this area was eliminated recently to emphasize a focus on passenger vehicles. This decision was shortsighted.

In 2008, truck operators in Maine and around the country were hard hit by increases in the price of diesel fuel. While fortunately there has been some relief in 2009, it is likely that as our Nation recovers from the current economic downturn, the demand for and prices of diesel fuel will increase again in the future. Given that our Nation relies upon the trucking industry to keep our economy running by providing timely delivery of food, industrial products, and raw materials, we must develop alternatives that make the industry less susceptible to dramatic changes in oil prices. Hybrid power technologies offer tremendous promise of reducing this critical industry's dependence on oil.

Trucks consume large amounts of our imported fuels. Successfully transitioning trucks to hybrid power technology will reduce our Nation's oil consumption and improve our energy security. The Heavy Duty Hybrid Vehicle Research, Development, and Demonstration Act directs the Department of Energy to expand its research in advanced energy storage technologies to include hybrid trucks as well as passenger vehicles. Current hybrid technology works well for cars that can be made with lightweight materials and travel short distances. Trucks need to be constructed with heavy materials commensurate with the heavy loads they carry and, if they are going to be plug-in hybrids, travel relatively long distances between charges. Thus advances in battery and other technologies are needed to make plug-in trucks commercially viable and may require more advanced technology than is required for passenger cars.

Grant recipients will be required to complete two phases. In phase one, recipients must build one plug-in hybrid truck, collect data, and make performance comparisons with traditional trucks. Recipients who show promise in phase one will be invited to enter into phase two where they must produce 50 plug-in hybrid trucks and report on the technological and market obstacles to widespread production. The bill will also sponsor two smaller programs to deal with drive-train issues and the impact of the wide use of plug-in hybrid technology on the electrical grid. In total, the bill authorizes the expenditure of $16,000,000 for each of fiscal years 2010, 2011, and 2012.

We need a comprehensive approach to modernize commercial transportation in the 21st century. The Heavy Duty Hybrid Vehicle Research, Development, and Demonstration Act is one vital piece of that approach. I urge my colleagues to support this important legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today I am introducing the Heavy Duty Hybrid Vehicle Research, Development, and Demonstration Act, along with my colleagues from California and Wisconsin, Senator Feinstein and Senator Kohl. This bill will accelerate research of plug-in hybrid technologies for heavy duty trucks.

The Federal Government, through the 21st Century Truck Partnership, has for some years provided funding to conduct research and development for the modernization of this industry, in association with a collection of private industry partners. Despite the significant potential benefits of hybrid trucks, however, research in this area was eliminated recently to emphasize a focus on passenger vehicles. This decision was shortsighted.

In 2008, truck operators in Maine and around the country were hard hit by increases in the price of diesel fuel. While fortunately there has been some relief in 2009, it is likely that as our Nation recovers from the current economic downturn, the demand for and prices of diesel fuel will increase again in the future. Given that our Nation relies upon the trucking industry to keep our economy running by providing timely delivery of food, industrial products, and raw materials, we must develop alternatives that make the industry less susceptible to dramatic changes in oil prices. Hybrid power technologies offer tremendous promise of reducing this critical industry's dependence on oil.

Trucks consume large amounts of our imported fuels. Successfully transitioning trucks to hybrid power technology will reduce our Nation's oil consumption and improve our energy security. The Heavy Duty Hybrid Vehicle Research, Development, and Demonstration Act directs the Department of Energy to expand its research in advanced energy storage technologies to include hybrid trucks as well as passenger vehicles. Current hybrid technology works well for cars that can be made with lightweight materials and travel short distances. Trucks need to be constructed with heavy materials commensurate with the heavy loads they carry and, if they are going to be plug-in hybrids, travel relatively long distances between charges. Thus advances in battery and other technologies are needed to make plug-in trucks commercially viable and may require more advanced technology than is required for passenger cars.

Grant recipients will be required to complete two phases. In phase one, recipients must build one plug-in hybrid truck, collect data, and make performance comparisons with traditional trucks. Recipients who show promise in phase one will be invited to enter into phase two where they must produce 50 plug-in hybrid trucks and report on the technological and market obstacles to widespread production. The bill will also sponsor two smaller programs to deal with drive-train issues and the impact of the wide use of plug-in hybrid technology on the electrical grid. In total, the bill authorizes the expenditure of $16,000,000 for each of fiscal years 2010, 2011, and 2012.

We need a comprehensive approach to modernize commercial transportation in the 21st century. The Heavy Duty Hybrid Vehicle Research, Development, and Demonstration Act is one vital piece of that approach. I urge my colleagues to support this important legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Madam President, I ask unanimous consent that I be permitted to proceed for 15 minutes as in morning business.

Mr. President, at the heart of the deep recession is a crisis in our financial system that has choked off credit upon which the health of our economy depends. With their jobs disappearing and their life savings evaporating, the American people rightly ask why the Federal Government failed to protect them from Wall Street's greed, unwise decisions, and manipulations that have caused so much harm.

As a former Maine financial regulator, I am convinced regulatory reform is essential to restoring public confidence in our financial markets. America's main street small businesses, homeowners, employees, savers, and investors deserve the protection of a new regulatory system that modernizes regulatory agencies, sets safety and soundness requirements for financial institutions to prevent excessive risk- taking, and improves oversight, accountability, and transparency.

To achieve those goals, I am introducing the Financial System Stabilization and Reform Act of 2009. This legislation will fundamentally restructure our financial regulatory system. It will strengthen oversight and accountability in our financial markets, and it would help rebuild the confidence of our citizens in our economy and help restore stability to our financial markets.

Mr. President, as financial institutions speculated in increasingly risky products and practices, not one of the hundreds of Federal and State agencies involved in financial regulation was responsible for detecting and assessing the risk to the system as a whole. The financial sector was gambling on the rise of the housing market, yet no single regulator could see that everyone, from mortgage brokers to credit default swap traders, was betting on a bubble that was about to burst. Instead, each agency viewed its regulated market through a narrow lens, missing the total risk that permeated our financial markets.

In order to prevent this problem from recurring, a single financial regulator must be tasked with understanding the full range of risks our financial system faces. This regulator also must have the authority to take proactive steps to prevent or minimize systemic risk.

This is an urgent need. Unemployment reached 7.8 percent in my home State in January. Last month, the national unemployment rate hit 8.1 percent, the highest in 25 years. Earlier this month, the Federal Reserve reported that the net worth of American households plummeted by more than $11 trillion in 2008, a staggering drop of nearly 20 percent, the most in 63 years. And, at the same time, court proceedings and congressional hearings on the Bernie Madoff case revealed that this multibillion-dollar Ponzi scheme of nonexistent transactions and fraudulent statements was perpetrated for

years under the very noses of the Federal agencies that should have stopped it.

The American people need more than words of optimism or promises of a turnaround. With their jobs lost or in jeopardy, with their financial plans in ruin, and now with their hard-earned tax dollars on the line to clean up the mess, they need reforms. They need action.

The American people are angry, and rightfully so. They are angry because the current crisis was not created from their own bad investments or decisions, but by those on Wall Street who concocted complicated financial instruments that ended up backfiring. Investment firms borrowed to the hilt when they did not have the resources to do so.

When the average American decides to purchase a security on credit, margin requirements dictate that he or she put up at least 50 percent of its value in cash. But investment banks did not have to play by the same rules when they bought for their own accounts. And they took advantage of this system.

Indicative of the extent of the borrowing, Bear Stearns had a leverage ratio of 35 to 1, which means the firm borrowed $35 for every dollar of its own money. For example, suppose your net worth is a dollar and you combine that dollar with $35 in borrowed money to buy an asset worth $36. If the value of that asset declines by only $2, to $34, you are now bankrupt. This is exactly what happened to Bear Stearns and other investment banks.

Since last spring, the Homeland Security and Governmental Affairs Committee, on which I serve as ranking member, has held a series of hearings on the roots of the present crisis. We began by looking at the derivatives and commodity markets and more recently looked at the steps that can be taken to protect our Nation's financial system as a whole by creating a systemic-risk regulator. The many expert witnesses who have appeared before us have described how our financial system was destabilized by a combination of reckless lending, complex new instruments, securitization of assets, poor disclosure and understanding of risks, excessive leverage, and inadequate regulation.

Our witnesses were in wide agreement that the mounting risk went virtually undetected by the vast network of Federal and State regulatory agencies. As the Government Accountability Office put it in a recent report to the committee, ``it has become apparent that the regulatory system is ill-suited to meet the nation's needs in the 21st century.'' To meet this challenge, Federal Reserve Chairman Bernanke said recently:

We must have a strategy that regulates the financial system

as a whole, in a holistic way, not just its individual

components.

This statement confirms a view that I find inescapable, our current system suffers from regulatory gaps that pose enormous risks to our entire economy. The holistic approach recommended by Chairman Bernanke is the guiding principle of the comprehensive legislation I introduce today. Like legislation I introduced last fall, this bill would also regulate Wall Street investment banks for safety and soundness and close the gap that has allowed credit default swaps and other financial instruments to escape regulation by both Federal and State regulators.

To ensure a systemic approach to Federal financial regulation, this legislation calls for the creation of an independent financial stability council to serve as a ``systemic-risk regulator.'' The council would maintain comprehensive oversight of all potential risks to the financial system, and would have the power to act to prevent or mitigate those risks. The financial stability council would be composed of representatives from existing Federal agencies which now have the responsibility to oversee segments of the financial system--the Federal Reserve; the Treasury Department; the Securities and Exchange Commission; the Commodity Futures Trading Commission; the Federal Deposit Insurance Corporation; and the National Credit Union Administration.

The council would be led by a chairman nominated by the President and confirmed by the Senate, with the responsibility for the day-to-day operations of the council. The chairman would be required to appear before Congress twice a year to report on the state of the country's financial system, areas in which systemic risk are anticipated, and whether any legislation is needed for the council to carry out its mission of preventing systemic risks.

Witnesses who have appeared before our committee have stressed the need to ensure that the systemic-risk regulator has the responsibility and the authority to ensure that risks to our financial system are identified and addressed. If it is not clear who has that responsibility, then agencies will dig in their heels and resist changes they do not agree with, and engage in finger-pointing when things go bad. At the same time, other witnesses have stressed the dangers of consolidating too much power in the hands of a single regulator and the need to maintain the level of oversight Congress has historically exercised with respect to financial market regulation.

The financial stability council created by this legislation balances these concerns. As Damon Silvers, the AFL-CIO representative on the TARP congressional oversight panel, testified before our committee earlier this month:

[T]he best approach is a body made up of the key

regulators. . . . It is unlikely a systemic risk regulator

would develop deep enough expertise on its own. . . . To be

effective it would need to cooperate. . . . with all the

routine regulators where the relevant expertise would be

resident. . . .

Former Senator John Sununu, another member of the congressional oversight panel, recognized that ``systemic risk can materialize in a broad range of areas within our financial system. . . . Thus, it is impractical, and perhaps a dangerous concentration of power, to give one single regulator the power to set or modify any and all standards relating to such risk. Systemic risk oversight and management must be a collaborative effort. . . .''

The financial stability council will be the primary entity responsible for detecting systemic risk and implementing the steps necessary to protect against that risk. The key to such a structure, I believe, is to ensure that the council is headed by a chairman confirmed by the Senate and subject to oversight by Congress, who is dedicated entirely to the mission of the council, and who does not carry a bias in favor of any particular agency on the council.

Some have suggested that the Federal Reserve play the role of systemic-risk regulator. That is not what my bill contemplates. The chairman of the Federal Reserve will be a member of the council, and of course, the Nation's top banker will play a critical role in how the council discharges its responsibilities. But in my view, the Federal Reserve already has enough on its plate, and does not need additional, heavy responsibilities. I should add that nothing in my bill alters the Federal Reserve's role with respect to monetary policy in any way.

This bill, however, would apply safety and soundness regulation to investment bank holding companies by assigning the Federal Reserve this responsibility. Although the five big firms have left the field, this is a necessary step. Any new investment bank would fall into the same regulatory void as its predecessors. The SEC would be able to regulate its broker-dealer operations, but no agency would have the explicit authority to examine its operations for safety and soundness or for systemic risk. The collapses at Bear Stearns and Lehman Brothers illustrate the tremendous costs that can be inflicted if these investment banks are not regulated for safety and soundness. Under this legislation, the council's role as the systemic-risk regulator will support the critical importance of the Federal Reserve's safety and soundness duties.

Under my bill, whenever the financial stability council believes that a risk to the financial system is present due to a lack of proper regulation, or by the appearance of new and unregulated financial products or services, it would have the power to propose changes to regulatory policy, using the statutory authority provided to our existing Federal financial regulatory agencies.

The financial stability council will have the power to obtain information directly from any regulated provider of financial products and, in limited form, from State regulators regarding the solvency of State-regulated insurers.

The council will also be able to propose regulations of financial instruments which are designed to look like insurance products, but that in reality are financial products which could present a systemic risk. But--and I want to stress this point--my bill does not preempt State law governing traditional insurance products.

In keeping with the recommendations of the experts who testified before our committee, the bill provides the council with the power to adopt rules designed to address the ``too big to fail'' problem. How often we have heard that term lately. We hear financial experts and Federal officials telling us we have to continue to bail out large institutions like AIG because they are ``too big to fail.'' We need to remedy this problem so we don't find ourselves in the same situation a decade from now. This bill provides the council with the power to adopt rules designed to discourage financial institutions from becoming ``too big to fail'' or to regulate them appropriately if they become what we call ``systemically important financial institutions.'' The need to regulate how these systemically important financial institutions, or ``SIFIs,'' invest their own capital was not previously recognized. Indeed, the prevailing attitude was that if firms failed because of bad investments, possibly bringing some of their creditors down with them, that was how the market was supposed to work. In true Darwinian fashion, eliminating firms with less investment acumen would only serve to strengthen American capitalism. We now know the fallacy of that reasoning, and it has been a very painful lesson, for it is not just the large investment houses that are hurt, but average Americans from Maine to California also suffer.

Under this legislation the council would help make sure financial institutions do not become ``too big to fail'' by imposing different capital requirements on them as they grow in size, raising their risk premiums, or requiring them to hold a larger percentage of their debt as long-term debt. The TARP congressional oversight panel adopted this position, explaining:

We should not identify specific institutions in advance as

too big to fail, but rather have a regulatory framework in

which institutions have higher capital requirements and

pay more on insurance funds on a percentage basis than

smaller institutions which are less likely to be rescued

as being too systemic to fail.

I want to make clear, though, that the power this bill provides to the council is not meant to restrict financial institutions from growing in size, but rather from becoming risks to the system as a whole.

The bill also provides the council with authority to address so- called regulatory ``black holes,'' created by new and imaginative financial instruments that do not fall within the jurisdictional authority of any Federal financial regulatory agency. Credit default swaps are a perfect example of this problem. Prior to 2000, credit default swaps existed in a regulatory limbo. Neither the SEC nor the CFTC were willing to exert authority over the credit default swap market. As a result, they fell through the jurisdictional cracks. Congress then compounded the problem by explicitly exempting credit default swaps from regulation under the Commodity Futures Modernization Act of 2000.

As was the case with AIG, serious problems can arise when a major ``credit event'' suddenly reveals that massive claims for collateral posting or payment are converging on credit default swap parties who cannot meet their obligations. But because the market was bilateral and over-the-counter, it was often impossible for regulators--and even market participants--to know in advance how all the tangled webs of contract commitments overlapped and affected any particular party. Under the current system which lacks a systemic-risk regulator, regulators at times lack the authority to take action against excessive debt, inadequate reserves, and other threats, even when they see them occurring.

This legislation specifically addresses the credit default swap problem by repealing the exemption from regulation that Congress created for these instruments in 2000, and by setting up a government- regulated clearinghouse.

But beyond credit default swaps, risky new financial instruments could still avoid the reach of our regulatory system. For that reason, my legislation provides the council with the power to propose regulations and legislation governing the sale or marketing of any financial instrument which would fall into a ``black hole,'' and would otherwise present a systemic risk to the financial systems of the United States if left unmonitored.

Professor Howell Jackson, the acting dean of Harvard Law School, discussed this ``black hole'' problem in his testimony to our committee early this year. He stated that the underlying issue is that ``well- advised financial services firms are capable of exploiting the legalistic boundaries of jurisdictional authority that characterize our system of financial regulation. Without broad jurisdictional mandates, our financial regulators will remain at a serious disadvantage in setting policy for new financial products and risks.''

Finally, my bill will merge the Office of Thrift Supervision, OTS, into the Office of the Comptroller of the Currency, OCC. Secretary Paulson recommended this merger in the plan he released last year, and 2 years ago, John Dugan, the U.S. Comptroller, said that such a merger would be ``appropriate and healthy.'' There are currently at least four agencies involved in bank regulation, including the FDIC, the Federal Reserve, and the OCC and OTC. Consolidating and reducing the number of banking regulators would improve the efficiency and effectiveness of this system.

OTS is the best candidate for several reasons, including that many of its largest regulated entities, thrifts, have either collapsed or been acquired in the midst of the financial crisis--such as Washington Mutual and Indy Mac. And in the last 4 months, the inspector general for Treasury has raised serious questions about the objectivity and effectiveness of OTS's supervision of the largest thrifts.

Mr. President, the regulatory reforms in this legislation are absolutely essential to restoring public confidence in our financial markets. We have relied too long on a patchwork of regulatory agencies that is incapable of understanding or controlling risks to the system as a whole. The overarching purpose of this legislation is to ensure that, as the financial-services industry becomes ever more global and complex, those in government, responsible for overseeing the system's stability, can see the whole picture. We are in this crisis precisely because firms, whether for good or bad, exploited legal boundaries, risky financial instruments fell beyond the reach of regulators, and institutions doomed to fail grew too big to fail.

Honest savers, borrowers, investors, Main Street businesses, and responsible financial institutions deserve a regulatory system suited to demands of modern times, where dangerous gaps are closed, and where risky transactions are indentified and controlled before they pose a threat to the markets as a whole. These reforms must be made to restore the confidence necessary to stabilize our financial markets. That is what this legislation aims to do, and I urge my colleagues to support it.

Mr. President, at the heart of the deep recession is a crisis in our financial system that has choked off credit upon which the health of our economy depends. With their jobs disappearing and their life savings evaporating, the American people rightly ask why the Federal Government failed to protect them from Wall Street's greed, unwise decisions, and manipulations that have caused so much harm.

As a former Maine financial regulator, I am convinced regulatory reform is essential to restoring public confidence in our financial markets. America's main street small businesses, homeowners, employees, savers, and investors deserve the protection of a new regulatory system that modernizes regulatory agencies, sets safety and soundness requirements for financial institutions to prevent excessive risk- taking, and improves oversight, accountability, and transparency.

To achieve those goals, I am introducing the Financial System Stabilization and Reform Act of 2009. This legislation will fundamentally restructure our financial regulatory system. It will strengthen oversight and accountability in our financial markets, and it would help rebuild the confidence of our citizens in our economy and help restore stability to our financial markets.

Mr. President, as financial institutions speculated in increasingly risky products and practices, not one of the hundreds of Federal and State agencies involved in financial regulation was responsible for detecting and assessing the risk to the system as a whole. The financial sector was gambling on the rise of the housing market, yet no single regulator could see that everyone, from mortgage brokers to credit default swap traders, was betting on a bubble that was about to burst. Instead, each agency viewed its regulated market through a narrow lens, missing the total risk that permeated our financial markets.

In order to prevent this problem from recurring, a single financial regulator must be tasked with understanding the full range of risks our financial system faces. This regulator also must have the authority to take proactive steps to prevent or minimize systemic risk.

This is an urgent need. Unemployment reached 7.8 percent in my home State in January. Last month, the national unemployment rate hit 8.1 percent, the highest in 25 years. Earlier this month, the Federal Reserve reported that the net worth of American households plummeted by more than $11 trillion in 2008, a staggering drop of nearly 20 percent, the most in 63 years. And, at the same time, court proceedings and congressional hearings on the Bernie Madoff case revealed that this multibillion-dollar Ponzi scheme of nonexistent transactions and fraudulent statements was perpetrated for

years under the very noses of the Federal agencies that should have stopped it.

The American people need more than words of optimism or promises of a turnaround. With their jobs lost or in jeopardy, with their financial plans in ruin, and now with their hard-earned tax dollars on the line to clean up the mess, they need reforms. They need action.

The American people are angry, and rightfully so. They are angry because the current crisis was not created from their own bad investments or decisions, but by those on Wall Street who concocted complicated financial instruments that ended up backfiring. Investment firms borrowed to the hilt when they did not have the resources to do so.

When the average American decides to purchase a security on credit, margin requirements dictate that he or she put up at least 50 percent of its value in cash. But investment banks did not have to play by the same rules when they bought for their own accounts. And they took advantage of this system.

Indicative of the extent of the borrowing, Bear Stearns had a leverage ratio of 35 to 1, which means the firm borrowed $35 for every dollar of its own money. For example, suppose your net worth is a dollar and you combine that dollar with $35 in borrowed money to buy an asset worth $36. If the value of that asset declines by only $2, to $34, you are now bankrupt. This is exactly what happened to Bear Stearns and other investment banks.

Since last spring, the Homeland Security and Governmental Affairs Committee, on which I serve as ranking member, has held a series of hearings on the roots of the present crisis. We began by looking at the derivatives and commodity markets and more recently looked at the steps that can be taken to protect our Nation's financial system as a whole by creating a systemic-risk regulator. The many expert witnesses who have appeared before us have described how our financial system was destabilized by a combination of reckless lending, complex new instruments, securitization of assets, poor disclosure and understanding of risks, excessive leverage, and inadequate regulation.

Our witnesses were in wide agreement that the mounting risk went virtually undetected by the vast network of Federal and State regulatory agencies. As the Government Accountability Office put it in a recent report to the committee, ``it has become apparent that the regulatory system is ill-suited to meet the nation's needs in the 21st century.'' To meet this challenge, Federal Reserve Chairman Bernanke said recently:

We must have a strategy that regulates the financial system

as a whole, in a holistic way, not just its individual

components.

This statement confirms a view that I find inescapable, our current system suffers from regulatory gaps that pose enormous risks to our entire economy. The holistic approach recommended by Chairman Bernanke is the guiding principle of the comprehensive legislation I introduce today. Like legislation I introduced last fall, this bill would also regulate Wall Street investment banks for safety and soundness and close the gap that has allowed credit default swaps and other financial instruments to escape regulation by both Federal and State regulators.

To ensure a systemic approach to Federal financial regulation, this legislation calls for the creation of an independent financial stability council to serve as a ``systemic-risk regulator.'' The council would maintain comprehensive oversight of all potential risks to the financial system, and would have the power to act to prevent or mitigate those risks. The financial stability council would be composed of representatives from existing Federal agencies which now have the responsibility to oversee segments of the financial system--the Federal Reserve; the Treasury Department; the Securities and Exchange Commission; the Commodity Futures Trading Commission; the Federal Deposit Insurance Corporation; and the National Credit Union Administration.

The council would be led by a chairman nominated by the President and confirmed by the Senate, with the responsibility for the day-to-day operations of the council. The chairman would be required to appear before Congress twice a year to report on the state of the country's financial system, areas in which systemic risk are anticipated, and whether any legislation is needed for the council to carry out its mission of preventing systemic risks.

Witnesses who have appeared before our committee have stressed the need to ensure that the systemic-risk regulator has the responsibility and the authority to ensure that risks to our financial system are identified and addressed. If it is not clear who has that responsibility, then agencies will dig in their heels and resist changes they do not agree with, and engage in finger-pointing when things go bad. At the same time, other witnesses have stressed the dangers of consolidating too much power in the hands of a single regulator and the need to maintain the level of oversight Congress has historically exercised with respect to financial market regulation.

The financial stability council created by this legislation balances these concerns. As Damon Silvers, the AFL-CIO representative on the TARP congressional oversight panel, testified before our committee earlier this month:

[T]he best approach is a body made up of the key

regulators. . . . It is unlikely a systemic risk regulator

would develop deep enough expertise on its own. . . . To be

effective it would need to cooperate. . . . with all the

routine regulators where the relevant expertise would be

resident. . . .

Former Senator John Sununu, another member of the congressional oversight panel, recognized that ``systemic risk can materialize in a broad range of areas within our financial system. . . . Thus, it is impractical, and perhaps a dangerous concentration of power, to give one single regulator the power to set or modify any and all standards relating to such risk. Systemic risk oversight and management must be a collaborative effort. . . .''

The financial stability council will be the primary entity responsible for detecting systemic risk and implementing the steps necessary to protect against that risk. The key to such a structure, I believe, is to ensure that the council is headed by a chairman confirmed by the Senate and subject to oversight by Congress, who is dedicated entirely to the mission of the council, and who does not carry a bias in favor of any particular agency on the council.

Some have suggested that the Federal Reserve play the role of systemic-risk regulator. That is not what my bill contemplates. The chairman of the Federal Reserve will be a member of the council, and of course, the Nation's top banker will play a critical role in how the council discharges its responsibilities. But in my view, the Federal Reserve already has enough on its plate, and does not need additional, heavy responsibilities. I should add that nothing in my bill alters the Federal Reserve's role with respect to monetary policy in any way.

This bill, however, would apply safety and soundness regulation to investment bank holding companies by assigning the Federal Reserve this responsibility. Although the five big firms have left the field, this is a necessary step. Any new investment bank would fall into the same regulatory void as its predecessors. The SEC would be able to regulate its broker-dealer operations, but no agency would have the explicit authority to examine its operations for safety and soundness or for systemic risk. The collapses at Bear Stearns and Lehman Brothers illustrate the tremendous costs that can be inflicted if these investment banks are not regulated for safety and soundness. Under this legislation, the council's role as the systemic-risk regulator will support the critical importance of the Federal Reserve's safety and soundness duties.

Under my bill, whenever the financial stability council believes that a risk to the financial system is present due to a lack of proper regulation, or by the appearance of new and unregulated financial products or services, it would have the power to propose changes to regulatory policy, using the statutory authority provided to our existing Federal financial regulatory agencies.

The financial stability council will have the power to obtain information directly from any regulated provider of financial products and, in limited form, from State regulators regarding the solvency of State-regulated insurers.

The council will also be able to propose regulations of financial instruments which are designed to look like insurance products, but that in reality are financial products which could present a systemic risk. But--and I want to stress this point--my bill does not preempt State law governing traditional insurance products.

In keeping with the recommendations of the experts who testified before our committee, the bill provides the council with the power to adopt rules designed to address the ``too big to fail'' problem. How often we have heard that term lately. We hear financial experts and Federal officials telling us we have to continue to bail out large institutions like AIG because they are ``too big to fail.'' We need to remedy this problem so we don't find ourselves in the same situation a decade from now. This bill provides the council with the power to adopt rules designed to discourage financial institutions from becoming ``too big to fail'' or to regulate them appropriately if they become what we call ``systemically important financial institutions.'' The need to regulate how these systemically important financial institutions, or ``SIFIs,'' invest their own capital was not previously recognized. Indeed, the prevailing attitude was that if firms failed because of bad investments, possibly bringing some of their creditors down with them, that was how the market was supposed to work. In true Darwinian fashion, eliminating firms with less investment acumen would only serve to strengthen American capitalism. We now know the fallacy of that reasoning, and it has been a very painful lesson, for it is not just the large investment houses that are hurt, but average Americans from Maine to California also suffer.

Under this legislation the council would help make sure financial institutions do not become ``too big to fail'' by imposing different capital requirements on them as they grow in size, raising their risk premiums, or requiring them to hold a larger percentage of their debt as long-term debt. The TARP congressional oversight panel adopted this position, explaining:

We should not identify specific institutions in advance as

too big to fail, but rather have a regulatory framework in

which institutions have higher capital requirements and

pay more on insurance funds on a percentage basis than

smaller institutions which are less likely to be rescued

as being too systemic to fail.

I want to make clear, though, that the power this bill provides to the council is not meant to restrict financial institutions from growing in size, but rather from becoming risks to the system as a whole.

The bill also provides the council with authority to address so- called regulatory ``black holes,'' created by new and imaginative financial instruments that do not fall within the jurisdictional authority of any Federal financial regulatory agency. Credit default swaps are a perfect example of this problem. Prior to 2000, credit default swaps existed in a regulatory limbo. Neither the SEC nor the CFTC were willing to exert authority over the credit default swap market. As a result, they fell through the jurisdictional cracks. Congress then compounded the problem by explicitly exempting credit default swaps from regulation under the Commodity Futures Modernization Act of 2000.

As was the case with AIG, serious problems can arise when a major ``credit event'' suddenly reveals that massive claims for collateral posting or payment are converging on credit default swap parties who cannot meet their obligations. But because the market was bilateral and over-the-counter, it was often impossible for regulators--and even market participants--to know in advance how all the tangled webs of contract commitments overlapped and affected any particular party. Under the current system which lacks a systemic-risk regulator, regulators at times lack the authority to take action against excessive debt, inadequate reserves, and other threats, even when they see them occurring.

This legislation specifically addresses the credit default swap problem by repealing the exemption from regulation that Congress created for these instruments in 2000, and by setting up a government- regulated clearinghouse.

But beyond credit default swaps, risky new financial instruments could still avoid the reach of our regulatory system. For that reason, my legislation provides the council with the power to propose regulations and legislation governing the sale or marketing of any financial instrument which would fall into a ``black hole,'' and would otherwise present a systemic risk to the financial systems of the United States if left unmonitored.

Professor Howell Jackson, the acting dean of Harvard Law School, discussed this ``black hole'' problem in his testimony to our committee early this year. He stated that the underlying issue is that ``well- advised financial services firms are capable of exploiting the legalistic boundaries of jurisdictional authority that characterize our system of financial regulation. Without broad jurisdictional mandates, our financial regulators will remain at a serious disadvantage in setting policy for new financial products and risks.''

Finally, my bill will merge the Office of Thrift Supervision, OTS, into the Office of the Comptroller of the Currency, OCC. Secretary Paulson recommended this merger in the plan he released last year, and 2 years ago, John Dugan, the U.S. Comptroller, said that such a merger would be ``appropriate and healthy.'' There are currently at least four agencies involved in bank regulation, including the FDIC, the Federal Reserve, and the OCC and OTC. Consolidating and reducing the number of banking regulators would improve the efficiency and effectiveness of this system.

OTS is the best candidate for several reasons, including that many of its largest regulated entities, thrifts, have either collapsed or been acquired in the midst of the financial crisis--such as Washington Mutual and Indy Mac. And in the last 4 months, the inspector general for Treasury has raised serious questions about the objectivity and effectiveness of OTS's supervision of the largest thrifts.

Mr. President, the regulatory reforms in this legislation are absolutely essential to restoring public confidence in our financial markets. We have relied too long on a patchwork of regulatory agencies that is incapable of understanding or controlling risks to the system as a whole. The overarching purpose of this legislation is to ensure that, as the financial-services industry becomes ever more global and complex, those in government, responsible for overseeing the system's stability, can see the whole picture. We are in this crisis precisely because firms, whether for good or bad, exploited legal boundaries, risky financial instruments fell beyond the reach of regulators, and institutions doomed to fail grew too big to fail.

Honest savers, borrowers, investors, Main Street businesses, and responsible financial institutions deserve a regulatory system suited to demands of modern times, where dangerous gaps are closed, and where risky transactions are indentified and controlled before they pose a threat to the markets as a whole. These reforms must be made to restore the confidence necessary to stabilize our financial markets. That is what this legislation aims to do, and I urge my colleagues to support it.