Christopher Dodd

Mr. DODD

Mr. DODD. Madam President, I ask unanimous consent that the only debate remaining on the pending Dodd and McCain amendments be 20 minutes, with 10 minutes accorded to each amendment; that upon the use or yielding back of time, the Senate proceed to vote in relation to the Dodd amendment No. 3938, to be followed by a vote in relation to the McCain amendment No. 3839, with no amendment in order to either amendment prior to the vote; further, that upon disposition of the amendments described above and as if in executive session, the Senate proceed to executive session and proceed to vote on confirmation of the following nominations in the order listed: Executive Calendar No. 704 and 729; that upon confirmation, the motions to reconsider be considered made and laid upon the table, any statements relating to the nominees be printed in the Record, the President be immediately notified of the Senate's action, and the Senate then resume legislative session; that after the first vote in this sequence, the remaining votes be limited to 10 minutes each.

Mr. DODD. Well, Madam President, let me now proceed with my time. I know my colleague from Arizona will come over to be heard. Let me emphasize again to my colleagues that the McCain amendment is opposed by the National Association of Realtors, the homebuilders, and the credit unions for the simple reason that the amendment doesn't do anything except end Fannie Mae and Freddie Mac. That is hardly reform. It replaces it with nothing, so we end up in a free fall in this country when it comes to providing affordable mortgages for middle- income families. Granted, Fannie Mae and Freddie Mac need to be reformed, and the amendment we will vote on first off--that I will be proposing--in fact requires that the administration, by January, submit a specific plan that would call for how to reform Fannie Mae and Freddie Mac and what to replace it with in a housing financing system. Not to have a housing financing system, just to leave us without one altogether, as we would achieve with the McCain amendment, just eliminating Fannie Mae and Freddie Mac with no replacement within the year, is hardly what we need to do at this time. We have been through a lot. This problem began in the housing market, in an unregulated segment of our economy. For years, the previous administration and others advocated a totally unregulated market. Because of those attitudes, we ended up where we did--with brokers and mortgage companies that were providing mortgages to people without any documentation, without any underwriting standards whatsoever, and we ended up, of course, with 7 million homes lost, 4 million underwater today, and 250,000 seized just in the last number of months, since the outset of this year. The McCain amendment would actually leave us in a very fragile situation, and that is the point the homebuilders, the realtors, and the credit unions are making in their strong opposition to this amendment. Our amendment lays out a timeframe in which the administration would have to submit a specific set of plans so we could then, in the next Congress, move forward. As my colleague from New Hampshire has pointed out, the issue of replacing and coming up with an alternative housing finance system is very complex. There are a lot of different ideas out there about which plan ought to replace the one we have working today. Obviously that is something the Congress will have to consider. I mentioned earlier Fannie Mae, Freddie Mac, and the FHA together account for 96.5 percent of the funding for mortgages today. The McCain amendment would undermine this supply without establishing a reasonable alternative. It is irresponsible public policy at a very uncertain time. As Senator Gregg said earlier, on the debate in the Wall Street reform bill the GSE issue is ``too complex to do in this bill.'' The McCain amendment would require the Federal Housing Finance Agency to either end the conservatorship of Fannie and Freddie or disband them, put them into receivership within 2 years. That is all. The amendment poses no alternative to Fannie Mae and Freddie Mac. It would totally privatize the mortgage market other than FHA. We have had some experience with how the housing market behaves when it is completely privatized. It is called subprime and exotic mortgage markets. As we know, it was this unregulated market, fanned by Wall Street, that pushed out those irresponsible mortgages that they knew people could not afford which led to our current problems. With a still fragile housing market in dangerous times, the McCain amendment would push us back into this downward spiral. The amendment would do the following. It results in an increase in mortgage rates for home buyers and homeowners. Try to explain that as you go back to your States, if this amendment were adopted. It reduces the availability of mortgage credit in communities across our country, including communities with relatively low-cost housing. This would result in reductions in existing housing values at a time when the housing market is just starting to recover some value. Further, this amendment would reduce the availability of mortgage credit to first-time home buyers, to low- and moderate-income families seeking to buy or refinance a home by eliminating housing goals. It goes on by delaying or to put home ownership out of reach to many families. It raises the minimum downpayment requirements to 10 percent. A minimum 10 percent for families starting out, with better underwriting standards, that kind of criterion excludes a lot of young families starting out who wish to buy their first home. It reduces the availability of mortgage credit for affordable rental housing by eliminating the housing goals, and it undermines the efforts to get loan modifications and affordable refinances to homeowners trying to save their homes. Last, it results in the potential elimination of a 30-year fixed rate prepayable mortgage. This last point is something I do not think most Americans are aware of. We are the only country in the world that provides a 30-year fixed rate mortgage for families. That is the source of wealth creation for most Americans. It is not buying stocks on Wall Street or getting involved in fancy credit default swaps and over-the-counter derivatives and all of this casino gambling that goes on. Average Americans accumulate wealth when they can afford to buy a home and hold on to that property, watching equity increase. That equity provides a source of income for retirement years, helps provide for the college education of their kids, and equity in a neighborhood provides stability for that neighborhood and strengthens communities. If you eliminate the 30-year fixed rate mortgage, you have dealt a huge blow to working families in this country. I do not think we want to look like Europe when it comes to home mortgages, and that is how we will end up if the McCain amendment is adopted. For all of those reasons, as I said, homebuilders, realtors, and credit unions oppose this amendment. Reform of the GSEs--everyone agrees we need to make that reform. However, the homebuilders say in their letter to Senator McCain: . . . we remain concerned about how to get from the current structure to future arrangements without . . . disrupting the operation of the overall housing finance system. Any changes should be undertaken with care. . . . I agree. We should keep in mind that the Congress created a strong new regulatory regime for Fannie Mae and Freddie Mac in 2008. Their regulator is maintaining strong oversight of these enterprises, while they continue to provide crucial assistance to the housing market. Longer term reform of Fannie and Freddie would require a thoughtful reconsideration of the structure of the whole housing finance system. This will require hearings about exactly what structure we want to put in place to finance housing in this country. This will require hearings with many stakeholders and others involved in the serious discussions to determine what that system ought to be. To wipe out the present system--I have to tell you a quick story. It may seem unrelated to the subject at hand. Many years ago, when I was the ripe old age of 22, I was a Peace Corps volunteer in the Dominican Republic and I went to one of the mountain villages near the border of Haiti and I asked the people what they thought their needs were. They said, What do you think we need to do, of this young American. I looked over at the old schoolhouse they had, one room, made of palm wood with a dirt floor. I said I think you need a new school. They said that is a pretty good idea. We agree with you. What should we do first? I said, first tear down the old school. It was my first project. For the next 2 years they had no school in town. It took that long. We didn't know where to build the school. We didn't know where the property was, we didn't have the materials, so we gathered in people's homes to become the school. In effect, that is what the McCain amendment is going to do. I made a mistake at age 22. Before deciding to build what you are going to have, don't tear down what you have without knowing what you are going to replace it with. Eventually we got a school built in that town, but they went through a rough 2 years because this young American didn't understand that while the old school wasn't great and it was in desperate need of repair, tearing it down and leaving them with no school left that little community without the ability to have a decent place to house and teach their kids. That analogy applies here because what the McCain amendment does is tear down without building anything in its place. Again, I will take a back seat to no one. Democrats should have done a better job. Republicans--I listen to my colleague from Alabama talk about the history of Fannie and Freddie. Believe me, I have an alternative history. But we can go back and forth on that endlessly. Let's suffice to say this: We all should have done a better job at this and finger pointing doesn't get us anywhere. We are not in the business of trying to rewrite history today, we are trying to see to how best to ensure the coming generation will never have to go through what this generation has. What we are offering here is a specific idea of how to get us to that new plan of housing finance. You don't get there by eliminating what we have today and putting everything else at risk as a result of what is included in this amendment. Under our amendment, the Treasury specifically is told not ``may'' but it ``shall'' do following things: Come up and tell us how we are going to wind down and liquidate Fannie and Freddie; the privatization of the two GSEs; the breakup of the GSEs into small companies; and other options that may be available. This is a tough study. This isn't one to kind of paint this over; it demands a report back, ``shall,'' how specifically we can do this in a time certain. It is not perfect. I wish I had some magical reform to offer everyone today. We have looked at this for weeks and months and there is a significant debate over what that housing financing system ought to be. I can't tell you with any certainty what is the best idea at this juncture. I know this much, to tear down what we have and replace it with nothing would be the height of irresponsibility. It would put our country's economy into a tailspin, in my view, at the very time we are beginning to come out of our difficulties--290,000 new jobs created in the last month alone. In the last previous months, 121,000 more than we anticipated. Housing starts are picking up, values are picking up again. Why at this very hour would we step back? For all those reasons, I say respectfully, the McCain amendment I hope will be rejected by our colleagues and our substitute amendment will be supported. I yield the floor.

Mr. DODD. All time has expired, I hope.

Mr. DODD. I think it is safe to say we can yield back our time. I ask for the yeas and nays on the Dodd amendment.

Mr. DODD

Mr. DODD. If I could just interject, I believe Senator Bennet, after the judges, would be prepared to speak for about 10 minutes on his amendment, and then we could have a voice vote on that amendment. We do not even need a recorded vote on that amendment. It is a bipartisan amendment.

Mr. DODD. And 30 minutes equally divided, I think we are talking about, for both amendments.

Mr. DODD

Mr. DODD. Mr. President, I ask unanimous consent that the following be the next amendments in order: Bennet of Colorado amendment No. 3928; Corker amendment No. 3955; Merkley-Klobuchar amendment No. 3962, a side-by-side to the Corker amendment; that the Senate resume consideration of S. 3217; that Senator Bennet of Colorado be recognized to call up his amendment; that after his statement, the amendment be set aside and Senator Corker be recognized to call up his amendment; that immediately after the amendment is reported by number it be temporarily set aside and Senators Merkley and Klobuchar be recognized to call up their side-by-side amendment.

Mr. DODD. After the side-by-side on Senators Corker and Merkley-- after that, I would be happy to set a time and either debate this evening and vote in the morning, however the Senators want to do it.

Mr. DODD. I am worried about an obligation that we all have this evening. We are getting pressed. I want to be careful about asking Members to hang around when we all have an obligation--100 of us. I suggest that we enter into an agreement if we can. I am hopeful this can be worked out. There may be a side-by-side. I would be agreeable to setting a time certain tonight--preferably tomorrow, with debate tonight and a vote in the morning--maybe an hour after we come in, or a half hour after we come in. We will have to make sure the leadership is fine with that.

Mr. DODD. We will work this out. Let's get the vote here.

Mr. DODD. These are groups, it appears that, in fact, I should say in fairness to Senator Corker, in the latest version of his amendment, that allows for some exceptions on a case-by-case basis of these nonprofits, where each individual nonprofit has to go to the regulators for such an exemption. But they simply may not get it. They get to apply. It is optional to give that. Many insured depositors, of course, have mortgage programs that require less than 5-percent downpayments. They are performing well, and have done so in the past. And we want low- and moderate-income families to go to banks and get loans, qualified low- and moderate-income people to have to meet those standards. We do not want to simply shut them off to nonprofits. We want to get them into the financial mainstream. The Corker amendment would create a new barrier to accomplishing that goal. But the Merkley-Klobuchar amendment provides for those underwriting safeguards, does not put such tight restrictions, even on FHA mortgages, that would make it impossible for an awful lot of people. I thank my colleagues. I have spoken a long time here. I apologize. But I think it is important to know the history of how we got into the mess and what happened out there that led us to these difficulties, why underwriting is important. What Senator Merkley and Senator Klobuchar have offered is to get back to that sensible requirement here without writing these stringent requirements in this legislation that would be so difficult. So I urge my colleagues to support the Merkley-Klobuchar amendment and respectfully oppose the Corker amendment. By the way, their amendment is endorsed by a number of our colleagues on both sides of the aisle. I thank Senator Scott Brown of Massachusetts, who is involved with this amendment, by Senator Merkley and others. I commend him for it. It is a good proposal. The PRESIDING OFFICER (Mr. Udall of Colorado.) The Senator from Rhode Island.

Mr. DODD. First of all, let me just say regarding the Merkley- Klobuchar amendment to the Corker--not amendment to it, but the side- by-side--I wish to thank Senator Scott Brown of Massachusetts and Olympia Snowe of Maine for cosponsoring that amendment on the underwriting standards. I appreciate that very much. Let me say to both of my colleagues, Senator Hutchison and Senator Klobuchar, as my colleagues know, I started out many months ago with the idea of trying to come down to a single prudential regulator as one of the reforms in this bill. One of my concerns, as my colleagues know, was we had some nine agencies. It was an alphabet soup out there with a lot of overlap in terms of actually who is responsible, who is going to be accountable for things that occur. Obviously, we want to have a dual banking system, the State banks and so forth, that don't want to be drawn into a Federal system unnecessarily. So it began to break down from a single prudential regulator to maybe two. I say this with great respect, but I would point out that the Federal Reserve Board, of course, never implemented the requirements on mortgage lending that passed in 1994. A lot of the major financial institutions were basically unregulated institutions. My concern has been that the Fed did not exactly live up to its reputation during this period of time and contributed in major ways to the problems we are in today. So I have great respect for their monetary function, which is the core function; the payment system, which is their core function; their primarily monetary function, determining the credibility of our currency. We had an earlier debate today on that very issue. The system was established in 1914, 1917, almost 100 years ago. At some point down the road we are going to need to think about the Federal Reserve System. We have two Federal Reserve regional banks in the State of Missouri. The next one is in San Francisco. So I think the idea of thinking through how to make it more relevant is a legitimate issue. Obviously, we are not going to deal with that in this bill. We will leave that for a later Congress to work on those issues. I appreciate what my colleagues are trying to do, and I recognize the importance at these regional levels that want to maintain some involvement in all of this for the reasons that Senator Klobuchar and Senator Hutchison have identified. Again, I know how we have been talking about how to work on this a bit. Let me just make one plea. One of the major concerns that happened with this proliferation of regulators--it happened with AIG classically and in other cases; it happened back in the thrift crisis days as well--is that industries go out and shop and they look for the regulator of least resistance, the ones they can get away the most with. That was one of the major problems that happened here. So I want to avoid wherever possible this, what they call regulatory arbitrage; that is, the shopping that goes on: Let me find the regulator that will let me get away with the most. Of course, the Federal Reserve has a lot to demonstrate in the years ahead that they got the message, as they didn't do a very good job when they had the responsibility. So coming Congresses will have to keep an eye on this to make sure they are going to not only want the job, but also to assume the responsibility in doing this so we don't end up with problems running haywire again. It is true, small banks didn't create a problem. Only about 800 out of the 8,000 are regulated by the Federal Reserve. The overwhelming majority, of course, are not regulated by the Federal Reserve. And, of course, they didn't do much in it because they didn't get involved in subprime lending. So it wasn't a problem. There was a reason they didn't get involved in subprime lending, which is for another day, but nonetheless I understand they got in trouble with commercial loans which was their major problem. So I hope on the arbitrage issue that we try to create as much of a level playing field as possible so we don't find institutions shopping around because of assessment costs or other matters which can once again find this migration into an area, not because it is a right place to be but because it is where you would prefer to be. The decision by institutions as to where they want to be ought not be the criteria by which we determine regulation. We have to have a better set of rules than that or we end up back where we were before. My colleagues have done a great job. They have been faithful in reaching out and trying to find accommodation where they can. So I am very grateful to both of my colleagues and their cosponsors. We look forward to tomorrow having a vote. In the meantime, I have made an appeal to work on a couple of pieces of this thing. We would not go into that right now. I thank them both and I thank my colleagues. It has been a long day. We covered a lot of ground today--some major amendments. We will vote tomorrow and move along. Again, I make the point that this almost seems like a throwback. When I arrived some 30 years ago, this was the way we did things. We haven't had a single tabling motion. We haven't had a single filibuster. I would argue maybe this is one of the top two pieces of legislation to be considered in this Congress on regulatory reform. It is a major undertaking. The patience and the involvement of my colleagues has been terrific, and I wish to thank them as well.

Mr. DODD. I thank you both.

Mr. DODD. Mr. President, there is no more debate this evening.

Mr. DODD. Mr. President, I ask unanimous consent that on Wednesday, May 12, following any leader time, the Senate then resume consideration of S. 3217, and that the time until 10 a.m. be for debate with respect to the following three amendments, with the time equally divided and controlled between the leaders or their designees; that at 10 a.m., the Senate proceed to vote in relation to the amendments in the order listed, with no amendments in order to the amendments prior to a vote, with 2 minutes of debate prior to the succeeding votes and with the succeeding votes limited to 10 minutes: Merkley amendment No. 3962, Corker amendment No 3955, Hutchison-Klobuchar amendment No. 3759, as modified; provided further, that the next two amendments in order would be the Landrieu-Isakson amendment regarding risk retention and the Snowe-Landrieu amendment No. 3918.

Mr. DODD

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

Mr. DODD

Mr. DODD. Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motions to reconsider be laid upon the table, with no intervening action or debate, and that any statements related to the resolution be printed in the Record, as if read.

Mr. DODD

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

Mr. DODD

Mr. DODD. Mr. President, there will be three rollcall votes beginning at 10 a.m. Those votes will be in relation to the Merkley amendment No. 3962, the Corker amendment No. 3955, and then the Hutchison and Klobuchar amendment No. 3759, as modified.

Mr. DODD

Mr. DODD. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet during the session of the Senate to conduct a hearing entitled ``Safe Patient Handling & Lifting Standards for a Safer American Workforce'' on May 11, 2010. The hearing will commence at 2:30 p.m. in room 430 of the Dirksen Senate Office Building.

Mr. DODD. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate on May 11, 2010, at 10 a.m., in room SD-226 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Oversight of U.S. Citizenship and Immigration Services.''

Mr. DODD. Mr. President, I ask unanimous consent that the Subcommittee on Oversight and the Subcommittee on Water and Wildlife be authorized to meet during the session of the Senate on May 11, 2010, at 10 a.m., in room 406 of the Dirksen Office Building.

Mr. DODD. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on May 11, 2010, at 2:30 p.m.

Mr. DODD

Mr. DODD. Mr. President, I understand there is a bill at the desk, and I ask for its first reading.

Mr. DODD. Mr. President, I now ask for its second reading, and in order to place the bill on the calendar under provisions of rule XIV, I object to my own request.