Byron Dorgan

Mr. DORGAN

Mr. DORGAN. Mr. President, again, Michael Walsh is a good soldier, who served 30 years and has gone to war for this country. The demand that existed and resulted in holding this nomination is a demand that could not be met. He could not possibly do what he was asked to do. He does a good job.

Mr. DORGAN

Mr. DORGAN. Mr. President, I thank my colleagues, Senator Levin and Senator McCain, and the rest of the Armed Services Committee. I think all of us would say to General Walsh: Congratulations to you. We are sorry it took the time it took. It was unfair. Nonetheless, as of today, you should understand this Senate very much values and respects your duty and dedication to this great country.

Mr. DORGAN

Mr. DORGAN. Mr. President, reserving the right to object--and I will not object--I want to ask the Senator from Connecticut if he might add to that unanimous-consent request that following that, amendment No. 4109, which I have filed, be considered at that point. Let me explain. I had filed an amendment. We have modified it. The amendment, properly filed, as I had modified it, is amendment No. 4109. It is the amendment that deals with the issue of naked credit default swaps. As my colleague knows, I have been here for 2 weeks attempting to get it pending. I ask that the unanimous consent request be modified to include making amendment 4109 pending following the disposition of the other two amendments.

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 I ask unanimous consent that the order for the quorum call be rescinded.

Mr. DORGAN. Mr. President, my understanding is that there is a question now about how to proceed with respect to which amendments might be allowed to be offered by the two sides. It appears to me, at least from my perspective, that some have decided we will only allow amendments we prefer to be allowed and others who have amendments will not be allowed to offer amendments from this point on. My colleagues know I have been here I guess a couple of weeks with an amendment. It is filed, No. 4109. It deals with trillions and trillions of dollars of what are called naked credit default swaps--one of the significant problems that caused part of the near collapse of our economy. I have been here now attempting to get this amendment pending because if there is a cloture vote tomorrow, those amendments that are not pending will not be allowed to be offered and voted upon. I am attempting to get this pending. What we have appears to me to be gatekeepers who decide we will only allow these amendments through the gate, and someone else, unnamed, unknown, will decide that we have to have somebody else object for them. So the result is that an amendment such as this--and I assume there are others as well--would not be able to be considered. To have the negotiations between the manager and the ranking member now come together and decide, well, only amendments they will allow us to offer will be offered--if that were the standard, maybe we could go back and I could think of half a dozen or a dozen amendments that we already had offered and had to vote on that probably we should have said: Let's not offer those. Those are inconvenient, uncomfortable. I don't want to vote on that. But we have not done that. None of us have done that. Now, all of a sudden, we have been told: Someone else wants us to object, so therefore you can't offer your amendment. That is just, in my judgment, not an acceptable way to proceed. While I guess we are waiting, I encourage somebody, if they wonder whether the amendment I have filed, No. 4109, dealing with naked credit default swaps--if they are wondering whether there is an urgency to this issue, read the book ``The Big Short'' by Michael Lewis. When you are finished, come back to the floor and ask if you can support this amendment or how quickly you can support this amendment. It is unbelievably necessary to do if, in fact, we are going to finish financial reform and claim we have reformed the financial system. It is pretty hard for me to understand how we proceed if the point is that someone else has decided exactly which amendments will be tolerable to be considered and those of us who have amendments that are a little more difficult, perhaps a little more aggressive in trying to fix those things, shut the door on the kinds of practices that caused the near collapse of the American economy, if our amendments are inconvenient to someone, we are told: You will not have an opportunity to do this. We will just pick other amendments that we think are fine, amendments that don't have quite as much bark or bite to them. We will consider those amendments along the way, and when we get to the end, if your amendment is not considered, that is just tough luck. It is much more than tough luck, it seems to me, for the American people. I have a series of charts. I would like to offer the amendment and have it pending. I have previously been here asking unanimous consent. It was objected to. I have spoken earlier on the floor and was told it would be considered. If I may have the attention of my colleague from Connecticut, we didn't get to that second portion of the previous UC. Let me ask unanimous consent that following whatever other business has previously been agreed to, amendment No. 4109, which I have properly filed, be considered pending and that we would be able to consider amendment No. 4109.

Mr. DORGAN. Will the Senator yield for a question?

Mr. DORGAN. Has that happened at this point? I don't know of a circumstance where someone, during debate on this bill, has objected to setting the pending amendment aside. I have seen it happen, but that is not what has happened on this bill.

Mr. DORGAN. Mr. President, will the Senator yield for a further question?

Mr. DORGAN. It is not just me. It is my understanding that the Levin- Merkley amendment is in the same position. So it is a circumstance, it appears to me, where someone said: Well, now, it is inconvenient for us to vote on things that are a little bit controversial or have a little more bite to address these issues. Because it is inconvenient, we are going to object, so you are not going to be able to offer those amendments. I do not know how we got to this cliff, but falling off that cliff is not acceptable to me. We have been voting for 2 weeks and people have been able to offer amendments. I voted on amendments I did not want to vote on from the other side. They had a right to offer them, and I voted on them. That is fine. Was there a moment when we decided, all of a sudden, that the other side will have a veto authority over our ability to offer amendments of any consequence? I do not know when that happened, but that is totally inappropriate, given the couple weeks we have been through here.

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

Mr. DORGAN. Mr. President, I am going to speak for a few moments about the amendment I just referenced, amendment No. 4109, which was filed and to which there has now been an objection. As I have indicated to my colleague, objections run both ways. I could sit here and object as well to most things that are going to go on here, if we have a gatekeeper or several gatekeepers who decide that two amendments that would get a little tougher on Wall Street are amendments they don't want to vote on; if they don't want to countenance an amendment that would tighten the strings just a little bit. Let me speak about what this amendment is because it sounds like a foreign language, ``naked credit default swaps.'' ``Credit default swaps'' by itself sounds like a foreign language. The reason is they haven't been around all that long. This is an exotic financial instrument that was created to allow certain things to happen on Wall Street between banks and big hedge funds and so on. If we have not yet at this point understood the danger of this unbelievable orgy of speculation in credit default swaps--and especially what are called naked credit default swaps--then I guess we are destined to never fully understand what happened, and that is fine. Maybe some people don't want to know what happened. A naked credit default swap is pretty simple. Someone out there needs some money, so they issue bonds. Someone else buys the bonds. Now they hold the bonds and the person who issued them has the money. The person who bought the bonds wants to make sure the person who issued the bonds won't default, so they want to buy an insurance policy from someone else, a credit default swap. So for a small amount of money, they buy an insurance policy against the bonds defaulting. It is a relatively recent phenomenon where all of this has been created. Normally speaking, if someone issued bonds, the other people bought the bonds and they did due diligence on the other side to decide if this is a good risk, and that is the way it worked. Now they buy insurance called credit default swaps. The difficulty is credit default swaps are now called naked credit default swaps if, in fact, they have no insurable interest at all. That is a credit default swap that bets that someone who issued bonds is going to default, despite the fact that neither party to this transaction ever has purchased any of those bonds. They don't have an insurable interest in the bonds; they just made a bet. They have said: We have not bought those bonds over there. But those bonds were issued, and we would like to make a wager. We think those bonds are probably going to default. Someone else says: I don't think they will. So you have a naked credit default swap with no insurable interest in anything. Why is that troublesome? Well, I can't buy fire insurance on the house of the Presiding Officer in Alaska. Why would they not allow me to buy fire insurance on his house? Because I don't have an interest in his house, and they don't want about 10 or 15 people having a fire insurance policy on his house. The only way you can get fire insurance is if you have an insurable interest. I can't buy a life insurance policy on someone else's life because I don't have an insurable interest. Those are rules most of us understand. You can't buy fire insurance against somebody else's house; you can't buy a life insurance policy against somebody else's life. But Wall Street has discovered there is a new way to allow someone to buy insurance policies or speculate in certain kinds of insurance without ever having an interest; that is, allowing two parties to speculate on whether a third party might default on a bond issue they placed with a fourth party, despite the fact that the first two parties have no interest in that at all. It is just as if they went to Las Vegas and one bet on red and the other bet against red on the roulette wheel. It is just a flatout bet. It is not an investment; it is just a bet. Let me talk about how prevalent this is, just because I think it is important. There was about $10.9 trillion in naked credit default swaps held by commercial banks in the fourth quarter of last year; $10.9 trillion held by commercial banks. Those are institutions, by the way, whose deposits are insured by us, by the American taxpayer, by the FDIC. Up to $19.9 trillion of naked credit default swaps are held by the top 25 holding companies. It is estimated by one expert that as much as 80 percent of the credit default swap market is traded by firms that don't own the underlying debt. There is also a United Kingdom report shared by the Congressional Research Service that says only 20 percent of the credit default swaps are estimated to be covered. That means 80 percent of all of this paper that is put out there in credit default swaps is so- called naked. It has no insurable interest. It is a bet rather than an investment. Let me just show what some of the experts are saying about this. One of the editors of the Financial Times says: I can't understand why we are still allowing the trade in credit default swaps--he meant naked swaps--without ownership of the underlying securities. A generalized ban on so-called naked CDS's should be a no-brainer. It ought to be a no-brainer. It is not a no-brainer in this Chamber, apparently. A naked CDS purchase means someone takes out insurance on bonds without actually owning them. It is a purely speculative gamble. There is not one social or economic benefit. My amendment is trying to shut this down, but I am being blocked by those who don't want us to get tough on Wall Street. Charlie Munger, who is the partner of Warren Buffett and who has spoken a lot about these issues, said: If I were the governor of the world I would eliminate credit default swaps entirely, 100 percent. That's the best solution. It isn't as though the economic world didn't function quite well without it and it isn't as though what has happened has been so wonderfully desirable that we should logically want more of it. Do we need to go to the edge of a cliff again with this economy, with tens of trillions of dollars of notional value of credit default swaps before we decide this is a problem for our country and for our future? Again, the associated editor of the Financial Times: Another argument I have heard from a lobbyist is that naked CDS's allow investors to hedge more effectively. That is like saying that a bank robbery brings benefits to the robber. Well, I guess so. George Soros, a pretty good investor I might say, made $3 billion last year, I am told in the reports: CDS's are toxic instruments whose use ought to be strictly regulated: Only those who own the underlying bonds ought to be allowed to buy them. Well, those are a few thoughts from some people of consequence: editor of the Financial Times, Charlie Munger; George Soros; and others. But it describes a very significant problem. It describes, in my judgment, a fairly large portion of what caused this country's economy to teeter on the edge of a cliff. The Treasury Secretary one day comes and leans across a lectern on a Friday and says to us: You need to ante up $700 billion and pass a three-page bill in 3 days or the economy might collapse. Now, a year and a half has passed, a little more, and some, I think, have too quickly forgotten the lessons. So the question is, Are we going to do something about naked credit default swaps, about the unbelievable orgy of speculation, the bubble of speculation that exists to the tune of tens of trillions of dollars? Let me read it again: Up to $10.9 trillion in naked credit default swaps were held by commercial banks in this country in the fourth quarter of 2009. I am talking about up to $10.9 trillion of naked credit default swaps in the bowels of commercial banks. These are institutions that we guarantee, we underwrite. I don't understand at all the notion that we should be prevented from addressing this issue. It may be that we have people here willing to shake the pompoms and be cheerleaders for naked credit default swaps. Good for you, if that is the way you feel. It is just you have missed a significant chapter of American financial history. But if you feel that way, vote against my legislation. My legislation would ban the use of naked credit default swaps. After the phase-in period, they are gone. If you don't have an insurable interest, they are gone. It is a simple enough proposition to say: Why should we have 5 or 10 times the number of insurance policies against bonds than there are bonds to insure? Why should we allow that? We don't allow it in other circumstances. I understand the offering of this amendment and the shutting down of naked credit default swaps will cost Wall Street a substantial amount of money. They will not get fees on these things. I understand that. This is all about churning and getting fees and making a lot of money. I understand all that. I also understand sometimes this notion of making a lot of money in a short period of time by cutting corners and by doing things that aren't appropriate is the wrong thing. My colleagues know and I know that we saw banks being robbed in this country. Yes, we saw banks being robbed in the last several years. In the old days, when I used to watch the western movies, you could tell who the bank robber was. They usually had a bandana, they brandished a couple of six-guns. Often they stopped a train or they ran into a bank, and that is the way they robbed things. In the last several years, there have been some bank robberies going on in this country, and I can refer you to a lot of contemporary writing that describes the way those banks were robbed. Two people driving home from work, each making $20 million, one supervising the other in one of the biggest investment banks, loading that bank up with unbelievably risky investments because they know at the end of the day, somebody is going to lean over a lectern and say: Oh, by the way, we need to bail all these folks out. The folks who went to the basement of the Securities and Exchange Commission, I believe, in the year 2004-- said: We need you to allow us, the biggest investment banks in the country, to extend our leverage from 12 times to 30 times and more. You need to give us the opportunity to free up some money by exacerbating the leverage capabilities we have. The Securities and Exchange Commission, ever the compliant regulatory agency, said: Yes, sir-- saluting handily in the basement of their building--absolutely, go right ahead. By the way, one of those companies was run by Mr. Paulson who, 2 years later, came back as Treasury Secretary and leaned across the lectern and said: I need $700 billion to bail out these companies. What was part and parcel of that which caused these companies to almost ruin this economy? Naked credit default swaps, just flatout gaming. Not investing, just betting. The question is, Do we want to continue to do that? I fear we are going to pass a piece of legislation that does not address too big to fail. At the end of the day, we will have institutions that are still too big to fail. I have an amendment on that, but I haven't bothered because we already did one amendment on too big to fail, the Brown-Kaufman amendment. That got 33 votes, too big to fail. Banning these unbelievable speculative instruments like naked credit default swaps, if we can't do that, it is very hard, it seems to me, to climb on the high step and say we have taken on this subject. We have really made sure this isn't going to happen again. So I have an amendment that is filed, and now I am told that, no; it is inconvenient and uncomfortable for me to offer this amendment and, therefore, someone has objected. To my colleague from Alabama, I would say I understand. He is required--when people in the caucus say there is an objection, his job is to reflect the objection of someone in his caucus. So my beef is not with him. But I would just say that it is not acceptable to me to, at 5 o'clock on Tuesday, have a process by which we have now decided that if amendments are inconvenient--getting a little too tough on Wall Street; trying to draw the strings a little tighter on things that have to be fixed in this bill--if that is the case, well, then, you know what. We are not going to allow those things to be offered. We will just sit here and offer amendments on tourism or something else equally benign. If that is the case, then I will just sit here as well and say that is not a process I respect. It seems to me we ought to have the right to bring to this Chamber at this point, given the shadow of what we have been through as a country, the right to bring amendments to this bill that try to address some very significant problems; the right to bring them to the floor, to have a debate, and to offer them for a vote. If that is not going to be the case, then I am going to sit here and object to proceeding until it is the case. So my colleague, Senator Bingaman, I know is here. I have more to say, but I will save it because I fully expect either to get to this amendment or to be sitting here for some long while, and I will have an opportunity again to talk about naked credit default swaps, their danger to this economy, and why, when this bill is done, it ought to include the provisions of amendment No. 4109 which bans the use of naked credit default swaps and says there is a place to gamble in America and it is not in a bank lobby. If you want to put a Keno table or a blackjack table in a bank lobby, shame on you. We ought to pass this amendment, and, most importantly, we ought to allow amendments to be offered. I will sit here until that is the case. I yield the floor.

Mr. DORGAN. Well, Mr. President, listen, my objective is not to obstruct or to try to slow anything down. My objective is to allow people to offer amendments, especially those who have been here for some long while, to offer amendments that are consequential relative to the issue of financial reform. If from this day forward, we have decided--or from today forward we have decided that if someone on the other side--who is at this point unknown--is going to object to amendments that are uncomfortable, amendments that I think will strengthen the bill, this is not much of a process anymore. We will, I guess, pick out the amendments that deal with tourism or babies or whatever it is that is uncontroversial to everybody and pass those and then go on to final passage. Those who had other amendments of consequence are told: Someone objected. We are not quite sure who. So I guess what I can do is say that I will object to having people decide we will only deal with noncontroversial amendments and that those amendments of substantial consequence to this bill are not relevant enough to be considered. So I wish that were not the case. But I am not going to sit here and say: Yes, go ahead and just pass over these amendments and pick out some amendments you like. If everybody can agree on amendments we like, you can offer them and we will have votes and no one will have concern over it. But if there are amendments that somebody does not like, you are not going to be able to offer them because someone is going to object. It does not make much sense to me.

Mr. DORGAN. Madam President, I object.

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

Mr. DORGAN. Madam President, the second-degree amendment that I have just sent to the desk to the Grassley amendment is the amendment that there has been an objection to my offering. So it is the only way, apparently, I can offer the amendment. It is the amendment dealing with naked credit default swaps. We cannot possibly end this discussion without addressing the central issues that caused the near collapse of our economy, one of which is the unbearable speculation, the speculation in exotic financial instruments such as credit default swaps that, by the way, now is on the rise. It is not receding, it is on the rise. The fourth quarter of last year the credit default swaps were up by 8 percent, $14 trillion in notional value, up 8 percent in the fourth quarter of last year alone. I also feel very strongly that the issue of too big to fail is a real issue. We cannot just brush it away saying: I wish it was not an issue. The too-big-to-fail companies have gotten bigger, much bigger. Well, that is not a solution for this country's economy. The issue of betting in the lobby of our banks, as I have said, they might as well put in a Keno table or a blackjack table and wager that way. These are bets, not investments. There are tens of trillions of dollars' worth of these bets. Because we want to tighten the laces a little on this, this amendment would ban naked credit default swaps over a period of time. Because we want to tighten the laces a bit, we have folks who object to even offering this because it would take on Wall Street. Well, you know what. That is what this legislation is about. If we go back to 2008 when Wall Street lost--I think, $36 billion net loss--and they paid out bonuses of $17 or $18 billion. They were having a carnival. What was it all about? It was about big fees, trading all of these unbelievably speculative instruments, things that we had never heard of before--and, by the way, instruments in which they had no insurable interest. I said before you cannot buy fire insurance on someone else's house. You cannot buy life insurance on someone else's life. But what is happening is the biggest financial institutions in this country are buying and selling credit default swaps, are selling insurance policies against bonds that they will never own and have never owned. It is like buying things they will never get from people who never had it and making fees on both sides of the transaction, except it is building a pyramid of speculation. At some point that pyramid came down and nearly took the entire American economy with it. So we now do something called financial reform. The central question is, are we going to do it right? Are we going to be tough? Are we going to make sure we get rid of these things, the unbelievable speculation that injured this country's economy? There are trillions of dollars of them out there. And, by the way, the five largest commercial banks in this country hold 90 percent of the total credit derivatives, the $13.2 trillion of credit derivatives. They are owned by the five largest commercial banks. Somebody said: Well, you cannot ban these things. The banking industry needs them. Oh, really? Well, if that is the case, why are only five companies doing 90 percent of the business in what are called naked credit default swaps? I will speak about this at another time. I promised my colleague from Maine I would be a minute. I have gone well over the minute. But I will speak about the second-degree amendment at much greater length. It is the only way, apparently, I can offer an amendment. So I believe that method, using a parliamentary technique that is perfectly legitimate, gives me an opportunity to force a vote on this amendment at some point. It is an amendment that should have been able to have been offered as a result of an agreement on both sides to deal with real issues, in real time, on one of the most significant challenges that confront our country: how to put this financial system back together again in which the financial industry plays a very important role in the expansion of this country, as opposed to building more and more and more speculation and seeing that too-big-to-fail institutions get builder and bigger and bigger. I yield the floor, and I will come back and speak on the second- degree at some point later.

Mr. DORGAN. Madam President, I send a second-degree amendment to the desk to the Grassley amendment.

Mr. DORGAN. Mr. President, I have spoken on this amendment previously and have waited patiently for several weeks to be able to have an opportunity to vote on it. We have not been able to get it pending. I now have it pending because I offered it as a second-degree amendment to the Grassley amendment. This is an amendment that would ban the use of naked credit default swaps. You ask, how does a credit default swap get naked? It is an exotic, new financial instrument that has been developed over recent years to be traded back and forth by the big financial institutions. In fact, 90 percent of them are traded by the five biggest financial institutions. When people say you need these--banks need these--just a handful of banks trade most of these. What is a naked credit default swap? It means someone is buying insurance against some other instrument that they have no interest in, except they want to make a wager. I have said before that I can't buy fire insurance on the house that the Presiding Officer owns in Colorado. Why? Because I don't have an insurable interest in that house. If I went to somebody and said: I would like to buy some insurance against fire for that house, they would say: You don't own that house, so I cannot possibly sell you that policy. Also, I cannot buy a life insurance policy against my colleague from Connecticut because I don't have an insurable interest either. But I can go buy $100 million worth of insurance, right this second, on a bond issue that was issued by some company yesterday, even though I never, ever intend to own the bond, have no interest in the bond, and don't know much about the company. I just want to bet someone who will take the opposite side of the wager. I believe the bonds will not be repaid, and the counterparty says: No, you are wrong about that. I think that company will repay its bonds. So we make a friendly wager-- kind of like one of those Saturday sports wagers. We bet. I am betting this person about the question of whether the bonds will default. It is called synthetic when it is not real or naked when it has no interest. So this would be a synthetic or a naked credit default swap. It is a different story if I have an interest, where I actually bought those bonds--some company let the bonds and I bought them, so I am the investor in the bonds. But I want to make sure the default doesn't take me down with it, so I buy an insurance policy. That is a credit default swap that is covered. Naked means you have no interest, just a bet. Covered means it is an investment you made to try to hedge your risk on the default of the bonds. Here is what is interesting. We expect, based on what we know to be the case, that about 80 percent of all credit default swaps are not covered or what are called naked swaps--80 percent. Some people say to us: Well, we can't get rid of these financial instruments. These are very important for normal hedging. That is absolutely absurd, total rubbish. My amendment would say that at some point we have to ban naked credit default swaps. Mr. Pearlstein, who writes for the Washington Post, asked the question many months ago: Why should there be more insurance policies sold on a bond issue than there are bonds to be insured? Why should you have 20 times more insurance policies than you do bonds? Because it is wagering, not investing. I find myself fairly disappointed by what is happening. This is a moment of substantial consequence for our country. We came very close, they say, to a meltdown of our economy. Trillions of dollars were lost. I guess there was about $14 trillion or $15 trillion in lost value for the American people. Millions of people lost their jobs. Millions of people have lost their homes. By the way, at graduation time, when colleges all across the country are graduating these bright, young men and women who have now gotten their college diploma--they are out looking for work, and way too many of them cannot find a job because of what happened to this economy in recent years. What happened? We created a casino economy. You didn't have to read the newspapers very much to understand what was going on. This unbelievable speculation, a bubble of speculation, occurred in virtually every single area, and there were new financial products on steroids--securitizing everything. Are you loaning somebody some money? Well, put it into a security, wrap it up and sell it to a hedge fund or an investment bank. Securitize everything. By the way, you can get some very bad stuff that is rated AAA. So sell it up. By the way, once you start selling things, you don't ever have to worry about whom you are issuing credit cards to or that you are wallpapering the room of people who don't have jobs with more credit cards. You don't have to do normal underwriting or sit across from somebody who wants to buy a house and look into their eyes and say: Tell us your income. How are you going to repay the loan if we loan you the money? You can put out liars' loans, no-doc loans. Don't document your income because we don't care. Don't pay any interest or principal now; we will put that on the back side. We will make the first 12 months of payments for you. If you have no credit or low credit, come to us--I will show you the advertisements that were on the radio, television, and newspapers: Slow credit, no credit, bad credit? We want to loan you money. They said: Let's securitize it and we will ship it upstream and we will all make big profits and fees and we will create credit default swaps and CDOs and we will all have a great time. When the whole thing crashes down, ``Wall Street'' will have lost about $36 billion in 1 year and paid $17 billion in bonuses at the very same time. Do you think this wasn't a carnival of greed? Of course it was. There are a number of things we ought to do and too many that we will not do in this legislation. Too big to fail ought to have meant to all of us that you are simply too big. By the way, those who were judged too big to fail and would cause a grave risk to this entire economy if that firm should fail, they have now become much larger by the actions of the Federal Government arranging marriages of companies that weren't making it. So the too-big-to-fail companies are actually much larger now, and the underlying legislation doesn't do a thing about too big to fail in terms of paring it away and deciding if you are too big to fail, you are too big and you must divest until you don't cause a grave risk to the entire economy. In addition to the issue of too big to fail, there is the Glass- Steagall reconnection. My colleague has an amendment on that. There is this issue I am raising on naked credit default swaps. If we have decided we are not going to get rid of these financial curveballs-- financial instruments on steroids that took this country for a huge ride and stuck the American people with trillions and trillions of dollars of loss and bad debt--if we don't do that, let's not crow about what we did because this is essential, in my judgment. This is what I think happens, as is always the case when it comes to Wall Street versus the rest of us; it is let's pretend time. This is a case of whose side are you on? Are you going to try to see if you can shut the door and deal with those issues that helped cause this near collapse of our economy or are we just going to buff it up a little bit around the edges? I am trying to tighten this bill. I have not been able to get this amendment up, except by offering it as a second-degree amendment. My understanding is, there will be a tabling motion. Those who decide they want to table it don't want to tighten this bill, don't want to take on Wall Street on these issues. They say: No, let's let Wall Street prance around and trade naked credit default swaps. They were up 8 percent in the fourth quarter of last year. You would think somebody would learn a lesson. They had a $700 billion bailout fund and so on, so you would think they would tone it down. No. In the fourth quarter of 2009, the use of credit default swaps was up 8 percent. If one wonders how much money is involved in all these things--I have spoken before about John Paulson, whose name came up recently with Goldman in the scandal that was the subject of a congressional hearing. In 2007, he was the highest income earner on Wall Street, earning $3.6 billion--one person. When he came home and his spouse said: Honey, how are we doing? If she wanted it by the month, he could say that this month we made $300 million. If she wanted it by the day, he could say: Pretty good. It is Saturday and I made $10 million--$10 million a day, $3.6 billion a year. There was so much money involved in all these issues, and the reason there was so much was this unbelievable binge of speculation. We can pass financial reform, and we can call it whatever we want, but if we pass it and don't put a cork in this bottle, and we fail to deal with this issue, I will tell you, we will be back and we will find a way to have to confront, once again, the creation of these unbelievable speculative issues--naked credit default swaps--that have no insurable interest. We will regret the day we didn't address this issue head on. I understand why there is pushback from Wall Street and why some will be nervous about voting for this. They will want to table it because they are getting pushback from Wall Street. Wall Street is wrong--dead wrong. They don't need, nor do American banks need, to be trading credit default swaps in order to make money. Yet, as I indicated to you, five of the largest financial institutions in this country have 90 percent of the credit default swaps. We think about 80 percent of them are without any insurable interest in anything. That is wagering, not investing. This country deserves better, and the American people deserve for the Congress to stand up to Wall Street and say: You know what, the creation of these instruments exacerbated the economic troubles of this country in a significant way, and at long last it is time to put an end to it. This amendment simply bans the use of naked credit default swaps. It has a provision that says, if such a ban in a certain timeframe would cause undue--Mr. President, the Senate is not in order. There is a provision in this legislation that, as opposed to a ban on a date certain, if that would prove to be troublesome, it would stretch out for an 18-month period by which such a ban could take effect. Let me say this. I understand the tabling motion will be made. My hope is that colleagues who believe we ought to take on Wall Street on these issues will stand up for the American people on these issues and do the right thing on these issues, especially since we are living in the shadow of a near collapse of this economy. My hope is that my colleagues will vote against tabling this amendment and, thereby, express their support for the amendment I am offering. I am offering this amendment on behalf of colleagues which I will submit for the Record as well. I yield the floor.

Mr. DORGAN. Mr. President, I appreciate the courtesy of my colleague from Connecticut. My colleague talks about unintended consequences. We already know the real consequences of what are called naked credit default swaps. That is all we are talking about with this amendment. My colleague started out by talking about normal hedging by a candy manufacturer with respect to the price of sugar. That is not what this is about at all, and I am not prepared to lose a debate in which I am not involved. That is not what this is about. This is about naked credit default swaps. My colleague says there is $25 trillion of notional value of credit default swaps. I have cited two sources--the best two of which I am aware--that says 80 percent of them--think of this--as much as 80 percent of them have no insurable interest. They are just flatout naked, just gambling, betting, not investing. This is not a case of unintended consequences. We know the real consequences. We have already lived it and experienced it and we ought to understand that we cannot accept it any longer. This bill allows us to decide what kind of financial system we want going forward. Do we want to leave here saying we want a financial system in which the big shots on Wall Street decide they want to trade $25 trillion worth of credit default swaps, 90 percent of them in the five biggest banks? If that is what they want to do and it is betting rather than investing, God bless them; let them do it. Who are we to tell them? Who are we to tell them? We lost about $15 trillion, that is who we are. My question is: Are we going to see if we can sober up this system to say this is not the kind of financial system with which we grew up? Only in the last decade and a half did we decide to securitize everything and create these new exotic instruments--CDOs, naked credit default swaps and the like. That has happened recently. It was not because my colleagues from Connecticut and Alabama came to the floor of the Senate and said: Let's decide to create a whole series of new financial instruments in this country that are hard to pronounce and understand. They can all make a lot of money in fees, pay big bonuses, and it will work out just fine. That is not how it happened. It happened because we had a bunch of brain-dead regulators, among other things, who said: Go play. And they all went to play and made a lot of money, and this economy nearly pancaked. So this amendment, I would say to the Senator from Connecticut, is very simple. It would ban the use of naked credit default swaps in which no one has any insurable interest. By the way, with respect to unintended consequences, under this modified amendment I have offered, the appropriate Federal regulators, including the chair of the Financial Stability Oversight Board, may phase in the effective date for up to 18 months if they determine the phase-in of the prohibitions and limitations in the amendment is necessary to avoid undue market disruptions. Having said that, I respect the view of my colleague. I profoundly disagree with it. I hope very much that my colleagues will decide not to table this amendment and to stand on the side of people who say: Let's really make a change here. We understand what happened. It was awful for this country. Let's make sure it doesn't happen again. The only way we will do that is to effect the kind of change that exists in this amendment.

Mr. DORGAN

Mr. DORGAN. Madam President, let me say, my purpose here is not to add to the burdens of the Senator from Connecticut, who is trying to get a bill through the Congress and signed by the President. I understand that. I think I tried to in my opening comments be pretty complimentary of the work and understanding of the work. I agree there are times when there is a straw that breaks the camel's back. I also think this camel can carry a bit more. What I wish is, I think the Senator from Connecticut would agree that I have been to this floor a fair number of times, spoken with some passion and some vigor on things that I care a lot about. It is not as though I came out of a closet someplace here in the cloakroom and started talking about the issue that I intend to offer an amendment. What I wish to do, with the consent of the Senator from Connecticut, is ask unanimous consent that the pending amendment be set aside and to call up amendment No. 4008.

Mr. DORGAN. Let me say that unfortunately when I, last evening, saw the note on the desk in front of us that said ``no further rollcall votes'' I had another event, and so I left the Chamber, because there were no further votes, and I went to the other event. I discovered later that even as I was leaving the Chamber, I understood that there were three amendments at that point made in order. There were, I believe, two Republican amendments and one Democratic amendment that were noticed, and I think the chairman indicated they would be the next amendments. That is the basis on which I left this Chamber. When I came back this morning, I understand that a fair number of other amendments had been called up, the pending amendment had been set aside, and other amendments had been called up. I do not know how many. I think four or six amendments, perhaps, beyond the three. I was unaware that opportunities such as that would have existed last evening. I think as one Member of the Senate who has spent a considerable amount of time on this floor on this issue, had I been aware last evening that the gate was open a bit to be able to get an amendment pending that I have talked about many times on this floor, I would have been here last evening. I was not aware of that, and that is the basis on which I came this morning at 11 o'clock. I hope the Senator from Connecticut would not object. I would hope he would rethink that. He has every right as chairman to decide to manage this bill as he wishes. We cannot have 100 managers for this bill. The chairman has done a lot of work to bring the bill to the floor. On the other hand, this issue is not some ordinary issue. The country will live with the consequences of this bill perhaps for a decade, perhaps more, perhaps less than a decade if we do not do the right things and we suffer another economic near collapse. We will have another bill on the floor for those who are here in 2 years or 5 years. What I want is financial reform to be done, done well, done right. I was going to say to the Senator from Connecticut, the amendment I have offered is an amendment that I think is very important. I don't have any idea whether we have the votes for it. But I do think it is one of those pieces that is essential--critical, in fact-- in order to address financial difficulties going forward. If we don't pierce this unbelievable building bubble of speculation that has caused a significant part of our problem, then we will not have addressed the real issues of financial reform. The issue of what are called naked credit default swaps, those are newly created instruments by which people make wagers with one another with no insurable interest on any side of the security. If we don't put a dagger in the heart of that kind of activity--and that is not shutting down, as my colleague from Georgia said yesterday, the use of credit default swaps. It is shutting down one portion of them, the largest portion that is just a flatout gambling device. I hope we can address these issues. I think I have been respectful to the chairman of the committee. I say to the chairman if I am allowed to set this amendment aside and offer amendment No. 4008, I will certainly be willing to have a reasonably short time period for debate. That kind of cooperation is also important in the construct of trying to get this bill done. It is an amendment that should have a lengthier debate. When I left the floor yesterday, the Senator from Georgia had an amendment. I think it was 2\1/2\ hours later that we had a vote. This amendment is much more consequential than that. I am willing, if we can at least get it pending, when the Senator from Connecticut believes it is appropriate to debate it, to engage in an agreement on a short timeframe.

Mr. DORGAN. Madam President, I wanted to note during this discussion some commentary this week about something that is quite extraordinary. We saw news reports this week about a perfect game that was pitched in the Major Leagues recently by a pitcher from the Oakland Athletics named Braden. In all of the history of baseball, it was the 19th perfect game ever pitched. But it is not the only perfect thing that has happened recently. We have news reports now that the four biggest banks in America have scored a perfect 61-day run, never having lost money in 61 days. That is like a perfect game, batting 1,000. It is all of those things. How is it that the four largest banks in the country could, for the first quarter of the year, make money every single day? Is the system rigged? A columnist named Jonathan Well pointed out that if you managed a highly leveraged, diversified investment fund and have become so skilled at it that you had a 70-percent probability of winning on any given trading day, the prospect of your winning 63 times in a row would be about 1.75 billion. Even if you had a 95-percent chance of winning every day because you were so skilled at picking all of the right investments, you would have about a 3.9-percent chance of doing it on 63 straight trading days. And yet four of the largest banks in America, Goldman Sachs, JPMorgan Chase, Bank of America and Citi, scored a perfect game. How did that happen? Does it happen because the Federal Reserve Board loans them money at near-zero interest rate, and then they invest in 10-year Treasuries at 3.8 percent? That is how you make profits every single day. Is that a rigged game? Can everyone do that? If everyone can do that, I have got a sure-fire way here for everybody to make money. You get to borrow from the Federal Reserve Board for near nothing, and then you can invest it in 3.8-percent 10- year Treasury notes. It is interesting this relates to something else we have been trying to do for a while. We have been trying to get information about how much money the Federal Reserve Board is lending those investment banks and the biggest banks in America. How much money is the Federal Reserve Board giving them and at what rate? We know it is at a near-zero rate, but we do not know how much and to whom. The Federal Reserve Board has now been told by two Federal courts, you have a responsibility to tell the American people and the Congress who got your money and what the terms were and how much. The Federal Reserve Board has said, we do not intend to tell everybody. They have now appealed it to a third Federal court. I have led the effort in letters to the Fed Chairman saying, you have a responsibility here. But now this latest evidence tells us how this game is played. Isn't it interesting, and isn't it pathetic, that at a time when so many people wake up in the morning jobless, so many people are still losing money on their homes, on their assets, losing hope and losing confidence in the future of this economy, that at the very top of the heap, some of the same firms that caused the problem that threw this country into the deepest recession since the Great Depression now announce they are pitching a perfect game every single day. They are batting 1,000 and pitching perfect games. Why? It appears to me that it is not about lending money to help restore America and help firms that want to expand by providing capital. It appears to me that their reports suggest they are once again back doing the same things they used to do, except this time they understand that they cannot fail. They borrow money from the Fed at near-zero interest rates, and invest it in Fed 10-year notes at 3.8 percent. That is about as close to guaranteed income as you can get. But it is not guaranteed income for all of the American people, it is just for the folks at the very top of the chain, the biggest financial firms. Again, let my say as I do every time I come to the floor, I don't have a grief against the biggest financial firms. We need big financial firms. But we do not need them too big to fail. And we certainly do not need to be feeding them with a strategy that says, I tell you what; we will give you a deal no other American has. You get to go to a window at the Fed, get money for almost nothing, and then invest it back in Fed bonds and pay 3.8 percent. We will give you a guaranteed annual income. I just wanted to make note. It is too often little known, and it is seldom raising much concern among anybody these days, that all of this is happening. I think it is scandalous. It seems to me worth mentioning the only perfect game that is going on around here was not by a pitcher named Braden, but it is by some of the biggest financial institutions in the country that are not only fully recovered but have guaranteed income opportunities every single day, every single day, while a lot of the American people are trying to figure out, how am I going to pay the rent? How am I going to find another job? I had come to the floor because I want to indulge--I should not say indulge. I wonder if the Senator from Connecticut will indulge me for a moment. I have spoken to the Senator, and I recognize that doing what he is doing is perhaps a cross between a migraine headache and a root canal. This is tough business out here hour after hour after hour and day after day. I respect that. I was on the floor with a piece of legislation last year that took forever and it did try my patience. So kudos to my colleague from Connecticut. I respect the difficult job he has. I have had an amendment, along with Senator Kaufman, Senators Levin, Cantwell, Feingold, Sanders, and so on, a Dorgan amendment No. 4008. I would ask the courtesy of being able to set aside the pending amendment and call up this amendment. I do not intend to proceed with it, I just want to get it pending. I would proceed with debate at any time that is convenient. I do not want to inconvenience the Senator and the schedules he has. But I wish to ask if he would give me the opportunity to at least call it up, get it pending, and then we will proceed at a pace and at a time that would be convenient to the manager of the bill.

Mr. DORGAN. I am not unsympathetic to what the Senator is doing. It is the case that I, certainly as one Senator, see amendments being offered again and again by Senators from the Banking Committee, and they had a pretty good shot at this for a good long while before it came to the floor. Those of us who don't serve on that committee just want an opportunity to get amendments pending and up and so on.

Mr. DORGAN. I am speaking about amendments that have been offered. If the Senator objects, he has the right, but I will be back. If I am in the next tranche the Senator from Connecticut announces, that is fine. I will be able to offer an amendment. But between now and then, I guess I would like to understand how the system is going to work because I will continue to come and ask consent to offer this amendment. Then when we do debate it, I will have a real debate. This is the heart and soul of trying to shut down a system that creates unbelievable speculation in the economy and poses great danger. I might point out, we should not always assume that we are in safe territory on all of these issues. Colleagues probably saw the news this morning. Last month's Federal budget deficit is $83 billion. Take a look at what the trade deficit is. As I mentioned, in the midst of all this, the biggest financial institutions in the country are batting a thousand. Every single day they make a profit with what I think looks like a rigged system. This bill is very important. I want the Senator from Connecticut to succeed. If we don't pass a financial reform bill, the American people have a right to look at the Congress and say: What on Earth are you there for? What are you doing? But not just any bill, a bill that actually addresses the heart of the issues that caused the near economic collapse of this country. That is what we need to have accomplished at the end of this process. That is what brings me to the Senate floor. I am sorry I can't get this pending at the moment. But as Governor Schwarzenegger said in a previous life: I will be back, and soon.

Mr. DORGAN

Mr. DORGAN. Mr. President, I know this is beginning to be a lengthy debate and process on the floor of the Senate to get through amendments. My colleague from Connecticut exhibits great patience to try to work through this. I know there are a lot of interests that have different views about this, and they come to the floor and they want this amendment or that. I understand all that. I know my colleague from Connecticut views this with the same seriousness of purpose as I do and understands that many of us not on the Banking Committee have not had the opportunity to be involved in the debate until now--until it comes to the floor of the Senate--and have not been able to offer amendments. I think that represents the appetite in the Senate to be engaged and to understand what has caused the most devastating financial event for our country since the Great Depression--something that collapsed some $15 trillion in value for the American people, caused very substantial unemployment, dramatic losses in income, the loss of homes and has led to hopelessness and helplessness for many Americans. What happened to cause that? Was this some sort of natural disaster? No, it wasn't a fire, a flood, a tornado, or an earthquake. It wasn't a natural disaster. This was made with human hands. This is a manmade disaster and, by the way, it could well have been predicted, in my judgment, and some of us did. Without pointing at myself necessarily, I said 11 years ago that I thought we were setting ourselves up for massive taxpayer bailouts. I will not show the charts again, but it is not surprising. We were going to modernize the financial system a decade ago in order to compete with the Europeans and to bring it into the modern age. Modernizing meant deciding let's deregulate everything. Let's not look at everything that is going on. The result is, a decade later, a very substantial collapse in our economic system. Mr. President, I have been thinking about the work that has gone on in the last couple of weeks on the floor of the Senate. I came in early this morning to get something from the radio addresses of Franklin Delano Roosevelt in 1933 and 1934. The situation in this country, while different by many decades, is similar with respect to what caused a substantial problem in this country. Then it was the Great Depression. Let me read, if I might, just a couple of excerpts of what then- President Franklin Delano Roosevelt said about our country and about what was needed to be done because it has, I think, significant application to today. Here is a quote from Franklin Delano Roosevelt on March 12 of 1933: We had a bad banking situation. Some of our bankers had shown themselves either incompetent or dishonest in their handling of the people's funds. They had abused the money entrusted to them in speculation and unwise loans. This was of course not true in the vast majority of our banks but it was true in enough of them to shock the people for a time into a sense of insecurity and put them into a frame of mind where they did not differentiate, but seemed to assume that the acts of a comparative few had tainted them all. It was the government's job to straighten out this situation and do it as quickly as possible. And the job is being performed. This was, again, from President Franklin Roosevelt in 1933. Quoting again, he says: After all, there is an element in the readjustment of our financial system more important than currency, more important than gold, and that is the confidence of the people. Confidence and courage are the essentials of success in carrying out our plan. You people must have faith; you must not be stampeded by rumors or guesses. Let us unite in banishing fear. We have provided the machinery to restore our financial system; it is up to you to support and make it work. He was talking about a time in the shadow of the Great Depression. On September 30, 1 year later, in his address to the Nation, Franklin Delano Roosevelt said: The second step we have taken in the restoration of normal business enterprise has been to clean up thoroughly unwholesome conditions in the field of investment. In this we have had the assistance from many bankers and businessmen, most of whom recognize the past evils in the banking system, in the sale of securities, in the deliberate encouragement of stock gambling, in the sale of unsound mortgages and in many other ways in which the public lost billions of dollars. They saw that without changes in the policies and methods of investment there could be no recovery of public confidence in the security of savings. Interesting. You could read that today, and it describes the task we have before us today. But this wasn't language of today. This was from 1933 and 1934. The thoroughly unwholesome conditions in the field of investment, in the sale of securities, in the deliberate encouragement of stock gambling, the sale of unsound mortgages. That is the year 2005, 2009. Yet Franklin Delano Roosevelt described it in 1934, and he put together a plan. That plan included Glass-Steagall and other things to protect this country; to say never again will we allow that to happen. Then, a little over a decade ago, in this Chamber and in the White House, they said: We have to modernize our system. We have to get rid of all those protections from the Great Depression. They are old- fashioned. Let's dump them. So the Congress dumped them. I didn't support that. I vigorously opposed that. But they dumped them. So the country had a very serious problem--the runup of a substantial amount of new exotic securities, things that people didn't understand very well--CDOs, securitization of almost anything somebody could securitize, getting fees from the sale of the transfer of securities, and then the development of something new called the credit default swap. The credit default swap was a new approach. It was an insurance policy against a bond default. But then there was a synthetic CDO or a synthetic credit default swap, or what some called naked default swaps. That meant that you could buy one of these instruments back and forth without ever having an insurable interest in the instrument itself, just making a wager with someone else about what might or might not happen in the future. During all of this time we watched a very substantial amount of activity, on Wall Street particularly, take place that I think has been pretty unwholesome for our country. This is an article of September 30, 2008, which talks about the money from Wall Street that is beyond the legal reach. It says there is $1.9 trillion of money that is run out of the New York metropolitan area that sits in the Cayman Islands--a secrecy jurisdiction. Another $1.5 trillion is lodged in four other secrecy jurisdictions. Let me quote from this article by Robert Morgenthau in the Wall Street Journal on September 30, 2008. Following the Great Depression, we bragged about a newly installed safety net that was supposed to save us from such a hard economic fall in the future. However, the Securities and Exchange Commission, the Federal Reserve System, the Comptroller of the Currency and others have ignored trillions of dollars that have migrated to offshore jurisdictions that are secretive in nature and outside the safety net--beyond the reach of U.S. regulators. Well, it is not surprising that at the same time that money was being hidden in other parts of the world by some of the same Wall Street interests that a massive amount of money was being paid one to another on Wall Street and in the investment banking area. Just to cite a couple of these examples, I have a description from about a year and a half ago when Lehman Brothers went bankrupt. The Lehman Brothers bankruptcy followed Lehman Brothers Holdings agreeing to pay a total of more than $23 million to three executives leaving the securities firm just days before it collapsed. The reason I point this out is there was so much money around for everybody--for everything--days before the collapse of Lehman Brothers. There was $23 million paid to three executives leaving the securities firm days before it collapsed. You wonder why. Does that make any sense? Does anybody think that is something that is worthy? Here is a payment of $19 million to a man named Alan Fishman. He was the CEO of Washington Mutual, which was run right into the ditch and went belly up and had to be acquired by another company. Alan Fishman worked 3 weeks for Washington Mutual, and he got a severance deal of $19.1 million--$19.1 million. In the heyday of executive compensation a couple of years ago on Wall Street, in 2007, the head of Merrill Lynch made $161 million. That was Stanley O'Neal. John Thain at Merrill Lynch made $83 million; Lloyd Blankfein of Goldman made $54 million; John Mack of Morgan Stanley made $41 million; James Dimon of JPMorgan Chase made $29 million; and--well, the list goes on. Kenneth Lewis of Bank of America only made $20 million. He must be looking up at Stanley O'Neal's $161 million and asking: Where did I miss the boat? But this kind of money was hanging around all of these issues and these firms, and it was, Katey, bar the door. We are making massive amounts of money and we are going to pay almost never before heard of sums to individuals for running these big companies--$150 million, $50 million, $83 million. So it is not surprising, then, that the American people have a pretty dim view of what was going on on Wall Street when we announce that what went on on Wall Street led to this dramatic economic devastation to our country. By the way, the devastation doesn't apply to everybody. I just saw this morning that the unemployment rate among the higher income Americans is 3 percent. So they are not feeling the pinch so much. But in the bottom 20 percent of the American people, the unemployment rate is around 18 percent. So there are a whole lot of folks at the bottom of the economic ladder who are paying the price for this unbelievable behavior. So the question is, What do we do about all this? What do we do to make sure that when we are done in the Congress on something called financial reform, the American people have some notion that we will have done the right things to prevent from happening again that which happened to us in the last couple of years? The presentations I have made on the Senate floor have perhaps led people to think that I believe investment banks have no merit or no worth. That is simply not the case. I understand that our country and the ability to produce in our country through a productive sector needs financing and that financing would include a range of financing opportunities. You do need investment banks, you need commercial banks, you need venture capital firms, you need securities. I understand all of that. But I also understand--it was a comedian, Mark Russell, who once described investment banks by saying: ``Investment banking is to productive enterprise like mud wrestling is to the performing arts.'' If ever that applied, it surely must apply now when we look back to see what has happened in the last decade in investment banking. If we do not fix it in this legislation, put a cork in it, and we leave this Chamber and this Congress and claim to have fixed it and have not done it, then shame on us. We have a responsibility. Let me tell you what I think the responsibility is. It relates to a range of things that are not yet done. It relates to dealing with the issue of too big to fail. I know we had one vote, and we failed, unfortunately. There are other ways to do this. But if we have institutions that are too big to fail, that are so large that they cause moral hazard to this country should they fail, so large that they cause completely unacceptable risks of bringing the country's economy down should they fail--if we do not do something about that, we cannot claim ever that we have done something about this system. It is not about saying big is bad. It is about saying no-fault capitalism doesn't work if you allow financial institutions to become so large that their failure can bring down this country's economy. That is what the issue is, and that needs to be fixed. It appears to me we are probably not on the way to fixing that, but hope still arises. For me, it is not a triumph of hope over expectation; it is a triumph of hope, believing it is still possible for us to do the things necessary to fix what we need to do. I also think the set of issues, in addition to too big to fail, includes an amendment I will be offering banning naked credit default swaps, saying that if there are credit default swaps issued that have no insurable interest in bonds, then it seems to me that is just wagering and that can be done at our gambling centers in our country but ought not be done in the lobbies of banks. That is an amendment which is very important. If we don't fix this, we will leave this town saying we did financial reform but we did nothing about too big to fail and we did nothing about the binge of speculative activity in instruments that have no insurable interest in bonds, credit default swaps that have no insurable interest in bonds. Mr. Pearlstein, who writes a column for the Washington Post, asked a question which led me to be interested in the question, Why should there be more insurance policies against bonds than there are bonds? In any event, why should we, in our financial institutions, have people wagering about whether a bond will default when, in fact, they have no interest in the bond? We do not allow people to buy life insurance on someone else's life because they don't have an insurable interest. We don't allow someone to buy fire insurance on someone else's house because there is not an insurable interest. Yet we have trillions of dollars out there, called credit default swaps, making a wager on someone else's bond, whether someone else's bond will fail, despite the fact that they have no insurable interest in the bond. If we do not put a dagger in the heart of that kind of intense speculation that has caused a significant amount of these problems, then we will have, in my judgment, failed to have addressed the real causes and failed to have done what we should do to make sure this cannot happen again. I believe my colleague from the State of Washington is going to offer a restoration of sorts of the old Glass-Steagall law, which I think makes sense. Others will offer legislation that would say to insured banks: You ought not be trading securities and derivatives on your own proprietary accounts. It makes a lot of sense to me. All of those are important. I mentioned before that I wrote the cover story for the Washington Monthly magazine 15 years ago titled ``Very Risky Business.'' At that time, there was $16 trillion of notional value of derivatives, and I wrote the article saying it was very risky business because even then banks were beginning to trade derivatives on their own proprietary accounts. That is not what insured banking should be. That is far too risky and puts the taxpayer at risk. Now we see that unemployment is at 9.9 percent. We are still trying to recover from this devastating recession. We are making some progress. Wall Street is back on track for record profits. This is 5 months ago, now, from the New York Times. In a report released Tuesday, the comptroller of New York State said Wall Street profits in 2009 are on track to exceed the record set 3 years ago at the height of the credit bubble. He also talked about bonuses at six banks that he thought would exceed the $162 billion paid in 2007. By the way, fueling these record profits by these institutions is from the firm's own securities trading accounts, according to this story, as they borrow at near zero interest rates and put the money to work in the securities markets. It sounds as if nothing has changed. That is what helped cause this mess. Yet here we are, back again, and the question is, Who is healing? The big investment banks are healing. Let me for a moment remind everyone how important regulation is. This bill has a lot of regulatory allowance--some instruction but a lot of it allowance that says to regulators: Here is your responsibility. One of the key issues that has exacerbated this substantial economic collapse was something that happened in 2004, on April 28, in the basement of the Securities and Exchange Commission. On the afternoon of April 28, 2004, there were five members of the Securities and Exchange Commission who met in a basement hearing room to consider a request by the five biggest investment banks. They wanted an exemption for their brokerage units from the old regulation that limited the amount of debt they could take on. What they said is: We want to be able to unshackle billions of dollars now that we hold in reserve as cushions against losses on investments. If we could unshackle that money we have to hold in reserve against losses, we could use that to flow up to the parent company and we could enable it to invest in a fast-growing world of mortgage-backed securities and credit derivatives and so on. The five investment banks that led the charge--one of them was Goldman Sachs, headed then by Henry Paulson, who 2 years later was Secretary of the Treasury and inherited the mess that was in part created by it. They had 55 minutes of discussion that afternoon, and after 55 minutes of discussion, the Securities and Exchange Commission voted unanimously to allow these biggest banks in America to take on leverage, going from about 12 to 1 or so, to 33 to 1. In other words, for every dollar in equity, it could leverage about $33 in debt. By that notice in a basement hearing, with no press there at all--I think one reporter was there; it was barely reported--they set the stage for loading up dramatic amounts of debt in these institutions. Now these institutions are, of course, very opposed to the amendment I am going to be offering here at some point, I hope, I expect, or I insist--one of the three--that would ban naked credit default swaps trading. They are very opposed to that. I understand why. They are making a lot of fees and profits as a result of this massive bubble of speculation in these kinds of securities. But I don't think we have any choice but to be taking on the center of the cause of this economic collapse in our country. The amount of effort that has been made to water down some of the amendments that have been offered is troublesome to me. I think the legislation that came out of the Banking Committee is meritorious. It has value. I appreciate the work the committee did. But, as I said when I started, most Members of the Senate have not had a chance to weigh in on this, and there are some substantial improvements that can be made-- I hope should and will be made to the Banking Committee product. But the improvements will not be improvements that strengthen our ability to prevent what happened from ever happening again if the so- called improvements are diminishing the strength of this bill. We need regulatory oversight. If we have learned one thing in the last decade, it is that you have to have regulators on the beat who take regulation seriously. You also have to decide to put a stop to the things that don't represent the kinds of business practices that give any strength to this country at all and, in fact, represent business practices that undermine this country's economy. That is why I believe it is critically important we continue to address the issues as I have just described--too big to fail and credit default swaps and related issues. I am going to read, just for a moment, something from the November 5, 1999, New York Times article when Congress passed a new piece of legislation called financial modernization. This was written by Stephen Labaton. This is a quote, after the passage of the bill. I voted against it. I believed strongly then that it was a dangerous mistake for our country. It turns out it was even more dangerous than I thought. The architects and others said: Today, Congress voted to update the rules that have governed the financial services industry since the Great Depression and replaced them with a system for the 21st century. This historic legislation will better enable American companies to compete in the new economy. Another quote--in fact, that was from the White House, by the way. That was from someone at Treasury. This is from a Senator: The world changes and we have to change with it. We have a new century coming and we have a new opportunity to dominate this century the way we dominated that century. Glass-Steagall in the midst of the depression came at a time when the thinking was that government was the answer. In this era of prosperity, we decided that freedom is the answer. Another Senator said: If we don't pass this bill, we could find London or Frankfurt or, years down the road, Shanghai becoming the financial capital of the world. There are many reasons for this bill but first and foremost is to ensure that U.S. financial firms remain competitive. The passage of that bill set this country up for the biggest fall since the Great Depression. The question on the floor of the Senate is this: Are we going to pass a piece of legislation that has real strength in deciding that which caused this deepest recession since the Great Depression cannot be allowed to happen again? Are we going to pass a piece of legislation that has real regulation and real rules that work? Are we going to pass a piece of legislation that says too big to fail is too big, period? Are we going to pass a piece of legislation that pierces the balloon of speculation in instruments such as naked credit default swaps-- something that was not even in our language 20 years ago. Are we going to address the questions of the securitization of everything, in many cases just for the sake of being able to capture fees? Are we going to address the question effectively of rating agencies that gave AAA ratings to bonds that were worthless? Are we going to address all these questions or are we just going to pass a bill to say: We did it, good for us, this is success, only to find out 5 years later or 10 years later that we are right back in the same swamp? I wish to simply say today that the American taxpayer has now been obligated--in addition to the joblessness and homelessness and other things visited on the American people and the loss of about $14 trillion or $15 trillion in value, the American taxpayer has been obligated to the tune of somewhere around $11 or $12 trillion lent, spent, or borrowed to interests that we do not now know because the Federal Reserve Board says: It is none of your business to whom we gave trillions of dollars. Given that, given the economic catastrophe that has visited a lot of the American people, I think we owe them a piece of legislation here with amendments that improve it, a piece of legislation that allows all of us at the end of this day to say no, we didn't water it down, we strengthened it. We recognize the value of our financial institutions, but we don't recognize the value of financial institutions that run this country into the ground, pay $83 million in salaries, $20 million in bonuses, buy things they will never get from people who never had them and claim fees on both ends, and claim they have done something good for the country. This country can do better than that. This is one of those times--I know this is not seen perhaps by some with the same passion as some of the other issues that get peoples' blood boiling, but I tell you, what we do here will long be remembered because it will have consequences, whether this country has a growing, strong economy for many years ahead, and whether we avoid economic collapse or a deep recession. I watch every morning and read the stories about Greece and other countries that are in great difficulty. Our country is in some significant economic difficulty. We have sent people off to fight wars for 8, 9 years, not paid for one single penny of it. Unbelievable to me. Every single bit was borrowed and put on the debt. Then we have got people who thumb their suspenders and talk about how awful the debt is. We have a trade deficit that is relentless and means we end up owing other countries, which will be paid with a lower standard of living in our country. In addition to those issues, we have got this issue of the near collapse of our economy by unbelievable speculation coming from the banking industry. We have got to fix all of these things if we want a country that gives our children the same opportunities we had. We cannot fix it by glossing over things with a coat of light paint. This has to be fixed with real policies that tackle the central issues on what caused this collapse. I am here and I am ready to offer my amendment. In fact, the sooner the better. I have been anxious to do that. I will stick around. As soon as I am told my amendment will be in order, I am going to offer it. I guess we will be here until we finish this debate and complain until I get to offer the amendment. With that, I yield the floor. I will be hanging around.

Mr. DORGAN. Reserving the right to object, and I will not object, I understand the unanimous consent request is to set aside the pending amendment. Is that correct?