Byron Dorgan

Mr. DORGAN

Mr. DORGAN. Mr. President, what is the pending business?

Mr. DORGAN. I make a point of order that the amendment is legislation on appropriations.

Mr. DORGAN. Mr. President, I suggest the absence of a quorum.

Mr. DORGAN. Madam President, I ask unanimous consent to set aside the pending business and call up amendment No. 1855.

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

Mr. DORGAN. Madam President, this amendment has been cleared on both sides. I believe there is no further debate. I ask for its immediate consideration.

Mr. DORGAN. I suggest the absence of a quorum.

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 I ask unanimous consent that the order for the quorum call be rescinded.

Mr. DORGAN. While Senator Bennett and I await our colleagues to offer amendments on the underlying appropriations bill, I ask unanimous consent to speak in morning business for 10 minutes.

Mr. DORGAN. Madam President, our country is in a very deep economic hole, the most significant economic decline since the Great Depression. Much of it is attributable to the fact that we have created an economy in recent years, especially the last two decades, in which we have responsible business men and women engaged in casino-like gambling. They do it under the rubric of business. In 1994, I wrote a cover story for the Washington Monthly magazine titled ``Very Risky Business.'' The subtitle of that article was about the banks trading very risky derivatives, which I said I believed could lead to taxpayers being on the hook for a bailout. That was 15 years ago. At that point, there was $16 trillion of notional value in derivatives. And banks, even then, which prompted me to write the article, were trading very risky derivatives on their own proprietary accounts, which I believed was unbelievably ignorant of the risk involved. The $16 trillion in notional value of derivatives exploded way beyond anyone's expectation. Then at the same time that the trading of derivatives was exploding, new instruments were being developed, credit default swaps and CDOs and all kinds of exotic instruments to be traded back and forth, creating a dramatic amount of additional risk. Even as that was occurring, we saw the development of a subprime loan scandal in which we were watching brokers and mortgage banks provide entreaties to those who had homes or those who wished to buy homes: Come and get a mortgage from us. You have bad credit, slow pay, no pay, you have been bankrupt, come to us. We would like to give you a loan. Subprime home loans--some called liars loans--you don't even have to tell the person giving you the loan what your income is. By the way, you don't have to pay any principle. We will wrap that around the backside, just pay interest. Can't pay interest, then name your own payment. Don't want to do that, then don't pay any principle and don't pay all your interest. We will wrap it around the backside, and you don't even have to describe what your income is. By the way, when you get a mortgage from us, we will not tell you it is going to reset in 2- 3 years because we are giving you a 2-percent teaser rate right now, which means your home loan payment will be way down here, and it is going to look good. But the reset that will happen in 24 or 36 months, you will never be able to make the payments. Everybody was fat and happy, making a lot of money putting out bad loans and then slicing them up into mortgage-backed securities and then trading them up to the hedge funds and investment banks, and everybody was making a lot of money, not asking any questions. Then the whole thing collapsed. And it is derivatives, it is swaps, it is mortgage- backed securities. It all collapsed in a sea of greed with unbelievable risk, and it brought down with it some of America's largest financial institutions. I describe all of that gambling and all of that risk because something else happened last year that has the American people concerned and worried--and they should be wondering: What was the cause of it? Here is what happened last year. I have this chart in the Chamber that shows the price of crude oil. It actually went from $60 a barrel, in October of 2006, up to $147 a barrel in July of 2008. It went up like a Roman candle, and then came right back down. By the way, the same folks who made the money on the upside made the money going back the other way, starting last July. It was unbelievable speculation in a market called the oil futures market. This is not an abstract graph. This means right up here someplace, as shown on the chart, every American who went to the gas pump to fill up their vehicle with gasoline was paying through the nose--$4, $4.50 a gallon. So the question for them, and the question for other users--airlines, for example, were hemorrhaging in red ink, unable to pay the cost of this kind of oil price--the question was: What has caused all of this? What has resulted in this unbelievable spike in oil prices? The answer? An orgy of speculation in the oil futures market by interests that were never before--at that point--manipulating that marketplace. Investment banks, for the first time, were actually buying oil storage and holding it off the marketplace until the price rose, as an example. The oil futures market, it is estimated, was populated in terms of the trades by somewhere between two-thirds to three-fourths of the trades coming from speculators--not people who were moving the physical commodity back and forth, at least people who would want to sell the physical commodity to somebody who wanted to buy the physical commodity because they want oil. Instead, it was speculators who were simply betting on this. They could have gone to Las Vegas. They did not need to. They were able to go to the oil futures market and make a lot of money going up and a lot of money going down; and, meanwhile, the victims were the American drivers who had to fill their gas tanks with gasoline. I am describing this because yesterday there was a hearing in this town by the Commodity Futures Trading Commission, a commission that has largely been dead from the neck up for some while, uninterested in regulating--despite the fact that is their charge--sitting on their hands, doing nothing. And all of last year while this was going on, while the price of oil was going up, up, up, the CFTC largely explained it away as saying: Well, this is supply and demand. That is what is going on. There is another agency other than the Commodity Futures Trading Commission that did not do its job. This is an agency we are actually funding. Senator Bennett and I are actually funding it in this bill. It is called EIA, the Energy Information Administration. It has several hundred people working there. It is a very important agency. It provides substantial amounts of information to our country, to policymakers, about what is happening with energy. I want to show you what has happened with the EIA. We spend about $110 million a year on this agency with several hundred people. They are good people, smart people, the best in the business, we assume. Here is what happened. In May of 2007, they had to make an estimate. That is what they do. They make an estimate: What is the price of oil going to be? Well, they started here, as shown on the graph, and they said: Here is where we think the price of oil is going, right that way. So in May of 2007--I do not know what they had to eat back then, but something was affecting the brain. Here is what happened to the price of oil. Here is where they estimated the price of oil would be. These are smart people. These are the best. We are spending a lot of money getting their advice. So let's pick January of 2008. They made a new estimate: Here is where we think the price of oil is going to go. Well, the price of oil did not do this. The price of oil went like this--almost straight up. So what did they get wrong? In April of 2008: Here is what we think the price of oil will be. Here is what it was. My point is, this agency, along with the Commodity Futures Trading Commission, would come to our committee at a hearing, and I would say: What is it that you get it so unbelievably wrong? They said: Well, it is supply and demand. That is total rubbish. The fact is, even while this was happening, the supply was going up and demand was going down, which meant that the price of oil would not be going up like a Roman candle. In fact, the price would be moderating. Instead, speculators captured that market. That is why EIA got it so wrong. They did not have the foggiest idea what they were doing. Supply and demand--total nonsense. But we know what happened to these prices. The reason I want to discuss this for a moment is because yesterday the Wall Street Journal had a story. The Commodity Futures Trading Commission--this is the commission that last year spent all of their time telling us this was just supply and demand. We knew better. But either they knew better as well and would not admit it or they did not know better. That agency was insisting it was supply and demand. Well, the very same agency now, with a new head, is going to issue a report next month, according to the Wall Street Journal, ``suggesting speculators played a significant role in driving wild swings in oil prices.'' Three people in my hometown cafe--I come from a small town of 300 people--3 people, over a strong cup of coffee, knew that last year. Wild swings in oil prices as a result of speculators. Last year, the same U.S. futures market agency pinned oil price swings primarily on supply and demand. But the new report will say that analysis was based on ``deeply flawed data.'' So the question is, What does all this mean? It means if we are going to have some impact on an economy where we put it back on some solid foundation, we have to have markets that work, and we have to have regulators who are not blind. I happen to think the free market system is the best system of allocating goods and services that I know of. I taught economics ever so briefly in college, and I always say I was able to overcome that, nonetheless, and lead a productive life. But the field of economics is something that is so important in terms of understanding how markets work. I believe the free market system is an incredibly good system-- not perfect. The free market system needs effective oversight and regulation from time to time. That means we have regulators who are supposed to be wearing the striped shirts, blowing the whistle, and calling the fouls because, yes, there are fouls in the free market system. Go back and ask Teddy Roosevelt, when he was a big trust buster. What was he doing? He was busting those interests that were trying to subvert the free market system. The same thing happens today. We have interests--and I described it earlier--that want to subvert the system by getting engaged in substantial risk and establishing mechanisms by which they can control a market at the expense of the rest of the American people. That is what I believe has happened in the oil futures market. The oil futures market is very important, and we need to make it work the right way. It ought to work responding to the urges of supply and demand. But, regrettably, that has not been the case. My hope is now the Commodity Futures Trading Commission will be able to take the kind of action necessary to straighten this market out. Every market needs liquidity. That means some speculators will play a role in the market. But when speculators capture the market, and begin to play the kind of games that were played last year, that has a profound impact on this country's economy. We should expect the agencies that are hired to do the regulatory oversight do their jobs, and do it properly. That has not been the case for some while. So my hope will be--with the new report coming out that will finally assign the responsibility of excess speculation in this perversion of the marketplace--my hope will be we will have effective regulators who will take action. What should that action be? My own view is the Commodity Futures Trading Commission should designate a distinction between the traders in this marketplace: those who are truly trading a physical commodity because they are engaged in the marketplace because that is the business they are in and those who are just speculators. The Commodity Futures Trading Commission could at that point determine what kind of margin requirements, what kind of speculative limits should exist so that activity does not subvert the marketplace. Let me be quick to say there are people who will listen to me, and who hear what I say, and they will say: Do you know what. You don't have the foggiest idea what you are talking about. All of this system works. None of that which you describe existed. All of that risk by the smartest people in the room, the top investment banks that took on this massive amount of risk, the investment banks that were buying oil storage, to buy oil and take it off the market until it goes up in price--all of that is just business. It is not just business. Just business is running a business the right way. Does anybody believe it was just business to have the biggest financial enterprises in the country run into the ditch because of bad behavior by those who were running the companies--by the way, some of whom are still running the same companies? By the way, with respect to solutions, does anybody think it is just business to decide we had institutions in this country that were too big to fail--that loaded up with risk and then failed--and the taxpayer is told they cannot be allowed to fail, they are too big, and you have to bail them out? And now we say to those same businesses: We are not going to get rid of ``too big to fail.'' In fact, we are going to allow you to merge with other firms, which makes you much too big to fail-- too much bigger to fail. We have a lot of work to do this year to address these issues and address some of the causes that caused the economic collapse last year. I want us to put this economy back on track. First and foremost, it starts with jobs and restoring confidence. Confidence is everything about this economy. When people have confidence, they will do the things that are expansive to this economy: buy clothes, buy a car, take a trip, buy a house. That expands the economy. When they are not confident, they do exactly the opposite. I want the American people to have confidence. I want them to have confidence in believing that Federal agencies that hire regulators are going to look over the shoulder and provide the oversight to make sure this is not going to happen again, to make sure someone is not going tp subvert a marketplace that makes the rest of the American people victims. All of this, in my judgment, with good government, can be done. But it will not be done if we have regulators who boast about being willfully blind. It will be done if we understand our responsibility to make sure the free market system is indeed free. Madam President, I yield the floor. I suggest the absence of a quorum.

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

Mr. DORGAN. Madam President, it is nearly 2 o'clock on Wednesday. We have been on this bill since Monday. Senator Bennett and I have spent a lot of time on the floor waiting for amendments to be offered. We have had several and we appreciate that, but we have many filed but not offered. I know the majority leader has filed a cloture motion which would ripen tomorrow, so we would have a cloture vote tomorrow. Our hope has been we would not get to that point. Inasmuch as we have waited and waited very patiently for Senators who do have amendments that they wish to offer but have not come to offer them, Senator Bennett and I have talked about perhaps going to third reading this afternoon at 5 o'clock. So I ask, if there are those Senators and/or staff who have amendments they wish to have considered on this legislation they would keep that in mind. We have a couple of hours here. Senator Bennett and I have talked about going to third reading by 5 o'clock. I would ask people to come and offer amendments, let's have debates on the amendments and have votes and see if we can resolve this legislation this afternoon. I make a point of order that a quorum is not present.

Mr. DORGAN. Mr. President, I would have no objection. We are limiting morning statement business up to 10 minutes. We are on the business of the energy and water appropriations bill, waiting for amendments to be filed. So we have a general order on this bill that morning business speeches will be 10 minutes. I have no objection if the Senator wishes to take a few minutes extra, but I did want both Senators to understand that we are on the energy and water appropriations bill, and morning business is done under the consideration of that legislation. So I have no objection.

Mr. DORGAN. Mr. President, the 1 o'clock time has passed for the filing of amendments as a result of the cloture motion being filed last evening. I believe we now have about 90 amendments filed to this bill. Not all of them will be offered, certainly, but 90 amendments represent the determination of people who wish to alter this bill, who wish, presumably, to come and offer amendments, have a debate on amendments, and perhaps have a vote on their amendments. Yet no one arrives. I indicated earlier that Senator Bennett and I have talked about a third reading on this legislation to move it through the Senate. The fact is, the majority leader will not have the patience to allow us to sit here with nothing to do and people saying they want to offer amendments but not being willing to show up to offer amendments. We have been here since Monday afternoon, and very little has been done. I again say to the staff that may be watching or Senators who are watching, I think we ought to conclude this bill. If people are not interested in offering amendments--filing amendments is not offering them. If they do not have the interest in coming to the floor of the Senate to offer them, I am going to push very hard with the majority leader to go to third reading and finish this legislation this afternoon.

Mr. DORGAN. Mr. President, I am prepared to accept the amendment. My colleague, Senator Bennett, is as well. The amendment has been cleared. We have reviewed it. We think it has merit, and we have approved it on both sides. I suggest we ask for consideration and have a vote on the amendment at this point.

Mr. DORGAN. I thank the Senator from Vermont. I know he cares passionately about this issue. The description he has given demonstrates the merit of this proposal. Frankly, I am happy to be supportive.

Mr. DORGAN. Might I ask the Senator to yield for a question?

Mr. DORGAN. Senator Coburn and I and Senator Bennett talked about the order of his amendments. I believe he has three amendments. We intend to accept one. I had indicated to him on the contracting amendment he intends to offer, I will offer an amendment as well, and we will have side-by-side votes. I wonder if I might offer my amendment to have it pending. The Senator would then offer his amendment and discuss it and I would offer my amendment on behalf of myself and Senator Bennett. If that is acceptable to the Senator from Oklahoma, I believe my amendment is filed. I ask unanimous consent that that amendment be called up. It is amendment No. 1895. I ask that on behalf of myself and Senator Bennett.

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

Mr. DORGAN. Mr. President, I will respond, of course, to the comments of the Senator from Oklahoma. If he would wish, it might be sensible for him to proceed to offer his other amendments, calling them up, setting aside this amendment, and we will have them all in front of us. Then we can discuss them and develop an order by which we might vote. Amendment No. 1878 as Modified to Amendment No. 1813

Mr. DORGAN. Mr. President, Senator Bennett and I have reviewed this amendment and think it has merit and support it and hope we could vote on this by voice vote and that we might do so immediately. So, Mr. President, if the Senator from Oklahoma is ready, I will suggest that we dispose of this amendment by consent.

Mr. DORGAN. It has been cleared by both the Republican side and Democratic side.

Mr. DORGAN. Mr. President, as always, the Senator from Oklahoma is thoughtful and courteous, and we appreciate--Senator Bennett and I appreciate--him coming to the floor and offering his amendments. Let me say to the Senator from Oklahoma, we cut the administration budget in the Department of Energy by $8 million as we brought it to the floor. But even more important than that, we have cut $643 million from the Department of Energy from the President's budget. So as CBO recalculates the President's request to the Congress, we have cut $643 million. And we have cut $8 million in the administration budget in the Department of Energy. So I sympathize with his notion. I certainly strongly support what he is suggesting to the Department of Energy they should do. I just say to him, we have already made those cuts and far, far more in terms of what the President wanted for the Department of Energy. We are $643 million below the President's request and $8 million below in the administration accounts in the Department of Energy. Mr. President, I will be happy to yield to the Senator.

Mr. DORGAN. That is correct.

Mr. DORGAN. Mr. President, again, I agree that what we ought to be doing is encouraging the Department of Energy--all Departments--to be engaged in energy savings and efficiencies and so on. I will be glad to visit the Senator about cuts. But, as I said, we already made substantial cuts. I think the Senator from Oklahoma knows that the President's request, in the context of the broad range of budget requests for a broad group of Federal agencies, was what he felt he wanted and needed in order to have some sort of transformational energy future. We are working on a wide range of new and innovative energy approaches: decarbonizing coal, additional production in wind and solar and biomass, additional production offshore in the gulf. We are working on a lot of issues, and some of that requires substantial research and development. So the President had a pretty good appetite for what he felt was needed. We cut that by $643 million. The reason I am emphasizing that to the Senator is Senator Bennett and I did not just saddle up and say: Well, whatever you want, here it is. We cut it, and we cut it because we felt those cuts were deserved. I certainly appreciate the Senator from Oklahoma coming to the floor wanting additional cuts. But $643 million is a pretty substantial walk away from what the President had originally requested for that agency. My hope is that we can include--we will include--certainly I will be the chairman of the conference--we will include very strong and assertive language of the type the Senator is requiring of the Department of Energy. I would insist, as well, that the Department of Energy--all agencies--demonstrate efficiencies and conservation and the kinds of things that can and should be done to address the overusage of energy.