Judd Gregg

Mr. GREGG

Mr. GREGG. Mr. President, I rise today on behalf of myself and my wife Kathy to thank the people of New Hampshire for giving us the great honor and privilege to represent them. This is an extraordinary body, the Senate. It is filled with wonderful people. I look around this room and I see a lot of them, friends, people I have had the chance to do work with. I admire them immensely. I thank them for their friendship. And when people ask me about leaving the Senate, what is the thing I am going to miss the most, I always say, it is the people, the people of the Senate, because they are special, dedicated to making this country a better place, dedicated to doing their jobs well, dedicated to serving America. So I thank you for the great honor and privilege that you have given Kathy and me to allow us to serve and participate in this body with yourselves and your spouses. I want to thank everybody else who has been so helpful throughout our career, the folks here at the dias, the staff, people in the cloakroom, throughout this building. I mean, there are so many people who make this Senate work, people working in the furniture room, and people working in the hallways, our staffs, obviously. This is a special place filled with people who are committed to making the Senate work. I thank them for allowing Kathy and me to be part of that. But I want to take a point of personal privilege here and especially thank my wife Kathy who is here today. You are not allowed to acknowledge people, I know that, but I am going to violate the rules. My wife is sitting right up there. Kathy. We have been married 37 years, and for 32 of those years we have held elective office; 9 major campaigns, innumerable campaigns such as those for other people that we have participated in. Through this whole intensity--and we all know, who have participated in this process, the intensity of the elective process in this Nation--there has been a rock and a solid force in our family. She has raised three extraordinary children, Molly, Sarah and Joshua, who have been exceptional in their own right and have done exceptional things, even though they are still young by our standards. Some of them think they are aging a little bit, but they are still young. Their value system and their belief in this Nation and their willingness to give of themselves to other people is a direct expression of the values Kathy has given them; sometimes a little overcompetitive on occasion, but that has been one of her strengths also. We have been through some hard times and some good times, and always she has been there to basically be our lighthouse. So I express my love and thanks to her. Bismarck, at the beginning of the 20th century said--first I should say, Kathy told me I should not walk back and forth like this. I have been doing it for 18 years. And she says it makes people sick who are watching it on TV. Like the famous time she called up, and we were having a colloquy, and there were a bunch of us talking this way, and I am talking to, I think, Johnny Isakson. She calls the floor staff and says: Go out and tell him to turn around and face the cameras. Bismarck, at the turn of the 20th century--of course, Bismarck was one of the true great forces in Europe throughout the late 1800s and into the 1900s--said that: The defining fact of the 19th century was that England and the United States spoke the same language. What I think he meant was that the defining fact of the 19th century was that England and the United States had a value system which believed in the individual, in liberty, democracy, and markets. It was a value system that grew out of the Scottish Enlightenment, people such as John Locke, Hutcheson, Adam Smith. In the 20th century, if you look at it, it was a test of that value system against the other value systems which had come up over the years, mostly totalitarianism. There was a test of democracy against fascism, a test of democracy against totalitarian socialism. And we won. We won that test. The second big challenge of the 20th century was a test of how you would create prosperity for people, a test of markets versus communism, of markets versus, again, totalitarian socialism. And by the end of the 20th century, there was no longer an issue, no longer an issue. The American philosophy of government had come to dominate the world-- democracy, individual liberty, and markets. The whole world was moving in that direction. Now we are 10 years into the next century, and we are challenged again, challenged again. This time the challenge is different: Substantive, significant. Maybe not at the same level that the Soviet Union represented a challenge, because they had the capacity to destroy us, maybe not even at the same level of fights against Japan, fascist Japan and fascist Germany. But the challenges are huge and they will determine our future as a country. They basically, in my opinion, break into two primary areas: The first is, of course, the threat of a terrorist group using a weapon of mass destruction against us. We must acknowledge that 9/11 fundamentally changed our culture, changed our personality as a nation, and caused us to realize our vulnerability. That threat of terrorism is driven by a fanatical belief in a religious philosophy. We should not deny that. We should acknowledge that. Because in order to defeat that threat we have to understand that. The second major thrust that I see as our concern as we go forward is clearly of our own making. It is a positive making, but it is still an issue for us, and that is we have a nation which has always been extraordinarily prosperous, where one generation has always passed on to the next generation a better, more prosperous, and more secure country. Yet today we are on the cusp of not being able to do that again, because we have this population, of which I am a member, called the baby boom generation, which is taking our retired population from 35 million to 70 million people. As a result, we and the rest of the world, and in Japan for that matter, because of this demographic shift, find ourselves confronted with governments which are struggling to figure out how they are going to pay for what our entitlement society is. The way I have sort of phrased it is that when a populist government, a government that moves by election of the people--when a populist government meets a massive demographic shift in an entitlement society, you get unsustainable debt. That is something we confront right now and need to stand up to. Those two streams are our biggest concerns, or at least my biggest concerns as I leave the Senate: How do we defend ourselves against a fanatical movement, which has an asymmetry base, which wants to do us harm,--they are not a nation state, we cannot find them easily--but wants to do us harm and will do us harm if they have the capacity, and will do it with a weapon of mass destruction? And, secondly, how do we deal with this shift in our society--this is driving the populist movement, which is making our structure of government unaffordable in many ways? America's greatness and our ability to address the issues such as this comes from our people and from our Constitution. It is that Constitution which embraces, basically, the liberties that allow our people to create prosperity and give this Nation its strength. Our freedom and prosperity is absolutely resilient. There is no question about that. But government can either be an enabler of that freedom and that resilience or it can be a stifler of it. Whether we are going to succeed, I believe, is whether we continue to assert the core values which allow us to govern well, and they all basically arise from our Constitution. I have the good fortune to sit at the Webster desk. Daniel Webster was a Senator from Massachusetts. New Hampshire, in an act of appropriate stealthiness, had the desk designated to the senior Senator from New Hampshire by statute in the 1970s. It is a great honor to have the right to sit at this desk. Webster and Clay kept this Nation together at a time when had it been torn apart. It would no longer have existed, because we were not capable. We had no Lincoln, and we had no strength of the North to survive. Webster, in his speech on the Compromise of 1850, said: I mean to stand upon the Constitution. I need no other platform. I know but one country. No man can suffer too much. No man can fall too soon if he suffers on or if he fails in defense of the liberties of the Constitution of our country. At the center of our constitutional form of government, which was designed by Madison and Randolph, which was built on the concept that there should never be an overly powerful branch of the government, at the center of this government is the Senate. It is the cauldron of liberty for our Nation. Why is that? Because it is the place where issues are aired, people are heard, amendments are made, and no one gets to shut down the minority until a supermajority decides to do so. The rights of the minority are the source of the power of our government. They are the source of the power of our Constitution. They are the source of the power of our liberty. This is the center, this institution is the center of the rights of the minority. I have been in the minority. I have been in the majority. It is almost irrelevant from the standpoint of the importance of the role of the Senate, because it is the Senate that gives voice to all Americans, that does not allow us to shut out any American or any thought process in America that is legitimate and which can come to the floor of the Senate and make its case. I have often wondered, what would this government be like if there were no Senate? Well, it would be a parliamentary government, for all intents and purposes, lurching to the left, lurching to the right, and as a result, in many ways, undermining individual rights, but, more importantly, having no continuity of purpose or force. We play politics in this city and in this country between the 40 yard lines, for all intents and purposes. We are not a government that ever moves too radically left or radically right. That is the way it should be. That is the way it should be. In this institution, compromise is required. To govern you must reach agreement. We are 300 million people obviously of a diverse view. If we are going to govern 300 million people, we must listen to those who have legitimate views on both sides of the aisle. So as I leave this Chamber, I want to say this, simply: It has been a huge honor to have the chance to serve here. It is something that is the highlight of our career, Kathy's and mine. We move on with reservations, we hopefully move on to something equally interesting, but it will never have the same status as being in the Senate. This, to me, is the ultimate job when it comes to the governance of America. I simply ask you who stay here--and I know this will be done-- continue to carry the torch. Understand that it is the Senate that is the center of the liberty that leads to the prosperity our people expect. It is the Senate that is the center of our Constitution. Thank you very much. (Applause, Senators rising.)

Mr. GREGG

Mr. GREGG. Mr. President, I rise to speak briefly about S. 510, the FDA Food Safety Modernization Act, which we will be voting on today. This bill incorporates the best ideas from food safety experts, farmers, small business owners, the Bush administration's Food Protection Plan, the Obama administration's Food Safety Working Group, and Members on both sides of the aisle.When enacted, it will transform America's approach to food safety by emphasizing prevention and by strengthening our capacity to detect and rapidly respond when food safety emergencies occur in the future. I would especially like to thank Senator Durbin for all of his efforts on the issue of food safety and his commitment to working on this issue in a bipartisan manner. We originally teamed up to begin this effort in the spring of 2008, and after numerous drafts and twist and turns, I am hopeful that we are close to getting this bill across the finish line. None of this would have been possible without a core group of bipartisan Members who have helped shepherd this bill since its inception. Senator Burr has been a key leader on food defense issues and has worked tirelessly to ensure that this bill is not burdensome for small farmers and food producers. Senator Dodd, along with Senator Alexander, contributed greatly to the bill as a whole, and were instrumental in providing a key provision relating to the need for schools to be more prepared to protect children with life-threatening food allergies. We have also been extremely fortunate to have the tireless support of both Chairman Harkin and Ranking Member Enzi, who assisted in moving the bill through the HELP Committee with unanimous support roughly a year ago, and who, in the last year have helped us navigate our way to the floor. Finally, I would like to thank our staffs who have put so much time into this legislative effort. Although it has been a long and sometimes arduous process, they have shown time and again that almost every problem is solvable when you get a group of hard working folks around a table. I would like to especially recognize and thank my own lead staffer on this bill, Liz Wroe, as well as the following: Dave Lazarus, Candice Cho, and Albert Sanders with Senator Durbin; Jenny Ware, Jenn Alton, Josh Martin, Margaret Brooks, and Anna Abram with Senator Burr; Jenelle Krishnamoorthy, Tom Kraus, and Bill McConagha with Senator Harkin; Amy Muhlberg, Travis Jordan, Keith Flanagan, and Chuck Clapton with Senator Enzi; and Tamar Magarik Haro and Anna Staton with Senator Dodd.

Mr. GREGG

Mr. GREGG. Mr. President, this is not the proper way to address this issue, to add $19 billion to our deficit. That has to be paid too by our children and by small businesses being affected by this 1099 proposal. Let's do this the right way. Let's do it the way the Senator from Nebraska has suggested--pay for it. It should be corrected that way, not by adding $19 billion to our debt.

Mr. GREGG

Mr. GREGG. Absolutely.

Mr. GREGG. Absolutely. More than that, it begs the question as to why is the majority party governing. If they are not willing to govern, what are they collecting their paychecks for? Governing means putting together a budget and deciding how to spend the money. They are not willing to do that.

Mr. GREGG. Those are very generous and kind comments coming from a Senator who is of huge stature not only in the Senate but in the country. I do hope to make some comments on that. It won't take me an hour because the answer is simple: Stop spending. That is pretty much the bottom line. The point of the Senator from Tennessee and the Senator from Arizona on the issue of shutting down the amendment process is as critical to us getting better governance as anything. We can't have good governance if we don't have discussion and different ideas brought forward. Yet we are not allowed to do that any longer because the majority leader says: We will not allow any additional amendment or any discussion. On budgetary issues, on the spending issue, independent of the Defense bill, I think one of the reasons we haven't done a budget this year is because the other side knows that if they bring the budget to the floor, they cannot shut down amendments. Amendments have to be allowed. Under the rules, we have to be able to amend the budget resolution. I don't think they want to do that. They couldn't fill the tree on the budget. As a practical matter, this attempt to foreclose debate on core issues of public policy, such as the defense issue and spending, by shutting down the floor through filling the tree is undermining not only the Senate and its role but the whole constitutional process and the right of the people to be heard.

Mr. GREGG. I will be with you; I just will not physically be here.

Mr. GREGG. Because I think the Senator has addressed a core issue of constitutional government. When the Founding Fathers got together in Philadelphia and created this extraordinary Nation called America, and built the Constitution upon which we were based, and upon which we govern, was it not their intent to create the Senate as a body different from the House of Representatives? We understand in the House of Representatives amendments are not allowed if the Speaker does not want them. It is an autocracy over there. We know that. But was not it the intention of the Founding Fathers, as the Senator has pointed out, to give the American people a chance, through their Senators, to amend complex legislation? And has that not always been the tradition since the founding of our Nation? Did Washington not explain this rather accurately when he said, The Senate is the saucer into which the hot coffee is poured? The House boils the coffee, they get all charged up about an issue, they pass it without amendments, often without any debate. It comes over here, and the American people get to hear a little more subtlely about the issue, a little more discussion about the issue. Specifically, they get to amend it and address the issue. I know the Senator from Arizona is here. Maybe he will be able to tell us--I am sure he will--how many times we have had a bill as big as the Defense authorization bill on the floor, which is spending $700 billion, and not had a chance to amend it. But was that not the purpose of the Founding Fathers, to make the Senate the place where there was debate and discussion and amendment? Has that not been basically cut off by the majority leader and the majority party's attitude that they do not want to take tough votes?

Mr. GREGG. Would the Senator yield on that point?

Mr. GREGG

Mr. GREGG. I thought I put us into a quorum call. Mr. President, at this time I intend to make a point of order. Actually, there are two points of order pending against this bill dealing with the budget. The budget is violated. It is not my budget--I didn't vote for the budget. The Democratic budget is violated two times by this bill. I am not going to make both because it would be redundant to have a vote on both. It wouldn't be redundant, actually. There are two different points of order, and they are both fairly significant. So I will just make one because I do think we should be on record. If this Congress is going to pass a budget, which it did in the last session--it has not done one in this session; it should--we should maintain the discipline of that budget. That is why we did the budget. And it is not my budget; it is your budget. So I am just suggesting that you follow your budget, if you are Members of the Democratic Party. So with that point, I would make a point of order that section 404(a) of the 2010 budget resolution makes it out of order to consider legislation that increases the deficit by more than $10 billion in the Senate for any fiscal year covered by the most recently agreed to congressional budget resolution, S. Con. Res. 13. The pending amendment would increase the short-term deficit in excess of $10 billion in the following year: 2011. Therefore, I raise a point of order under section 404(a) of S. Con. Res. 13 against the pending amendment. I would note that this exceeds the budget resolution by, I believe, about $10 billion. That is how much it is out of kilter relative to what we said we would spend.

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

Mr. GREGG. Is the Senator from Washington ready? May I go forward on a point of order? Mr. President, I suggest the absence of a quorum.

Mr. GREGG. Mr. President, I thank the Senator from Tennessee, who is not only a former Governor but also a former Secretary of Education. The Senator has framed the question adequately and very accurately, and that is this: Why should the Federal Government be saying to the States: We are going to give you some money, but we are going to attach to this money a whole lot of strings? And the basic strings are these: Unless you spend a heck of a lot more money, you are not going to get this money. It does appear that it is focused on a special interest group, does it not, the teachers unions? It appears this is more or less a commitment to take care of this constituency out there at the expense, ironically, of a lot of people who are employed in those States. We use the term ``multinational corporation'' around here as if that is some sort of evil empire. I have a few multinational corporations in New Hampshire--I suspect the Senator does in Tennessee--and they employ people. If you raise their taxes by $10 billion, they are going to employ a lot less or they are going to send them overseas. We used to hear around here constantly about outsourcing--outsourcing jobs. This bill is a job outsourcer.

Mr. GREGG. The Senator's point is very important because 41 cents of every dollar we are sending back to the States--and as the Senator says, the majority of State money is now Federal money that we are sending down, as the Senator outlined--is borrowed from China or from the Middle East. Our people are going to have to pay all this back. We don't have that money to be sending to the States. In this bill, at least there is an attempt to pay for it. But the way they pay for it is by penalizing job creators and forcing people to outsource jobs which, again, comes back to harm us for no purpose that seems to be practical other than to have the Federal Government step in and try to control the manner in which these various programs are run in the States and to reward constituencies who happen to be very supportive of the other party.

Mr. GREGG. If the Senator will yield for a question, is the Senator saying the Federal Government is going to say: If you want this money, you can't improve the program?

Mr. GREGG. Mr. President, I want to get back to the essence of what the Senator from Tennessee is saying. It goes to this point. People look at this and say: Oh, my goodness, there is a whole bunch of money coming to this State. What is it coming for and who it is paying? This money does not grow on trees and gets picked up in the morning by trucks that drive by and drop it off. This money is taken from somebody else to be used for this purpose. When you go to the essence of what this bill is about, it is to pay off education unions. That is what this is about. Let's not be coy about what is happening around here. The education unions were the single biggest interest group represented at the Democratic National Convention. I think 26 percent of the delegates at the Democratic National Convention were teachers, members of teachers unions. They probably were not teachers; they probably were administrators. What is happening here? A lot of States are trying to reorganize their budgets because they are in hard times. Most States are not able to print money--none are--the way the Federal Government does. So they actually have to be fiscally disciplined. What they are saying to all the different categories within their States is: We are going to adjust here. They are actually going through a very aggressive--I know it is happening in New Hampshire, I know it is happening in Tennessee, and I suspect it is happening in most States--they are going through a very aggressive process of ordering priorities and making tough decisions so they can get their house in order relative to such things as the cost of education. But that has upset the teachers unions. Now we get a bill on the floor of the Senate to basically put the States in a position where they will have to maintain the teachers union status relative to employees and actually add to it at the expense of the employers in those States and the people who go to work in those States, at the expense of the companies that are deemed ``multinationals.'' In New Hampshire, we have a lot of companies that are multinational. We are quite proud of that. We are proud of the fact we are an export- oriented State, that a lot of our major employers--in fact, I suspect our top five major employers are all deemed multinationals. They are not going to be able to hire as many people in New Hampshire because of the fact that they are going to get hit with this huge tax bill, the purpose of which is not actually to improve the situation--the States are working on that--the purpose of which is to take care of a constituency group that happens to have a significant amount of influence. It is called a special interest, unless it happens to be a liberal group and then they are called concerned citizens or something. But in this case it is a special interest group, and this bill is nothing more than a payoff to a special interest group at the expense of another group who happens to employ people and have workers in New Hampshire.

Mr. GREGG. Did not the point of order lie? Is not the bill in violation of the Budget Act?

Mr. GREGG. Mr. President, a parliamentary inquiry is in order, isn't it?

Mr. GREGG. Mr. President, I have a parliamentary inquiry.

Mr. GREGG. Mr. President, I made a point of order dealing with the budget and the fact that this bill violates the budget, so I find myself once again rising with enthusiasm to defend the Democratic budget because that is what this bill violates. It is the Democratic budget that is violated in this bill. It increases the deficit in 2011 by $22 billion. That is not small change anywhere in this country. So $22 billion is what the budget deficit increase is next year as a result of this bill. That is why it violates the Democratic budget. I congratulate my colleagues on the other side of the aisle for putting in place this point of order. I presume they would want to defend their own budget and defend this point of order because they do not want to run up the deficit by $22 billion in 2011.

Mr. GREGG

Mr. GREGG. Mr. President, I rise today to recognize the accomplishment of a truly remarkable American family. This summer, the Strong family celebrates their 50th family reunion here in Washington, DC, the site of their first annual reunion. Although the rich history of the Strong family has been centered in the Mid-Atlantic States, I am proud that one of their daughters, Cindy Strong Woolfolk, has been a dedicated member of my staff, and served the people of New Hampshire for more than 11 years. In recognition of Cindy and her extraordinary family, Kathy and I offer our congratulations on this momentous occasion. In the summer of 1960, Addie Cora Strong Dixon had a vision to honor and remember the life and legacy of her family by convening the first of many annual reunions. That first year's motto, ``Strong bond of love and support'', which so aptly describes Addie's love for her family, would also characterize the subsequent reunions held throughout the country and attended widely by members of her family. This year's motto for the Golden Anniversary Reunion, ``Celebrating Generations of a STRONG Legacy,'' serves as reminder to the next generations of Strong children to continue this important tradition and carry on the legacy of their family. Throughout the years, the Strong annual reunion has become a major event not only for family members, but also for various notables who helped to shape our country's history including Federal, State and local politicians. One such notable, Rosa Parks, attended the 1993 family reunion in Detroit. I am also told that Addie's famous pineapple upside down cakes and the family's North Carolina-style BBQ are some of the best in the country. On behalf of Kathy and myself, we extend our congratulations to Cindy Strong Woolfolk and her family. For those in the U.S. Senate family who have had the pleasure of getting to know Cindy and experience her laughter and warm personality, you have gained a sense of how special the Strong family is through her. We applaud the Strong family for reaching this significant milestone and wish them strength and longevity for many more years to come.

Mr. GREGG

Mr. GREGG. Madam President, let me begin by thanking the Senator from Connecticut and congratulating him. He has been pretty effective in his last year in the Senate. He got a lot of stuff moving and a lot of stuff through. And I have not agreed with all of it, by the way. Most importantly, he has done it in a fair and balanced way, always with a sense of humor and an openness and willingness to listen to those with whom he may not agree entirely and allow us to participate at the table in discussions about the problems at the very beginning of the process in a very substantial way. So I thank him for his courtesy and for the way he runs the committee and the way he ran the HELP Committee when he succeeded to that leadership on the unfortunate passing of Senator Kennedy. It has been a pleasure to serve with him on this bill and on some very significant issues as we tried to work through them. I have reservations about this bill--they are more than reservations. I, obviously, believe the bill doesn't get us to where we need to go. When we started on this effort, our purpose was, in the beginning, twofold: First, we wanted to make sure we could do everything we could to build into the system of regulatory atmosphere and the marketplace the brakes and the ability to avoid another systemic meltdown of the type we had in late 2008, which was a traumatic event. Nobody should underestimate how significant the events of late 2008 were. If action had not been taken under the TARP proposal, and under the leadership of President Bush, Secretary Paulson, and then President Obama and Secretary Geithner, this country would have gone into a much more severe economic situation--probably a depression. Secretary Paulson once estimated the unemployment rate would have gone to 25 percent. The simple fact is the entire banking system would have probably imploded--most likely imploded--and certainly Main Street America would have been put in dire straits. But action was taken. It was difficult action. We are still hearing about the ramifications of it, but it was the right action, and it has led to a stabilization of the financial industry. But we never want to have to see that happen again. We never want to have to go through that type of trauma again as a nation, where our entire financial community is teetering. So the purpose of this bill should be to put in place a series of initiatives which will hopefully mute that type of potential for another event of a systemic meltdown. The second purpose of this bill--and it is an equally important purpose--is that we not do something that harms one of the unique strengths and characteristics of our Nation, where if you are an entrepreneur and have an idea and are willing to take a risk and try to create jobs, you can get credit and capital reasonably easily compared to the rest of the world. That has been the engine of the economic prosperity of our Nation--the availability of credit and capital, reasonably priced and reasonably available to entrepreneurs in our Nation. Those should have been our two goals. If we match this bill to those goals, does it meet the test of meeting those goals? Unfortunately, I don't think it does. There are some very positive things in the bill. The resolution authority is a good product in this bill, and it will, in my opinion--though I know there is a lot of discussion about this-- pretty much bring an end to the concept of too big to fail. If an institution gets overleveraged to a point where it is no longer sustainable, and it is a systemic risk institution, it is going to be collapsed. The stockholders will be wiped out, the unsecured bond holders will be wiped out, and the institution will be resolved under this bill. That is positive because we do not want to send to the markets a signal that the American taxpayer is going to stand behind institutions which are simply large. That perverts capital in the markets, and it perverts flow of economic activity in the markets when people think there is that sort of guarantee standing behind certain institutions in this country. And I think progress is made in this bill on the issue of resolution. But, unfortunately, in a number of other areas, the opportunity to do something constructive was not accomplished. In fact, in my opinion, there will be results from this bill which will cause us to see a negative effect from this bill. The most negative effects I think will occur from this bill lie in two areas. First, in the area of the formation of credit. It is very obvious that under this bill there is going to be a very significant contraction of credit in this country as we head into the next year, 2 years, maybe even 3 years. We are in a tough fiscal time right now. It is still very difficult on Main Street America to get credit. The economy is slow. We should not be passing a bill which is going to significantly dampen down credit, but it will. This bill will. It will for three reasons: First, the derivatives language in this bill is not well thought out. It just isn't. Most people don't understand what derivatives are, but let's describe them as the grease that gets credit going in this country and everywhere. It is basically insurance products that allow people to do business and make sure they can insure over the risks that they have in a business. This bill creates a new regime for how we handle derivatives in this country. Our goal should have been to make derivatives more transparent and sounder. That could have been done easily by making sure most derivatives were on over-the-counter exchanges--went through clearinghouses I mean, and had adequate margins behind them, adequate liquidity behind them, and were reported immediately to the credit reporting agencies as to what they were doing. It didn't involve a lot of complications, just changing the rules of the road. Instead of doing that, we have changed the entire process. In changing the entire process, we are basically going to contract significantly the availability of these products to basically fund and to be the engine or the grease or the lubricant for the ability of a lot of American businesses to do business. End users in this country who use derivatives are going to find it very hard to have an exemption. They are basically going to have to put up capital, put up margin--something they do not do today on commercial derivative products--and that is going to cause them to contract their business. They will have to contract their business or they are going to have to go overseas. Believe me, there is a vibrant market in derivatives overseas. They will go to London, and this business will end up offshore. Then we have this push to put everything on an exchange. Well, there are a lot of derivatives that obviously should go through clearinghouses but are too customized to go on exchanges, and we are going to end up inevitably with a contraction in the derivatives market as a result. Then we have the swap desk initiative, which was simply a punitive exercise, in my opinion. It is going to accomplish virtually nothing in the area of making the system sounder or more stable. But what it will do is move a large section of derivative activity--especially the CDS markets--offshore. They will go offshore because they will not be done here any longer. Banks and financial houses which historically have written these instruments are not going to put up the capital to write them because they don't get a return that makes it worth it to them. I guarantee we are going to see a massive contraction in a number of derivatives markets as a result of this swap desk initiative, which was more a political initiative than a substantive initiative, and which is counterproductive. It is a ``cut off your nose to spite your face'' initiative, and it will move overseas a lot of the products we do here and make it harder for Americans to be competitive--especially for financial services industries to be competitive--in the United States. So that will cause a contraction and a fairly big one. The estimates are that the contraction may be as high as $\3/4\ trillion. That is a lot of credit taken out of the system. On top of that, there is the issue of the new capital rules in this bill. It isn't constructive for the Congress to set arbitrary capital rules. That should be left to the regulators. But this bill pretty much does that. As a result, a lot of the regional banks, the middle-sized banks--the larger banks would not be affected too much--will find they are under tremendous pressure as their tier I capital has to be restructured relative to trust preferred stock. This is not a good idea because, as a practical matter, we will again cause a contraction in the market of capital--of credit. As banks grow their capital, they will have to contract credit. When a bank has to get money back in order to build its capital position up, it doesn't go to its bad loans because the bad loans aren't performing. It goes to its good loans, and it doesn't lend to them. Or it says: We are going to draw down your line of credit, because that is where they can get capital. That is what will happen, and we will see capital contract there. On top of that, we have the Volcker rule. The concept is a very good idea. We should never have banks using insured deposits to do their proprietary activity. But straightening out what this Volcker rule means will take a while. It may be a year or two before anybody can sort out what it means and before the regulations come down that define it. So there will be a period of uncertainty, and that uncertainty means less credit available. Of course, this is another situation where the international banks are the winners and the domestic banks are the losers because the international banks will be able to go and do the same business--the proprietary trade--in London, if they are based in London or in Singapore, if they are based in Singapore or Tokyo, if they are based in Tokyo. But the American banks they compete with aren't going to be able to do it. So that makes no sense at all. But as a practical matter, that is what this bill does. So we will end up again with a tentativeness in the markets as to what they are supposed to be doing and what they can do in the area relative to the Volcker rule, and this will end up creating further credit contractions. So my guess is, when we add it all together, this bill will lead to a credit contraction of probably $1 trillion or more in our economy. What does that translate into? It translates into fewer jobs and less economic activity. It didn't have to happen this way. This could have been done in a way that would have been clearer, where the clarity would have been greater, and where we would not have had to take arbitrary action which was more political than substantive to address what problems in the industry did exist and should have been addressed. Another area of concern, of course, is this consumer agency. Consumer protection is critical. We all agree to that. What we proposed on our side of the aisle was that we link consumer protection and safety and soundness at the same level of responsibility and the same level of authority within the entire bank regulatory system so that the prudential regulator--whether it is the Fed or the Office of the Comptroller--when they go out to regulate a bank and check on it for safety and soundness--or the FDIC--they, at the same time, have the same standard of importance placed on making sure that the consumer is being protected in the way that bank deals with the consumers. That is the way it should be done. The two should be linked because the regulator that regulates the bank for safety and soundness is the logical regulator to regulate the bank to make sure it is complying with consumers' needs. But this bill sets up this brandnew agency, which it calls consumer protection, but it will not be at all, in my opinion. It will be the agency for political correctness or correcting political justice or issues of political justice that somebody is concerned about. It is totally independent of everybody else. It doesn't answer to anyone except on a very limited and narrow way to the systemic risk council. It is a single person with an $850 million unoversighted revenue stream with no appropriations. Basically, the person just gets the money and can go off and do whatever they want. There is no relationship between this person and the prudential regulator. So what we will have is an individual who may get on a cause of social justice and say that XYZ group isn't getting enough loans, and they go out to the banks and say: You have to send XYZ group more loans. We might have the bank regulator over here saying to the local banks, the regional banks: You can't lend to XYZ group because we know they are not going to pay you back or they will not pay you back at a rate that is reasonable. So we are going to have this inherent conflict. Now, what will be the result of that? The banks will probably have to lend to the XYZ group, which means the people borrowing from that bank who pay their loans back will have to pay more because the bank will have to make up for the loss of revenues. As a result, the cost of credit will go up, especially for individuals who are responsible and paying down their debts and paying for their credit--paying back their loans. We are going to end up with layers and layers of conflicting regulation which will cost the banking community money--a significant amount of unnecessary money. Who pays for that? Well, the consumer pays for it. Clearly, that gets passed through. This is one of those Rube Goldberg ideas that can only come out of a government entity. They used to say: You know, the government produces a camel when it is supposed to be producing a horse. There is just a disconnect between the reality of what we are supposed to be doing in the area of producing effective regulation relative to protecting consumers and what this bill ends up finally doing. I would not be here to oversee it or participate in it. In fact, nobody gets to oversee it, by the way. This consumer protection agency is not responsible to the Banking Committee of the Senate or the Banking Committee of the House. It is not responsible to the Fed. This person is a true czar. The term ``czar'' is thrown around here a lot, but this person is a true czar in the area of consumer activity. I suspect we will see that this agency becomes a very controversial agency, with a very political social justice type agenda, not an agenda which is aimed at primarily protecting consumers. So that is a big problem with this bill, and there are a lot of other issues with this bill. At the margin, the issue of how we restructure the regulatory regimes is of some concern, the whole question of how stockholders' rights in this bill--and probably not relevant to the banking issue so much--could have been improved on. The bill overall could have been a much better product. But the primary concern I have goes back to this issue of what was the original purpose--to protect systemic risk in the outyears and make sure we continue to have a strong and vibrant credit market for Americans who want to take risks and create jobs. Two major issues were totally ignored in the bill which would address that question: What drove the event of this meltdown? What caused this financial downturn? It was the real estate market and the way it was being lent into. Two things were the basic engines of that problem, that were government controlled. There were a lot of things which caused it, but the two things which the government controlled were, No. 1, underwriting standards. Basically we divorced underwriting standards from the issue of whether a person got a loan, so loans were being made on assets which could not cover the cost of the loan. It was presumed the asset was going to appreciate, a home was always going to appreciate in these communities and therefore they could loan at 100 percent of the value of the home or 105 percent of the value and still have a safe loan. That was a foolish assumption, to say the least. Second, we didn't look at whether the person could pay the loans back when these loans were made at zero interest for a year or 2 years. But then they reset, these loans reset at a fairly reasonable or sometimes very unreasonable interest rate and nobody looked at whether the person could pay them back. These loans were being made not for the purposes of actually recovering the loans. That was not the reason these loans were being made. These subprime loans were being made because there were fees on the loans and the people making the loans were getting the fees. There was a whole cottage industry of people down in Miami who had just gotten out of prison who figured this out while they were in prison and they developed an entire cottage industry of former prisoners who had been released, legally, and actually went back into the loan business and were making these loans and getting the fees. Then what aggravated it--first what aggravated it was the underwriting standards, but then it was that these loans got securitized. They got picked up by Freddie Mac and Fannie Mae, with the understanding--it was implicit but it was obvious, as we found out-- that Fannie Mae and Freddie Mac would essentially insure these loans. So if you bought one of these securitized loans, Fannie Mae and Freddie Mac would be standing behind it even though the loans were not viable. This bill ignores both those issues. It has very marginal language on the issue of underwriting. It doesn't get us back to standards which would basically protect us from overly aggressive underwriting. People say Canada did not have a problem, Australia didn't have a problem. Why didn't they have a problem? They didn't have a problem because they required people who were borrowing to put money down and they required that people who were borrowing actually be able to pay the money back. It seems like a perfectly reasonable thing to require, but this bill ignores it. Second, this bill does nothing about Fannie or Freddie--nothing. Talk about ignoring the elephant in the room, this is the whole herd of elephants in the room. The American taxpayer today is on the hook for something like $500 billion to $1 trillion. The estimates vary. Some people say it is even higher than that--the American taxpayer, for bad loans, securitized by Fannie and Freddie. This bill says nothing. It is as if this problem doesn't exist. It is as if this problem doesn't exist. Not only was it one of the primary drivers of the financial meltdown but it is one of the biggest problems we have going forward. The administration says we will do it next year. Well, if you do a financial reform bill without Fannie and Freddie, you essentially are not doing a financial reform bill at all. I apply the same to the issue of underwriting. In my opinion, this bill has some pluses. I know this was worked very hard and I admire the efforts of the Senator from Connecticut and actually the chairman in the House, Congressman Frank from Massachusetts. But the negatives of this bill unfortunately are too significant to ignore, especially in the area of the short-term credit contraction that is going to occur, the poorly structured derivatives language, the Consumer Protection Agency--which I think is going to end up being counterproductive to consumers--and the failure to take up the Freddie and Fannie issue, and the failure to do stronger underwriting standards. For that reason, I remain opposed to this bill. I understand it is going to pass. I hope some of my concerns do not come to fruition because, if they do, unfortunately this economy is going to be slowed and our Nation will be less viable economically. But I am afraid they will come to fruition. I yield the floor.

Mr. GREGG. I understand the vote will occur somewhere around 2 o'clock.

Mr. GREGG. Madam President, I rise to make a point of order that the Senator from Connecticut alluded to. We have rules around here we have set up to discipline ourselves on spending. Unfortunately, we consistently ignore and waive them. That is one of the reasons we have a $13 trillion debt. That is one of the reasons we will have a $1.4 trillion deficit this year alone. This bill violates those rules. This bill violates one of the sections of those rules which says that in any 10-year period, we shall not have more than a $5 billion effect on the deficit in a negative way; that we need to otherwise pay for what we are doing. Therefore, this bill does violate the Budget Act. If we are going to have any fiscal discipline around here--and we hear a lot of people talking about that--we should be living by the rules we have to assert fiscal discipline. Therefore, I make a point of order that the pending bill violates section 311(b) of S. Con. Res. 70 of the 110th Congress.

Mr. GREGG

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