Edward Kaufman

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, I ask unanimous consent that the Special Committee on Aging be authorized to meet during the session of the Senate on June 16, 2010, from 2-5 p.m. in Dirksen 562 for the purpose of conducting a hearing.

Mr. KAUFMAN. Mr. President, I ask unanimous consent that the Committee on Homeland Security and Governmental Affairs' Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security be authorized to meet during the session of the Senate on June 16, 2010, at 3 p.m. to conduct a hearing entitled, ``The Gulf of Mexico Oil Spill: Ensuring a Financially Responsible Recovery.''

Mr. KAUFMAN. Mr. President, I ask unanimous consent that the Subcommittee on Public Lands and Forests be authorized to meet during the session of the Senate to conduct a hearing on June 16, 2010, at 2:30 p.m., in room SD-366 of the Dirksen Senate Office Building.

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, I ask unanimous consent that the previous order regarding debate be extended to 1 p.m. under the same conditions, and limited.

Mr. KAUFMAN. Mr. President, I ask unanimous consent to speak as in morning business for up to 20 minutes.

Mr. KAUFMAN. Mr. President, I have always believed--and I have spoken many times on the Senate floor--that the two most important things that make America great are democracy and free capital markets. But over the last year, as many of my colleagues are aware, I have become deeply concerned that the credibility of our stock markets--one of our Nation's most precious national treasures--can no longer be taken for granted. On May 6, when the markets yo-yoed up and down, plunging 573 points in a mere 5 minutes before recovering 543 points in the next 90 seconds--it was nothing less than an embarrassment. The strength of our stock market depends on its ability to establish an accurate price for a company's fundamental value that reflects a consensus among buyers and sellers at any given moment. In that capacity, the markets failed, in fact they spectacularly failed, for a harrowing 20-minute time period. In the aftermath of May 6, the integrity of our markets has been questioned, and investor confidence has been shaken. In order to restore market credibility and instill confidence among the investing public, regulators and lawmakers alike must act wisely but urgently to fix the structural schisms that plague today's capital markets. That is why I am encouraged, and relieved, that Mary Schapiro, the Chairman of the Securities and Exchange Commission, clearly understands what is at stake. Testifying before the Senate Subcommittee for Securities, Insurance, and Investment on May 20, she said: I believe the markets exist for public companies to raise capital, to build businesses, and create jobs, and they exist for investors to support that activity. And those are the number one and number two purposes of markets. And everything else from my perspective has to be put into the context of those two goals. At a panel last week in Montreal at the International Organization of Securities Commissions, Chairman Schapiro reiterated that point, saying the SEC needs to . . . [E]xplore whether bids and orders should be regulated on speed so there is less incentive to engage in this microsecond arms race that might undermine long-term investors and the market's capital-formation function. The markets have to serve that function for companies to raise money, create jobs and allow the economy to grow . . . We are also looking at whether and to what extent pre-trade price discovery is impaired by the diversion of desirable, marketable order flow from public markets to dark pools. I couldn't agree more with Chairman Schapiro. May 6 made clear what many have long claimed: today's overly- fragmented marketplace, which seems to favor speed over substance, and trading over investing, may be inhibiting the capital-formation process and failing to protect the interests of long-term investors. If that is the case, then regulatory action is needed urgently. Simply put, do stock prices adequately reflect the economics of the companies they represent? On May 6, when liquidity vanished and established companies like Accenture traded briefly for a penny a share, the answer to the question of whether our markets are performing their central function was clearly no. But rather than an aberration, it appears that the May 6 flash crash was no isolated event. On June 2, we saw yet another ``mini-flash crash'' in the stock of Diebold, a technological services company. Prior to 12:22 p.m. that day, Diebold had traded at around $28 per share and within a range of roughly 80 cents. In the next minute, the rug was swept out from under Diebold as 399,000 shares were traded and Diebold's stock price plunged 35 percent to $18. By 12:40, Diebold was once again trading at $28 per share. The sudden decline in price appeared to be in response to news of Diebold's settlement with the SEC over fraudulent accounting practices, which Bloomberg began reporting at 12:25 and Diebold confirmed with a press release a little more than an hour later. The SEC should investigate both the manner in which the news broke and the trading activity that followed it. In the aftermath of the extreme plunge, questions have been raised concerning the manner in which the SEC filed the complaint, which data feeds first reported it, and the electronic overreaction to the news-- all of which suggest that the severe volatility in Diebold could have been largely avoided altogether. The SEC was actually resolving an old investigation with Diebold, the settlement of which had been previously disclosed, and not making any new accusations against the company. But when word of the complaint reached Bloomberg or other sources, it led to a ``trigger'' that potentially activated algorithms programmed to react immediately to breaking news. This may explain why trading activity in Diebold exploded shortly before the story broke publicly. Notably, the SEC filed the complaint manually at the U.S. Federal District Court in DC during market hours rather than using the Public Access to Court Electronic Records--PACER--filing system. Mr. President, regulators should add to their list the need to examine whether the precipitous drop in Diebold stock was the result of high frequency traders who can subscribe directly to market data and news feeds and perhaps had programmed faulty correlations into their algorithms to react to breaking news events. Indeed, with so much of the marketplace dominated by high frequency traders employing similar strategies, an overreaction by a few algorithms looking to trade instantaneously on the basis of imprecise correlations could trigger a dramatic plunge. While the algorithms' calculations may be accurate ``most of the time,'' the chaos that ensues when they are not inexcusably undermines investor confidence. In the Diebold case, once the algorithmic overreaction became clear, humans with actual knowledge of Diebold's true fundamentals quickly intervened. It is no surprise, then, that the stock price rebounded so quickly. Though volatility has always been present in the markets, we see that without human judgment the speed of trading can indeed lead to very brief ``bungee jumps'' for individual stocks whenever there is a significant news event. At the same time, regulators should also consider whether the extreme volatility in Diebold's stock is yet another example of sell orders breaking through a ``razor-thin crust'' of liquidity provided by high- frequency traders. As we saw on May 6, the high-frequency traders who fill the order books on many market centers provide only ``fleeting'' liquidity, particularly in periods of market stress or uncertainty. This is because many high frequency traders prefer to continuously place and cancel small, rapid-fire orders rather than risk letting their orders sit on public venues where they would increase order book depth and promote orderly markets. Regardless of what caused Diebold's ``bungee jump'' or the May 6 market meltdown, we should all agree that such unusual market activity strikes at the very heart of our market's credibility. Even if the SEC's circuit breaker pilot program--which would halt trading for 5 minutes in any S&P 500 stock that experiences a 10 percent price change in the previous 5 minutes--were in place, market and stop-loss orders would still remain vulnerable to a 10 percent insta-drop. This situation undermines the confidence of long-term investors. Mr. President, the Diebold incident and other factors from May 6 make me concerned about what our markets have become. According to a research group survey of 145 market participants conducted in the weeks following May 6, I am not alone. The Executive Summary of the survey results states overall investor confidence in the existing market structure is waning. The summary says: Barely half of all participants have at least a high degree of confidence in U.S. equity market structure; The buy side has the least confidence in U.S. equity market structure. This is particularly demoralizing given they are the guardians over much of our nation's equity investments; Participants no longer believe market structure strongly supports an orderly market; Increasingly, market participants believe that the U.S. equity market structure is not a level playing field. These results underscore how critical it is for regulators to address problems with the current market structure in order to restore investor confidence and protect the strength and credibility of our capital markets. Sadly, Mr. President, the fact is that we simply do not have the data we need to assess fully the impact of market structure changes on long- term investors. Indeed, regulators currently lack sufficient information on the routing history of orders--including those that may go through broker- dealer internalization venues, other dark pools, and multiple exchanges and ECNs before being executed. The SEC also acknowledges it does not have: ``important information on the time of the trade or the identity of the customer.'' As Kevin Cronin, the director of Global Equity Trading at Invesco, a retail and institutional investment fund, said at a June 2 SEC Roundtable: There are dimensions of cost that today we do not have the ability to really understand. Accordingly, I have pushed for the SEC to quickly implement tagging for large traders and a consolidated audit trail in order to gain a more granular view of the marketplace. Once the Commission has collected the data, it should improve its internal analytical capabilities while also making the data available in masked form to the public, or at least academics and independent analysts, so that objective experts can study market performance comprehensively. I admit there are no easy solutions, Mr. President, but we need to strive to answer the difficult questions or millions of Americans will eventually lose confidence in our markets and leave what is already starting to look like a ``casino.'' In that regard, Chairman Schapiro again appears to be on the right track. Regulators must consider, as she said, whether high frequency traders should be subject to speed limits and whether deep and valuable liquidity is being shielded from the public marketplace. Our markets should not be reduced to a battle of algorithms in which capital formation is an afterthought and long-term investors are relegated to second-tier status, nor should the public ``lit'' markets house only ``exhaust'' order flow that is passed over by those who trade in dark pools. Perhaps high-frequency traders who claim to be ``modern-day market- makers'' should be subject to some quoting obligations like their traditional market-maker predecessors. Setting reasonable speed limits on how quickly such traders can withdraw their bids and offers, as Chairman Schapiro alluded to last week, could help level the playing field and make the markets safer and more stable for all investors. I have also proposed requiring exchanges and market centers to allocate costs at least partially based on message traffic share. Cancellations, of course, are not inherently bad--they can enhance liquidity by affording automated traders greater flexibility when posting quotes. But with as many as 98 percent of orders placed on Nasdaq cancelled or otherwise unexecuted on a given trading day, their use is clearly excessive. Those who choke the system with cancellations make the markets less efficient for investors. And they should pay the price for the inefficiencies they create. Exchanges cater to high frequency traders in a variety of ways, by electing not to charge them for high cancellation rates, and providing co-location services for their computers right next to the exchanges' own servers. Fortunately, co-location and direct market data feeds appear to be on the regulatory radar--the CFTC proposed a rule last week to ensure exchanges provide ``fair access'' for, and increased transparency of, co-location services. But new practices that further threaten market integrity have recently come to light. Several market participants, including institutional investment adviser Southeastern Asset Management, have said exchanges are releasing private information on investor orders, including details on the total shares an investor has accumulated and other data that could be used by high-frequency traders to trade ahead of investor orders. It is important to remember that these potentially disadvantaged institutional orders represent the tens of millions of Americans who invest in mutual, pension, and retirement funds. These market practices, among many others, underscore how critical it is for regulators to keep pace with market developments. The May 6 flash crash and the miniflash crash in Diebold a month later have sounded the alarm that the very credibility of our market is at stake. While regulators must continue to rely on data to drive the rulemaking process and be mindful of unintended consequences, they cannot delay in tackling the problems that leave us vulnerable to another flash crash today. As an engineer and a graduate of Wharton Business School, I understand and appreciate as much as anyone the importance of innovation and technological development. I want to make it clear I am not interested in banning high frequency trading or dark pools, nor am I advocating a return to the horse-and-buggy system. But new technologies must operate in a regulatory framework that considers both positive and negative consequences. If the public marketplace has been reduced to a battle of algorithms in which liquidity is fleeting and inaccessible when investors need it the most, and if the deep liquidity that is so critical to establishing accurate prices--particularly during times of market stress--is largely traded in dark pools, that must be carefully but urgently remedied. As John Wooden, the legendary UCLA basketball coach who passed away 2 weeks ago, used to say, ``Be quick, but don't hurry.'' Be quick, don't hurry. The SEC and CFTC must adopt the same philosophy as they confront the great challenges before them. ``Be quick, but don't hurry.'' I yield the floor and suggest the absence of a quorum.

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

Mr. KAUFMAN

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

Mr. KAUFMAN. Mr. President, I ask unanimous consent to speak as in morning business for up to 20 minutes.

Mr. KAUFMAN. Mr. President, it has only been 2 years since we had an extremely painful financial crisis that almost brought down our entire economy. To try to address the root cause of the crisis, we are currently nearing completion of a long and arduous process to develop a comprehensive financial reform bill. The world is watching to see how strong a bill this Congress will produce, and we need to show leadership. Yet I fear that instead of putting in place strong structural reforms as a model for other nations, we are deferring too much to the discretion of regulators who have failed in the past, and to international negotiations--currently underway in Basel, Switzerland--that have all too often resulted in global standards that were the lowest common denominators. Capital flows easily across borders, and so the United States needs to provide leadership and then produce harmonized global standards. Instead, I fear we are doing the opposite. We have hollowed out our national response so that we can negotiate with a free hand on the global stage--after Congress showed the world that we lack the political resolve to impose hard measures. This is why we have heard a common refrain that statutory requirements on capital or other prudential standards will tie regulators' hands during these international negotiations. We heard it before on the Brown-Kaufman amendment to restrict the size, leverage, and risk of our megabanks. Now we hear it on the Collins amendment. Senator Collins's commonsense provision would ensure that bank holding companies and systemically significant nonbank financial institutions are subject to capital and leverage requirements as stringent as those that insured depository institutions face under existing prompt corrective action regulations. This provision would raise the capital bar for our largest financial institutions, requiring them to hold more committed and reliable forms of capital; namely, common equity and retained earnings. As my colleagues will recall, it passed by a voice vote during the Senate debate. Now there is the threat that the Collins amendment might be eliminated for the sake of ``international negotiations.'' Mr. President, I fear this is a recipe for a global race to the bottom for two reasons: First, a tepid response by the United States may also undermine other countries' consideration of tough reform measures. For example, the U.K. is studying whether to break up their megabanks. But some in the U.K. have suggested that since the United States isn't taking this preemptive action, the U.K. would not do it either. Second, some countries' regulators appear to be wedded to the status quo, and we are only reinforcing the impression that tough measures are not needed. Remarkably, only weeks before the European Government and the IMF cobbled together an almost $1 trillion bailout of European megabanks, one French Government official stated: The situation is completely different here, and the system that was in place has not worked badly and does not need to be overhauled. Regulators from Germany, France, and Japan, among others, are opposed to having a leverage requirement and a more strict definition of what constitutes capital. Leaving aside the opposition of many countries to the very concept of a leverage capital requirement, there are those who still indicate that the quantitative requirement must be set through the Basel negotiations. In fact, Treasury Secretary Geithner said: By the end of this year, we will negotiate an international consensus on the new ratios. Why does it strengthen our negotiating hand for the Congress to have failed to enact hard rules? Moreover, it is tougher to imagine how we can set a number on leverage when we don't even have an agreement on how to measure leverage, since the United States follows GAAP accounting standards while the rest of the world follows IFRS. It is unlikely we will have uniformity, or even harmonization of those rules, for many years--if we ever will at all. While the accounting standard issue is often overlooked, it should go without saying that it is a more basic and first-order problem. Most important, for what are we negotiating? The history of international capital standards is that of colossal failures--Basel I, Basel II, and now Basel III. Instead, we have a sovereign banking failure and should be establishing a sovereign solution. If other countries want to permit banks to become risky and fail-- such as what Europe may be facing due to the European debt crisis--let them learn the hard lessons America has already learned. Let me briefly review the history of the Basel accords, which should stiffen the resolve of the conference negotiators to include measures that will prevent another financial crisis caused by U.S. megabanks. The Basel I Accord was a crude apparatus that established numerical requirements for the amount of capital that banks need to set aside based upon how risky the assets on their balance sheets were perceived to be. Different types of loans and assets were lumped into risk buckets. Some received lower risk weights, while others received higher risk weights. However, those weightings were arbitrary determinations that did not even take into account basic risks--most notably credit risk--associated with loans and other financial assets that banks hold. Under the Basel I system, a bond issued by a blue chip AAA company such as Johnson & Johnson would have had a much higher risk weight than a subprime stated-income loan, a loan to Greece, or a loan to Lehman Brothers. Not surprisingly, banks were able to easily game--or arbitrage--these capital requirements in a way that generally increased their risk profile. Banks were able to cherry-pick high-risk, and therefore, high-return assets that had low capital requirements because of the risk bucket in which they were placed. Banks also got around the Basel I requirements by shifting more assets off their balance sheets. The Basel II Accord, which was agreed to in 2004, was the culmination of several years of negotiations. While it was intended to address the flaws of Basel I by making capital requirements more risk sensitive, it actually created bigger problems. Most notably, the accord's complexity and sophistication masked a deregulatory philosophy that sought to make determinations on capital adequacy dependent on the judgments of rating agencies and, increasingly, the banks' own internal models. By outsourcing their regulatory responsibilities to the banks that they were supposed to regulate, bank regulators were making an implicit admission that the size and complexity of the megabanks had exceeded their comprehension. Unfortunately, complex capital standards that rely upon banks' own internal models pose serious problems for any democratic nation that prizes accountability and transparency, such as the United States. In his book ``Banking on Basel,'' Federal Reserve Governor Daniel Tarullo provides an exhaustive account of the Basel II capital accord that specifically questions the accord's decision to base capital standards on the internal ratings of banks. Tarullo indicates that the ``very complexity of the [accord's] approach gives banks more opportunities to manipulate, or make mistakes during, calculation of their capital ratios.'' Even more troubling, Governor Tarullo noted it would also be nearly impossible for any independent auditor or examiner to identify failures and forbearance on the part of regulators. To that point, he states ``it may be extremely difficult for an independent entity such as the Government Accountability Office to reconstruct the series of decisions and judgments that went into the creation and supervisory assessment of the credit risk model.'' Given that, how will we in Congress be able to hold either the megabanks or their regulators accountable? By virtually all accounts, the Basel II Accord was a complete failure. The Basel Committee itself estimated that it reduced capital for some banks by as much as 29 percent, at a time in which regulators should have been ramping up capital and other prudential requirements upon banks. By trying to tie capital requirements to so-called risked-based measurements, the Federal Reserve--the main driver of the Basel process--apparently hoped to eliminate the basic leverage requirement. In fact, former Fed Governor Susan Bies told banks that ``the leverage ratio down the road has got to disappear.'' Fortunately, despite the Fed's objections, Basel II has not been implemented in the United States, in large part due to concerns that it would disadvantage smaller community banks that did not have the resources and wherewithal to make investments in supposedly advanced risk models. It was, however, applied to European banks. Unconstrained by a basic leverage capital ratio, many of these banks went on to arbitrage the Basel requirements by gorging on AAA-rated bonds backed by subprime mortgages, not to mention the sovereign debt of highly indebted Eurozone countries such as Greece and Spain. The result has been hundreds of billions of dollars of losses followed by both explicit and implicit bailouts by EU governments. The accord was also effectively applied to investment banks such as Lehman Brothers and Goldman Sachs, which had precarious and explosive business models that utilized overnight funding to finance illiquid inventories of assets. These institutions were nominally regulated by the SEC, which had no track record to speak of with respect to ensuring the safety and soundness of financial institutions. The Commission allowed these investment banks to leverage a small base of capital over 40 times--I repeat, over 40 times--into asset holdings that, in some cases, exceeded $1 trillion. Of course, in the wake of the most recent crisis, the same failed regulators now tell us that, this time, they have learned their lesson and will develop a new agreement that will address the deficiencies of the last one. But what reasons do we have for thinking that will be true? Assistant Treasury Secretary Michael Barr notes that regulators are now pushing for new global capital standards that will be ``more robust, higher and better quality, less pro-cyclical, and include global agreement on a leverage ratio.'' But the megabanks are already developing new ways to arbitrage as well as weaken the global capital standards to which Secretary Barr refers. In other words, they are finding ways to gut and go around the rules before they are even finalized. What is more, many of the regulators involved in the discussions inspire little confidence. Christian Noyer, the governor of the Bank of France and the new chairman of the Bank of International Settlements, the entity that oversees the Basel rulemaking process, indicated, that the new rules ``shouldn't undermine the business model of banks which have perfectly withstood the crisis.'' Given that the same Bank of International Settlements estimates that eurozone banks have two-thirds of the exposures to the most fiscally imperiled European countries-- Greece, Ireland, Portugal and Spain--it is not clear to which banks Governor Noyer is referring. As the Financial Times notes, France, Germany and Japan are ``more attached to the preeminence of the current risk-based approach and wants the leverage ratio to have a much less important role in governing banks' balance sheets.'' In effect, they are pushing for the status quo of Basel II, which has been an unmitigated disaster. After the multiple trillions of dollars worth of public funds expended on megabank bailouts, it seems amazing that many regulators would like to maintain a system where the largest banks effectively regulate themselves. But U.S. regulators are not immune to the defense of the existing regime. As the Wall Street Journal reports, ``some U.S. government officials are fighting what they view as an anti-American proposal that would prevent banks from counting as part of their capital cushion a specific type of security favored by U.S. banks known as a trust- preferred security.'' In other words, we have unnamed U.S. regulators that are fighting against Senator Collins' amendment in international negotiations. The current state of international capital negotiations gives little comfort to those who would like to see fundamental structural reforms to address the problem of too big to fail. I am in favor of international negotiations to harmonize financial regulatory standards. However, these negotiations should not preclude the Congress from setting statutory floors. They should never result in the abdication of our sovereign powers and responsibilities. I, therefore, agree with the sage thoughts of former Federal Reserve Chairman Paul Volcker when he said that while ``good things may come out of the Basel process, ``it is not structural change.'' In his view, and in mine, we need to do both. Instead of trusting our financial stability solely to unelected financial guardians, in this country and abroad, Congress should legislate structural and fundamental reforms that preemptively address the persistent problem of too big to fail. Senator Collins' provision is but one example of that. There is also Senator Lincoln's proposal to require swap dealers to be spun off and separately capitalized from insured depository institutions; a strong Volcker Rule ban on proprietary trading at banks, as proposed by Senators Merkley and Levin. Without transparency and accountability, a democracy cannot function. That is why we still need the statutory standards on the leverage as well as the size of these megabanks. While some technocrats may say that they are blunt tools, I say that that is precisely the point. They will not only provide a sorely needed gut check that ensures that regulators do not miss the forest for the trees when assessing the capital adequacy of a financial institution, they will also provide a basic means to ensure accountability in the performance of government officials. We cannot--we cannot--afford another meltdown and the American people--and, indeed, the rest of the world--are looking to Congress to take steps to ensure that that does not happen. By adopting these fundamental reforms and preemptive measures, Congress will go a long way towards protecting the American people from future bailouts. It will also be providing global leadership, demonstrating to the rest of the world that fundamental reform of our financial system does not rest upon the decisions of unelected technocrats whose grand designs brought our financial system to the brink. Mr. President, I yield the floor.

Mr. KAUFMAN

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

Mr. KAUFMAN. Madam President, I ask unanimous consent to speak as in morning business.

Mr. KAUFMAN. Madam President, I rise today once again to recognize some of our Nation's great Federal employees. This week, the Trachtenberg School at the George Washington University announced the winners of the annual Arthur S. Flemming Awards. These distinguished awards for public service have been bestowed upon outstanding Federal employees for the past 61 years. The Flemming Awards recognize career Federal employees, both civilian and military, who have served between 3 and 15 years in government. Nominees come from across the many departments, agencies, and service branches. Notable winners include former Senators Elizabeth Dole and Daniel Patrick Moynihan, Defense Secretary Robert Gates, former Federal Reserve Chairman Paul Volcker, astronaut Neil Armstrong, among others. The awards are named for Arthur S. Flemming, who had a long and exemplary career in public service which spanned from 1939 until his death in 1996. He served in a number of important roles, including Secretary of Health, Education, and Welfare under President Eisenhower. Secretary Flemming also served on the U.S. Civil Service Commission under Presidents Roosevelt and Truman, the National Advisory Committee on the Peace Corps under Presidents Kennedy and Johnson, and as Chairman of the U.S. Commission on Civil Rights under Presidents Nixon, Ford, Carter, and Reagan. President Clinton awarded him the Medal of Freedom in 1994. It is fitting that these awards, which were originally bestowed by the DC Jaycees, are named for Flemming. His lifetime of dedication to public service continues to inspire so many. The Flemming Awards are divided into three categories: applied science, engineering, and mathematics; basic science; and managerial or legal achievement. These categories highlight some of the most outstanding and exciting accomplishments by our public servants who are helping to lead the way in scientific discovery, efficient public management, and upholding justice. This year's medals in applied science, engineering, and mathematics were won by a trio of brilliant individuals who are keeping America at the forefront of STEM research. Dr. Lynn Antonelli is leading the way in developing laser-based sensors for the Navy. The sensors she and her team created have found commercial and medical applications, in addition to providing our Navy vessels with extended optics and sensing underwater. Dr. Steven Brown of the National Institute of Standards and Technology--or NIST--also works with light. He and his team have made great strides in the field of light measurement that have enabled more detailed environmental imaging of the Earth. His work is revolutionizing the ability to detect minute changes in the environment as a result of climate change. Also winning the applied science, engineering, and mathematics award is Dr. John Kitching. John has been leading the world's top research program in atomic measurement. He and his team developed ultra- miniature devices that can improve the accuracy of GPS, telecommunications, and medical imaging. They even have important national security uses, including in the more accurate detection of chemical toxins. The three Federal employees who won this year's award for basic science are pioneers on the cutting edge of science research. Dr. Dietrich Leibfried is one of NIST's leading experts on quantum computing. This exciting field could lead to supercomputers faster and more powerful than the best ones we have today. Dietrich Leibfried is responsible for many innovations in quantum computing, including the successful demonstration of a simple, fully programmable quantum computer, the first step in a long-term effort to build supercomputers that can handle nationally important applications, such as weather prediction, secure data encryption, and developing new drugs. The basic science award is also going to Dr. Shyam Sharan of the National Cancer Institute at the National Institutes of Health. He has developed a simple and reliable way to analyze genetic mutations that increase a patient's chances of developing breast cancer. This will help doctors identify those who have the highest risk of cancer and treat them preventively. Sharing the award with them is Dr. Eite Tiesinga, who works at NIST on ultra-cold atoms. By manipulating these atoms, scientists can carefully tune the quantum gases that might one day power quantum computers. Eite is frequently asked by researchers around the world to consult on their measurements and findings, and his work on ultra-cold atoms has put the United States ahead in the race to achieve successful quantum computing. Four outstanding public employees were chosen for this year's managerial and legal achievement medal. Angela Clowers works at the Government Accountability Office, and she led the GAO's efforts to audit transportation investments made under the Recovery Act. Her careful analysis and testimony before Congress prompted the Department of Transportation to refocus some of its investments in order to stimulate additional job growth. Angela also led the GAO's audit of government assistance to the American auto industry under TARP. Another who won this award is Dr. Marla Dowell of NIST'S laboratory in Boulder, CO. Marla leads the world's most comprehensive research program in laser metrology. She won this award for outstanding management skills and for leading a team that is developing lasers for highly accurate measurement of manufacturing equipment. This will have profound and positive effects on both defense programs and high-tech businesses. Kana Enomoto won the award for a distinguished career working on mental health access. She served as a leader in this area in the aftermath of Hurricane Katrina through her work at the Substance Abuse and Mental Health Services Administration. Kana also spearheaded efforts to improve the agency's operations, human resource management, and other critical functions as the Acting Deputy Administrator. The fourth winner of this award is Natalie Harrop of the Air Force Global Logistics Center in Utah. Natalie distinguished herself as a lead budget analyst for the Air Force's 748th Supply Chain Management Group. She revolutionized the group's financial management, and her new system is being implemented across the 448th Supply Chain Management Wing. It is saving hundreds of work hours and over $5 million. These 10 men and women are not an exception, they are exemplary. They represent the norm of excellence of our civil service. They have achieved great things and now join the ranks of those who share the Arthur S. Flemming Award for their great contribution to our Nation. I hope my colleagues will join me in congratulating the winners of the 2009 Arthur S. Flemming Awards and thanking them all for their service. They are all truly great Federal employees. I yield the floor and suggest the absence of a quorum.

Mr. KAUFMAN

Mr. KAUFMAN. Madam President, I enjoy it very much and I learn a lot every time the Senator from North Dakota gets up to speak. There is no one in this body who better states the issues I am concerned about than he does. This house in the Cayman Islands--maybe we should take a codel down there. Also, his comments on the gulf are absolutely right on point. Not only am I not disturbed, I enjoyed the opportunity to hear him speak once again. In Praise of Judge Timothy Rice

Mr. KAUFMAN. Madam President, I rise today to recognize another of our Nation's great Federal employees. Since first embarking on this series over a year ago, I have honored so many dedicated public employees from across the executive branch. I have shared the stories of some who work in the legislative branch as well. Today, it is my distinct privilege to highlight an outstanding public servant from the Federal judiciary. Ever since the First Congress passed the Judiciary Act of 1789, one of the hallmarks of American life has been our fair and independent judicial system. Indeed, our courts have long been the envy of the world and a model for other nations. It has been an honor to serve on the Judiciary Committee and to participate in the confirmation of Federal judges. Over the past year in office and in my many years of working as chief of staff for the former Judiciary chairman, Joe Biden, I have met so many highly qualified judges. America's Federal judges have, at times, faced great danger. From those who served on the frontier in the 19th century to those who today face ever-increasing threats from angry litigants and others, Federal judges honor us all through selfless devotion to duty. Although they come from diverse backgrounds, judges must all share a dedication to justice and the law. For so many, these are truly a passion. They don their robes each day inspired by the biblical pronouncement: ``justice, justice, you shall pursue.'' The great Federal employee I am honoring today serves as a magistrate judge for the district court for the Eastern District of Pennsylvania. That court falls under the jurisdiction of the Third Circuit, which also covers Delaware. Judge Timothy Rice has been a Federal magistrate judge since 2005. Before coming to the bench, Tim spent 17 years working for the Justice Department as an assistant U.S. attorney. He served as chief of the Eastern District's financial crimes section from 1995-1997 and later as chief of the public corruption section from 1997-2002. In his last 3 years as an assistant U.S. attorney, Tim served as chief of the criminal division. While obtaining his law degree magna cum laude from Temple University, he held the position of editor-in-chief of the Temple Law Review. After graduating he clerked for Judge Anthony Scirica of the Third Circuit Court of Appeals. Before attending law school, Tim worked for 4 years as a news reporter for the Observer-Dispatch in Utica, NY. Despite his busy schedule presiding over a wide range of criminal and civil matters, Tim makes time to give back to his community and his country. He has taught courses at the Temple University School of Law since 1990, and he was appointed last year by Chief Justice John Roberts to serve on the Advisory Committee on Federal Rules of Criminal Procedure of the U.S. Judicial Conference. Tim volunteers his time with a number of charitable Catholic organizations, such as the St. Vincent De Paul Society and ResponseAbility. He also works with Philadelphia Reads, a literacy mentorship program for second grade students. As a magistrate judge, Tim cofounded the Supervision to Aid Re-entry or ``STAR'' program to help reduce recidivism among ex-offenders. Not only has the 3-year-old STAR program helped dozens of ex-offenders make a smoother transition back into society, it has also saved the Federal prison system an estimated $380,000. With volunteers from the court system, the Philadelphia Bar Association, and area law schools, as well as support from local charitable organizations, the STAR program mentors ex-offenders to finish high school or college, find employment, and avoid a return to crime. Thanks in large part to Tim's commitment, energy, and vision, the STAR model is being replicated elsewhere around the country. Tim and his wife Elaine have passed on a love of public service to their daughters, Meghan and Courtney, who work for the State Department and have been assigned to numerous overseas posts since 2005, including war-time service by both in Iraq. Their youngest daughter, Caitlin, just graduated from the College of Charleston. Judge Timothy Rice is just one of hundreds of Federal judges across the Nation working day in and day out to fulfill the promise of our Constitution's preamble to ``establish justice'' throughout this land. I hope my colleagues will join me in thanking him and all those serving in the Federal judiciary for their tireless work to protect our lives and our liberties. They are all truly great Federal employees. Madam President, I yield the floor and suggest the absence of a quorum.

Mr. KAUFMAN. Madam President, I ask unanimous consent to speak as in morning business for 5 minutes.

Mr. KAUFMAN

Mr. KAUFMAN. Mr. President, I ask unanimous consent to speak as in morning business.

Mr. KAUFMAN. Mr. President, one of my primary concerns in the debate on Wall Street reform has been that we should not write legislation that turns all of the major reform proposals over to the regulators. Instead, we should follow on the footsteps of our forebears from the 1930s--those Senators of old who made the tough decisions and wrote bright-line laws which lasted for over 60 years, until they were repealed. I also argued that we should not depend on regulators who had not used powers they already possessed. Instead, we passed a Senate bill that, in the area of bank regulation, primarily restates existing regulatory powers, provides some general directional authority, and leaves us with the hope that our present regulators will devise and enforce rules that prevent another financial crisis; that a systemic risk council of regulators will be able to detect early warning signals of impending financial instability; that the regulators will impose higher capital standards on systemically significant banks; that the regulators will be able to resolve failing institutions, and so on, and so on, and so on. Yesterday, a third reason for writing laws and not turning to regulators was brought home to me. It relates to how the Securities and Exchange Commission is studying the incredibly unregulated growth of high-frequency trading. I am deeply concerned by preliminary reports of the makeup of the SEC panels studying high-frequency trading after the ``flash crash'' of May 6. On that day, the Dow Jones fell almost 1,000 points, temporarily causing a $1 trillion drop in market value. I call on the SEC to make those panels more balanced by adding individuals from outside Wall Street who are truly sincere and knowledgeable about the further actions the SEC may need to take. In just a few years' time, high-frequency trading has grown from just 30 percent to 70 percent of the daily trading volumes of stocks. These black box computers trade thousands of shares per second across more than 50 market centers with no real transparency--no real transparency--and therefore no effective regulation. If those ingredients--no transparency, no regulation--sound familiar, it might be because those are the same characteristics applied to over-the- counter derivatives. My concern about the opaque and unregulated nature of high-frequency trading led me to write to SEC Chair Mary Schapiro last August 21, 2009, calling for a comprehensive review of market structure issues. I wrote: The current market structure appears to be the consequence of regulatory structures designed to increase efficiency and thereby provide the greatest benefits to the highest volume traders. The implications of the current system for buy-and- hold investors have not been the subject of a thorough analysis. I believe the SEC's rules have effectively placed ``increased liquidity'' as a value above fair execution of trades for all investors. On September 10, Chair Schapiro responded, saying she recognized the importance of standing up for the interests of long-term investors and would undertake a comprehensive review of market structure issues. Because I had heard these concerns raised by credible voices, in a speech on September 14, 2009, I predicted some of the events of last May 6. At that time, I said: Unlike specialists and traditional market-makers that are regulated, some of these new high-frequency traders are unregulated, though they are acting in a market-maker capacity. If we experience another shock to the financial system, will this new, and dominant, type of pseudo market maker act in the interest of the markets when we really need them? Will they step up and maintain a two-sided market, or will they simply shut off the machines and walk away? Even worse, will they seek even further profit and exacerbate the downside? On October 28, Senator Jack Reed convened a hearing in the securities subcommittee on these issues. He graciously asked me to testify at the hearing, where I said in my first statement: First, we must avoid systemic risk to the markets. Our recent history teaches us that when markets develop too rapidly--when they are not transparent, effectively regulated or fair--a breakdown can trigger a disaster. On November 20, I sent a letter to Chairman Schapiro summarizing some of the hearing testimony and called on the Commission to acted quickly to ``tag'' high-frequency traders and address the systemic risk they pose. On December 3, Chairman Schapiro responded to my letter and wrote that the SEC would issue a concept release in January and put forth two rule proposals that would, respectively, impose tagging and disclosure requirements on high-frequency traders and address the risk of naked access arrangements. In January, the SEC did indeed issue a concept release, as well as a proposed rule banning naked access arrangements. Unfortunately, it was months later--April 14--before the SEC finally issued the ``large trader'' rule requiring tagging of high-frequency traders. In that proposed rule, the SEC noted that the current data collection system is inadequate to recreate market events and unusual trading activity. Now think about this. This was back on April 14, before the May 6 thing, and what she said was: In the proposed rule, the SEC noted that the current data collection system is inadequate to recreate market events and unusual trading activity. Is there any question why we don't know yet what happened on May 6? Then, on May 6, the disaster struck that I and others were worried about. For 20 minutes, our stock market did not perform its central function: discovering prices by balancing buyers and sellers. And as the SEC has noted--both before and after the ``flash crash''--it indeed does not have the data to discover easily the causes of the market meltdown. It is true that the SEC and CFTC have gone into overdrive since May 6. Indeed, the staffs and Commissioners of both agencies have worked heroically around the clock to try to recreate and study the unusual trading activity of that day. They have kicked into high gear and formed an advisory commission. They have quickly come together to propose two more possible rules: an industry-wide circuit breaker so that if we ever again have another market ``flash crash,'' we won't see absurd prices for some of our Nation's proudest company stocks, and also a long overdue proposal to have a consolidated audit trail across market centers that will finally provide regulators with access to the information they need to police manipulation, understand trading practices, and reconstruct unusual market activity in a timely manner. After weeks of helpful action by the SEC--when the industry itself was helping the agencies to find band-aid solutions--now is not the time to see the SEC continue with rulemaking by Wall Street consensus. We may need further action, probably against the interests of those who benefit from the current market design. Further action only through industry-consensus is a prescription for no change. This all brings me to why I became so concerned yesterday. As part of the Commission's ongoing market structure review, the SEC has decided to hold a roundtable discussion on June 2--good idea. I have learned preliminary reports about the make-up of the high frequency trader panel. Based on those reports, the panel is dramatically out of balance. It appears as though it was chosen primarily to hear testimony that reinforces the top-line defenses of the current market structure--that high frequency trading provides liquidity and reduces spreads--rather than what it should be doing, a deep dive into the problems that caused severe market dislocation on May 6 and damaged our market's credibility. I have called on the SEC to add more participants to give the panels some semblance of balance. Frankly, I find the preliminary reports to be so stacked in favor of the entrenched money that has caused the very problems we seek to address that the panel itself stands as a symbolic failure of the regulators and regulatory system--that is, with the exception of a few brave souls who have been invited to critique the conventional industry wisdom. Let me read from the comment letters and statements of five of the expected participants. Not surprisingly, in comments to the SEC and members the industry made prior to the unusual volatility of May 6, each of these five participants reported that--contrary to the concerns I and others had expressed--they think the markets are running as smoothly as ever. One of the expected panelists wrote: [O]ver the past 18 months--since the height of the financial crisis--the Commission has been very active with rule making proposals. Nearly all of the issues that may have contributed to diminishing investor confidence have been addressed by Commission rule-making. Ironic, after what happened on May 6. That panelist also wrote: We believe that the current national market system is performing extremely well. For instance, the performance during the 2008 financial crisis suggests that our equity markets are resilient and robust even during times of stress and dislocation. Another expected participant wrote in an email sent widely that his exchange-- doesn't believe the equities markets are broken. To the contrary, we would argue that the U.S. equity markets were a shining model of reliability and healthy function during what some are calling one of the most challenging and difficult times in recent market history. Another expected participant wrote: Implementing any type of regulation that would limit the tools or the effectiveness of automation available for use by any class of investor in the name of ``fairness'' would turn back the clock on the U.S. Equity market and undo years of innovation and investment. That is an interesting comment, because I have always believed that fairness was the hallmark and number one priority of U.S. markets. That is what people say. That is why people come to America. They don't come to invest in some casino game. Liquidity is important, but the key thing for our markets to be credible is fairness. Another expected panelist sounded a similar note in a comment letter filed before May 6. All market regulation should be evaluated with respect to its impact on the liquidity and efficiency of equity markets for the benefit of investors . . . For example, certain short-term traders and high frequency traders provide liquidity to the markets. Although some of these short-term traders may differ at times in their goals and overall position vis-a-vis other types of investors, we believe, on the whole, that the liquidity they provide is beneficial to the markets. I agree with that statement. Liquidity is vital to the strength and stability of our markets. But on May 6, liquidity vanished, as some of the short-term traders left the marketplace. And for those who didn't, we learned that the liquidity they provide was about 1/100th of an inch deep. Finally, another panelist co-signed a letter stating: We believe that any assessment of the current market structure or the impacts of `high frequency trading' should begin with the recognition that by virtually all measures, the quality of the markets has never been better . . . . The equity markets have also proven to be remarkably resilient. Despite the significant stresses that occurred during the recent financial crisis, U.S. equity markets remained open, liquid and efficient every day, while other less competitive and less transparent markets failed. The SEC has picked one voice for the panel--Sal Arnuk of Themis Trading--who has been a vocal and intelligent critic of high frequency trading. He has valiantly raised questions about market structure and the trading advantages that high frequency traders enjoy, but he is being asked to go up against six Wall Street insiders who will no doubt be primed to argue against his position. People wonder why Americans have such little faith in Washington, DC. Talk about a stacked deck. I am particularly concerned by the upcoming SEC roundtable on high frequency trading because it is reminiscent of the one that the SEC held last September on ``naked'' short selling. Naked short selling occurs when a trader sells a financial instrument short without first borrowing it or even ensuring it can be borrowed. Just a reason on faith that it may be borrowed. What this means is traders can sell something they do not own or have not borrowed. Americans understand you cannot sell something you don't have. After the SEC's repeal of the 70-year uptick rule in 2007, abusive short selling facilitated the sort of self-fulfilling bear raids on stocks that we saw during the financial crisis. Since coming to office last year, I have highlighted this serious problem through a series of speeches and letters to the SEC. Along with seven other Senators, of both parties, I also called for pre-borrow requirements and centralized ``hard locate'' system solutions. In response to those concerns, the SEC held a roundtable last September to examine these proposals. Unfortunately, like the panel coming up, the panel was stacked with industry representatives even though the industry had done virtually nothing to address what had become a glaring problem. Listen to the lineup: Goldman Sachs, State Street, and the Depository Trust & Clearing Corporation DTCC, among others, participated. Not surprisingly, these panelists were resistant to the hard-locate requirement and other serious solutions, even while they generally acknowledged that there are bad actors who engage in naked short selling and don't comply with the current locate system. DTCC even backed away from discussing the very proposal it had laid before the U.S. Senate. I fear that an industry-stacked panel in the upcoming roundtable on high frequency trading will be more of the same and will once again dismiss fundamental reforms, ultimately leaving retail and long-term investors with half-measures or none at all. Why? Because repeatedly we see that regulators are dependent almost exclusively for the information and evidence they receive about market problems on the very market participants they are supposed to be confronting about needed changes. This is as true in other agencies--we filed the papers just last month and you can see it--like the agency charged with the oversight of oil drilling--as it is at the SEC. The regulators are surrounded--indeed they consciously choose to surround themselves--by an echo chamber of industry players who are making literally billions of dollars under the current system. Who speaks to the regulators on behalf of the average investor? Who outside of the industry itself has access to the data that only the industry controls? Who other than the market players who have invested so much of their capital into the very systems that profit and serve their own interests has the analytical capability to lead the SEC in a different direction? We must have evidenced-based rules in our system, we are told. But when all the evidence comes from Wall Street, who is going to stop Wall Street from once again pulling the wool over the SEC's eyes? The events of May 6 demonstrate that technological developments have outpaced regulatory understanding. If we are to ensure our markets are safe from future failures--because the markets did fail their primary function on May 6th--regulators must catch up immediately. Competition is critical in our markets and has led to many positive developments. But with competition, we also need good regulation. Just like we need referees on the field who will blow their whistles when the game becomes rigged. In football, we don't let the players make up the rules during the game. So, we need action from our regulators, not negotiation. We need independent leadership by the SEC, not management by consensus with Wall Street. Again, I call on the SEC to rebalance these panels. The Commission will never be able to catch up if it hears mostly from those who will fight to maintain the status quo. The SEC must hear from those who speak for long-term investors and others who use our capital markets, not just from those who profit from high frequency trading. The American people deserve no less. I yield the floor.

Mr. KAUFMAN

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

Mr. KAUFMAN. Mr. President, I would like to speak as in morning business.

Mr. KAUFMAN. Mr. President, I rise to speak about the nomination of Elena Kagan to be Associate Justice of the Supreme Court of the United States. Ms. Kagan is, without a doubt, an exceptionally well-qualified nominee. In every job she has held, including associate White House counsel, dean of the Harvard Law School, and Solicitor General, she has distinguished herself through her work ethic, intelligence, and integrity. I was part of 10 confirmation hearings during my time with then- Senator Biden, and during that time, I witnessed Ms. Kagan's talents firsthand, when she served as special nominations counsel to the Judiciary Committee during the nomination of Justice Ginsburg in 1993. She is also a woman of many ``firsts''--the first woman to serve as dean of Harvard Law School as well as the first to serve as Solicitor General. She now stands to be the fourth in history to serve on the Supreme Court. When she is confirmed, for the first time in history three women would take their seats on the Nation's highest Court. I have consistently called on President Obama to nominate candidates to the bench who expand, and not contract, the breadth of experiences represented on the Supreme Court. Every one of the current Justices came to the Court from the Federal appellate bench. While this experience can be valuable, I believe the Court should reflect a broader range of perspectives and experience. Ms. Kagan brings valuable nonjudicial experience and a freshness of perspective that is currently lacking. Prior judicial experience has never been, nor should it be, a pre- requisite to be a Supreme Court Justice. In the history of the Supreme Court, more than one-third of the Justices have had no prior judicial experience before nomination. History further shows that a nominee's lack of judicial experience is no barrier to success as a Supreme Court Justice. When Woodrow Wilson nominated Louis Brandeis in 1916, many objected on the ground that he had never served on the bench. Over his 23-year career, however, Justice Brandeis proved to be one of the Court's greatest members. His opinions exemplify judicial restraint and his approach still resonates in our judicial thinking more than 70 years after his retirement. This list of highly regarded Justices without prior judicial experience is not insignificant. Felix Frankfurter, William Douglas, Robert Jackson, Byron White, Lewis Powell, Hugo Black, Harlan Fiske Stone, Earl Warren and William Rehnquist--they all became Justices without having previously been judges, yet we consider them to have had distinguished careers on the Supreme Court. In fact, Justice Frankfurter wrote in 1957 about the irrelevance of prior judicial experience. He said: One is entitled to say without qualification that the correlation between prior judicial experience and fitness for the functions of the Supreme Court is zero. That is a point that some of my Republican colleagues have recognized when addressing the qualifications of other nominees. Ms. Kagan's lack of prior judicial experience should not be a determining factor in assessing her qualifications to be a Justice. Indeed, if significant prior experience as a judge were a prerequisite, where would that leave Justices like John Roberts and Clarence Thomas? Thomas had served on the DC Circuit for less than 16 months before his nomination, and Roberts for just over 2 years. I have an insightful article on this subject by Joel Goldstein, published in the Kansas City Star. I ask unanimous consent it be printed in the Record.

Mr. KAUFMAN. Another attack on Elena Kagan, equally unjustifiable, focuses on military recruiting while she was dean at Harvard Law School. Most of the charges about the Harvard Law recruiting ban are distortions. The university policy reflected a policy preference for nondiscrimination against gays, but Dean Kagan never denied military recruiters physical space at the law school or access to the student body. Just as important, military veterans at Harvard have high praise for Kagan's role as dean. In February 2009, several Iraq War veterans who graduated from Harvard Law School when she was dean wrote a letter to the Washington Times describing their ``appreciation for Miss Kagan's embrace of veterans on campus. During her time as dean, she has created an environment that is highly supportive of students who have served in the military.'' I was pleased to see this view echoed by our colleague from Massachusetts after his meeting with Solicitor General Kagan last week. He said: It was very clear to me after we spoke about it at length that she is supportive of the men and women who are fighting to protect us and very supportive of the military as a whole. I do not feel that her judicial philosophy will be hurting men and women who are serving. The best answer to these charges comes from the nominee herself. In 2007 while serving as dean of Harvard Law, she addressed cadets at West Point. She said: I am in awe of your courage and your dedication, especially in these times of great uncertainty and danger. I know how much my security and freedom and indeed everything else I value depend on all of you. Addressing the controversy regarding the military recruiters she said: I have been grieved in recent years to find your world and mine, the U.S. military and U.S. law schools, at odds, indeed, facing each other in court--on one issue. That issue is the military's ``don't ask, don't tell'' policy. Law schools, including mine, believe that employment opportunities should extend to all their students, regardless of their race or sex or sexual orientation. And I personally believe that the exclusion of gays and lesbians from the military is both unjust and unwise. I wish devoutly that these Americans could join this noblest of all professions and serve their country in this most important of all ways. But I would regret very much if anyone thought that the disagreement between American law schools and the U.S. military extended beyond this single issue. It does not. And I would regret still more if that disagreement created any broader chasm between law schools and the military. It must not. It must not because of what we, like all Americans, owe to you. In consulting with leadership, as well as with me and my colleagues on the Judiciary Committee, President Obama honored the Senate's advisory role in the selection process. As the Senate process moves from advice to consent, I look forward to a confirmation process that is orderly and filled with an honest exchange of views, not partisan bickering. The vote for a Justice of the U.S. Supreme Court is one of the most important votes a Senator can cast. That is because a Justice serves for a lifetime appointment and will continue to have an impact long after the vote is made. Since her nomination, Solicitor General Kagan has already met with dozens of Senators and has many more meetings scheduled. My meeting with her strengthened my belief that President Obama has selected a nominee with both impeccable credentials and a superior intellect. Her ability to bridge disagreement and find common ground among disparate voices, as well as her experience in all three branches of government, would be a tremendous asset on the current Court. I yield the floor and note the absence of a quorum.

Mr. KAUFMAN. Mr. President, I rise today to voice my support for H.R. 4899, the Fiscal Year 2010 Supplemental Appropriations Act. This bill is critical to our future success in Iraq, Afghanistan, and Pakistan and also delivers much needed humanitarian aid to Haiti. Today, I wish to highlight how some of the provisions in this legislation support U.S. foreign policy goals, strengthen our military and civilian efforts, and defend against security threats around the world. This bill does a great deal to support our ongoing counterinsurgency effort in Afghanistan. As General McChrystal has said, counterinsurgency is not an ``event,'' but rather, a ``process,'' and this supplemental provides the essential resources needed at each stage of the process. First, the military must ``shape and clear'' in a military operation. The President made the bold decision in December that an additional 30,000 troops were needed in Afghanistan, and this bill fully funds the additional deployment. As we saw earlier this year in Marjah and will witness this summer in Kandahar, the U.S. military is partnering with the Afghan security forces for the ``clear and hold'' portion of counterinsurgency, and I am pleased this bill provides $2.6 billion to train and equip the Afghan security forces. Next we must ``build,'' which requires a unity of effort between the military and civilian agencies and which is why this bill provides $1.48 billion to the State Department for continued reconstruction and law enforcement programs. As I have stated before, our goal is to transfer authority to the Afghans. For this, we must continue to train and mentor the Afghan Army, police, and civil servants, so they may assume greater responsibility to provide security and effective governance themselves. On a recent trip to Afghanistan in March, I saw firsthand the improvements that have been made with the Afghan National Army, ANA, training program. Thanks to a recent pay raise for ANA recruits and intensified partnering with U.S. forces, we are on track to exceed the stated goal of 134,000 trained ANA by October. The additional resources in this bill will help ensure we stay on this positive trajectory for ANA training and mobilization. Unfortunately, the same progress has not been realized in training the Afghan National Police, ANP. A lack of oversight, coupled with high rates of attrition, drug use, illiteracy, and widespread corruption have severely undermined our efforts to establish a credible police force. I was appalled--appalled does not describe it--I was appalled to learn we have spent $6 billion on training the ANP in the past 9 years, with little to show for it. I have been in literally 60 to 100 meetings--before my three trips to Afghanistan, in Afghanistan, and my trips back. I have yet to hear anyone say anything good about the Afghan national police. It was not until I got on the Homeland Security Subcommittee that I found out we were spending $6 billion to train them. I would have been shocked if I had heard we were spending $100 million to train them. However, this is key to our success in Afghanistan, and I believe the administration is now fully aware of the problems that have become endemic to this program and is focused on eliminating them in the months ahead. Funding in this bill will support efforts to get police training back on track, which is one of the most critical elements of our strategy in Afghanistan. This bill also does a great deal to reinforce our partnership with Pakistan. After traveling three times in the past year to Pakistan, I cannot underscore enough the importance and strategic value of this partnership to our shared fight against violent extremism. This resonates at home today in the wake of the failed Times Square bombing and Faisal Shahzad's alleged ties to Pakistani extremists in Waziristan. In light of mutual security interests, we must continue to nurture our relationship with the Pakistani people and military, demonstrating our enduring long-term interest in the region. Last year, Congress validated that commitment in the form of a 5- year, $7.5 billion economic aid package, otherwise known as the Kerry- Lugar bill, and in the past 2 years, we have invested over $1 billion in military aid in the Pakistan counterinsurgency capability fund. This bill reaffirms these commitments with $259 million to support ongoing programs to strengthen democratic governance, rule of law, and social and economic services to improve the lives of the people of Pakistan. Of the total, $10 million would be provided for the Pakistani Civilian Assistance Program, $5 million for human rights programs, and $1.5 million to facilitate the implementation and oversight of USAID and Department of State programs. This bill also provides $50 million for the purchase of helicopters for Pakistan which will be used to combat terrorist groups and other extremist organizations. I am hopeful that this level of commitment will help persuade the Pakistanis to redouble their efforts to address security concerns along the border with Afghanistan. I cannot emphasize enough the importance of Pakistan's contribution to the security situation in the tribal areas, especially as it pertains to targeting the Afghan Taliban--not just the Pakistani Taliban--including the Haqqani Network and Quetta Shura. This bill also helps ensure a stable and secure Iraq in preparation for the drawdown of United States forces and complete withdrawal of combat troops by September. During my recent visit to the region, I was struck by the helicopter view of Baghdad at night. The glimmering lights of the city and the traffic looked similar to any city in the U.S. That sight illustrated the progress that has been made in Iraq and the enduring mutual commitment and partnership that has been created in recent years. As a means of reinforcing this commitment and continued progress, this bill provides an additional $1 billion for the Iraqi security forces fund. It also provides $650 million in additional economic and security assistance for Iraq which includes $450 million for the Iraqi police program. These measures support the security framework in Iraq, which will provide Iraq's leaders with the stability they need to form a new government. With the election recount recently completed, the groundwork has been laid for Iraqi elected officials to work toward a common goal of establishing a government representative of the people of Iraq. While a functioning government should not just be cobbled together in the interest of time, it is important to note that a prolonged delay could create a power vacuum that may exacerbate ongoing security concerns. This bill reinforces and continues to build upon the security infrastructure that the Iraqis have created, and the goal of building and sustaining past success. Finally, I am grateful this bill includes $3 million for the Voice of America's Creole language broadcasting in Haiti. The VOA Creole broadcasts include public service announcements from U.S. Government agencies, which have been so valuable in previous crises around the world, and have helped Haitians find loved ones, shelter, medical assistance, and aid, in the aftermath of the earthquake. Since then, it has provided a vital service in helping them to find essential resources and assistance. VOA runs public safety and relief supply updates, as well as a call-in line to broadcast messages from families and friends of the injured and missing. The additional resources in this bill will help to sustain these critical public services, and I commend the VOA for its commitment and its great contribution to disaster relief globally, and especially in Haiti. This bill reinforces our foreign policy goals and secures our interests at home and abroad. It also funds our Armed Forces which are deployed in harm's way, and supports the civilian diplomatic and development initiatives that are necessary to our efforts in Afghanistan, Pakistan, and Iraq. I thank the leadership for moving this bill forward, and I call on my colleagues to join me in supporting this supplemental. I thank the Chair.

Mr. KAUFMAN

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

Mr. KAUFMAN. Mr. President, I ask unanimous consent to speak as in morning business.