Carl Levin

Mr. LEVIN

Mr. LEVIN. Mr. President, once again, oil prices have spiked to high levels threatening our economic recovery. Prices are now nearing $110 a barrel, up nearly 30 percent since October 2011, only 5 months ago. For years now the commodity markets have taken the American people on an expensive and damaging roller coaster ride with rapidly changing prices for crude oil. In 2007, a barrel of crude oil started out costing $50 a barrel. By the end of the year, the price had nearly doubled. In 2008, oil prices shot up in July to nearly $150 a barrel, and then by the end of the year crashed to $35. In the beginning of 2011, oil prices took off again, climbing to over $110 per barrel in May. Then they began falling. In October oil traded at $75 per barrel, a drop of more than 30 percent over 4 months. Now 5 months later oil prices are back up to nearly $110 a barrel. This unpredictable and incessant price volatility is burdening American consumers and businesses with both uncertainty and expense. Some in the media are blaming recent events in the Middle East for the latest oil price spikes, but Middle East instability cannot explain these large gyrations. We have seen uncertainty, unrest, and armed conflict in that region for more than 50 years without seeing this same pattern of extreme price volatility in oil prices. That volatility has become a feature of U.S. oil markets over the last 7 years. There is something else at work behind the spikes and sudden drops in the price of oil and other commodities in recent years, and we have strong evidence showing what it is. It is the increasing role of market speculators betting on price swings. For years now the Permanent Subcommittee on Investigations, which I chair, has been digging into the problem of excessive speculation in the commodity markets. Since 2002, the subcommittee has conducted a series of investigations into commodities pricing, in particular focusing on how speculators have changed the game. Our investigations have used specific case histories involving oil, natural gas, and wheat prices to show how excessive speculation in the futures and swaps markets have distorted prices, overwhelmed normal supply-and-demand factors, and pushed up prices at the expense of consumers and American businesses. For example, in 2006 the subcommittee released a report that found that billions of dollars of commodity index trading by speculators in the crude oil market had helped push up futures prices in 2006, causing a corresponding increase in cash prices and was responsible for an estimated $20 out of the then $70 cost for a barrel of oil. Since then even more speculators have entered the commodities markets. Today we have commodity index traders, exchange-traded products, even mutual funds betting billions of dollars on crude oil prices on a daily basis. Speculators have now come to dominate our futures and swaps markets, overwhelming the commercial users and producers who use and need these markets to set fair prices and hedge risks. At a November hearing before my subcommittee, the Chairman of the Commodity Futures Trading Commission, Gary Gensler, testified that over 80 percent of the outstanding futures contracts for crude oil are now held by speculators. That fact is new, it is significant, and we cannot ignore it. It used to be that prices were determined primarily by fundamental market forces of supply and demand for physical commodities. When commodities were tight and demand high, prices generally went up. In contrast, when supplies were ample and demand low, prices generally went down. Nowadays that relationship is largely absent. Here are some startling facts from recent press and government reports that show how U.S. crude oil prices today have become disconnected to supply and demand. First is the fact that the United States has ample oil supplies in the neighborhood of 350 million barrels in storage, which is toward the higher range since 2008. World supplies are also adequate with the Saudi Arabian oil minister recently stating that world supplies are stronger today than they were 4 years ago in 2008. In addition, the United States is producing more domestic oil than it has in years. In 2010, U.S. domestic crude oil production increased to 5.5 million barrels per day, up from 5.1 million barrels in 2007, and is still climbing. In 2011, overall U.S. refining capacity also increased. Perhaps most surprising of all in 2011, for the first time since 1949, the United States exported more gasoline, diesel, and other petroleum products than it imported. The United States is projected to do the same in 2012 and 2013. At the same time U.S. oil supplies stayed steady and production increased, U.S. demand went down. In 2011, U.S. fuel consumption actually sank and oil demand in North America contracted by 0.5 percent. Some of that drop was due to lower economic activity, some to greater energy efficiencies, and some to higher energy costs. For example, U.S. demand for gasoline sank nearly 3 percent last year. More broadly, in 2011, total U.S. demand for all types of oil products fell to 18.8 million barrels a day, from 20.8 million barrels a day in 2005. That is a drop of 10 percent. The end result is that over the last year oil demand was down and supply was up in the United States. Under normal economic conditions, both factors should have led to lower oil prices. Instead, despite steady or improving oil supplies and steady or dropping demand, U.S. crude oil prices became more like a roller coaster than ever. What explains the price volatility and escalation? The answer is pretty clear to me after 10 years of investigations by our subcommittee: It is the large amount of speculation in oil markets which is a major contributing factor to high prices. Speculators who now comprise more than 80 percent of the U.S. futures oil market are bidding on contracts, speculating on price swings, and helping to drive up price volatility and crude oil prices. Higher crude oil prices translate directly into higher gasoline prices. According to a February 27, 2012 article in Forbes magazine citing a recent report by Goldman Sachs, oil speculation ``translates out into a premium for gasoline at the pump of 56 cents a gallon.'' In other words, speculation is adding 56 cents to the price of each gallon of gas bought at the pump. Here is a Reuters chart that uses CFTC data. It focuses on the crude oil holdings of speculators, the group of traders that the CFTC refers to as ``managed money'' and which includes commodity index funds, hedge funds, commodity pool operators, and commodity trading advisers. The chart uses CFTC data to track the ratio of their long to short crude oil futures holdings over time. Last month, there was a spike, way over here to the right. Speculators held more longs than shorts by a 12-to-1 ratio, the largest recorded difference in 5 years. That same week, U.S. crude prices hit a 9-month high of $110. And it is no surprise that when more than 80 percent of the market suddenly bets 12 to 1 on prices going up, oil prices do just this. As we can see from this chart, these spikes occurred in the last year or two. Before that, we did not have the spikes. Before this, there was this huge amount of speculation in the oil futures market and we did not have these large spikes which we have had in the last few years. The reality is that oil prices again are not just affected by physical supply and demand but by speculative pressures on prices. That means if we are to get a handle on oil prices, excessive speculation must be curbed. There is a lot we can do to combat excessive speculation, and I will spell out some of these steps. Congress has already taken the first steps. In July 2010, Congress enacted the Dodd-Frank Act which, in Section 737, directed the CFTC to establish speculative position limits on energy and other previously exempted commodities, and broadened CFTC authority to apply those limits to all types of commodity-related instruments, including futures, options, and swaps. The Dodd-Frank Act also required all large commodity traders to begin reporting their trades in real time to a central repository, increasing transparency, producing new detailed trading data, and strengthening regulatory oversight. In November 2011, in compliance with the Dodd-Frank requirements, the CFTC issued a new position limits rule. The rule sets limits that are not as tough as they should be, but the real problem is that they are not yet fully in force. That means this important new tool to clamp down on excessive speculation lies dormant. One big roadblock is that, within a month of the rule's issuance, the financial industry filed a lawsuit to stop it from taking effect. The lawsuit claims Dodd-Frank didn't require the CFTC to impose position limits, although those of us in the Senate who fought for the law know position limits were made mandatory by Dodd-Frank and were regarded as vital to curbing excessive speculation. The court is considering the case now and hopefully will not allow the lawsuit to delay or thwart the legal protections needed to stop American families and businesses from being whipsawed by excessive speculation in oil and other commodities. In the meantime, what should Congress do? First, we should stop pretending that $110 per barrel of oil is caused solely by Mideast unrest or physical supply and demand factors, and acknowledge a major contributing role played by speculators in crude oil prices. Second, we ought to urge the CFTC to find that current U.S. oil prices, which do not reflect physical supply and demand factors, are evidence of a severe market disturbance. That finding would allow the CFTC to exercise its emergency authority, without waiting any longer, to clamp down on excessive speculation in the oil markets. Among other options, the CFTC could tighten position limits for oil traders, make those limits immediately effective in the futures, options, and swap markets, strengthen margin requirements, and take other actions needed to bring oil prices back into alignment with supply and demand. Third, on a longer term basis, we should revamp the rules that enable commodity index traders, exchange traded products, and mutual funds to flood U.S. commodity markets with speculative bets on commodities to the detriment of American families and businesses. Legislation is needed to require the SEC and CFTC to impose joint registration and reporting obligations for traders that use securities to gain exposure in commodities, joint regulation of hybrid products that combine securities and commodities trading, and increased margin and capital requirements for risky speculative bets. The Internal Revenue Service needs to stop allowing mutual funds to use phony offshore corporations to circumvent a longstanding 10 percent limit on their commodity investments. Additional restrictions on commodity index trading should also be considered, since it is the largest root cause of modern day excessive speculation. Finally, we should ask more of the President's task force on commodity speculation. In March 2011, a year ago, Senator Jack Reed and I sent a letter asking President Obama to convene a task force to investigate and combat excessive speculation and manipulation of oil prices. While the Attorney General did convene a task force, it has concentrated principally on detecting a few cases of alleged criminal activity, instead of tackling the broader issue of excessive speculation cases in which no one is committing a crime, but aggregate commodity trading tactics are driving up prices and price volatility to the point where they damage the U.S. economy. The task force needs to urgently refocus and bring its firepower to the battle to stop excessive speculation. In closing, until we limit excessive speculation in commodity markets, the American economy will continue to be vulnerable to violent price swings and American consumers and businesses will continue to be whipsawed by oil prices unconnected to actual supply and demand. American families cannot afford the current price of oil and gas and neither can our economy, which, after 4 years, is beginning to turn a corner toward real growth. Today's prices--$110 for a barrel of oil and $4 for a gallon of gasoline--are a clarion call to action that Congress and the CFTC ignore at the Nation's peril. Mr. President, I thank the Chair, and I yield the floor.

Mr. LEVIN

Mr. LEVIN. Mr. President, today the Senate has the opportunity to vote in support of the STOCK Act. If we vote for the House amendment to the Senate bill, we can send this legislation right to President Obama to be signed into law. That is exactly what we should do. The lifeblood of our democratic government is the contract between the people and their elected representatives, a contract that must be based on trust that elected officials will act for the good of our Nation and in the interests of their constituents, and not for personal gain. To ensure that we maintain that trust, our Nation has laws and our Congress has rules that establish clearly the responsibilities of government officials, Members of Congress and their staffs and provide for the enforcement of violations. The legislation before us is, in a way, preventative maintenance to protect that trust. It is a tightening up of our legal and ethical guidelines as part of what must be a constant effort to assure that the interests of our Nation and our constituents come first. Our constituents must have confidence that Members of Congress and our staffs will not use our positions for our personal financial benefit. To be clear, as it stands now, it is a violation of the trust our constituents place in us, a violation of the democratic process, a violation of the securities laws, and a violation of congressional ethics rules for Members of Congress or their employees to engage in insider trading--the use of information not available to the public to make investment decisions. But questions have been raised about insider trading by Members of Congress. The legislation before us today is designed to ensure that those questions are answered. It removes any doubt that insider trading by Members and employees of Congress is against the law and against Congressional rules. It is important to remove that doubt because any appearance of a breach in trust between Congress and our constituents is corrosive to honest, open and effective government. Back in December, the Homeland Security & Governmental Affairs Committee, of which I am a member, held extensive discussions on the need to preserve that trust, including a very productive hearing on December 1. Later in December, our committee held a markup and approved the Stop Trading on Congressional Knowledge Act, or STOCK Act. I want to commend our chairman, Senator Lieberman, and our ranking member, Senator Collins, for their leadership, and the many members of the committee, Democratic and Republican, who made contributions to that process. Two things became clear during our hearings and our markup. The first is that there was consensus that we should remove any uncertainty about the prohibition against insider trading. The second thing that became clear was significant bipartisan desire to avoid any unintended consequences as we sought to remove any uncertainty. We reported out the legislation because of widespread agreement on our goals, but there remained concerns about the means, and it was understood that we would attempt to address those concerns before the bill came to the floor. And so a number of us worked in the weeks after the markup to make sure that our goals and our means were in concert. We met that objective, and our consensus was reflected in the language of the bill that passed the Senate by a vote of 96 to 3. The House amendment before us today retains the key language from the Senate bill that Senator Lieberman, Senator Collins and I, among others, worked so hard to get right. While some provisions that I supported have been removed by the House amendment, the central purpose of this bill remains the same. The House amendment, like the Senate bill it replaces, removes any uncertainty over the prohibition on insider trading, and it avoids unintended harmful consequences that concerned some of us. I would now like to discuss two critical provisions in the bill before us today. The first reassures the American people that there are no barriers to prosecuting Members and employees of Congress for insider trading. It does so through language establishing that Members and employees of Congress have a duty arising from ``a relationship of trust and confidence'' with the Congress, the government, and most importantly, with the American people. Establishing such a duty removes any doubt as to whether insider trading prohibitions apply to Congress. It is also important that the bill's language makes clear that in offering this new language it does not in any way prevent enforcement of the anti-insider trading provisions contained in current law. Again, I am confident that under current law, Members of Congress and our staffs are prohibited from insider trading. This bill will ensure that the current prohibition is unambiguous, and thereby strengthened. The second major provision of the legislation instructs the Ethics Committees of both chambers to issue clear guidance to members and staffs regarding the prohibition on profiting from inside information. This guidance will clarify that existing rules in both chambers relative to gifts and conflicts of interest also prohibit the use of nonpublic information gained in the conduct of official duties for private profit. Let me briefly mention one other provision, unrelated to insider trading but nonetheless an important step forward in terms of gaining the confidence of our constituents. As one of the originators of the Lobbying Disclosure Act of 1995, I am well aware of the value of transparency in government. The bill before us improves congressional transparency by requiring that personal financial disclosure filings required of members and certain staff are made available electronically to the public. But because this bill also significantly expands the number of officials required to file public disclosures, including law enforcement, military, and intelligence officers, it is critical that this provision be implemented in a way that is consistent with our national security interests. Care should be taken to ensure that public filers are not made unnecessarily vulnerable to malicious use of personal information. The House amendment also removes a provision of the Senate bill that would have required political intelligence consultants to register in a way similar to how lobbyists are required to register currently. Instead, the House amendment, like the version of the Senate bill that was reported by the Homeland Security and Governmental Affairs Committee, requires the Comptroller General of the United States to study the role of political intelligence in financial markets and report back to Congress. It is corrosive of open government for political intelligence consultants to sell their access to officials. Before Congress acts to address this issue, we must learn more about it, which is why I support this study. I look forward to working with my colleagues to address this issue once we have the benefit of the Comptroller's report. In addition to the insider trading and disclosure provisions, this bill contains numerous other important improvements to our ethics laws. I urge my colleagues to join together today, to pass this legislation and send it to President Obama for his signature. I ask unanimous consent that my statement appear in the Record at the appropriate place before the vote on the STOCK Act. Cloture Motion on the STOCK Act, S. 2038

Mr. LEVIN

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on March 22, 2012. at 9:30 a.m.

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on March 22, 2012, at 9:45 a.m., to conduct a hearing entitled ``International Harmonization of Wall Street Reform: Orderly Liquidation, Derivatives, and the Volcker Rule.''

Mr. LEVIN. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on March 22, 2012, at 2:30 p.m.

Mr. LEVIN. 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 March 22, 2012, at 10 a.m., to conduct a hearing entitled, ``New Audit Finds Problems in Army Military Pay.''

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on Environment and Public Works be authorized to meet during the session of the Senate on March 22, 2012, at 10:15 a.m., in room SD 406 of the Dirksen Senate Office Building to conduct a hearing entitled ``Environmental Protection Agency Fiscal Year 2013 Budget Hearing.''

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet, during the session of the Senate to conduct a hearing entitled ``Stay-at-Work and Back-to-Work Strategies: Lessons from the Private Sector'' on March 22, 2012, at 10:15 a.m., in room 430 of the Dirksen Senate Office Building.

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on March 22, 2012. at 2:15 p.m.

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on Indian Affairs be authorized to meet during the session of the Senate on March 22, 2012. at 2:15 p.m. in room 628 of the Dirksen Senate Office Building.

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate, on March 22, 2012. at 10 a.m., in room SD 226 of the Dirksen Senate Office Building, to conduct an executive business meeting.

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on Small Business and Entrepreneurship be authorized to meet during the session of the Senate on March 22, 2012. at 10 a.m. in room 432 of the Russell Senate Office building to conduct a roundtable entitled ``A Spotlight on Small Business Investment Companies and Their Role in the Entrepreneurship Ecosystem.''

Mr. LEVIN. Mr. President, I ask unanimous consent that the Committee on Veterans' Affairs be authorized to meet during the session of the Senate on March 22, 2012. The Committees will meet in room 345 of the Cannon House Office Building, beginning at 10 a.m.

Mr. LEVIN. Mr. President, I ask unanimous consent that the Subcommittee on Health Care of the Committee on Finance be authorized to meet during the session of the Senate on March 22, 2012, at 10 a.m., in room 215 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Prescription Drug Abuse: How are Medicare and Medicaid Adapting to the Challenge?''

Mr. LEVIN. Mr. President, I ask unanimous consent that the Subcommittee on Public Lands and Forests be authorized to meet during the session of the Senate on March 22, 2012, at 2:30 p.m., in room 366 of the Dirksen Senate Office Building.

Mr. LEVIN

Mr. LEVIN. Mr. President, I ask unanimous consent that I be yielded 10 minutes.

Mr. LEVIN. Mr. President, in a few hours, after votes on two amendments that I hope we will pass, we are going to vote on final passage of the House of Representatives-passed bill, the so-called JOBS bill. I am going to vote against passage of this bill because it would remain far too deeply flawed even if the two amendments were passed to justify passage by the Senate. I am going to vote no on this bill because it will significantly weaken existing protections for investors against fraud and abuse. The supporters of this bill claim it will help to create jobs. They have even titled it the JOBS Act, but there is no evidence it will help create new jobs. There is not one study that its proponents have shown us how repealing provisions that protects us from conflicts of interest in the research coverage of companies with up to $1 billion in revenue will create jobs; nor is there evidence that removing transparency and disclosure requirements for very large companies will create jobs; nor is there evidence that allowing unregulated stock sales to those unable to assess or withstand high-risk investments will create jobs; nor is there much else in this bill that will, even arguably, help create jobs. It will, however, take the cop off the beat relative to the activities of some huge banks, and it will threaten damage to the honesty and integrity of our financial markets. That is a mistake in its own right. We should value honesty and integrity in markets, as in all things. And legislation that creates new opportunities for fraud and abuse should be amended or rejected. But the damage done by this bill to the integrity of our markets will also work against the purported goal of this bill--the encouragement of investment to create jobs. By making our financial markets less transparent, less honest, and less accountable, this legislation threatens to discourage investors from participating in capital markets. That damage would make it harder--not easier--for companies to attract the capital that they need and to hire new workers. Our capital markets are the envy of the world, and that is in part because we recognize that efficient markets that help businesses raise capital and aim to match up investors in companies need transparency and they need financial integrity. But this bill will allow companies to make fewer disclosures and will remove important investor safeguards. This bill will increase many types of risks to investors, including the risk of outright fraud. I want to focus on a few of the many serious flaws in this bill. First, it harms investors by allowing a wide range of companies to avoid basic requirements for disclosure and transparency. It does that by changing the threshold at which companies are considered large enough and their stock is widely enough held to trigger those disclosure requirements. Today, companies are generally required to register with the SEC and meet basic requirements for financial transparency and accountability if they have 500 or more shareholders. The bill before us would raise that exemption to 2,000 or even more shareholders. It would even raise the level at which banks can deregister from 300 to 1,200 or more shareholders regardless of the bank's size in terms of assets. These changes will allow even very large companies with several thousand shareholders to avoid telling regulators, shareholders, and potential shareholders even the most basic information about their finances, and to avoid important accounting standards. Second, this bill harms investors by allowing companies to make largely unregulated private stock offerings to members of the public. Today, such inherently risky, unregulated offerings cannot be advertised to the public and are generally limited to shareholders who are financially able to absorb the risks involved. But the House bill allows advertisement of these unregulated offerings to the general public. It will allow TV ads for get-rich-quick schemes with almost no oversight. Advertisers could pitch these risky investments in cold calls to senior citizen centers. That is why groups such as AARP are deeply concerned about what these changes will do to senior citizens who are often the targets of financial fraud and abuse. Third, this bill abandons a lesson that we learned all too painfully during the dot-com crisis of the 1990s. At that time, investment banks seeking to underwrite initial public offerings--which is a lucrative line of business--engaged in brazen conflicts of interest. They sought this business by promising companies about to go public that their research analysts--whom investors depend on for honest and impartial advice--would give favorable coverage to their stocks in exchange for the underwriting business. In company after company, investors were misled about the strength of new stocks by investment banks engaging in this conflict of interest. This abuse helped to feed a stock bubble that, when it burst, wiped out investors, evaporated companies, and it devastated the economy. The Nasdaq index still, to this day, has not recovered from that bubble. As a result, regulators put up barriers designed to end these conflicts, but the House bill before us knocks down those barriers. It is astonishing that we would forget these lessons and allow the return of such blatant conflicts of interest. Fourth, this bill will allow very large companies, companies with up to $1 billion in annual revenue, to make initial public offerings without complying with basic disclosure and accountability standards. These companies would be able to avoid compliance with accounting and disclosure rules to help give investors accurate information on the company's finances. They would not have to obey standard accounting rules or have auditors certify that they have adequate internal controls. Many of these rules were adopted in response to high-profile accounting frauds, such as Enron and WorldCom. Some were recently enacted in the Dodd-Frank Act in the wake of the financial crisis. Yet while our economy is still recovering from the damage of the most recent crisis that arose, in large part, as a result of deregulation, we are about to consider undoing safeguards we created in its wake. The $1 billion limit of the House bill will allow nearly 90 percent of the IPOs to avoid even the most basic disclosure standards. With these provisions, we will essentially ask America's investors to place their capital at risk almost blindly, with little if any reliable information about the companies seeking their investment. It defies common sense to argue that investors will be more likely to put their money at risk and therefore help to create jobs in that kind of environment. This is a bad bill. Because debate was closed off and amendments severely limited, we will not be able to fix nearly enough of it. But we will hopefully remedy a few of its flaws in amendments we are going to be voting on. Change to the crowdfunding provisions of the House bill is welcome, and I commend Senators Merkley, Bennet, and others who crafted that provision which Senators Reed, Landrieu, and I also incorporated in our substitute bill, which was defeated yesterday. This amendment will give investors somewhat greater confidence in a new and potentially useful method in establishing capital and in support of Senator Reed's amendment to close important loopholes in the current law--one the House bill fails to address. With this amendment, it will be harder to evade registration and disclosure requirements by using shareholders of record who exist only on paper but who hold shares for large numbers of actual beneficial owners. This, too, is part of our substitute, and its inclusion in the bill would represent an improvement. But we should not fool ourselves. These improvements, if adopted, though welcome, are far from sufficient. We are about to embark upon the most sweeping deregulatory effort and assault on investor protection in decades. The Council of Institutional Investors warns us that ``this legislation will likely create more risks to investors than jobs.'' If we pass this bill, it will allow new opportunities for fraud and abuse in capital markets. Rather than growing our economy, we are courting the next accounting scandal, the next stock bubble, the next financial crisis. If this bill passes, we will look back at our votes today with deep regret. We should not adopt this bill today. We should return it to committee. We should have hearings. We should have opportunities to amend this bill. Adopting this bill will put us in a position of the most massive and mistaken deregulation of our capital markets in decades. I yield the floor.

Mr. LEVIN

Mr. LEVIN. Mr. President, for the Committee on Armed Services I report favorably the following nomination lists which were printed in the Records on the dates indicated, and ask unanimous consent, to save the expense of reprinting on the Executive Calendar that these nominations lie at the Secretary's desk for the information of Senators.

Mr. LEVIN

Mr. LEVIN. When you read over the long list of Senator Barbara Mikulski's accomplishments, one word keeps coming up, ``first.'' First woman to be elected to the Senate from Maryland, first woman of her party to serve in both the House of Representatives and in the Senate, first woman to serve in the Senate leadership. Today we gather to honor Senator Mikulski, who in addition to her many firsts, now stands as the longest serving woman in the history of the Congress. Senator Mikulski began her service in Congress in 1976, and in all her time here since, she has championed the causes dearest to her-- causes dear to the needs of her constituents and to our Nation's most vulnerable citizens. As chairwoman of the Children and Families Subcommittee, Senator Mikulski has been a determined champion of the young, the old, and the sick. She has fought for access to higher education for every child because she believes ours is a nation where every young boy and girl should have the chance to reach his or her true potential. She has fought for secure pensions for seniors because she believes ours is a nation where, after a lifetime of work, every person should have the chance to enjoy their retirement. And she has fought for preventive screening and treatment for every woman because she believes ours is a nation where no one should lose a mother, daughter, or wife from a preventable illness. As chairwoman of the Commerce-Justice-Science Appropriations Subcommittee, Senator Mikulski has led the charge to promote economic development, equip our first responders, and invest in science and research. Senator Mikulski understands the importance of the private sector, particularly small businesses, in creating job opportunities. That is why she has fought for legislation making it easier for businesses to make investments and hire new workers. No one has fought harder to support our emergency first responders than Barbara Mikulski, who said: We must protect our protectors with more than just words-- we must protect them with the best equipment, training and resources. Senator Mikulski is also committed to the promotion of scientific research and laying the groundwork for maintaining U.S. leadership in the area. She has advanced legislation to substantially increase the number of students earning degrees in science, technology, engineering, and math. As a Senator from Maryland, Senator Mikulski understands the importance of the Federal workforce. Many of her constituents are responsible for the high quality of life many of us take for granted every day. Whether its food inspectors, air traffic controllers, or medical researchers, many Marylanders who make up the Federal workforce contribute to our Nation's health and safety. Fortunately for them, and the rest of us, they have a powerful advocate in the Senate. Senator Mikulski said, ``I want every Federal employee to know I am on their side.'' Indeed she is--not only because it is in the interests of her State, but because she knows well that an effective Federal workforce is in the interests of every citizen in every State. Throughout her career, Senator Mikulski has fought off misguided efforts to privatize essential functions of the Federal workforce, and fought for fair pay and benefits for these committed public servants. Fair pay has been a focus for Senator Mikulski, and women across the country can be grateful for that. In 2007, the Supreme Court considered the case of Lilly Ledbetter, a woman who for nearly 20 years had been paid less than her male coworkers for equal work. In its decision, the Court ruled that Ms. Ledbetter could not proceed with her case, not because it had no merit, it did; but because of a technicality. Once the Supreme Court rules against you, where can you turn? Just ask Ms. Ledbetter; she will tell you. Senator Barbara Mikulski introduced the Lilly Ledbetter Fair Pay Act to address the flawed Supreme Court decision; and on January 29, 2009, it was signed into law. In the Book of Genesis, the first question asked of God is ``Am I my brother's keeper?'' Senator Barbara Mikulski has spent a lifetime and built a career in answer of that question. She said: I feel that I am my brother's keeper and my sister's keeper. I think that's why I am shaped by the words of Jesus himself: Love they neighbor. And I took it seriously. The Senate is better off because she did. The people of Maryland are better off. Our Nation is better off. I am grateful not just because she has become the longest serving woman in the history of Congress, but because she has served her Nation so well.

Mr. LEVIN

Mr. LEVIN. Madam President, in a few minutes, we are going to vote on whether we should end debate on a House bill which carries the false label of a jobs bill--a bill which cries out for debate and amendment. If we continue down this track, we will approve legislation that endangers America's senior citizens, its small investors, and its large pension funds and foundations. In doing so, we would, far from encouraging job growth, endanger job growth, by endangering the investments that help America's businesses grow and create new jobs. The jobs bill before us, as it now stands, is anything but a jobs bill. And if we invoke cloture, we will end debate and the opportunity to remedy this bill's flaws. The Senate should not take that step. Its flaws are deeply worrisome. It threatens to dampen investment, and therefore dampen job growth, in at least six ways. First, investors are now protected by federal securities laws that generally prevent companies from making largely unregulated stock offerings to the public. By limiting such unregulated stock offerings to investors who can better withstand the substantial risk of these investments, we discourage fraud while allowing companies to access capital. But the House bill does away with these restrictions. They could market them with cold calls to senior centers. This would expose Americans with few protections against fraud and little ability to analyze complex, risky investments to devastating losses. It gets worse. The House bill changes when a company is large enough to warrant SEC disclosure and transparency requirements--from one with fewer than 500 shareholders to one with 2,000 or more shareholders, and perhaps many more. Those could be very large companies. In fact, the House bill maintains a loophole that allows shareholders of record, on paper, to hold shares for potentially hundreds of real owners as a way of evading this shareholder limit. They would be exempt from filing regular financial reports and other measures that give investors the confidence they need to invest their hard-earned dollars. Taken together, these first two flaws would allow even large companies to make largely unregulated stock offerings to potentially unwary investors, and to evade even the most basic requirements to accurately inform shareholders of their financial condition. Combined, these provisions are a recipe for fraud, abuse, financial crisis and reduced investment to grow our economy. The House bill has other deep flaws. It erases barriers, erected after the dotcom bubble of the 1990s, that prevent conflicts of interest in which investment banks could promote the stock offerings that they underwrite by having their research analysts provide pumped- up assessments on the stock. This provision would mean that nearly 90 percent of all IPOs would be exempt from providing basic protections that help investors commit their money with confidence. Now, it has been said by supporters of this bill that we should approve this bill because the President supports it. I would remind my colleagues of two things. First, the President's support would not dissolve our own responsibility. We are in danger of rubber-stamping a bill simply because someone slapped a clever acronym with the word ``jobs'' on it. If this bill threatens, rather than encourages, investment and job creation, we should repair its flaws. That is our responsibility. Madison told us two centuries ago: A senate, as a second branch of the legislative assembly, distinct from, and dividing the power with a first, must be in all cases a salutary check on the government. We should be that check today. Second, those who point to the President's support fail to mention another aspect of his position: support for common-sense fixes that protect the integrity of our markets. The White House said this week: The President strongly supports the efforts of Senate Democrats to find common ground by supporting the most effective aspects of the House bill to increase capital formation for growing businesses, while also improving the House bill to ensure there are sufficient safeguards to prevent abuse and protect investors. The President supports this bill, yes--but he also supports improving it. And we should have the chance to do so. This is not a bill to promote investment in our economy. This bill will discourage investment. As SEC Chairman Schapiro wrote: If the balance is tipped to the point where investors are not confident that there are appropriate protections, investors will lose confidence in our markets, and capital formation will ultimately be made more difficult and expensive. Unless we protect investors, they will not invest in our economy. We can only add those protections if we slow this rush, debate this bill, and amend it. If we invoke cloture now, we end debate rather than beginning it. If we invoke cloture, we restrict amendment rather than allowing it. That would be a grave mistake, one that puts American investors, American workers and the stability of our economy at risk, and I urge my colleagues not to walk that path. Again, this bill would allow companies to advertise these virtually unregulated stock offerings on television or on billboards. This House bill would allow large companies with thousands of shareholders to avoid SEC regulation. The House bill would allow banks of any size to avoid SEC regulation if they have fewer than 1,200 shareholders. The House bill would allow companies with annual sales of up to $1 billion to evade the most basic transparency, accountability, and disclosure requirements in making initial public offerings. This is not a bill which will promote investment in our economy. This bill will discourage investment. As SEC Chairman Schapiro wrote us: If the balance is tipped to the point where investors are not confident that there are appropriate protections, investors will lose confidence in our markets. That is why the Council of Institutional Investors warns us ``this legislation will likely create more risks to investors than jobs.'' This is not a bill which will allow new opportunities for American workers but one which will create new opportunities for fraudsters and boiler-room crooks. I urge defeat of cloture. We should not end debate on this bill and make it more difficult to amend this bill by restricting amendments.

Mr. LEVIN

Mr. LEVIN. Mr. President, over the last several days there has been an immense outpouring of concern about the so-called JOBS bill the House has sent to us, and this outpouring should weigh upon us. It should make us question the speed and the lack of deliberation with which we are considering this House bill and question the wisdom of just sending it back to the House if there is one amendment to it, which is on the Ex-Im Bank, and hoping that somehow or another investors are going to be protected in a conference instead of by the Senate. What we are considering should be done with great deliberation, and we should take the time to get this right. The House majority leader suggested yesterday that those of us who are concerned about the House bill are ``creating phantom investor protection issues.'' We did not create these issues. People who know far more about capital markets than the House majority leader or myself or probably any of us have asked us to reconsider what we are poised to do. Start with the Council of Institutional Investors. This group's members invest a combined $3 trillion in our Nation's capital markets. They include the Nation's largest pension funds, university endowments, and foundations. The Council of Institutional Investors, an outside, independent, objective group whose sole purpose in life is to make sure investors are given sound opportunities and are not defrauded, is warning us that rather than boosting investment in our economy, we could frighten investors out of the market. They are asking us, they are pleading with us to reevaluate, and we should. Next, take a look at the letter from the current SEC Chairman Mary Schapiro to the Banking Committee last week. Chairman Schapiro issues a lengthy list of warnings about provisions in the House bill. She sums up her warnings this way: ``If the balances tip to the point where investors are not confident that there are appropriate protections, investors will lose confidence in our markets and capital formation will ultimately be made more difficult and expensive.'' That is precisely the opposite of the impact we should want. We should listen to the American Institute of Certified Public Accountants, which warns us that the House bill ``would create marketplace and investor confusion'' that dampens rather than strengthens investment in growing companies. We should listen to the association that represents State securities administrators. What does that association do? They warn us that ``Congress is on the verge of enacting policies that although intended to strengthen the economy, will in fact only make it more difficult for small businesses to access investment capital.'' We should listen to the editors of Bloomberg News, one of the most trusted sources of commentary on the markets, who tell us that provisions of the House bill ``would be dangerous for investors and could harm already fragile financial markets.'' Can any of us who have lived through the fearful days of the financial crisis, days when we wondered if the entire economy would crumble--can any of us or should any of us vote to rush through this body legislation that threatens harm to fragile financial markets? Do we want to live through that again? We should amend this flawed House bill so we can create opportunity for American workers, companies and investors and not opportunities for fraudsters, boiler room hucksters, and con artists. We can do that, and we should do that. One way to do that is to invoke cloture on the alternative that Senators Jack Reed, Mary Landrieu and I have offered and to begin debate and amendments on that alternative so the Senate's deliberative process can begin. If that cloture vote fails, the only remaining prudent alternative is to reject the cloture motion on the underlying bill so the Senate can begin to deliberate and consider amendments to a bill that has aroused such concern among so many experts whose very job it is to protect consumers. Some may fear that by slowing a runaway train, they risk being portrayed as hostile to job creation or to small businesses. After all, how can we oppose legislation titled the ``JOBS Act''? It takes more than a clever acronym to create jobs. As the astonishing amount of concern among market experts tells us, this JOBS Act--this so-called JOBS Act is not a jobs act but an invitation to the kind of fraud that destroys jobs. The Senate is the place where care and deliberation is supposed to rule and is supposed to rein in the excesses of haste and incaution, and I urge my colleagues to undertake that responsibility today. I yield the floor and I suggest the absence of a quorum.

Mr. LEVIN

Mr. LEVIN. Mr. President, before the Senator from Louisiana leaves the floor, I just want to commend her for the passion she has brought to this debate, as well as the reason and the wisdom she has brought to this debate. This is a bill that is extremely complex. The House bill comes over and it has had almost zero the attention it deserves because of the complexity in this bill. But Senator Landrieu has been a voice appealing to us to do what the Senate should do, which is deliberate. If there has ever been a bill which cried out for deliberation, it is this bill. The way it stands now, amendments are not going to be in order, and that is not the way we should proceed in this body. We are all grateful--I hope everyone is grateful--to Senator Landrieu for kind of blowing the whistle on the 100-mile-an-hour train that is moving through this Senate unless we stop it tomorrow and say: Slow this down. Let's look at the details of the provisions of this bill. In the years since the financial crisis sent our economy into a tailspin, many of us in the Senate have sought to do what we could to create the conditions for a rebound in the job market so that American workers could find the jobs they needed. We have fought, we have debated, scratched, and clawed our way to do everything we could to boost job creation. Now before us is a bill called the Jumpstart Our Business Startups Act--the acronym being the JOBS Act. Just because you can come up with an acronym which spells ``jobs'' should not lead anybody to believe this necessarily makes it a jobs bill. It is obviously a clever acronym that has been picked up by many people in the media, so all of a sudden it is a jobs bill. But when you look at this bill and when you look at the people who are in this field who have analyzed it, including people who are in the investment world, including the people who protect investors from fraud and abuse, from their perspective and the SEC's perspective and the Council of Institutional Investors' perspective, this is not a jobs bill. This is a bill which threatens jobs in this country. Its supporters say it will create jobs. But, again, making it possible for an acronym to spell jobs doesn't make it a jobs bill. In ``Alice in Wonderland,'' Humpty Dumpty could confidently declare to Alice: When I use a word, it means just what I choose it to mean. Well, we don't have that luxury here in the Senate. Calling it a jobs bill doesn't make it a jobs bill. And there is a rising wave of overwhelming concern among those who know this area the best that the ground we are about to tread on, far from helping to create jobs, is going to put jobs in jeopardy. The House bill before us would, its supporters tell us, allow companies--especially small growing companies that account for a large share of the jobs created in our economy--greater access to the capital they need to grow, market their products, and hire new workers. Its supporters say it will create new links between investors seeking new opportunities and the companies that can put those investments to work. For that to take place, investors need confidence that the new opportunities we seek to create are sound investments. But what are the investors telling us? They are telling us just the opposite. If this bill will help businesses attract new investors, why is the Council of Institutional Investors and some of the largest pension and investment funds in the Nation telling us it will frighten investors away rather than attract them? If this bill will create new growth opportunities for small businesses, why are business groups from the Main Street Alliance to the U.S. Chamber of Commerce appealing to us for changes? If this bill will allow companies to access capital more easily, why are the current Chairman of the SEC and former SEC Chairmen of both political parties telling us this legislation will dampen capital formation rather than speeding it? The problem is that in the guise of job creation, this legislation rolls back important investor protections and transparency requirements that are fundamental to our capital markets. Under the legislation the House has sent us, investors will know less about the companies they are solicited to invest in, they will have less confidence those companies follow standard accounting practices, they will have no assurance that the solicitation they have just received over the Internet or by telephone is for a legitimate company and not for a boiler room fraud operation. It does not have to be this way. We can remove obstacles to small business growth without creating new opportunities for fraud. We don't need to endanger jobs in the guise of helping to create jobs. Senator Jack Reed, Senator Landrieu, Senator Brown, and I believe we can create new opportunities for growing companies without creating a Wild West mentality in our capital markets. I am now going to outline a few of the ways in which we seek to repair the flaws of the House bill and enable real growth in job creation. Right now companies that need capital to grow and add jobs are allowed to sell stock in some cases without oversight by the SEC and under looser legal liability rules. But in return for that reduced oversight, the companies must sell almost exclusively to investors who meet high income or asset thresholds that help to ensure they are able to understand and absorb the high risk of these investments. Right now, companies making these largely unregulated offerings are not generally allowed to offer them to the public. The House bill will allow companies to market these unregulated stock sales, known as private offerings, to the general public. They could advertise on billboards or on TV or in cold calls to senior living centers, and offer them to investors regardless of the investor's ability to absorb the risk, and with almost no oversight. Our substitute would ensure that firms could sell these unregulated offerings only to investors better able to withstand the risks, and we direct the SEC to develop advertising standards. These provisions in our substitute heed the lesson from an earlier mistake. In 1992, the SEC loosened rules on these unregulated stock sales but reestablished restrictions 7 years later in part due to widespread fraud. That is why groups such as the AARP say: [The House] legislation represents a very considerable redrawing of the lines between the public and private markets, and should not be enacted without greater attention to the potential risks of such an approach. We urge the Senate to . . . adopt a much more narrowly targeted approach. The State Securities Administrators say: State securities regulators are deeply concerned that . . . the Internet will be flooded with new securities offerings, and . . . there will be no way for regulators--or prospective investors--to reasonably determine if the particular issuer is a legitimate business, or a criminal with good computer skills. There is another problem. Right now companies with more than 500 shareholders and $10 million or more in assets are deemed large enough and public enough that they must register with the SEC. Registration means they must provide the SEC and the public with regular financial reports and other information to help ensure that investors and regulators have an accurate picture of the company's finances. That is the current situation. It also means that companies must comply with accounting and other transparency standards that help to ensure the integrity of the market. What does the House bill do? The House bill allows firms with up to 2,000 shareholders--and perhaps significantly more--and with billions of dollars in assets to avoid registration and disclosure requirements, meaning investors in even very large companies would have almost no meaningful information on these firms. It would allow banks of any size to avoid oversight if they have fewer than 1,200 shareholders. This is not a small business bill; this is a big business bill in many key respects. What do we do in our substitute? We ensure that large companies with wide public stock ownership register with the SEC, file regular financial reports, and follow standard accounting rules. We eliminate a loophole that allows one shareholder to hold shares for many beneficial owners by clarifying, as our substitute does, that when determining whether a stock is widely enough held to trigger the disclosure requirements, what counts is beneficial owners, not just owners of record. And we do ease regulatory requirements, as does the House bill, for growing companies that use stock to recruit and compensate employees by exempting them from shareholder account requirements. What do some of the outside independent viewers say about this? Main Street Alliance: Rolling back basic transparency rules, like SEC registration, won't help small businesses. Instead, it will tilt the playing field toward unscrupulous actors who are looking to game the system. Americans for Financial Reform: The House bill would make it possible for companies, including very large companies with a large number of shareholders, to avoid making the periodic disclosures on which market transparency depends. The House bill's combination of unregulated stock offerings marketed to the general public, along with allowing even large, widely held companies to dodge meaningful transparency requirements, means that very large companies could market their shares to the general public with no meaningful oversight. They could do so without ever giving investors an accurate picture of their financial condition and without following standard accounting practices. The House bill is a recipe for widespread fraud that could undermine the integrity of stock markets, frighten investors away from the market, and kill jobs instead of creating them. What else exists currently that would be changed by the House bill and what would be corrected by our substitute? Right now, rules are in place to prevent conflicts of interest in investment banks by building a wall between research analysts who advise investors and salespeople who try to convince investors to buy new stocks that they are underwriting. For example, at investment banks competing for the lucrative business of helping companies go public, the current rules help to prevent the investment banks from competing for that business by promising companies that their research analysts will give favorable recommendations on the company's new stock. These rules were put in place based on the lessons of the dot-com bubble of the 1990s. What would the House bill do? It would largely dissolve the wall, tear down the wall between research analysts and sales staffs for companies in advance of and up to 5 years following an initial public offering of stock. This has raised concern among regulators, investment groups, and businesses that investment banks might issue misleading research in order to attract underwriting business. What does the Chairman of the SEC say? The House bill could return us to conflicts of interest which ultimately severely harm investor confidence. We in our substitute would keep these conflict-of-interest rules in place as they currently exist. What does the Chamber of Commerce say? This is called a jobs bill, pro-business bill. This is what the Chamber says about this provision: There may be a blurring of boundaries that could create potential conflicts of interest between the research and investment components of broker dealers. The SEC Chairman, what does she say? I am concerned that the House bill could foster a return to those [conflicted] practices and cause real and significant damage to investors. What do the State Securities Administrators say? These are the folks in each of our States who try to protect us from fraudulent or erroneous representations relative to securities. [W]eakening the standards applicable to research analysts . . . could create a conflict of interest resulting in devastating losses for Main Street investors. That is our State Securities Administrators. The Financial Analyst Institute: In particular, we are concerned that the proposal to permit brokerage firm analysts to write and distribute research on companies whose IPO shares their firms are underwriting will lead to the kind of conflicted research that decimated investor confidence in the late 1990s and early 2000s. In another provision in current law, companies that want to raise money by selling stock to the public must comply with accounting and disclosure rules to help give investors accurate information on company finances. These companies must obey standard accounting rules and have adequate internal controls. Many of these rules were a response to high-profile accounting frauds such as Enron and WorldCom, and some were in the Dodd-Frank act in the wake of the financial crisis. My Permanent Subcommittee on Investigations investigated Enron. We saw what happened in the absence of these kinds of standard accounting rules being followed by companies. So what does the House bill do? It creates a new class of company called emerging growth companies with up to $1 billion in annual revenues. How is that for small business, $1 billion in annual revenues? It would be exempt from many of these accounting standards and financial disclosures. This $1 billion figure is so high that it would have exempted well over 80 percent of all companies that made initial public stock offerings from meaningful disclosure and integrity rules in recent years. One billion dollars in revenue is not anybody's reasonable definition of a small company. What would we do in our substitute? We would reduce the House bill's revenue exemption from $1 billion to $350 million, making it easier for truly small firms to raise the money to grow, but we maintain important transparency requirements for large companies. And what do the outside independent folks have to say about this particular provision? The Council of Institutional Investors, again representing the largest investors in this country, pension funds and so forth, says: The Council is concerned that the threshold may be too high in establishing an appropriate balance between facilitating capital formation and protecting investors. The Chairman of the SEC says: The definition of ``emerging growth company'' is so broad that it would eliminate important protections for investors even in very large companies. The former SEC chief accountant, Lynn Turner, says: The House bill's changes for companies of up to $1 billion in revenues is a ``fundamental reduction in the level of transparency and regulation for companies going public.'' And, finally, the issue of crowdfunding, so-called, where there are small investments by large numbers of people. Right now, the rules generally prohibit a company from raising very small amounts from ordinary investors without significant costs. Some businesses would like to attract small investments from ordinary investors by selling shares through the Internet through using intermediaries or funding portals--a practice known as ``crowdfunding.'' If done right, this could be a useful tool of the Internet age that helps innovative companies find the funding they need to grow and add jobs. But the House bill allows crowdfunding with almost no oversight or investor protections. Under their bill, companies could solicit investors through the Internet with virtually no regulatory oversight, liability for misstatements, transparency, or other investor protections. Senior citizens, state securities regulators, and others worry that this will give rise to money laundering and fraud risks. One expert calls it the ``Boiler Room Legalization Act.'' By allowing companies and funding intermediaries to solicit small investments with no oversight or accountability, the House bill essentially legalizes the business model of unscrupulous boiler rooms. Our bill creates new opportunities for crowdfunding but establishes basic regulatory oversight, liability, and disclosure rules that will give investors the confidence to participate in this promising emerging source of money for growing companies. What do outside groups say about crowdfunding?

Mr. LEVIN

Mr. LEVIN. Mr. President, as news reports focus on yet another horrific shooting in an American school, we must again confront the simple and sad truth: tragedies like this are often preventable. On February 27, 17-year-old T.J. Lane opened fire in his high school cafeteria in Chardon, OH, killing three of his classmates and wounding two other students. This is a narrative we have heard over and over again. Lane is believed to have taken the gun from his grandfather's barn. Similar to what happened 5 days earlier in Port Orchard, WA, when a 9-year-old boy accidentally shot his classmate with a .45-caliber handgun he took from his mother's house. Or in 2009, when a 15-year-old boy was institutionalized after stealing three guns and hundreds of rounds of ammunition from his father as part of a plan to shoot other students at Pottstown High School in Philadelphia. Sadly, these are not rare circumstances. A 2000 study by the U.S. Secret Service found that in more than 65 percent of school shootings, the attacker got the gun from his or her own home or from a relative. The guardians of these children never intended for their firearms to be used for harm. But they left their loaded guns without any measures to prevent their children--or anyone else--from using them irresponsibly. According to reports by the Legal Community Against Violence, in a nation where approximately one-third of households with minors have a firearm, studies have shown that 55 percent of these households store one or more of their guns unlocked. Another study showed that 22 percent of the parents who claimed their children had never handled their firearms were contradicted by their children. When it comes to gun safety, a young person's curiosity and recklessness can be a dangerous thing. It is imperative that gun owners across the country safely store their weapons out of the reach of young people. But despite these troubling statistics, there are no Federal laws that prevent adults from leaving firearms easily accessible to children and minors. Some State and local governments around the Nation have adopted child firearm access prevention measures, and these laws work. From 1990 to 1994, in the 12 States where child access prevention laws had been in effect for at least 1 year, unintentional firearm deaths fell by 23 percent among children under the age of 15. Laws that encourage parents to keep their firearms locked and unloaded, to store their ammunition in a locked location separate from their firearms, and to educate their children on proper gun use and safety, would help prevent shootings involving children and teenagers. We must not wait for the next Chardon High School or the next Virginia Tech or the next Columbine. Commonsense gun safety legislation protects our schools, our universities, our religious institutions, and our homes from gun violence. But despite this evidence, legislation has been introduced in this Congress to dismantle the few Federal gun safety provisions that protect the American people. I urge our colleagues to support sensible gun safety measures that could prevent tragedies like the one unfolding in Ohio.

Mr. LEVIN

Mr. LEVIN. Madam President, before the Senator from Louisiana leaves the floor, let me thank her for her leadership in this area and the passion she has brought to it. This is a train which has moved with great speed from the House of Representatives--much too great a speed-- and her ability, just by the expression of her will and her determination to bring this to a point where we can debate it at least over a few days and the weekend, is critically important, I believe, to future of investors in this country. There is no State that has suffered more from the job losses of the great recession than my State of Michigan. We don't have to ask a Michigander twice if he or she believes Congress should take action to increase the speed of the jobs recovery. So I am ready to consider any legislation that promises more opportunity for the workers of this country, but unfortunately the legislation the House has sent to us, which is promoted as a job creation bill, is no such thing. In the name of job creation, the House bill would severely weaken investor and taxpayer protections in our securities laws. In the name of putting Americans to work, the House bill would hand a series of special favors to influential special interest groups. It also reflects a disturbing failure to learn the lessons of the recent and all-too-painful past. It defies belief that after the worst financial crisis in generations, a crisis brought on by the failure to effectively police our financial markets, Congress would consider removing vital obstacles to fraud and abuse. The House bill would take a series of steps that would undermine the integrity of our financial markets. We should not go down that road. We need not go down that road. In working with Senator Jack Reed, Senator Landrieu and Senator Sherrod Brown and others, I participated in an effort to make some changes in that bill that would give small, innovative companies more tools to access the capital they need. We want to do that. We all want to do that. But we do that in our bill without putting the stability of our economy and the interest of American investors and taxpayers at risk. I wish to lay out some of the problems with the House bill and how our Reed-Landrieu-Levin amendment would address those problems. The House bill would lower barriers to fraud that are now present in the so-called regulation A stock offerings. These are offerings that are exempt from the SEC registration requirements. The House bill would expose retail investors--those with no expertise and no resources--to assess the risks of participating in the unregulated market to massive potential fraud and abuse. The bill does not even require that companies making offerings under regulation A provide audited financial statements. The regulation A process is appropriate for very small companies, but the House bill provides few meaningful limits to its use. Instead, it would allow larger companies to avoid meaningful oversight year after year. I have worked with colleagues to fix this problem by ensuring that these offerings are limited, so they are only used once every 3 years-- that is one of the changes we would make--and that investors in the offerings get an accurate picture of the company's finances by requiring audited financial statements. In the name of giving smaller companies greater access to the initial public offering market, the House bill would create a new class of corporation called an emerging growth company and would strip from investors in such companies more than a dozen important investor protections. Some of the protections involve transparency. The House bill would weaken corporate governance provisions we enacted less than 2 years ago in the Dodd-Frank Act, including disclosures on executive pay. The House bill would exempt these companies from having to comply with changes to accounting standards. It would repeal the protections we put in place after the dot-com bubble burst. These protections require financial firms to separate research analysts who advise clients on whether to invest in initial public offerings from the sales teams of those same companies. There is supposed to be a wall between those two parts of any company so the sales teams don't take advantage of what the research teams are telling their customers. There are too many opportunities for conflicts of interest and front-running and other things if we allow that wall to be breached. The House bill provides that companies with up to $1 billion in annual revenue would not have to get an outside auditor to check their internal controls. So what happens if one of these companies is cooking the books? Who is going to catch it? We learned with Enron and WorldCom why we need meaningful checks on how companies prepare their financial statements. The vast majority of financial restatements, which are corrections to bad information given to the investing public, are made by medium and small companies. Investors in these companies should have the confidence that the financial statements on which they base their decisions are accurate. Now, those provisions in the House bill are bad enough given the chronic problem in financial markets with poor and misleading financial disclosure but, to make matters worse, the bill would open this collection of loopholes with companies of up to $1 billion in annual revenues. That is a level which would include well over 80 percent of all IPOs. So over 80 percent of all the IPOs that will be issued would then be exempt from the protections under the House bill. Financial regulators, associations of individual investors, many of the largest pension funds in this country, securities experts, and the chamber of commerce have raised alarm bells about that $1 billion threshold as well as the many problems that would follow from the House bill. Just this week, the SEC took a series of enforcement actions against fraudsters seeking to victimize investors in pre-IPO offerings. One SEC official noted, ``The newly emerging secondary market for pre-IPO stock presents risks for even savvy investors.'' The House bill threatens to bring the same level of risk and instability that plagues pre-IPO trading to the IPO market itself--changes that, rather than building support for IPOs, might actually make the IPO market so risky that it ends up dampening investor interest. The amendment some of us have been working on, which is the Reed- Landrieu-Levin, et al., amendment, accepts the premise that some small, newly public companies could benefit from somewhat relaxed requirements as they adjust to the public marketplace. But our amendment would limit these benefits to smaller companies--those with under $350 million in annual revenue--and our amendment would not exempt these companies from many of the critical investor protections. For example, we would not remove protections designed to protect the integrity of the research that is available to investors, nor would we exempt them from any new accounting rules, nor would we exempt them from requirements regarding important executive pay disclosures and shareholder input on executive pay packages. Our amendment would provide flexibility for smaller, newly public companies to adjust to the public markets, but we would leave in place the investor protections that ensure our public markets remain the best in the world. The House bill would also allow companies or fraudsters posing as legitimate companies to solicit investors directly through the Internet. This is one of the really big issues we are going to address next week. As written, the House bill would offer investors almost no protection from fraudulent schemes and fake investment opportunities. Although these Web sites that are often called intermediaries or funding portals are the only entities capable of making sure that a company seeking to sell its stock on its site is real, the House exempts them--exempts the intermediaries and the funding portals--from any real regulation or liability. The same is true with the issuing company. That is why labor groups, seniors organizations, regulators, and security experts all warn us that this measure is an open invitation to fraud. One group calls it the ``boiler room legalization act.'' So we have many problems with these provisions in the House bill, but we also believe the so-called crowdfunding, in which small startups can access pools of capital from small investors, usually over the Internet, has the potential to provide opportunity for truly small businesses to get additional capital they need to grow. This can be done legitimately. That is why we build on the work of Senators Merkley and Bennet to create a platform for raising money through the Internet. But we make sure, as they do, that it has the necessary investor and consumer protections. In fact, legitimate crowdfunding sites have made it clear to us that they, like us, are concerned about the House bill. So we have legitimate crowdfunding interest groups that want to make sure the protections are there for the investors, speaking out against some of the excessive provisions in the House bill. They want the additional protections we provide. So our amendment makes sure that funding portals are subject to meaningful regulation and that the companies that use them to raise capital are also subject to meaningful regulation. Our amendment would, unlike the House bill, require comprehensive disclosures to investors about the company and the risks of such investments. If this new way of investing in small companies is to succeed, then investor protections such as the ones embodied in the Merkley-Bennet provisions, which we have included in our amendment, are vital to giving investors the confidence to participate. The House bill also attempts to remove regulations on so-called private offerings. By allowing issuers of private offerings to market their stock to the general public--whether it is on billboards and the Internet, in visits to retirement homes or late-night television ads-- that provision in the House bill would dangerously lower our defenses against frauds. We have seen this movie before. In the 1990s regulators lowered the barriers to general solicitation for private offerings and within years reversed their error because of widespread fraud and abuse. Some have complained that the existing restrictions on solicitation for private offerings are too narrow and impede businesses' access to capital. That seems unlikely given the nearly $1 trillion a year in private offering activity. But if there are yet more worthy investments that are going unfunded because of unneeded investor protections, the SEC regulations should be updated for the Internet age. The Reed-Landrieu-Levin amendment would direct the SEC to revise its rules to allow companies to offer and sell shares to a credited investor, but it then directs the SEC to make sure those who offer or sell these securities take reasonable steps to verify that the purchasers are actually accredited investors. It requires the SEC to revise its rules to make sure these sales tactics are appropriate. There are not going to be, under our language, billboards or cold calls to senior living centers. I wish I could say the same about the House bill. There is little evidence that the reduced investor protections and invitations to fraud in the House bill will make any meaningful contribution to job growth. We do not have one study on any one of the provisions in the House bill establishing that even one job would be created. If such a study existed, I am sure we would have seen it. The simple reality is that repealing Federal securities laws--and that is clearly the intent of the House bill--does not create jobs. In fact, the former Chief Accountant to the SEC was quoted recently as saying that this JOBS bill was no jobs bill at all. He said: ``This would be better known as the bucket-shop and penny-stock fraud reauthorization act of 2012.'' Taken together, these and other provisions in the House bill send a false message: that in order to grow the economy, we must subject our citizens to more fraud, we must put pension funds and church endowments at greater risk of fleecing, we must create more threats to the financial stability of American families. The America that I know and that I believe in is capable of growing our economy without these unnecessary risks. Indeed, it is fraud and financial abuse that have repeatedly brought our economy to its knees. We opened the door to fraud and abuse in the savings and loan industry and precipitated a crisis that destroyed 750 financial institutions when we did that. We cut the number of new homes built in this country by nearly half and devastated entire communities. We dropped the barriers to fraud through financial statements and in swaps markets, opening the door to the predations of the so-called ``smartest guys in the room''--those are the criminal executives of Enron. We lowered the barriers to heedless risk and conflicts of interest in the financial system, thereby paving the road to the greatest financial crisis since the 1930s. Over the last 10 years, on a bipartisan basis, my Permanent Subcommittee on Investigations has held hearing after hearing and issued report after report on the Enron crisis, on accounting and securities frauds, and on the more recent subprime mortgage crisis. Our investigation has exposed how some American corporations, and their accountants and banks, were willing to dupe investors and, even after their wrongdoing came to light, walk away with huge paychecks while workers, investors, and the American economy at large paid the price. Enron was the seventh largest U.S. corporation before its crash bankrupted employees, pensions, and investors. It lied about its earnings and did so with the help of accountants and banks. Goldman Sachs sold securities through public and private offerings that did not fully inform investors about what they were buying. The wrongdoing our subcommittee has uncovered over the years is as powerful a reminder as we can get that investors deserve protection against abuses when they invest their hard-earned dollars in U.S. capital markets. There is a rising wave of concern among market experts that the effect of the House legislation might be precisely the opposite of its supporters' stated intent and that instead of boosting the ability of companies to find capital so they can grow, these changes would hurt the market for investing in new companies by making that market too risky. If we remove meaningful transparency and safeguards against fraud, SEC Chairman Schapiro wrote just a few days ago that ``investors will lose confidence in our markets and capital formation will ultimately be made more difficult and expensive.'' The question for the champions of lower regulatory barriers is this: Did those rollbacks of regulatory protections help our economy grow? Did those rollbacks which we saw so many of and which I have just outlined create jobs? Ask a family who was wiped out in the financial crisis. Ask an investor who lost everything to Enron. Ask one of the many 8.6 million American workers who lost their jobs in a financial crisis created on Wall Street, one we have yet to fully overcome. In November of 1999 this body debated another piece of financial legislation, one that supporters claimed would lead to boundless new economic opportunities for our country. The bill we were debating repealed the Glass-Steagall Act. It lowered barriers to concentration in the financial industry. It removed the wall that had separated investment banking from commercial banking since the aftermath of the Great Depression. Senator Byron Dorgan came to this floor and he issued a warning: ``It may be that I am hopelessly old-fashioned, but I just do not think we should ignore the lessons learned in the 1930s . . . I also think that we will, in 10 year's time, look back and say: We should not have done that because we forgot the lessons of the past.'' Well, that was 1999. Ten years after Senator Dorgan's remarks, almost to the day that he predicted, America's economy hit rock bottom, with the lowest mark of employment during the great recession. Well, old- fashioned sounds pretty good these days. I hope to be as old-fashioned as Senator Dorgan, who warned us that lowering the barriers that protect us from financial catastrophe can only destroy jobs--not create jobs, destroy jobs. I hope the Senate will turn away from the House bill that threatens more fraud, more abuse, and renewed crisis. I hope the Senate will embrace reforms that are present in our substitute amendment that give our innovative companies the chance to compete without endangering investor confidence or the stability of our economy. Madam President, I yield the floor, and I note the absence of a quorum.

Mr. LEVIN

Mr. LEVIN. Mr. President, we are long overdue to reauthorize our Nation's transportation programs. The last reauthorization, SAFETEA LU, expired in September 2009. Since then there have been seven short-term extensions, and the most current extension expires on March 31. I am pleased the Senate is finally voting on a bill, S. 1831, Moving Ahead for Progress in the 21st Century Act, or MAP 21. A path forward for action on the House bill is still unclear so we may indeed need another short-term extension. MAP 21 enjoys the strong support of a broad cross-section of organizations ranging from the AFL CIO, the U.S. Chamber of Commerce, and the American Public Transportation Association. This bill will improve the mobility of people and commerce while reducing traffic congestion and improving air quality. Investing in the construction and maintenance of our roads, bridges, public transit systems, trails, and rail infrastructure means people and goods move more efficiently and that improves our international competitiveness. And investing in infrastructure will create badly needed jobs. It is one of the most obvious things we can do to help boost the economy as it struggles to emerge from the great recession. So I will vote yes on final passage of S. 1813. MAP 21 is a bipartisan, 2-year bill that provides level funding with increases to account for inflation. The bill would provide $109 billion over 2 years for surface transportation programs. Given the difficult budget climate this has to be viewed as a victory. Our State transportation agencies need to be able to do long-term planning and a 2-year bill helps that cause, and is surely better than the short-term extensions we have been living under. Given the negative budget climate and the difficulty we had finding the revenue to offset the highway trust fund shortfall, a 2-year bill is what is possible, though I would have preferred a longer term bill. Under MAP 21's highway title, Michigan will get more than $1.1 billion per year for 2 years, slightly more than under the current bill. Under the transit formulas, Michigan is projected to get a little over $131.3 million per year for 2 years, a little more than we got last time in formula funds. When it comes to public transit, Michigan is an all-bus State except for the People Mover in Detroit. Whereas the highway title takes great pains to ensure that the distribution of highway revenue among States is largely unchanged, the transit title changes the distribution of transit revenue among States to favor those States with rail transit infrastructure over States like Michigan that do not yet have rail transit. In an effort to keep Michigan whole in terms of transit funding, I cosponsored an amendment to restore funding to both urban and rural bus programs. I am pleased provisions of that amendment have been adopted in the managers' package. My primary area of concern with this bill is in the formula for distributing funds to States and a lack of true donor equity based on contributions to the highway trust fund. Historically, about 20 States, including Michigan, have been ``donor'' States, sending more gas tax dollars to the trust fund in Washington than are returned in transportation infrastructure spending. Each time the highway bill has been reauthorized, I have joined Members from other donor States to try to correct this inequity in highway funding and we have made progress. In 1978, Michigan was getting around 75 cents back on our Federal gas tax dollar. That went up to about 80 cents in 1991, 90.5 cents in 1998, and 92 cents in 2005. Unfortunately, there simply isn't enough money this time around to improve the rate of return for donor States without taking funding from donee States, which we don't have the votes to do. Further undermining donor State efforts is the trend starting in 2008 of nonuser-fee money going into the trust fund. Before that, the trust fund was purely user-fee funded, primarily with gas taxes contributed from each State. When gas tax revenues started declining with increases in fuel economy and people driving less because of the recession, billions of dollars were transferred from the general fund to keep the trust fund solvent. Thus the blurring of the line between what was paid into the trust fund by States versus what is given back to States in Federal highway dollars which is now both gas taxes and general revenue monies. This means when calculated in dollar terms, donor States, including Michigan, are getting back more money than they put into the trust fund, or well more than 100 cents on the dollar. When you look at the percent, or share, contributed to the trust fund versus the percent, or share, paid out compared to other States, an inequity among donor and donee States remains. Overall, Michigan Department of Transportation, MDOT, officials view the bill favorably, particularly the program consolidation, increased flexibility, realistic performance management, and provisions to expedite project delivery. MDOT's director wrote to me that he is eager to see a long-term transportation authorization bill enacted because it is vital to providing the stability needed to improve transportation planning and project development. There are no earmarks in this bill and nearly all discretionary grant programs allocated by the Federal Highway Administration would be eliminated. The result is that most funding is allocated to the States by formula. MAP 21 proposes a new core program intended to direct funds to infrastructure segments that are particularly critical to freight movement. It allows the Wayne County Aerotropolis project to apply for grants under the freight program by specifically identifying as eligible an ``Aerotropolis'' transportation system defined as a planned and coordinated multimodal freight and passenger transportation network providing efficient, sustainable, and intermodal connectivity to a defined region of economic significance centered around a major airport. MAP 21 makes substantial changes to transportation planning requirements at all levels, including using performance management through the planning process. It requires that State and metropolitan planning organizations, MPOs, include performance measures and targets. Along with these increased technical responsibilities, the bill raises the designation threshold for MPOs from those serving a population of 50,000 to those serving a population of 200,000, unless the Governor certifies certain technical criteria are met. This could have been a problem for a number of Michigan mid-sized MPOs, including those in Battle Creek, Jackson, Holland, Bay City, and Saginaw. The MPOs in these cities have expressed concern to my office that they could lose their MPO designation. They argue that their organizations are comprised of local elected officials who are in the best position to determine local transportation needs, and this proposal could exclude local officials and their constituents from participating in the transportation decisionmaking process if the Governor does not certify them. I agree that this local expertise in the planning process is valuable and that it should be retained. The MDOT officials who work with and rely on these organizations assured my office the State would want the existing mid-sized MPOs in Michigan to retain their MPO designation. I cosponsored an amendment to grandfather in existing MPOs so that they are not at risk of losing their MPO designation and with it the planning funds needed to operate, and I am pleased a modified version of this amendment was accepted. I am also pleased the bill includes an amendment I authored with Senator Conrad which was adopted by voice vote. It would give Treasury a discretionary power to fight against tax evasions. Under the PATRIOT Act, Congress gave the Treasury the power to take a range of measures against foreign financial institutions or jurisdictions that it finds to be of ``primary money laundering concern.'' The Levin-Conrad amendment would authorize Treasury to impose the same types of measures on the same types of entities if Treasury finds them to be ``significantly impeding U.S. tax enforcement.'' Treasury could, for example, prohibit U.S. banks from accepting wire transfers or honoring credit cards from those foreign banks. This amendment, which is similar to a provision that I introduced as part of a broad offshore tax bill for several Congresses, has been scored as raising over $1 billion over 10 years. I am pleased the bill managers worked with me to include language regarding the need to fully use the Harbor Maintenance Trust Fund for operating and maintaining our Federal navigation channels, including the 69 Federal harbors and channels in Michigan. These ports and harbors support jobs, advance economic activity, and bolster exports. Maintaining these waterways is not only important for our economy and international competitiveness, but properly maintaining these harbors and ports keeps freight off of our highways and rails, relieving congestion and improving the environment. Somehow, keeping our ports and harbors in good repair has not been a priority in budgeting and funding decisions. This sense of the Senate on harbor maintenance acknowledges the shortfall, and states that ``the amounts in the Harbor Maintenance Trust Fund should be fully expended to operate and maintain the navigation channels of the United States.'' This affirmative statement puts the Senate on record in supporting full funding for our Federal ports and harbors, and is a good step forward in addressing this unfair situation. Every year, hundreds of millions of dollars collected from shippers are deposited into the Harbor Maintenance Trust Fund but never spent, despite the fact that our Nation has a significant navigational maintenance backlog. Collecting fees from shippers and not using these revenues for their intended purpose is not only unfair, it threatens jobs and economic growth. Including this important language in the Senate bill is an important first step to correcting our harbor maintenance problem, yet much work remains. I hope the House will take action on a transportation reauthorization bill so that we can work out any differences in conference committee. Along with my colleagues, I will be urging the conferees to retain and strengthen the harbor maintenance language to reflect S. 412, a bill I sponsored and which currently has 35 cosponsors, which would provide an enforcement mechanism to ensure that all of the funds deposited into the Harbor Maintenance Trust Fund are used for their intended purposes: for the operation and maintenance of our Nation's harbors. This bill takes some important steps to support green automotive technology. I am pleased that the bill supports the expansion of electric vehicle infrastructure by allowing highway funds to be used for new charging stations at existing or new parking facilities funded through the law. It also includes a provision authored by Senator Carper to include vehicle charging and refueling infrastructure improvement projects among the projects eligible to be carried out under the congestion mitigation and air quality improvement program. I am proud of the fact that Michigan has two fixed guideway projects under development that will go through the Federal Transit Administration's, FTA, New Starts Program which will provide Federal funding to build them. These projects, one in Grand Rapids and a two- part interconnected project in Detroit, will finally bring light rail and bus rapid transit to Michigan to supplement our current all-bus system. I have worked closely with the Banking Committee to secure changes to the New Starts Program that will benefit Michigan's initiatives. I am pleased to report that this bill modifies the New Starts Program in a way that is favorable to these Michigan projects, including the Detroit project which has a more complex set of circumstances. Michigan is developing two connected projects in Detroit: a streetcar circulator that will distribute riders within the downtown core along Woodward Avenue, built mostly with private funds, and a regional bus rapid transit network on multiple corridors leading into downtown Detroit, which will need Federal New Starts funds. Because it is largely privately funded, the streetcar project will be able to advance before everything is in place at both the State and Federal levels to submit the New Starts application for the entire program. FTA officials have told me they interpret the bill's ``Program of Interrelated Projects'' language as providing ample opportunity for the streetcar circulator project in Detroit's Woodward Avenue corridor and the connected bus rapid transit project in the same corridor to meet the New Starts requirements to apply as a single program and that one project can be built before the other project within a reasonable timeframe and still be eligible. This is reassuring as we work to advance this important project through the New Starts Program. In conclusion, MAP 21 is a consensus, bipartisan bill that represents our best hope to get a longer term transportation bill enacted. I urge my colleagues to support it and I hope the House of Representatives will also adopt it.