Carl Levin

Mr. LEVIN

Mr. LEVIN. Mr. President, I ask unanimous consent that after the Senator from Wyoming concludes his remarks that I be recognized.

Mr. LEVIN. Mr. President, I am deeply concerned by the apparent lack of a clear and consistent U.S. policy on the entering into of oil deals in Iraq in the absence of Iraqi national hydrocarbon legislation. Unfortunately, that hydrocarbon legislation, which would ensure equitable distribution of oil revenues among the Iraqi people, and enable increased oil production and long-term foreign investment, remains stalled in the Iraqi Assembly. Continued failure by the Iraqi Government to pass national hydrocarbon legislation, a political benchmark which was set by the Iraqis for themselves, risks fracturing the country and jeopardizing hard-fought gains. Last September, Hunt Oil Company, an American firm, was the first company to sign a production-sharing contract with the Kurdistan Regional Government, or KRG. The KRG has now apparently signed approximately two dozen such contracts with international oil companies, all of which have been condemned by the Iraqi national Government. Iraq's Oil Minister has called these deals ``illegal'' and the State Department's May 2008 report on Iraq indicates that progress on national hydrocarbon legislation has been ``complicated by the KRG's pursuit of oil contracts'' and is now ``at a standstill.'' Administration officials have stated publicly and in letters to me that U.S. policy strongly discourages oil production-sharing contracts between private companies and regional governments in Iraq, including the KRG. However, representatives from Hunt Oil Company have indicated that they specifically asked about U.S. policy regarding such deals in meetings with State Department employees prior to Hunt Oil signing their production-sharing contract with the KRG and were told ``there was no policy, neither for nor against.'' I am concerned that if a policy discouraging contracts with regional governments was in place prior to the signing of Hunt Oil's contract with the KRG, that it was not adequately understood or communicated by State Department employees in their interactions with Hunt Oil and other international oil companies seeking to do business in Iraq. Mr. President, I ask unanimous consent that a letter I wrote to the President's National Security Advisor, Stephen Hadley, and his response to me on this issue be printed in the Record.

Mr. LEVIN. Mr. President, on a related issue, recent reports indicate the Government of Iraq is now in negotiations with five Western oil companies for no-bid ``technical service'' contracts at existing oil fields. When asked about these contracts on June 19, 2008, Secretary Rice said: The United States Government has stayed absolutely out of the matter of the awarding of Iraqi oil contracts. It's a private sector matter. However, subsequent reports indicate that State Department employees advised the Iraqi Government on the drafting of these technical service contracts. These reports were followed on July 1 with news that Iraq intends to award contracts to develop six oil fields and two natural gas fields, with or without the passage of national hydrocarbon legislation. These contracts would seem to circumvent the national hydrocarbon legislation currently under consideration in Iraq and could risk further complicating what are already delicate negotiations. I am concerned by the administration's silence on these contracts and the message our reported involvement in drafting the no-bid technical service contracts sends to the Iraqi Government about the importance of passing national hydrocarbon legislation. I am sending a letter to Stephen Hadley today asking him about U.S. policy with regard to these service and development contracts and expressing my concern that such contracts might harm negotiations on national hydrocarbon legislation. I ask unanimous consent that this letter also be printed in the Record.

Mr. LEVIN. Mr. President, I yield the floor.

Mr. LEVIN

Mr. LEVIN. Mr. President, today I am introducing, along with Senator Feinstein, the Over-the-Counter Speculation Act. This legislation will provide the Commodity Futures Trading Commission, CFTC, with the ability to detect and prevent price manipulation and excessive speculation. In the currently unregulated over-the-counter commodity markets, this legislation will close a major loophole in our commodities laws that prevents the CFTC from conducting oversight in certain enforcement activities and obtaining information about trading in the unregulated over-the-counter market. It will ensure that large energy and other commodity traders cannot use the over-the-counter market to hide from the CFTC, escape reporting requirements, or avoid CFTC enforcement authorities to require traders to reduce their holdings of futures contracts in order to prevent manipulation or excessive speculation. This legislation is based on the work of the Permanent Subcommittee on Investigations, which I chair, regarding effect of speculation on rising energy prices. In 2006, the PSI study, called ``The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat,'' found the following: First, over the past few years, speculators have dramatically increased their activities in U.S. energy commodity markets. Second, speculation has contributed to rising U.S. energy prices. The 2006 report estimated that this increased speculation, particularly through commodity index funds, had contributed about $20 to the price of a barrel of oil which was then about $70, or roughly 25 to 30 percent of the price. The 2006 PSI report also found that CFTC access to daily reports of large trades of energy commodities is essential to its ability to detect and deter price manipulation. It recommended that Congress require reports of large trades on over-the- counter electronic exchanges. The 2006 report also recommended that Congress eliminate the Enron loophole to put the cop back on the beat in the over-the-counter electronic markets. Since the 2006 PSI report, the amount of speculation has increased significantly and so have energy prices. In 2006, there was about $60 billion invested in commodity index funds. Today there is over $200 billion. Since 2000, there has been nearly a 1200-percent increase in the amount of speculative trading compared to only a 200-percent increase in the commercial trading world. Even this understates the increase in speculation, since the CFTC data classifies futures trading involving index funds as commercial trading rather than speculation. A large amount of speculative trading is taking place in the unregulated over- the-counter market. Many market experts believe this huge increase in speculation in recent years has boosted oil prices. Last fall, as oil prices were nearing $100 a barrel--$40 a barrel lower than they are today--the president and CEO of Marathon Oil said: $100 oil isn't justified by the physical demand in the market. It has to be speculation on the futures market that is fueling this. Mr. Fadel Gheit, an oil analyst for Oppenheimer and Company, describes the oil market as ``a farce.'' The speculators have seized control and it's basically a free-for-all, a global gambling hall, and it won't shut down unless and until responsible governments step in. In January of this year, as oil hit $100 a barrel, Tim Evans, oil analyst for Citigroup, wrote: The larger supply and demand fundamentals do not support a further rise and are, in fact, more consistent with lower price levels. That is when oil was at $100 a barrel. At the joint hearing of my PSI Subcommittee and Senator Dorgan's Energy Subcommittee last December, Dr. Edward Krapels, a financial market analyst, testified: Of course financial trading, speculation affects the price of oil because it affects the price of everything we trade . . . It would be amazing if oil somehow escaped this effect. He said that as a result of this speculation: There is a bubble in oil prices. There is some concern that some large traders may be avoiding the limits on holdings and accountability levels that apply to trading on the futures exchanges by trading in the unregulated over-the-counter market. In the absence of data or reporting on the activity in the over-the-counter market, it is difficult to estimate specifically the specific impact of this large amount of unregulated trading on commodity prices. Moreover, even if we were to get better information about unregulated over-the-counter trades, the CFTC has no authority to take action to prevent price manipulation or excessive speculation resulting from this unregulated trading. The need to control this speculation is urgent. Only yesterday the presidents and CEOs of major U.S. airlines warned about the disastrous effects of rampant speculation on the airline industry. The CEOs stated: Normal market forces are being dangerously amplified by poorly regulated market speculation. They further stated: Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. So it has gone up from 21 percent purchased by speculators on these oil contracts, these futures, to 66 percent during this period, and that, again, excludes some of the transactions. The CEOs wrote that: For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. Earlier this year, Congress included legislation on the farm bill that closed the Enron loophole. This legislation closed one of the major regulatory gaps identified in the 2006 PSI report and then again in the 2007 PSI report on how a single hedge fund named Amaranth distorted natural gas prices through, in part, using the over-the- counter electronic exchanges that were not regulated under the Enron loophole. The legislation to close the Enron loophole placed over-the- counter electronic exchanges under CFTC regulation. However, that legislation did not address the separate issue of trading in the rest of the over- the-counter market, which includes bilateral trades through voice brokers, swap dealers, and direct party-to-party negotiations. The legislation we are introducing today builds on that previous legislation and addresses the rest of the over-the-counter market. Additionally, I have already introduced legislation with Senators Feinstein, Durbin, Dorgan, and Bingaman, S. 3129, to close the ``London loophole.'' This loophole has allowed crude oil dealers in the United States to avoid the position limits--limits on their holdings--that apply to trading on U.S. futures exchanges by simply directing their trades onto the ICE Futures Exchange in London. The legislation we have introduced has been incorporated into legislation introduced by Senator Durbin, S. 3130, which also would give the CFTC more resources and enable them to better obtain information about index trading and the swaps market. After these two bills were introduced, the CFTC imposed more stringent requirements upon the ICE Future Exchange's operations in the United States, and for the first time the London exchange imposed comparable position limits in order to be allowed to keep its trading terminals in the United States. This is the very action our legislation called for. However, although the CFTC took those important steps that will go a long way toward closing the London loophole, Congress still needs to pass the legislation to make sure the London loophole is closed. The legislation would put the conditions the CFTC has imposed upon the London exchange into statute, and ensure that the CFTC has clear authority to take action against any U.S. trader who is manipulating the price of a commodity or excessively speculating through the London exchange, including requiring traders to reduce positions. There are additional steps that need to be taken to address the issue of ensuring that increasing speculation in our commodity markets is not driving up commodity prices. The legislation we are introducing today is a practical, workable approach that will enable the CFTC to obtain key information about the over-the-counter market to enable it to prevent manipulation and excessive speculation. It will provide the CFTC with the authority to take action in the over-the-counter market to prevent excessive speculation and price manipulation, such as by requiring large traders to reduce their holdings of futures contracts. It enables the CFTC to obtain information on large trades in the over-the-counter market so it can determine whether any trader or class of traders has excessive holdings that may affect market prices, and whether such positions should be reduced. This legislation will ensure that large traders cannot avoid the CFTC reporting requirements by using the unregulated over-the-counter market instead of the regulated exchanges. It will ensure that the CFTC can take appropriate action, such as by requiring reductions in holdings of futures contracts against traders with large positions in order to prevent price manipulation or excessive speculation, regardless of whether the trader's position is on an exchange or in the over-the- counter market. The approach in this bill is practical and workable. I thank Senator Feinstein for her important support of this legislation. Mr. President, I ask unanimous consent, that a summary of the bill be printed in the Record.

Mr. LEVIN

Mr. LEVIN. Mr. President, today I am introducing, along with Senator Feinstein, the Over-the-Counter Speculation Act. This legislation will provide the Commodity Futures Trading Commission, CFTC, with the ability to detect and prevent price manipulation and excessive speculation. In the currently unregulated over-the-counter commodity markets, this legislation will close a major loophole in our commodities laws that prevents the CFTC from conducting oversight in certain enforcement activities and obtaining information about trading in the unregulated over-the-counter market. It will ensure that large energy and other commodity traders cannot use the over-the-counter market to hide from the CFTC, escape reporting requirements, or avoid CFTC enforcement authorities to require traders to reduce their holdings of futures contracts in order to prevent manipulation or excessive speculation. This legislation is based on the work of the Permanent Subcommittee on Investigations, which I chair, regarding effect of speculation on rising energy prices. In 2006, the PSI study, called ``The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat,'' found the following: First, over the past few years, speculators have dramatically increased their activities in U.S. energy commodity markets. Second, speculation has contributed to rising U.S. energy prices. The 2006 report estimated that this increased speculation, particularly through commodity index funds, had contributed about $20 to the price of a barrel of oil which was then about $70, or roughly 25 to 30 percent of the price. The 2006 PSI report also found that CFTC access to daily reports of large trades of energy commodities is essential to its ability to detect and deter price manipulation. It recommended that Congress require reports of large trades on over-the- counter electronic exchanges. The 2006 report also recommended that Congress eliminate the Enron loophole to put the cop back on the beat in the over-the-counter electronic markets. Since the 2006 PSI report, the amount of speculation has increased significantly and so have energy prices. In 2006, there was about $60 billion invested in commodity index funds. Today there is over $200 billion. Since 2000, there has been nearly a 1200-percent increase in the amount of speculative trading compared to only a 200-percent increase in the commercial trading world. Even this understates the increase in speculation, since the CFTC data classifies futures trading involving index funds as commercial trading rather than speculation. A large amount of speculative trading is taking place in the unregulated over- the-counter market. Many market experts believe this huge increase in speculation in recent years has boosted oil prices. Last fall, as oil prices were nearing $100 a barrel--$40 a barrel lower than they are today--the president and CEO of Marathon Oil said: $100 oil isn't justified by the physical demand in the market. It has to be speculation on the futures market that is fueling this. Mr. Fadel Gheit, an oil analyst for Oppenheimer and Company, describes the oil market as ``a farce.'' The speculators have seized control and it's basically a free-for-all, a global gambling hall, and it won't shut down unless and until responsible governments step in. In January of this year, as oil hit $100 a barrel, Tim Evans, oil analyst for Citigroup, wrote: The larger supply and demand fundamentals do not support a further rise and are, in fact, more consistent with lower price levels. That is when oil was at $100 a barrel. At the joint hearing of my PSI Subcommittee and Senator Dorgan's Energy Subcommittee last December, Dr. Edward Krapels, a financial market analyst, testified: Of course financial trading, speculation affects the price of oil because it affects the price of everything we trade . . . It would be amazing if oil somehow escaped this effect. He said that as a result of this speculation: There is a bubble in oil prices. There is some concern that some large traders may be avoiding the limits on holdings and accountability levels that apply to trading on the futures exchanges by trading in the unregulated over-the-counter market. In the absence of data or reporting on the activity in the over-the-counter market, it is difficult to estimate specifically the specific impact of this large amount of unregulated trading on commodity prices. Moreover, even if we were to get better information about unregulated over-the-counter trades, the CFTC has no authority to take action to prevent price manipulation or excessive speculation resulting from this unregulated trading. The need to control this speculation is urgent. Only yesterday the presidents and CEOs of major U.S. airlines warned about the disastrous effects of rampant speculation on the airline industry. The CEOs stated: Normal market forces are being dangerously amplified by poorly regulated market speculation. They further stated: Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. So it has gone up from 21 percent purchased by speculators on these oil contracts, these futures, to 66 percent during this period, and that, again, excludes some of the transactions. The CEOs wrote that: For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. Earlier this year, Congress included legislation on the farm bill that closed the Enron loophole. This legislation closed one of the major regulatory gaps identified in the 2006 PSI report and then again in the 2007 PSI report on how a single hedge fund named Amaranth distorted natural gas prices through, in part, using the over-the- counter electronic exchanges that were not regulated under the Enron loophole. The legislation to close the Enron loophole placed over-the- counter electronic exchanges under CFTC regulation. However, that legislation did not address the separate issue of trading in the rest of the over- the-counter market, which includes bilateral trades through voice brokers, swap dealers, and direct party-to-party negotiations. The legislation we are introducing today builds on that previous legislation and addresses the rest of the over-the-counter market. Additionally, I have already introduced legislation with Senators Feinstein, Durbin, Dorgan, and Bingaman, S. 3129, to close the ``London loophole.'' This loophole has allowed crude oil dealers in the United States to avoid the position limits--limits on their holdings--that apply to trading on U.S. futures exchanges by simply directing their trades onto the ICE Futures Exchange in London. The legislation we have introduced has been incorporated into legislation introduced by Senator Durbin, S. 3130, which also would give the CFTC more resources and enable them to better obtain information about index trading and the swaps market. After these two bills were introduced, the CFTC imposed more stringent requirements upon the ICE Future Exchange's operations in the United States, and for the first time the London exchange imposed comparable position limits in order to be allowed to keep its trading terminals in the United States. This is the very action our legislation called for. However, although the CFTC took those important steps that will go a long way toward closing the London loophole, Congress still needs to pass the legislation to make sure the London loophole is closed. The legislation would put the conditions the CFTC has imposed upon the London exchange into statute, and ensure that the CFTC has clear authority to take action against any U.S. trader who is manipulating the price of a commodity or excessively speculating through the London exchange, including requiring traders to reduce positions. There are additional steps that need to be taken to address the issue of ensuring that increasing speculation in our commodity markets is not driving up commodity prices. The legislation we are introducing today is a practical, workable approach that will enable the CFTC to obtain key information about the over-the-counter market to enable it to prevent manipulation and excessive speculation. It will provide the CFTC with the authority to take action in the over-the-counter market to prevent excessive speculation and price manipulation, such as by requiring large traders to reduce their holdings of futures contracts. It enables the CFTC to obtain information on large trades in the over-the-counter market so it can determine whether any trader or class of traders has excessive holdings that may affect market prices, and whether such positions should be reduced. This legislation will ensure that large traders cannot avoid the CFTC reporting requirements by using the unregulated over-the-counter market instead of the regulated exchanges. It will ensure that the CFTC can take appropriate action, such as by requiring reductions in holdings of futures contracts against traders with large positions in order to prevent price manipulation or excessive speculation, regardless of whether the trader's position is on an exchange or in the over-the- counter market. The approach in this bill is practical and workable. I thank Senator Feinstein for her important support of this legislation. Mr. President, I ask unanimous consent, that a summary of the bill be printed in the Record.

Mr. LEVIN

Mr. LEVIN. Mr. President, on that point, what is the time situation?

Mr. LEVIN. And how much time did I use?

Mr. LEVIN. Mr. President, we have these two nominations before us. I understand the vote on the two nominations will take place at 2 p.m. or thereabouts. The Senate Armed Services Committee unanimously approved the nomination of General Petraeus for reappointment to the grade of general and to be commander of the U.S. Central Command, and also the nomination of LTG Raymond Odierno for appointment to the grade of general to be commander of the Multinational Force Iraq. The confirmation of these nominations will provide a continuity of senior military leadership for the region and for Operation Iraqi Freedom. This continuity in U.S. military leadership will be helpful in working with regional and Iraqi political and military leaders. General Petraeus brings a large amount of experience and leadership to the position of CENTCOM commander. He has served over 30 years in the military, including 3 tours of duty in Iraq, first as commander of the 101st Airborne Division, then as commander of the Multinational Security Transition Command Iraq, and since February of 2007, as commander of the Multinational Force Iraq. As the Multinational Force Iraq commander, General Petraeus has led a shift in tactics in Iraq, helping to calm, hopefully permanently, very violent sectarian conflict. If confirmed as CENTCOM commander, General Petraeus would continue to oversee the U.S. troops in Iraq, drawing on his knowledge of the situation on the ground and his working relationships with Iraqi political and military leaders. He would also be responsible for addressing an increasingly violent insurgency in Afghanistan and other important national security interests throughout the CENTCOM region. General Odierno is well qualified for his new duties, with 32 years of uniformed service, including 2 tours in Iraq, first as commander of the 4th Infantry Division, and until recently as commander, Multinational Corps Iraq, in which he worked directly under the command of General Petraeus. He has assisted the change in operational approach in Iraq toward counterinsurgency. He understands that Iraqis must achieve political reconciliation to unite their country and to provide more effective governance for Iraq. He understands the importance of and is committed to increasing the Iraqi security forces technical capability, professionalism, evenhandedness, and full integration so they can eventually assume total and effective responsibility for their own nation's stability. He understands the recent gains in reducing violence, controlling militias, and rejection of al-Qaida must be supported and expanded by an Iraqi Government which grows more capable and is more attuned to meeting the needs of the Iraqi people. And most importantly, General Odierno understands the necessity for Iraqi political leaders to take responsibility for their own country--to take responsibility politically, economically, and militarily. So our country, I believe, is indebted to the service of General Petraeus and General Odierno for their willingness to continue that service, and we are also indebted to their families for the sacrifices those families endure when their two loved ones spend so much time in such difficult areas. I urge my colleagues to support these two nominations.

Mr. LEVIN. Mr. President, I reserve the remainder of my time. I have no objection to Senator Warner's yielding to the Senators he has identified, or other Senators speaking beyond that 9 minutes, or whatever time he has. But I will have to reserve the remainder of my time, because I think there may be speakers on my side who may oppose the nominations, and I want to protect them if they do. So I ask that same courtesy then be agreed to by the good Senator from Virginia, if there is additional time needed on our side for speakers.

Mr. LEVIN

Mr. LEVIN. Mr. President, I am pleased that we are at last moving closer to enactment of much-needed housing legislation. The foreclosure situation in my State of Michigan continues to be dire. In 2007, there were more than 103,000 foreclosures. According to the data released recently by RealtyTrac, there were nearly 13,000 Michigan foreclosure filings in May alone, a 25 percent increase from the previous month. That is one foreclosure filing for every 353 households, which puts our State's foreclosure rate at the fifth highest in the Nation. Nationwide, filings are up nearly 50 percent compared to this time last year, with one in every 483 U.S. households receiving a foreclosure filing in May. Sadly, we all know that homeowners facing foreclosure are not the only ones being impacted by this crisis. Property values have plummeted in many areas, due in part to the glut of abandoned and foreclosed homes. Lost property values moreover translate into decreased State and local revenue from property taxes, creating a shortfall in revenues and reducing the budget available for valuable State and local programs and services. Our Nation's broader economic woes can also be traced back, at least in part, to the foreclosure crisis. There is a long chain of investors, lenders, and financial markets relying on American homebuyers to pay what, in many instances, are shaky home loans. Because of the record defaults on these loans, credit remains tight. Throughout this crisis I have received wise counsel from many experts on foreclosure prevention and housing matters. Earlier this year I hosted a series of roundtable meetings in Michigan communities with leaders from local and State government, as well as organizations who are in the trenches working with families facing foreclosure, to discuss practical ways to help homeowners and protect our economy from further damage. Many of the ideas discussed at those roundtables are included in this legislation. I have also had the benefit of advice from Bernie Glieberman, chairman of the board of the Michigan State Housing Development Authority, and member of the board of the Michigan Housing Trust Fund and Harvard University's Joint Center for Housing Studies policy advisory board. Long before the committees started crafting this housing bill, Bernie brought to my attention the idea of increasing tax-exempt bonding authority to enable State housing agencies to help struggling homeowners acquire more affordable mortgages. I am pleased that this bill will bring this additional bonding authority to fruition. I am confident that the Michigan State Housing Development Authority, MSHDA, and other State housing agencies across the Nation will put it to good use. These tax-exempt bonds will help agencies like MSHDA raise the funds needed to refinance homeowners from adjustable rate mortgages into affordable fixed-rate mortgages, as well as provide loans for first-time homebuyers and finance the construction of multi- family residential housing. This bill has a number of other provisions that will help alleviate the suffering caused by the foreclosure crisis. Arguably the most important provision in this bill is the HOPE for Homeowners program, which will enable the Federal Housing Administration to provide groundbreaking new refinancing options to distressed borrowers. Through this temporary new program, the Federal Housing Administration, FHA, is authorized to insure up to $300 billion in 30-year, fixed-rate mortgages. I applaud the work of Senator Dodd and others of our colleagues in putting this FHA refinancing proposal together. It is based on the successful Home Owner's Loan Corporation that was implemented by President Franklin Roosevelt during the Great Depression to issue new loans to help homeowners in default. It is important to note that this new program is not an investor or lender bailout. FHA will only insure loans at 90 percent of the current property value, which in most cases is significantly less than the original loan amount. Investors and lenders who choose to take advantage of this program must, therefore, be willing to take a hit. They will likely be willing to take this loss, however, because it will be less than the losses associated with foreclosure. Also, this is hardly a windfall for distressed borrowers, as some are claiming. Those who sign up for the FHA insured loans will share their new equity and future appreciation with FHA by paying a premium--3 percent initially, 1.5 percent annually thereafter--for the FHA loan. They are also required to give a portion of the equity from sale proceeds for this home back to FHA. I am pleased to note that this program, which is estimated to help nearly 400,000 homeowners nationwide, will not cost taxpayers money; in fact, it is expected to net $250 million. Not only does this bill take significant steps to help keep families in their homes, it provides immediate help toward rehabilitating blighted neighborhoods. The nearly $4 billion in CDBG-like funding provided through this bill will go to areas of the country with the highest foreclosure rates and number of filings. Michigan stands to receive almost $170 million through this provision, and the funds could be used to restore an estimated 6,000 properties. Inclusion of these neighborhood stabilization funds will help protect more homeowners from going ``underwater,'' and I urge Members in the House to support keeping this provision in the final bill. Our economic crisis is exacerbated further by the fact that we are a nation at war. Our brave and dedicated soldiers should not have to return to U.S. soil to find that, facing foreclosure action, they no longer have a home. I am pleased that this bill will delay foreclosure action for returning soldiers and also provide them 1 year of relief from increases in mortgage rates. The bill also provides additional homeownership opportunities for veterans through increases in the VA loan guarantee amount. There is also funding for home modifications for veterans with service-related disabilities. In addition to the provisions in this bill that help alleviate the suffering of the many families in dire straits, this legislation will help stimulate the slumping housing market and help to ease the broader economic slowdown. One key provision of this bill is a 1-year, $8,000 tax credit available for first-time homebuyers. The homebuyer would repay the money over time, similar to an interest-free loan. I have heard from realtors, prospective buyers, home builders and many others who believe this would help reduce the existing stock of vacant housing. The availability of quality, affordable housing is critical to the economic health of America. This legislation would help create additional affordable rental housing and increased homeownership opportunities for low-income families by creating a new Housing Trust Fund and a Capital Magnet Fund. These funds, which would be provided as grants to States, would greatly help those who need it most because the funds are required to be used primarily for the benefit of low-income families. The bill also provides incentives to spur development of affordable housing property by the private sector through increases to current programs such as the Low Income Housing Tax Credit. It is not enough to simply alleviate the Nation's present suffering and get us back on track for the time being. Congress has a responsibility to do what it can to ensure that a housing crisis of this sort does not happen again. To that end, this bill contains a number of provisions aimed at helping homeowners avoid foreclosure and reforming major Federal players in the housing market: the Federal Housing Administration and the housing government-sponsored enterprises, including Fannie Mae and Freddie Mac. As I observed during the roundtable discussions I hosted in Michigan, many counselors are doing good work on the ground to try and help families avoid foreclosure. However, foreclosure prevention counselors are overwhelmed, and a lack of funds is tying the hands of local groups trying to help keep families on track. This bill would provide $150 million for pre-foreclosure counseling and $30 million for legal services to help keep people in their homes. This bill also establishes a new, independent regulator for the housing Government Sponsored Enterprises, GSEs, Fannie Mae and Freddie Mac. Through capital standards, audits and other internal controls, this regulator will oversee the safety and soundness of these financial giants who play such a key role in our housing markets. I am pleased that this bill also incorporates long-awaited legislation to modernize and expand the Federal Housing Administration. These reforms will help provide access to homeownership to families in higher cost areas who have not been able to take advantage of the FHA program in the past, by raising the FHA loan limit. It will also provide counseling for first-time homebuyers as well as homeowners who are having trouble making their mortgage payments through FHA, and improve the FHA loss mitigation process to help struggling homeowners stay in their homes. Finally, many blame predatory lending practices, at least in part, for the excessive number of irresponsible loans made to subprime borrowers. In response, this bill amends the Truth in Lending Act, TILA, to, among other things, require that borrowers be informed of the maximum monthly payments possible under their loan, and ensure full disclosures are provided no later than 7 days before closing so borrowers can shop for another loan if they are dissatisfIed with the terms. In order to discourage unscrupulous behavior, statutory damages for TILA violations have been increased 10-fold, from current rates of $200 and $400 to $2,000 and $4,000, respectively. I support this comprehensive housing legislation, and am confident that, once enacted, it will provide much-needed relief to many struggling homeowners in Michigan and across the country. Addressing the foreclosure crisis will require a team effort among Federal, State, and local governments, community and neighborhood organizations, and lenders, brokers, and borrowers. This bill recognizes that fact. It provides an opportunity to help keep struggling families in their homes. It provides an opportunity to help restore our housing markets by keeping declining property values stable. It will protect neighborhoods from a glut of vacant homes. I will continue to work with my colleagues to get this bill passed, and, if need be, to overcome a Presidential veto. This legislation cannot come too soon.

Mr. LEVIN

Mr. LEVIN. I yield the floor. I suggest the absence of a quorum.

Mr. LEVIN

Mr. LEVIN. Mr. President, I know the Senator from Connecticut has to leave, but before he does leave the floor, I congratulate and commend him on this bill. He has put a huge amount of effort into this issue over the years. This bill reflects that effort. His leadership in this matter will make a huge difference in getting this bill enacted. I thank him for that leadership and thank him for this bill.

Mr. LEVIN. Mr. President, the legislation we are introducing today is going to combat credit card abuses that have been hurting American consumers for far too long. With all the economic hardship facing Americans today, from falling home prices to rising gasoline and food costs, it is more important than ever for Congress to act now to stop credit card abuses and protect American families from unfair credit card practices. Credit card companies regularly use a host of unfair practices. They hike the interest rates of cardholders who pay on time and comply with their credit card agreements. They impose interest rates as high as 32 percent. They charge interest for debt that was paid on time. They apply higher interest rates retroactively to existing credit card debt. They pile on excessive fees and then have the gall to charge interest on those fees. They apply consumer payments first to the debt with the least expensive interest rate, saving the higher interest rate debt to be paid off last. And they engage in a number of other unfair practices that are burying American consumers in a mountain of debt. It is long past time to enact legislation to protect American consumers. The bill we are introducing today will not only help protect consumers, but it will also help ensure that credit card companies willing to do the right thing are not put at a competitive disadvantage by companies continuing unfair practices. Some argue that Congress does not need to ban unfair credit card practices. They contend that improved disclosure alone will empower consumers to seek out better deals. Sunlight can be a powerful disinfectant, but credit cards have become such complex financial products that even improved disclosure will not be enough to curb the abuses. Some practices are so confusing that consumers cannot easily understand them. Additionally, better disclosure does not always lead to greater market competition, especially when essentially an entire industry is using and benefiting from practices that unfairly hurt consumers. Credit card issuers like to say they are engaged in a risky business, lending unsecured debt to millions of consumers. But it is clear they have learned to price credit card products in ways that produce enormous profit. For the last decade, credit card issuers have maintained their position as the most profitable sector in the consumer lending field and reported consistently higher rates of return than commercial banks. In 2006, Americans used 700 million credit cards to buy about $2 trillion in goods and services. The average American family now has five credit cards. Credit cards are being used to pay for groceries, mortgage payments, and even taxes, and they are saddling U.S. consumers, from college students to seniors, with a mountain of debt. The latest figures show that U.S. credit card debt is now approaching $1 trillion. These consumers are routinely being subjected to unfair practices that squeeze them for ever more money, sinking them further into debt. While the remaining legislative days in this Congress are dwindling, there is still time to enact strong credit card reform legislation. Too many American families are being hurt by too many unfair credit card practices to delay action any longer. I commend Senator Dodd for tackling credit card reform. I look forward to Congress taking the steps needed this session to ban unfair practices that are causing so much pain and financial damage to American families today. Credit card abuse is a topic, as Senator Dodd mentioned, with which I have been deeply involved over the past several years through a number of investigations in the Permanent Subcommittee on Investigations. We held two subcommittee hearings in 2007, and based on our investigative hearings, I introduced legislation called the Stop Unfair Practices in Credit Cards Act, S. 1395, to ban the outrageous credit card abuses that were documented in the hearings. I was pleased that Senators McCaskill, Leahy, Durbin, Bingaman, Cantwell, Whitehouse, Kohl, Brown, Stevens, and Sanders, our Presiding Officer, joined as cosponsors. This new bill, the Dodd-Levin bill introduced today, as Senator Dodd mentioned, incorporates almost all the provisions of S. 1395, and it adds other important protections as well. It is the strongest credit card bill yet in Congress. I would like to add to the record more detailing of the provisions of this bill, along with an overview of some of the most prevalent abuses that we uncovered and some of the stories that American consumers shared with us during the course of the inquiries carried out by my Permanent Subcommittee on Investigations. With regard to excessive fees, the first case history we examined illustrates the fact that major credit card issuers today impose a host of fees on their cardholders, including late fees and over-the-limit fees that are not only substantial in themselves but can contribute to years of debt for families unable to immediately pay them. Wesley Wannemacher of Lima, OH, testified at our March 2007 hearing. In 2001 and 2002, Mr. Wannemacher used a new credit card to pay for expenses mostly related to his wedding. He charged a total of about $3,200, which exceeded the card's credit limit by $200. He spent the next 6 years trying to pay off the debt, averaging payments of about $1,000 per year. As of February 2007, he had paid about $6,300 on his $3,200 debt, but his billing statement showed he still owed $4,400. How is it possible that a man pays $6,300 on a $3,200 credit card debt, but still owes $4,400? Here is how. On top of the $3,200 debt, Mr. Wannemacher was charged by the credit card issuer about $4,900 in interest, $1,100 in late fees, and $1,500 in over-the-limit fees. He was hit 47 times with over-limit fees, even though he went over the limit only three times and exceeded the limit by only $200. Altogether, these fees and the interest charges added up to $7,500, which, on top of the original $3,200 credit card debt, produced total charges to him of $10,700. In other words, the interest charges and fees more than tripled the original $3,200 credit card debt, despite payments by the cardholder averaging $1,000 per year. Unfair? Clearly, I think, but our investigation has shown that sky-high interest charges and fees are not uncommon in the credit card industry. While the Wannemacher account happened to be at Chase, penalty interest rates and fees are also employed by other major credit card issuers. The week before the March hearing, Chase decided to forgive the remaining debt on the Wannemacher account, and while that was great news for the Wannemacher family, that decision doesn't begin to resolve the problem of excessive credit card fees and sky-high interest rates that trap too many hard-working families in a downward spiral of debt. These high fees are made worse by the industry-wide practice of including all fees in a consumer's outstanding balance so that they incur interest charges. It is one thing for a bank to charge interest on funds lent to a consumer; charging interest on penalty fees goes too far. Another galling practice featured in our March hearing involves the fact that credit card debt that is paid on time routinely accrues interest charges, and credit card bills that are paid on time and in full are routinely inflated with what I call ``trailing interest.'' Every single credit card issuer contacted by the Subcommittee engaged in both of these unfair practices which squeeze additional interest charges from responsible cardholders. Here is how it works. Suppose a consumer who usually pays his account in full, and owes no money on December 1, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020. That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill? If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That is because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time. In other words, the consumer would have to pay interest on the entire $5,020 from the first day of the new billing month, January 1, until the day the bill was paid on January 15, compounded daily. So much for a grace period. In addition, the consumer would have to pay the $20 past due, plus interest on the $20 from January 15 to January 31, again compounded daily. In this example, using an interest rate of 17.99 percent, which is the interest rate charged to Mr. Wannamacher, the $20 debt would, in one month, rack up $35 in interest charges and balloon into a debt of $55.21. You might ask--hold on--why does the consumer have to pay any interest at all on the $5,000 that was paid on time? Why does anyone have to pay interest on the portion of a debt that was paid by the date specified in the bill--in other words, on time? The answer is, because that is how the credit card industry has operated for years, and they have gotten away with it. There is more. One might think that once the consumer gets gouged in February, paying $55.21 on a $20 debt, and pays that bill on time and in full, without making any new purchases, that would be the end of it. But you would be wrong again. It's not over. Even though, on February 15, the consumer paid the February bill in full and on time--all $55.21--the next bill has an additional interest charge on it, for what we call ``trailing interest.'' In this case, the trailing interest is the interest that accumulated on the $55.21 from February 1 to 15, which is time period from the day when the bill was sent to the day when it was paid. The total is 38 cents. While some issuers will waive trailing interest if the next month's bill is less than $1, if a consumer makes a new purchase, a common industry practice is to fold the 38 cents into the end-of-month bill reflecting the new purchase. Now 38 cents isn't much in the big scheme of things. That may be why many consumers don't notice these types of extra interest charges or try to fight them. Even if someone had questions about the amount of interest on a bill, most consumers would be hard pressed to understand how the amount was calculated, much less whether it was incorrect. But by nickel and diming tens of millions of consumer accounts, credit card issuers reap large profits. I think it is indefensible to make consumers pay interest on debt which they pay on time. It is also just plain wrong to charge trailing interest when a bill is paid on time and in full. My subcommittee's second hearing focused on another set of unfair credit card practices involving unfair interest rate increases. Cardholders who had years-long records of paying their credit card bills on time, staying below their credit limits, and paying at least the minimum amount due, were nevertheless socked with substantial interest rate increases. Some saw their credit card interest rates double or even triple. At the hearing, three consumers described this experience. Janet Hard of Freeland, MI, had accrued over $8,000 in debt on her Discover card. Although she made payments on time and paid at least the minimum due for over 2 years, Discover increased her interest rate from 18 percent to 24 percent in 2006. At the same time, Discover applied the 24 percent rate retroactively to her existing credit card debt, increasing her minimum payments and increasing the amount that went to finance charges instead of the principal debt. The result was that, despite making steady payments totaling $2,400 in 12 months and keeping her purchases to less than $100 during that same year, Janet Hard's credit card debt went down by only $350. Sky-high interest charges, inexplicably increased and unfairly applied, ate up most of her payments. Millard Glasshof of Milwaukee, WI, a retired senior citizen on a fixed income, incurred a debt of about $5,000 on his Chase credit card, closed the account, and faithfully paid down his debt with a regular monthly payment of $119 for years. In December 2006, Chase increased his interest rate from 15 percent to 17 percent, and in February 2007, hiked it again to 27 percent. Retroactive application of the 27 percent rate to Mr. Glasshof's existing debt meant that, out of his $119 payment, about $114 went to pay finance charges and only $5 went to reducing his principal debt. Despite his making payments totaling $1,300 over 12 months, Mr. Glasshof found that, due to high interest rates and excessive fees, his credit card debt did not go down at all. Later, after the Subcommittee asked about his account, Chase suddenly lowered the interest rate to 6 percent. That meant, over a one year period, Chase had applied four different interest rates to his closed credit card account: 15 percent, 17 percent, 27 percent, and 6 percent, which shows how arbitrary those rates are. Then there is Bonnie Rushing of Naples, FL. For years, she had paid her Bank of America credit card on time, providing at least the minimum amount specified on her bills. Despite her record of on-time payments, in 2007, Bank of America nearly tripled her interest rate from 8 to 23 percent. The bank said that it took this sudden action because Ms. Rushing's FICO credit score had dropped. When we looked into why it had dropped, it was apparently because she had opened Macy's and J.Jill credit cards to get discounts on purchases. Despite paying both bills on time, the automated FICO system had lowered her credit rating, and Bank of America had followed suit by raising her interest rate by a factor of three. Ms. Rushing closed her account and complained to the Florida attorney general, my subcommittee, and her card sponsor, the American Automobile Association. Bank of America eventually restored the 8 percent rate on her closed account. In addition to these three consumers who testified at the hearing, the subcommittee presented case histories for five other consumers who experienced substantial interest rate increases despite complying with their credit card agreements. I would also like to note that, in each of these cases, the credit card issuer told our subcommittee that the cardholder had been given a chance to opt out of the increased interest rate by closing their account and paying off their debt at the prior rate. But each of these cardholders denied receiving an opt-out notice, and when several tried to close their account and pay their debt at the prior rate, they were told they had missed the opt-out deadline and had no choice but to pay the higher rate. Our subcommittee examined copies of the opt-out notices and found that some were filled with legal jargon, were hard to understand, and contained procedures that were hard to follow. When we asked the major credit card issuers what percentage of persons offered an opt-out actually took it, they told the Subcommittee that 90 percent did not opt out of the higher interest rate--a percentage that is contrary to all logic and strong evidence that current opt-out procedures do not work. The case histories presented at our hearings illustrate only a small portion of the abusive credit card practices going on today. Since early 2007, the subcommittee has received letters and e-mails from thousands of credit card cardholders describing unfair credit card practices and asking for help to stop them, more complaints than I have received in any investigation I have conducted in more than 25 years in Congress. The complaints stretch across all income levels, all ages, and all areas of the country. The bottom line is that these abuses have gone on for too long. In fact, these practices have been around for so many years that they have, in many cases, become the industry norm, and our investigation has shown that many of the practices are too entrenched, too profitable, and too immune to consumer pressure for the companies to change them on their own. Mr. President, in summary, this is what our bill contains: No interest on debt paid on time. The bill prohibits interest charges on any portion of credit card debt which the credit card holder paid on time during the grace period. The bill prohibits credit card issuers from increasing interest rates on cardholders who are in good standing for reasons unrelated to the cardholder's behavior with respect to that card. The bill requires increased interest rates to apply only to future debt and not to debt incurred prior to the increase. The bill prohibits the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees. The bill prohibits the charging of repeated over-the-limit fees for a single instance of exceeding a credit card limit. The bill requires payments to be applied first to the credit card balance with the highest rate of interest and to minimize finance charges. The bill requires the credit card issuers must offer consumers the option of operating under a fixed credit card limit that cannot be exceeded. The bill prohibits charging a fee to allow a credit card holder to make a payment on credit card debt, whether that payment is by mail, telephone, electronic transfer, or otherwise. Believe it or not, many credit card companies actually charge you a fee to make your payment. The bill contains some of the following provisions as well: It requires issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations. The bill gives each Federal banking agency the authority to prescribe regulations governing unfair or deceptive practices by banks and savings and loan institutions. The bill requires issuers to provide individual consumer account information and disclose the total period of time and interest it will take to pay off the credit card balance if only minimum monthly payments are made. And, as the Senator from Connecticut said, the bill contains a number of protections for young consumers from credit card solicitations. Again, I commend Senator Dodd for taking the leadership on this issue. As chairman of the Senate Banking Committee, his leadership will make a huge difference. It gives us a real chance of passing reform legislation relative to credit card abuses this session of the Congress.

Mr. LEVIN

Mr. LEVIN. Mr. President, I know the Senator from Connecticut has to leave, but before he does leave the floor, I congratulate and commend him on this bill. He has put a huge amount of effort into this issue over the years. This bill reflects that effort. His leadership in this matter will make a huge difference in getting this bill enacted. I thank him for that leadership and thank him for this bill.

Mr. LEVIN. Mr. President, the legislation we are introducing today is going to combat credit card abuses that have been hurting American consumers for far too long. With all the economic hardship facing Americans today, from falling home prices to rising gasoline and food costs, it is more important than ever for Congress to act now to stop credit card abuses and protect American families from unfair credit card practices. Credit card companies regularly use a host of unfair practices. They hike the interest rates of cardholders who pay on time and comply with their credit card agreements. They impose interest rates as high as 32 percent. They charge interest for debt that was paid on time. They apply higher interest rates retroactively to existing credit card debt. They pile on excessive fees and then have the gall to charge interest on those fees. They apply consumer payments first to the debt with the least expensive interest rate, saving the higher interest rate debt to be paid off last. And they engage in a number of other unfair practices that are burying American consumers in a mountain of debt. It is long past time to enact legislation to protect American consumers. The bill we are introducing today will not only help protect consumers, but it will also help ensure that credit card companies willing to do the right thing are not put at a competitive disadvantage by companies continuing unfair practices. Some argue that Congress does not need to ban unfair credit card practices. They contend that improved disclosure alone will empower consumers to seek out better deals. Sunlight can be a powerful disinfectant, but credit cards have become such complex financial products that even improved disclosure will not be enough to curb the abuses. Some practices are so confusing that consumers cannot easily understand them. Additionally, better disclosure does not always lead to greater market competition, especially when essentially an entire industry is using and benefiting from practices that unfairly hurt consumers. Credit card issuers like to say they are engaged in a risky business, lending unsecured debt to millions of consumers. But it is clear they have learned to price credit card products in ways that produce enormous profit. For the last decade, credit card issuers have maintained their position as the most profitable sector in the consumer lending field and reported consistently higher rates of return than commercial banks. In 2006, Americans used 700 million credit cards to buy about $2 trillion in goods and services. The average American family now has five credit cards. Credit cards are being used to pay for groceries, mortgage payments, and even taxes, and they are saddling U.S. consumers, from college students to seniors, with a mountain of debt. The latest figures show that U.S. credit card debt is now approaching $1 trillion. These consumers are routinely being subjected to unfair practices that squeeze them for ever more money, sinking them further into debt. While the remaining legislative days in this Congress are dwindling, there is still time to enact strong credit card reform legislation. Too many American families are being hurt by too many unfair credit card practices to delay action any longer. I commend Senator Dodd for tackling credit card reform. I look forward to Congress taking the steps needed this session to ban unfair practices that are causing so much pain and financial damage to American families today. Credit card abuse is a topic, as Senator Dodd mentioned, with which I have been deeply involved over the past several years through a number of investigations in the Permanent Subcommittee on Investigations. We held two subcommittee hearings in 2007, and based on our investigative hearings, I introduced legislation called the Stop Unfair Practices in Credit Cards Act, S. 1395, to ban the outrageous credit card abuses that were documented in the hearings. I was pleased that Senators McCaskill, Leahy, Durbin, Bingaman, Cantwell, Whitehouse, Kohl, Brown, Stevens, and Sanders, our Presiding Officer, joined as cosponsors. This new bill, the Dodd-Levin bill introduced today, as Senator Dodd mentioned, incorporates almost all the provisions of S. 1395, and it adds other important protections as well. It is the strongest credit card bill yet in Congress. I would like to add to the record more detailing of the provisions of this bill, along with an overview of some of the most prevalent abuses that we uncovered and some of the stories that American consumers shared with us during the course of the inquiries carried out by my Permanent Subcommittee on Investigations. With regard to excessive fees, the first case history we examined illustrates the fact that major credit card issuers today impose a host of fees on their cardholders, including late fees and over-the-limit fees that are not only substantial in themselves but can contribute to years of debt for families unable to immediately pay them. Wesley Wannemacher of Lima, OH, testified at our March 2007 hearing. In 2001 and 2002, Mr. Wannemacher used a new credit card to pay for expenses mostly related to his wedding. He charged a total of about $3,200, which exceeded the card's credit limit by $200. He spent the next 6 years trying to pay off the debt, averaging payments of about $1,000 per year. As of February 2007, he had paid about $6,300 on his $3,200 debt, but his billing statement showed he still owed $4,400. How is it possible that a man pays $6,300 on a $3,200 credit card debt, but still owes $4,400? Here is how. On top of the $3,200 debt, Mr. Wannemacher was charged by the credit card issuer about $4,900 in interest, $1,100 in late fees, and $1,500 in over-the-limit fees. He was hit 47 times with over-limit fees, even though he went over the limit only three times and exceeded the limit by only $200. Altogether, these fees and the interest charges added up to $7,500, which, on top of the original $3,200 credit card debt, produced total charges to him of $10,700. In other words, the interest charges and fees more than tripled the original $3,200 credit card debt, despite payments by the cardholder averaging $1,000 per year. Unfair? Clearly, I think, but our investigation has shown that sky-high interest charges and fees are not uncommon in the credit card industry. While the Wannemacher account happened to be at Chase, penalty interest rates and fees are also employed by other major credit card issuers. The week before the March hearing, Chase decided to forgive the remaining debt on the Wannemacher account, and while that was great news for the Wannemacher family, that decision doesn't begin to resolve the problem of excessive credit card fees and sky-high interest rates that trap too many hard-working families in a downward spiral of debt. These high fees are made worse by the industry-wide practice of including all fees in a consumer's outstanding balance so that they incur interest charges. It is one thing for a bank to charge interest on funds lent to a consumer; charging interest on penalty fees goes too far. Another galling practice featured in our March hearing involves the fact that credit card debt that is paid on time routinely accrues interest charges, and credit card bills that are paid on time and in full are routinely inflated with what I call ``trailing interest.'' Every single credit card issuer contacted by the Subcommittee engaged in both of these unfair practices which squeeze additional interest charges from responsible cardholders. Here is how it works. Suppose a consumer who usually pays his account in full, and owes no money on December 1, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020. That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill? If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That is because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time. In other words, the consumer would have to pay interest on the entire $5,020 from the first day of the new billing month, January 1, until the day the bill was paid on January 15, compounded daily. So much for a grace period. In addition, the consumer would have to pay the $20 past due, plus interest on the $20 from January 15 to January 31, again compounded daily. In this example, using an interest rate of 17.99 percent, which is the interest rate charged to Mr. Wannamacher, the $20 debt would, in one month, rack up $35 in interest charges and balloon into a debt of $55.21. You might ask--hold on--why does the consumer have to pay any interest at all on the $5,000 that was paid on time? Why does anyone have to pay interest on the portion of a debt that was paid by the date specified in the bill--in other words, on time? The answer is, because that is how the credit card industry has operated for years, and they have gotten away with it. There is more. One might think that once the consumer gets gouged in February, paying $55.21 on a $20 debt, and pays that bill on time and in full, without making any new purchases, that would be the end of it. But you would be wrong again. It's not over. Even though, on February 15, the consumer paid the February bill in full and on time--all $55.21--the next bill has an additional interest charge on it, for what we call ``trailing interest.'' In this case, the trailing interest is the interest that accumulated on the $55.21 from February 1 to 15, which is time period from the day when the bill was sent to the day when it was paid. The total is 38 cents. While some issuers will waive trailing interest if the next month's bill is less than $1, if a consumer makes a new purchase, a common industry practice is to fold the 38 cents into the end-of-month bill reflecting the new purchase. Now 38 cents isn't much in the big scheme of things. That may be why many consumers don't notice these types of extra interest charges or try to fight them. Even if someone had questions about the amount of interest on a bill, most consumers would be hard pressed to understand how the amount was calculated, much less whether it was incorrect. But by nickel and diming tens of millions of consumer accounts, credit card issuers reap large profits. I think it is indefensible to make consumers pay interest on debt which they pay on time. It is also just plain wrong to charge trailing interest when a bill is paid on time and in full. My subcommittee's second hearing focused on another set of unfair credit card practices involving unfair interest rate increases. Cardholders who had years-long records of paying their credit card bills on time, staying below their credit limits, and paying at least the minimum amount due, were nevertheless socked with substantial interest rate increases. Some saw their credit card interest rates double or even triple. At the hearing, three consumers described this experience. Janet Hard of Freeland, MI, had accrued over $8,000 in debt on her Discover card. Although she made payments on time and paid at least the minimum due for over 2 years, Discover increased her interest rate from 18 percent to 24 percent in 2006. At the same time, Discover applied the 24 percent rate retroactively to her existing credit card debt, increasing her minimum payments and increasing the amount that went to finance charges instead of the principal debt. The result was that, despite making steady payments totaling $2,400 in 12 months and keeping her purchases to less than $100 during that same year, Janet Hard's credit card debt went down by only $350. Sky-high interest charges, inexplicably increased and unfairly applied, ate up most of her payments. Millard Glasshof of Milwaukee, WI, a retired senior citizen on a fixed income, incurred a debt of about $5,000 on his Chase credit card, closed the account, and faithfully paid down his debt with a regular monthly payment of $119 for years. In December 2006, Chase increased his interest rate from 15 percent to 17 percent, and in February 2007, hiked it again to 27 percent. Retroactive application of the 27 percent rate to Mr. Glasshof's existing debt meant that, out of his $119 payment, about $114 went to pay finance charges and only $5 went to reducing his principal debt. Despite his making payments totaling $1,300 over 12 months, Mr. Glasshof found that, due to high interest rates and excessive fees, his credit card debt did not go down at all. Later, after the Subcommittee asked about his account, Chase suddenly lowered the interest rate to 6 percent. That meant, over a one year period, Chase had applied four different interest rates to his closed credit card account: 15 percent, 17 percent, 27 percent, and 6 percent, which shows how arbitrary those rates are. Then there is Bonnie Rushing of Naples, FL. For years, she had paid her Bank of America credit card on time, providing at least the minimum amount specified on her bills. Despite her record of on-time payments, in 2007, Bank of America nearly tripled her interest rate from 8 to 23 percent. The bank said that it took this sudden action because Ms. Rushing's FICO credit score had dropped. When we looked into why it had dropped, it was apparently because she had opened Macy's and J.Jill credit cards to get discounts on purchases. Despite paying both bills on time, the automated FICO system had lowered her credit rating, and Bank of America had followed suit by raising her interest rate by a factor of three. Ms. Rushing closed her account and complained to the Florida attorney general, my subcommittee, and her card sponsor, the American Automobile Association. Bank of America eventually restored the 8 percent rate on her closed account. In addition to these three consumers who testified at the hearing, the subcommittee presented case histories for five other consumers who experienced substantial interest rate increases despite complying with their credit card agreements. I would also like to note that, in each of these cases, the credit card issuer told our subcommittee that the cardholder had been given a chance to opt out of the increased interest rate by closing their account and paying off their debt at the prior rate. But each of these cardholders denied receiving an opt-out notice, and when several tried to close their account and pay their debt at the prior rate, they were told they had missed the opt-out deadline and had no choice but to pay the higher rate. Our subcommittee examined copies of the opt-out notices and found that some were filled with legal jargon, were hard to understand, and contained procedures that were hard to follow. When we asked the major credit card issuers what percentage of persons offered an opt-out actually took it, they told the Subcommittee that 90 percent did not opt out of the higher interest rate--a percentage that is contrary to all logic and strong evidence that current opt-out procedures do not work. The case histories presented at our hearings illustrate only a small portion of the abusive credit card practices going on today. Since early 2007, the subcommittee has received letters and e-mails from thousands of credit card cardholders describing unfair credit card practices and asking for help to stop them, more complaints than I have received in any investigation I have conducted in more than 25 years in Congress. The complaints stretch across all income levels, all ages, and all areas of the country. The bottom line is that these abuses have gone on for too long. In fact, these practices have been around for so many years that they have, in many cases, become the industry norm, and our investigation has shown that many of the practices are too entrenched, too profitable, and too immune to consumer pressure for the companies to change them on their own. Mr. President, in summary, this is what our bill contains: No interest on debt paid on time. The bill prohibits interest charges on any portion of credit card debt which the credit card holder paid on time during the grace period. The bill prohibits credit card issuers from increasing interest rates on cardholders who are in good standing for reasons unrelated to the cardholder's behavior with respect to that card. The bill requires increased interest rates to apply only to future debt and not to debt incurred prior to the increase. The bill prohibits the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees. The bill prohibits the charging of repeated over-the-limit fees for a single instance of exceeding a credit card limit. The bill requires payments to be applied first to the credit card balance with the highest rate of interest and to minimize finance charges. The bill requires the credit card issuers must offer consumers the option of operating under a fixed credit card limit that cannot be exceeded. The bill prohibits charging a fee to allow a credit card holder to make a payment on credit card debt, whether that payment is by mail, telephone, electronic transfer, or otherwise. Believe it or not, many credit card companies actually charge you a fee to make your payment. The bill contains some of the following provisions as well: It requires issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations. The bill gives each Federal banking agency the authority to prescribe regulations governing unfair or deceptive practices by banks and savings and loan institutions. The bill requires issuers to provide individual consumer account information and disclose the total period of time and interest it will take to pay off the credit card balance if only minimum monthly payments are made. And, as the Senator from Connecticut said, the bill contains a number of protections for young consumers from credit card solicitations. Again, I commend Senator Dodd for taking the leadership on this issue. As chairman of the Senate Banking Committee, his leadership will make a huge difference. It gives us a real chance of passing reform legislation relative to credit card abuses this session of the Congress.

Mr. LEVIN

Mr. LEVIN. Madam President, the Medicare Improvements for Patients and Providers Act, H.R. 6331, makes a number of needed changes related to Medicare reimbursement, including reimbursement for physicians' services. Due to the unwise filibuster by the minority, we missed our chance to pass this legislation before July 1, when reimbursement cuts were scheduled to take place. We now have another opportunity to do the right thing. I strongly urge the Senate to pass this legislation promptly. Medicare physician fee schedule payments are updated each year according to a complex formula based on a Sustainable Growth Rate--SGR. Unfortunately, because of the way the formula is calculated, even if Congress prevents the cuts in a given year, scheduled reimbursements cuts are likely to increase in subsequent years unless Congress takes additional action, such as developing a permanent alternative to the SGR formula. I support efforts to ensure that physicians receive adequate reimbursement for their services. If they do not, some physicians will not continue to provide services to Medicare beneficiaries. As a result, allowing reimbursement cuts to go into effect could pose significant access problems for many Medicare beneficiaries. While I believe past measures to alleviate this burden on physicians have been helpful, I know from my discussions with health care providers throughout Michigan that Congress must find an alternative to the SGR. The SGR is linked not to the cost of providing health services, but to the performance of the overall economy. The cost of health care has been rising much faster than inflation. Our nation should address the rising costs of health care as part of a larger discussion on health care reform. Until and unless we discover a way to contain health care costs to inflation, we should decouple Medicare reimbursement for physicians' services from the performance of the overall economy. Reimbursement should more accurately represent the cost of providing services. In the meantime, we need to pass this legislation, which includes, among other important provisions, an 18 month delay on Medicare reimbursement cuts for physicians' services and replaces the cut with a 1.1 percent increase in 2009. I am hopeful that the minority will end their filibuster, that the Senate will pass this legislation, and that the President will heed the will of Congress and the American people and sign this bill into law before the cuts are implemented and cause many Medicare beneficiaries to lose access to health care providers.

Mr. LEVIN

Mr. LEVIN. Madam President, the New York Times recently published an article entitled ``Web Start-up a Joint Israeli-Palestinian Venture'' and, as the title suggests, it is a story about a group of Israeli and Palestinian entrepreneurs that have joined forces to start an internet business venture. Mr. President, I will ask to have the New York Times article printed in the Record. What is impressive about this story is that technology, in the form of Internet-based video teleconferencing, has been able to jump boundaries to allow people to work together while apart by enabling this business, G.ho.st, to use the Internet to complete many of the day-to-day tasks that ordinarily require actual face-to-face contact. More importantly, this business venture is yet another example of the good will that exists on both sides of the Israeli-Palestinian divide. In March 2005, I had the opportunity to travel with six Michiganders, three Palestinian-Americans and three Jewish-Americans, to Israel and the Palestinian territories to study the possibility of joint Israeli- Palestinian business ventures. During this visit, we met with entrepreneurs active in a full range of industries, from agriculture to textiles to software development to manufacturing. While these joint business ventures cannot make peace, they do help foster good will, and they demonstrate the potential for effective, economic coexistence if a final peace agreement can be reached. More recently, during a trip to Israel to present the Senate resolution commemorating the 60th anniversary of the State of Israel, I learned of what I hope will be a major joint economic venture. During my meeting with President Shimon Peres, I learned about the Valley of Peace Initiative, a large-scale undertaking to construct a tourism corridor. The Valley of Peace is envisioned to stretch over the 500 kilometers along the Israeli-Jordanian border, from the Red Sea to the Yarmuk River. Under the current plan, the Valley of Peace initiative includes several projects, ranging from a water conduit connecting the Red Sea and the Dead Sea in an attempt to prevent the latter from drying up, to an Israeli-Jordanian airport near Eilat and Aqaba, to a connection of the Jordanian and Israeli railway systems and a mutual Israeli-Palestinian Authority industrial zone. While the initiative is still in the idea stage, it could offer a major opportunity for joint economic cooperation between Israelis, Palestinians, and, in this case, Jordanians. Employment and economic growth are critical to fostering stability for Israelis and Palestinians alike. G.ho.st is another example of a promising partnership that can benefit the region in ways that surpass the positive economic impact. Should their business model prove to be a success, it would bode well for building additional partnerships and fostering further much-needed goodwill in the region. Madam President, I ask unanimous consent to have The New York Times article to which I referred printed in the Record.

Mr. LEVIN

Mr. LEVIN. Mr. President, parliamentary inquiry. I thank my friend from New Mexico.

Mr. LEVIN. Under the plan that was just stated, if 10 minutes is yielded to this Senator, can the 10 minutes be used at any time this afternoon or must it follow immediately in sequence to either Senator Casey or Senator Bingaman?

Mr. LEVIN. At any time this afternoon. I thank the Presiding Officer. Amendment No. 5066

Mr. LEVIN. Mr. President, title II of the bill before us, which amends the Foreign Surveillance Intelligence Act, would authorize retroactive immunity for telecommunications companies that collected intelligence information inside the United States in defiance of the clear requirements of the Foreign Surveillance Intelligence Act as it was then on the books. The argument has been made that we must provide such immunity because these telecommunications companies responded to requests from the Government in a time of great uncertainty, after the events of September 11, 2001. I have some sympathy for their situation, but I also have sympathy for innocent Americans who may have had their privacy rights violated as a result of illegal actions taken by telecommunications companies at the behest of an administration that has all too frequently tried to place itself above the law. The bill before us makes no effort to reconcile these competing interests. Instead, it requires the dismissal of all civil suits against telecommunications companies that may have illegally disclosed confidential communications of their customers at the behest of U.S. Government officials. Dismissal would also be required even if the disclosure violated the constitutional rights of innocent U.S. citizens whose confidential communications were illegally disclosed. The so-called judicial review authorized in this bill is totally unsatisfactory. Under title II of the bill, the FISA Court would be permitted to review these cases only to determine whether the Attorney General or the head of an element of the intelligence community told telecommunications companies that the Government request had been authorized by the President and ``determined to be lawful,''--presumably determined by anybody--even if nobody could reasonably have believed that the request actually was lawful. A judicial review that is limited to determining whether the administration claimed that its actions were legal is a sham review that provides no justice at all. Of course the administration claimed its actions were legal. Indeed, the Intelligence Committee report on this bill specifically states that the administration's letters requesting assistance from telecommunications companies made the claims that they were legal. I do not believe this congressional grant of retroactive immunity is fair. I do not believe it is wise. And I do not believe it is necessary. Retroactive immunity is not fair because it leaves innocent American citizens who may have been harmed by the unlawful or unconstitutional conduct of telecommunications companies at the behest of the administration without any legal remedy. It is hard to understand how the Attorney General can claim, as he does in a letter dated July 7, 2008, that this is a ``fair and just result.'' Those who have been harmed are not likely to have any recourse against the Government officials who asked telecommunications companies to disclose the private information of their customers because the Government officials enjoy qualified immunity for actions taken in their official capacity. These officials do not even have the burden of demonstrating that their actions were legal and constitutional to be immune from suit. Nor is retroactive immunity wise, because it sets a dangerous precedent of retroactively eliminating rights of U.S. citizens and precludes any judicial review of their claim. If we act here to immunize private parties who cooperated with executive branch officials in a program that appears to have been illegal on its face, our laws and their prohibitions will be less of a deterrent to illegal activities in the future. This would be a terrible precedent if a future administration is as inclined as the current one to place itself above the law. Finally, retroactive immunity is not necessary for the intelligence community to collect intelligence against terrorists using newly available technology. They have the right to use newly available technology--``they'' being the intelligence community--under title I of this bill. Title I provides that the Attorney General and the Director of National Intelligence direct telecommunications companies to assist in collection programs, and these directives are enforceable by court order as has been the case since the Protect America Act was adopted last August. We are collecting needed intelligence information today pursuant to that act, without any retroactive immunity for telecommunications companies, and there is no reason why we cannot continue to do so in the future under title I of the bill without the retroactive immunity provided in title II. The administration argues that if we do not provide retroactive immunity to telecommunications providers, ``companies in the future may be less willing to assist the Government.'' But let's be clear what we are talking about here. Telecommunications companies have prospective immunity if they assist the Government in a manner that is authorized by this bill. Moreover, they can be compelled to do so under the bill, as has also been the case since the enactment of the Protect America Act. What companies might be less willing to do is to assist the Government in intelligence gathering efforts that are illegal. And what is wrong with that? Do we want to encourage companies to assist a future administration in unlawful intelligence-gathering efforts? Nor is retroactive immunity necessary to protect telecommunications companies that acted in good-faith reliance on representations from administration officials. There are other ways in which we can recognize their equity without insulating misconduct from judicial review and without denying any relief to innocent U.S. citizens who may have been harmed. For example, we can safeguard these interests by substituting the United States as the defendant in cases against telecommunications companies, or by requiring that the United States indemnify telecommunications companies for any damages in such cases. In either case, we could cap damages to make sure that the taxpayers are not required to pay an unreasonable burden as a result of unlawful decisions by the administration. We could also provide a measure of protection to American citizens whose rights have been violated by limiting the immunity provided to those cases where the telecommunications companies demonstrate that they had a reasonable basis for a good-faith belief that the assistance they were providing was lawful, a requirement that is notably absent from the bill before us. The Bingaman amendment is a very modest proposal which does not decide the retroactive immunity question or remove the retroactive immunity provision from the bill. It leaves the retroactive immunity provision in the bill but postpones the effective date of that immunity until 90 days after Congress receives the comprehensive inspector general report required by the bill. This amendment, the Bingaman amendment, does not have any effect at all on title I of the bill, which allows the intelligence community to collect information using newly available technology. The Bingaman amendment allows title I to go into law without change and without delay. The inspector general report may give us important information that helps us understand the extent to which the administration's actions were illegal or unconstitutional, and the extent to which innocent U.S. citizens may have been damaged by these actions. The delayed effective date in the Bingaman amendment would give us the opportunity to consider this information, not just assurances of administration officials, before retroactive immunity goes into effect and cases are dismissed. That information required to be provided to us by the inspector general is surely relevant to this issue. If we adopt the Bingaman amendment, we will have highly relevant information about the extent to which illegal or unconstitutional actions were taken against innocent American citizens and the extent to which those citizens were harmed by those actions. The Bingaman amendment gives us the opportunity to take this additional information into account before retroactive immunity takes effect, while at the same time preventing any harm to telecommunications companies by staying any litigation against them until the information becomes available. We can pass this bill and we can ensure that the intelligence community continues to have the authority to collect information on suspected terrorists without surrendering the rights of Americans whose privacy may have been violated. I support the Bingaman amendment as a way to introduce a bit of balance into the process of protecting the privacy of innocent Americans while recognizing some equity in the position of the telecommunications companies. I yield the floor and yield back my time.

Mr. LEVIN

Mr. LEVIN. Mr. President, I wish to publicly commend and congratulate MG Galen B. Jackman, U.S. Army, upon his retirement after more than 35 years of military service. During the last 3 years, from July 2005 through July 2008, Major General Jackman served as the Army Chief of Legislative Liaison. He was instrumental in improving the understanding of Members of Congress and staff concerning a wide range of Army issues, in particular an understanding of the Army's role in the wars in Iraq and Afghanistan, the resource requirements for an army at war, and the effect of those wars on the Army and its soldiers and their families. Major General Jackman worked tirelessly to ensure that soldiers and Army civilians had the resources necessary to maintain the Army as the world's preeminent land service. He forged effective relationships with congressional Members and staff, always responding quickly and effectively to congressional requests for information and assistance, and has been an invaluable advisor to the Secretary and Chief of Staff of the Army. General Jackman's assignment as Army Chief Legislative Liaison was the capstone to an outstanding career of service to our Nation. Prior to assuming this position, Major General Jackman served as the Commanding General, U.S. Army Military District of Washington and Commander, Joint Force Headquarters-National Capital Region, Fort Lesley J. McNair, Washington, DC. His other joint assignments include service as the Deputy for Training and Readiness, United States Pacific Command, and Director of Operations, United States Southern Command. Major General Jackman served as the Chief of Staff and Assistant Division Commander, Support, for the 10th Mountain Division, Light, Fort Drum, NY, deploying with the Division in support of OPERATION JOINT FORGE, Bosnia-Herzegovina June 2000 to July 2001. He began his service to our Nation in 1973 as a rifle platoon leader, Company A, 1st Battalion, Airborne, 508th Infantry, 82d Airborne Division, Fort Bragg, NC. His leadership positions include serving as a support squadron commander in 1st Special Forces Group, Airborne, Fort Bragg, NC; Commander, 2d Brigade, 7th Infantry Division, Light, Fort Ord, CA, and director, Combined Arms and Tactics Directorate, U.S. Army Infantry Center and School, Fort Benning. In his numerous leadership and command positions throughout his distinguished career, Major General Jackman demonstrated an unwavering commitment to the welfare of his soldiers and their families. Throughout his career, he played an important role in the development of the future officers and leaders of the Army. Major General Jackman holds a master of science degree in procurement and contract management from the Florida Institute of Technology and a bachelor of arts degree from the University of Nebraska. He is a graduate of the Industrial College of the Armed Forces. His outstanding Service has been recognized with numerous military awards including the Distinguished Service Medal, the Defense Superior Service Medal, with Oak Leaf Cluster; the Legion of Merit, with Oak Leaf Cluster; the Defense Meritorious Service Medal; and the Meritorious Service Medal, with 2 Oak Leaf Clusters. He proudly wears the Expert Infantryman Badge, the Master Parachutist Badge, the Air Assault Badge and the Ranger Tab. Major General Jackman is married to the former Ms. Cathy Dowd. They have two children David, 20, and Patrick, 18. David will be a senior at Gilford College this fall, while Patrick will attend Virginia Military Institute. I also congratulate them on their husband's and father's retirement from the Army. The demands of military life are such that military families also sacrifice and serve the Nation along with their soldier. Mr. President, the Army, the Congress, and the Nation have benefited greatly from the service of such a great leader and soldier. He will be sorely missed.

Mr. LEVIN

Mr. LEVIN. Mr. President, I would like to announce for the information of the Senate and the public that the Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs will hold a hearing entitled, ``Tax Haven Banks and U.S. Tax Compliance.'' The Permanent Subcommittee on Investigations hearing will examine how financial institutions located in offshore tax havens, including Liechtenstein and Switzerland, may be engaged in banking practices that could facilitate, and in some instances have resulted in, tax evasion and other misconduct by U.S. clients. The hearing will also examine how U.S. domestic and international tax enforcement efforts could be strengthened. The Subcommittee expects to issue a Subcommittee staff report in conjunction with the hearing summarizing its investigative findings. A witness list will be available Monday, July 14, 2008. The Subcommittee hearing is scheduled for Thursday, July 17, 2008, at 9:30 a.m., in room 106 of the Dirksen Senate Office Building. For further information, please contact Elise Bean of the Permanent Subcommittee on Investigations at 224-9505.

Mr. LEVIN

Mr. LEVIN. Mr. President, I would like to announce for the information of the Senate and the public that the Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs will hold a hearing entitled, ``Medicare Vulnerabilities: Payments for Claims Tied to Deceased Doctors.'' The Subcommittee hearing will examine fraud, waste, and abuse in the Medicare program in connection with the payment of claims containing the physician identification numbers of doctors who had died at least 1 year before the prescription was filled. The hearing will focus on Durable Medical Equipment (DME) claims citing a deceased doctor as the prescribing physician, and inadequate oversight by the Centers for Medicare and Medicaid Services (CMS) to correct the problem. The Subcommittee will also issue a Subcommittee staff report in conjunction with the hearing summarizing its investigative findings. Witnesses for the upcoming hearing will include representatives from CMS, Health & Human Services' Office of the Inspector General, and the Social Security Administration. The Subcommittee hearing is scheduled for Wednesday, July 9, 2008, at 10:30 a.m., in Room 342 of the Dirksen Senate Office Building. For further information, please contact Elise Bean of the Permanent Subcommittee on Investigations at 224-9505.