Carl Levin

Mr. LEVIN

Mr. LEVIN. Mr. President, today Congressman John Dingell of Michigan becomes the longest serving member in the history of the United States House of Representatives. As we observe this notable milestone in time, however, John Dingell's longevity is really a footnote that does not even begin to tell the full story of John and his wonderful partner Debbie. Fifty-four years from now, or 154 years from now, when historians look back for models of public service, John Dingell will stand among the best America has to offer. His commitment to the public good, his sense of fiduciary duty as a public servant and most of all the spirit, the passion, and the motivation that John brings to his work day in and day out, year after year, are nothing short of remarkable. Before John Dingell became a Member of the House, he was a son and a student of the House. His father, Congressman John Dingell Sr., was a New Dealer and a passionate advocate of FDR's agenda. As a House page in the late 1930s and early 1940s, John learned the intricacies of House procedure. He got to know his way around, and developed a profound respect for leaders like Sam Rayburn. Even in his youth, John was anything but a passive observer. When Japan attacked Pearl Harbor and FDR came to Congress and declared it a ``date which will live in infamy,'' John was in the Chamber. In fact, John saw to it that one audio recorder continued to run even after FDR's speech ended, so thanks to him we have a fascinating record of the deliberations afterward that quickly led to the declaration of war on Japan. When he was 18, John enlisted in the Army. After the war he returned to Washington, and, ever a student of the House, he worked as an elevator operator here in the Capitol while attending Georgetown, where he received undergraduate and law degrees. As a young lawyer, John served as a clerk for Sandy's and my uncle, Theodore Levin, a Federal judge in Michigan who, along with our Dad, had actually campaigned for John's Dad in the 1930s. A few years later, when his father passed away, John Jr. won the special election to fill the vacant seat. The son and student became a Member of the institution that he had studied so closely and that he respected so deeply. And over the years, the Member would become the Chairman, and the Chairman would become the Dean--the most senior member of the House of Representatives. While that alone is a significant achievement, the true mark of John Dingell is his devotion to public service that connects him to the great men and women of America's storied past whose statues grace this Capitol, and the legislation he has influenced that has so improved the lives of our people. He contributed to the creation of Medicaid and Medicare, to the Civil Rights bills, to the Endangered Species Act and the Clean Air Act. He fought to protect Social Security--which his father helped create. Like all great fighters, when John Dingell is knocked down, he picks himself up. For example, he has helped keep the fight for universal health care alive by introducing legislation to achieve it in each new Congress, just as his father did. John can be tough, running procedural circles around even the most skilled legislative adversaries. And he can be gruff, for instance comparing a proposal he thinks is foolish or unnecessary to ``side pockets on a cow'' or ``feathers on a fish.'' But this tough and gruff Congressman has a softer side. His wife Debbie is personable and glowing and brings extraordinary energy to everything she touches. John and Debbie are each powerhouses in their own right, and their relationship is a perfect synergy. While Debbie is everywhere, raising funds for great causes, creating personal relationships that enrich so many lives, John is only where he needs to be--focusing like a laser on legislative and policy goals. There is a common thread in the Dingells' legislative maneuvers, charitable endeavors and even John's unique use of language: they are all devoted to the goal of helping working people. People back home love ``Big John'' because they know he is on their side--fighting for their jobs, their health, their children. That is why, as much evidence as there is of John's influence and respect in the House of Representatives, the best way to really understand John's impact on the people he represents is to make a visit to ``Dingell Country.'' In John's district, people have placed John's name on a road, a bridge, a park and a library not just to honor him but to inspire others. Just talk to a few of John's fellow veterans at the VA Medical Center in Detroit. Those vets feel a little better and a little stronger knowing that they live in the John Dingell VA Medical Center. Or stop by the UAW Region 1a headquarters in Taylor, Michigan, and tell them you've stood shoulder to shoulder with John Dingell fighting for American workers--and you won't get a warmer welcome anywhere in America. John is beloved in his district, and he has been a role model to me and to my older brother Sandy since we arrived in Congress. He has also been a wonderful mentor to us and to the entire Michigan delegation. John has been a son of the House, a student of the House, a Member and a Chairman in the House he loves so much. On behalf of Michigan, I offer thanks to the now all-time Dean of the House of Representatives, John Dingell, a great institution within a great institution, for his devotion to public service and to the people of Michigan and the Nation.

Mr. LEVIN

Mr. LEVIN. Mr. President, I am pleased today to join my friend and colleague Senator Dodd in reintroducing comprehensive legislation to combat credit card abuses that have been hurting American consumers for far too long. Our bill, which is supported and cosponsored by other Senate colleagues as well, is called the Credit Card Accountability Responsibility and Disclosure Act, or CARD Act of 2009. With the economic hardships facing Americans today, from falling home prices to rising unemployment, it is more important than ever for Congress to act now to stop credit card abuses and protect American families and businesses from unfair credit card practices. Every day the taxpayer is being asked to foot the bill for our biggest banks' irresponsible lending decisions. America's banking giants can't be allowed to dig themselves out of the hole they are in by loading up American families with unfair fees and interest charges. Even as the prime rate has plummeted, some credit card companies are hiking interest rates on millions of customers who play by the rules. In other words, the banks are punishing the very taxpayers that they have come to, hat in hand, for financial rescue. It can't be allowed to continue. 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, charge interest for debt that was paid on time, and, in some cases, apply higher interest rates retroactively to existing credit card debt. They pile on excessive fees and then charge interest on those fees. And they engage in a number of other unfair practices that are burying American consumers in a mountain of debt. It's long past time to enact legislation to protect American consumers. In December, the Federal Reserve and other bank regulators finally issued a regulation to stop some of the most egregiously unfair practices. For example, the new credit card regulation stops banks from retroactively raising interest rates on cardholders who meet their obligations, requires banks to mail credit card bills at least 21 days before the payment due date, and forces banks to more fairly apply consumer payments. It is a good first step, and long overdue. But the regulation regrettably leaves in place many blatantly unfair credit card practices that mire families in debt. It fails to stop, for example, abuses such as charging interest on debt that was paid on time, charging folks a fee simply to pay their bills, and hiking interest rates on a credit card because of a misstep on another, unrelated debt, a practice known as universal default. Legislation is needed not only to end those abusive practices--which are not prohibited by the Federal Reserve regulation--but also to provide a statutory foundation for that new regulation so that it cannot be weakened in the future. The bill we are introducing today will not only help protect consumers and ensure their fair treatment, but it will also make certain 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 doesn't 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 frequently not be enough to curb the abuses. Some practices are so confusing that consumers can't 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. In 2006, Americans used 700 million credit cards to buy about $2 trillion in goods and services. The average family now has 5 credit cards. Credit cards are being used to pay for groceries, mortgage payments, 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 and further into debt. Congress acted boldly and quickly to bail out the banks; now is time to do something for the consumer. Too many American families are being hurt by too many unfair credit card practices to delay action any longer. I commend Senator Dodd, Chairman of the Senate Banking Committee, for tackling credit card reform, and look forward to Congress promptly and urgently taking the steps needed to ban unfair practices that are causing so much pain and financial damage to American families. Abusive credit card practices are a concern that I have been tracking over the past several years through the Permanent Subcommittee on Investigations, which I chair. The Subcommittee held two investigative hearings in 2007, exposing those practices, and based on those hearings, I introduced legislation--the Stop Unfair Practices in Credit Cards Act, S. 1395--to ban the outrageous credit card abuses we documented. I am pleased that Senators McCaskill, Leahy, Durbin, Bingaman, Cantwell, Whitehouse, Kohl, Brown, Kennedy, and Sanders joined as cosponsors. The Dodd-Levin bill we are introducing today incorporates almost all of S. 1395, and adds other important protections as well. It is the strongest credit card bill yet. The Dodd-Levin bill includes, for example, the following provisions that also appeared in the bill I introduced with Senator McCaskill and others. It would: No Interest on Debt Paid on Time. Prohibit interest charges on any portion of a credit card debt which the card holder paid on time during a grace period. Prohibition on Universal Default. Prohibit credit card issuers from increasing interest rates on cardholders in good standing for reasons unrelated to the cardholder's behavior with respect to that card. Apply Interest Rate Increases Only to Future Debt. Require increased interest rates to apply only to future credit card debt, and not to debt incurred prior to the increase. No Interest on Fees. Prohibit the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees. Restrictions on Over-Limit Fees. Prohibit the charging of repeated over-limit fees for a single instance of exceeding a credit card limit. Prompt and Fair Crediting of Card Holder Payments. Require payments to be applied first to the credit card balance with the highest rate of interest, and to minimize finance charges. Fixed Credit Limits. Require card issuers to offer consumers the option of operating under a fixed credit limit that cannot be exceeded. No Pay-to-Pay Fees. Prohibit charging a fee to allow a credit card holder to make a payment on a credit card debt, whether payment is by mail, telephone, electronic transfer, or otherwise. The Dodd-Levin bill also includes important additional protections. It would: Require issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations. Enhance protection against unfair and deceptive practices by giving each federal banking agency the authority to prescribe regulations governing unfair or deceptive practices by banks or savings and loan institutions. Improve disclosure requirements by, for example, requiring issuers to provide individual consumer account information and to disclose the period of time and total interest it will take to pay off the card balance if only minimum monthly payments are made. Protect young consumers from credit card solicitations. To understand why these protections are needed, I would like to provide a brief overview of some of the most prevalent credit card abuses 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. 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, Ohio, 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 six years trying to pay off the debt, averaging payments of about $1,000 per year. As of February 2007, he'd 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's 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 3 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, 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 our 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 didn'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 also incur interest charges. Those interest charges magnify the cost of the fees and can quickly drive a family's credit card debt far beyond the cost of their initial purchases. It is one thing for a bank to charge interest on funds lent to a consumer; charging interest on penalty fees goes too far. A second troubling case history involves Charles McClune, a 51-year- old Michigan resident who is married with one child. Mr. McClune has a credit card account which he closed in 1998, and has been trying to pay off for more than 10 years. Due to excessive fees and interest rates, and despite paying more than four times his original credit card debt of less than $4,000, Mr. McClune still owes thousands on his credit card, with no end in sight. Mr. McClune first opened his credit card account while in college, in 1986, at Michigan National Bank through a student-targeted credit promotion. After leaving college, the credit limit on his card was increased to $4,000. By 1993, although he had not exceeded the credit limit through purchases, Mr. McClune had missed some payments and was assessed interest and fees that pushed his balance over the $4,000 limit. From 1993 to 1996, he exceeded his limit again, on several occasions, due to interest and fee charges. He stopped making purchases on the credit card in 1995. In 1996, Mr. McClune's credit card account was purchased by Chase Bank. In 1998, Mr. McClune asked Chase to close the account, and Chase did so. Although he never made a single purchase on his credit card while the account was with Chase, Chase repeatedly increased the interest rate on his account, including after the account was closed. In 2002, for example, his interest rate was about 21 percent; by October 2005, it had climbed to 29.99 percent where it remained for more than two years until March 2008; it then dropped slightly to 29.24 percent. The higher interest rates were applied retroactively to Mr. McClune's closed account balance, increasing the size of his minimum payments and his overall debt. Chase also assessed Mr. McClune repeated over-the-limit and late fees, which began at $29 and increased over time to $39 per fee. Chase cannot locate statements for Mr. McClune's account prior to February 2001, so there is no record of all the fees he has paid. The records in existence show that, since February 2001, he has paid 64 over-the-limit fees totaling $2,200. Those fees stopped after the March 2007 hearing before my Subcommittee, in which Chase promised to stop charging more than three over-the-limit fees for a single violation of a credit card limit. In addition to the 64 over-the-limit fees, since February 2001, Chase has charged Mr. McClune nearly $2,000 in late fees. The records also show that since 2001, Mr. McClune was contacted by telephone on several occasions by Chase representatives seeking payment on his account. If he agreed to make a payment over the telephone, Chase charged him--without notifying him at the time--a fee of $12 to $15 per telephone payment. When asked about these fees, Chase told the Subcommittee that the fees were imposed, because on each occasion Mr. McClune had spoken with a ``live advisor.'' Since 2001, he has paid a total of $160 in these pay-to-pay fees. Altogether, since 2001, Mr. McClune has paid nearly $4,400 in fees on a debt of less than $4,000. If the more than four years of missing credit card bills were available from 1996 to 2000, this fee total would be even higher. In addition, each fee was added to Mr. McClune's outstanding credit card balance, and Chase charged him interest on the fee amounts, thereby increasing his debt by thousands of additional dollars. In February 2001, Chase records show that Mr. McClune's credit card debt totaled nearly $5,200. For the next 7 years, although he did not pay every month, Mr. McClune paid nearly $2,000 per year toward his credit card debt, but was unable to pay it off. At one time, he paid $150 every two weeks for several weeks. Those payments did not bring his debt under the $4,000 credit limit, or reduce his interest rate. In January 2007, Mr. McClune received a letter from Chase stating that if he made his next payment on time, he would receive a $50 credit on his debt. Mr. McClune cashed out his IRA and paid $4,000 on his credit card debt. Because he made this payment in February, however, he did not receive the $50 credit for an on-time payment. Instead, he was assessed a $39 late fee, a $39 over-the-limit fee, and a $14.95 payment fee for making the $4,000 payment over the telephone. Mr. McClune was never offered a payment plan or a reduced interest rate by Chase to help him pay down his debt. His credit card bills show that from February 2001 to June 2008, he paid Chase a total of $15,800. If the four years of missing credit card bills from 1996 to 2000 were available, his total payments would likely exceed $20,000. In June 2008, his credit card bill showed he was charged 29 percent interest and a $39 late fee on a balance of $3,300. How could Mr. McClune pay $15,000 to $20,000 on credit card purchases of less than $4,000, and still owe $3,300? His credit card statements since 2001 show that he was socked with over $9,700 in interest charges, $2,200 in over-the-limit fees, $2,000 in late fees, and $160 in pay-to-pay fees. All of these interest charges and fees were assessed by Chase while the account was closed and without a single purchase having been made since 1995. Despite his lack of purchases and payments totaling $15,800, Chase records show that, from February 2001 until June 2008, Mr. McClune was able to reduce his credit card balance by only about $1,850. Mr. McClune is not trying to avoid his debt. He has made years of payments on a closed credit card account that he has not used to make a purchase in 13 years. He has paid thousands and thousands of dollars-- four and possibly five times what he originally owed--in an attempt to pay off his credit card account. He is still paying. But his thousands of dollars in payments are not enough for his credit card issuer which is squeezing him for every cent it can, fair or not, for years on end. Tragically, Mr. McClune and Mr. Wannemacher have a lot of company in their credit card experiences. The many case histories investigated by the Subcommittee show that responsible cardholders across the country are being squeezed by unfair credit card lending practices involving excessive fee and interest charges. The current regulatory regime--even with the new Federal Reserve regulation--is insufficient to prevent these ongoing credit card abuses. Legislation is badly needed. 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's how it works. Suppose a consumer who usually pays his account in full, and owes no money on December 1st, 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's 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's how the credit card industry has operated for years, and they have gotten away with it. There's more. You 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 the 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, Michigan, 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 two 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 twelve 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, Wisconsin, 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 twelve 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, Florida. 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 and in full, 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'd 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 don't 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 emails 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've 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. For these reasons, I urge my colleagues to support enactment of the Dodd-Levin Credit CARD Act this year. Congress has already gone to bat for the banks that engage in abusive credit card practices; it's time we go to bat for the American family.

Mr. LEVIN

Mr. LEVIN. Mr. President, I am pleased today to join my friend and colleague Senator Dodd in reintroducing comprehensive legislation to combat credit card abuses that have been hurting American consumers for far too long. Our bill, which is supported and cosponsored by other Senate colleagues as well, is called the Credit Card Accountability Responsibility and Disclosure Act, or CARD Act of 2009. With the economic hardships facing Americans today, from falling home prices to rising unemployment, it is more important than ever for Congress to act now to stop credit card abuses and protect American families and businesses from unfair credit card practices. Every day the taxpayer is being asked to foot the bill for our biggest banks' irresponsible lending decisions. America's banking giants can't be allowed to dig themselves out of the hole they are in by loading up American families with unfair fees and interest charges. Even as the prime rate has plummeted, some credit card companies are hiking interest rates on millions of customers who play by the rules. In other words, the banks are punishing the very taxpayers that they have come to, hat in hand, for financial rescue. It can't be allowed to continue. 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, charge interest for debt that was paid on time, and, in some cases, apply higher interest rates retroactively to existing credit card debt. They pile on excessive fees and then charge interest on those fees. And they engage in a number of other unfair practices that are burying American consumers in a mountain of debt. It's long past time to enact legislation to protect American consumers. In December, the Federal Reserve and other bank regulators finally issued a regulation to stop some of the most egregiously unfair practices. For example, the new credit card regulation stops banks from retroactively raising interest rates on cardholders who meet their obligations, requires banks to mail credit card bills at least 21 days before the payment due date, and forces banks to more fairly apply consumer payments. It is a good first step, and long overdue. But the regulation regrettably leaves in place many blatantly unfair credit card practices that mire families in debt. It fails to stop, for example, abuses such as charging interest on debt that was paid on time, charging folks a fee simply to pay their bills, and hiking interest rates on a credit card because of a misstep on another, unrelated debt, a practice known as universal default. Legislation is needed not only to end those abusive practices--which are not prohibited by the Federal Reserve regulation--but also to provide a statutory foundation for that new regulation so that it cannot be weakened in the future. The bill we are introducing today will not only help protect consumers and ensure their fair treatment, but it will also make certain 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 doesn't 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 frequently not be enough to curb the abuses. Some practices are so confusing that consumers can't 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. In 2006, Americans used 700 million credit cards to buy about $2 trillion in goods and services. The average family now has 5 credit cards. Credit cards are being used to pay for groceries, mortgage payments, 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 and further into debt. Congress acted boldly and quickly to bail out the banks; now is time to do something for the consumer. Too many American families are being hurt by too many unfair credit card practices to delay action any longer. I commend Senator Dodd, Chairman of the Senate Banking Committee, for tackling credit card reform, and look forward to Congress promptly and urgently taking the steps needed to ban unfair practices that are causing so much pain and financial damage to American families. Abusive credit card practices are a concern that I have been tracking over the past several years through the Permanent Subcommittee on Investigations, which I chair. The Subcommittee held two investigative hearings in 2007, exposing those practices, and based on those hearings, I introduced legislation--the Stop Unfair Practices in Credit Cards Act, S. 1395--to ban the outrageous credit card abuses we documented. I am pleased that Senators McCaskill, Leahy, Durbin, Bingaman, Cantwell, Whitehouse, Kohl, Brown, Kennedy, and Sanders joined as cosponsors. The Dodd-Levin bill we are introducing today incorporates almost all of S. 1395, and adds other important protections as well. It is the strongest credit card bill yet. The Dodd-Levin bill includes, for example, the following provisions that also appeared in the bill I introduced with Senator McCaskill and others. It would: No Interest on Debt Paid on Time. Prohibit interest charges on any portion of a credit card debt which the card holder paid on time during a grace period. Prohibition on Universal Default. Prohibit credit card issuers from increasing interest rates on cardholders in good standing for reasons unrelated to the cardholder's behavior with respect to that card. Apply Interest Rate Increases Only to Future Debt. Require increased interest rates to apply only to future credit card debt, and not to debt incurred prior to the increase. No Interest on Fees. Prohibit the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees. Restrictions on Over-Limit Fees. Prohibit the charging of repeated over-limit fees for a single instance of exceeding a credit card limit. Prompt and Fair Crediting of Card Holder Payments. Require payments to be applied first to the credit card balance with the highest rate of interest, and to minimize finance charges. Fixed Credit Limits. Require card issuers to offer consumers the option of operating under a fixed credit limit that cannot be exceeded. No Pay-to-Pay Fees. Prohibit charging a fee to allow a credit card holder to make a payment on a credit card debt, whether payment is by mail, telephone, electronic transfer, or otherwise. The Dodd-Levin bill also includes important additional protections. It would: Require issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations. Enhance protection against unfair and deceptive practices by giving each federal banking agency the authority to prescribe regulations governing unfair or deceptive practices by banks or savings and loan institutions. Improve disclosure requirements by, for example, requiring issuers to provide individual consumer account information and to disclose the period of time and total interest it will take to pay off the card balance if only minimum monthly payments are made. Protect young consumers from credit card solicitations. To understand why these protections are needed, I would like to provide a brief overview of some of the most prevalent credit card abuses 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. 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, Ohio, 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 six years trying to pay off the debt, averaging payments of about $1,000 per year. As of February 2007, he'd 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's 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 3 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, 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 our 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 didn'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 also incur interest charges. Those interest charges magnify the cost of the fees and can quickly drive a family's credit card debt far beyond the cost of their initial purchases. It is one thing for a bank to charge interest on funds lent to a consumer; charging interest on penalty fees goes too far. A second troubling case history involves Charles McClune, a 51-year- old Michigan resident who is married with one child. Mr. McClune has a credit card account which he closed in 1998, and has been trying to pay off for more than 10 years. Due to excessive fees and interest rates, and despite paying more than four times his original credit card debt of less than $4,000, Mr. McClune still owes thousands on his credit card, with no end in sight. Mr. McClune first opened his credit card account while in college, in 1986, at Michigan National Bank through a student-targeted credit promotion. After leaving college, the credit limit on his card was increased to $4,000. By 1993, although he had not exceeded the credit limit through purchases, Mr. McClune had missed some payments and was assessed interest and fees that pushed his balance over the $4,000 limit. From 1993 to 1996, he exceeded his limit again, on several occasions, due to interest and fee charges. He stopped making purchases on the credit card in 1995. In 1996, Mr. McClune's credit card account was purchased by Chase Bank. In 1998, Mr. McClune asked Chase to close the account, and Chase did so. Although he never made a single purchase on his credit card while the account was with Chase, Chase repeatedly increased the interest rate on his account, including after the account was closed. In 2002, for example, his interest rate was about 21 percent; by October 2005, it had climbed to 29.99 percent where it remained for more than two years until March 2008; it then dropped slightly to 29.24 percent. The higher interest rates were applied retroactively to Mr. McClune's closed account balance, increasing the size of his minimum payments and his overall debt. Chase also assessed Mr. McClune repeated over-the-limit and late fees, which began at $29 and increased over time to $39 per fee. Chase cannot locate statements for Mr. McClune's account prior to February 2001, so there is no record of all the fees he has paid. The records in existence show that, since February 2001, he has paid 64 over-the-limit fees totaling $2,200. Those fees stopped after the March 2007 hearing before my Subcommittee, in which Chase promised to stop charging more than three over-the-limit fees for a single violation of a credit card limit. In addition to the 64 over-the-limit fees, since February 2001, Chase has charged Mr. McClune nearly $2,000 in late fees. The records also show that since 2001, Mr. McClune was contacted by telephone on several occasions by Chase representatives seeking payment on his account. If he agreed to make a payment over the telephone, Chase charged him--without notifying him at the time--a fee of $12 to $15 per telephone payment. When asked about these fees, Chase told the Subcommittee that the fees were imposed, because on each occasion Mr. McClune had spoken with a ``live advisor.'' Since 2001, he has paid a total of $160 in these pay-to-pay fees. Altogether, since 2001, Mr. McClune has paid nearly $4,400 in fees on a debt of less than $4,000. If the more than four years of missing credit card bills were available from 1996 to 2000, this fee total would be even higher. In addition, each fee was added to Mr. McClune's outstanding credit card balance, and Chase charged him interest on the fee amounts, thereby increasing his debt by thousands of additional dollars. In February 2001, Chase records show that Mr. McClune's credit card debt totaled nearly $5,200. For the next 7 years, although he did not pay every month, Mr. McClune paid nearly $2,000 per year toward his credit card debt, but was unable to pay it off. At one time, he paid $150 every two weeks for several weeks. Those payments did not bring his debt under the $4,000 credit limit, or reduce his interest rate. In January 2007, Mr. McClune received a letter from Chase stating that if he made his next payment on time, he would receive a $50 credit on his debt. Mr. McClune cashed out his IRA and paid $4,000 on his credit card debt. Because he made this payment in February, however, he did not receive the $50 credit for an on-time payment. Instead, he was assessed a $39 late fee, a $39 over-the-limit fee, and a $14.95 payment fee for making the $4,000 payment over the telephone. Mr. McClune was never offered a payment plan or a reduced interest rate by Chase to help him pay down his debt. His credit card bills show that from February 2001 to June 2008, he paid Chase a total of $15,800. If the four years of missing credit card bills from 1996 to 2000 were available, his total payments would likely exceed $20,000. In June 2008, his credit card bill showed he was charged 29 percent interest and a $39 late fee on a balance of $3,300. How could Mr. McClune pay $15,000 to $20,000 on credit card purchases of less than $4,000, and still owe $3,300? His credit card statements since 2001 show that he was socked with over $9,700 in interest charges, $2,200 in over-the-limit fees, $2,000 in late fees, and $160 in pay-to-pay fees. All of these interest charges and fees were assessed by Chase while the account was closed and without a single purchase having been made since 1995. Despite his lack of purchases and payments totaling $15,800, Chase records show that, from February 2001 until June 2008, Mr. McClune was able to reduce his credit card balance by only about $1,850. Mr. McClune is not trying to avoid his debt. He has made years of payments on a closed credit card account that he has not used to make a purchase in 13 years. He has paid thousands and thousands of dollars-- four and possibly five times what he originally owed--in an attempt to pay off his credit card account. He is still paying. But his thousands of dollars in payments are not enough for his credit card issuer which is squeezing him for every cent it can, fair or not, for years on end. Tragically, Mr. McClune and Mr. Wannemacher have a lot of company in their credit card experiences. The many case histories investigated by the Subcommittee show that responsible cardholders across the country are being squeezed by unfair credit card lending practices involving excessive fee and interest charges. The current regulatory regime--even with the new Federal Reserve regulation--is insufficient to prevent these ongoing credit card abuses. Legislation is badly needed. 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's how it works. Suppose a consumer who usually pays his account in full, and owes no money on December 1st, 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's 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's how the credit card industry has operated for years, and they have gotten away with it. There's more. You 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 the 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, Michigan, 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 two 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 twelve 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, Wisconsin, 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 twelve 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, Florida. 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 and in full, 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'd 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 don't 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 emails 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've 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. For these reasons, I urge my colleagues to support enactment of the Dodd-Levin Credit CARD Act this year. Congress has already gone to bat for the banks that engage in abusive credit card practices; it's time we go to bat for the American family.

Mr. LEVIN

Mr. LEVIN. Madam President, the American people are counting on us to act to stabilize and revitalize the economy, and the Economic Recovery and Reinvestment Act that the Senate is considering is an essential part of that effort. It will create jobs and make investments to bolster our economy in both the short and long term. The situation is dire. The Nation is in a deep recession. Michigan's unemployment rate is the highest in the country. Michigan has lost over half a million jobs since January 2001, and more than 300,000 of those were manufacturing jobs. In this January alone, the Nation lost 598,000 jobs, including 207,000 manufacturing jobs, and the number of first- time jobless claims was higher than any time in the past quarter century. The economy is in very bad shape, and it is getting worse. Job creation must be our No. 1 priority as we work to turn the economy around, and jobs are the focus of this recovery plan. The provisions in this bill are designed to create jobs, including funding for infrastructure, tax cuts, and investments in critical technology. The Obama administration estimates that this plan will create or save over 3 million jobs nationwide--well over 100,000 jobs in Michigan alone--over the next 2 years, including jobs in health care, clean energy and construction. The recovery plan includes funding for investments in technology and modernization efforts that can help us compete in the global economy. The bill includes $2 billion in funding for the Department of Energy for grants to manufacturers of advanced batteries and battery systems, which will help provide American manufacturers the resources and the support they need to manufacture these batteries in U.S. facilities. The recovery package also includes $100 million in Defense Production Act funding, which will go toward the support of manufacturers of technologies for the next generation of vehicles used by the military. This funding is critical because battery manufacturers and other manufacturers are deciding now where to locate their production facilities, and we cannot afford to lose those facilities and the jobs located there to other countries that are willing to offer greater financial incentives than we are. The package also includes significant measures to expand the American market for advanced technology vehicles. It increases from 250,000 to 500,000 the number of plug-in hybrid vehicles eligible for the consumer tax credit for these vehicles. And it includes funding for Federal agencies to aggressively lease alternative energy vehicles--such as hybrid vehicles--to support a wide variety of agency missions. Government leasing of these vehicles will help stimulate production of these vehicles. We cannot just preach about the need to produce these vehicles. We must lead the way in purchasing them, even though their up-front cost is greater. Shovel-ready infrastructure projects are the most immediate way to create jobs and get the economy moving quickly. The recovery plan includes over $45 billion in funding for ready-to-go road, bridge, rail and other projects to immediately and directly create jobs. I supported an amendment that would have added further funding for such projects, which unfortunately did not pass. Michigan has over $3 billion in transportation projects that can be commenced within 180 days. Even without the additional funding, the legislation we are considering will provide Michigan with nearly $900 million in highway formula funds and $165 million in transit formula funds, allowing for significant repairs to roads and bridges and purchases of buses for our public transit authorities. There is additional funding which will hopefully result in investments in the midwest high-speed rail corridor, and improvements to Amtrak that can help bring commuter rail to Michigan. I am especially pleased that the Senate stimulus bill distributes the highway infrastructure funds using the Surface Transportation Program, STP, authorized under the current highway law. The STP formula treats Michigan and other donor States in a much fairer manner than other highway funding allocation formulas. The legislation also provides $2 billion for the Army Corps to address river and harbor, flood and ecosystem restoration projects across our Nation. I am hopeful that a significant portion of these funds will be directed to the Great Lakes navigational system, one of our Nation's most important maritime highways, which faces a backlog in many much-needed maintenance projects that are ready to go. Additionally, the legislation includes $6 billion for water infrastructure investments that will immediately employ people, protect public health, improve the environment, and create a stronger economic climate. This bill will provide Michigan with over $150 million for job-creating projects to address crucial wastewater needs, and about $70 million to improve water mains, leaking pipes, water treatment plants, pumping stations, and similar projects. It also includes $200 million for environmental infrastructure projects that can create jobs while helping to mitigate the impact of combined sewer overflows, which dump harmful pollutants into the Great Lakes every year. There are also nearly $200 million worth of projects identified in conjunction with the Great Lakes Legacy Act, which was reauthorized in 2008 in order for the EPA to clean up contaminated sediments in the Great Lakes, which are shovel ready and could be done in a few months. Last year, the Brookings Institution released a report that concluded that a Federal investment would yield economic benefits of 2\1/2\ to 1. I will continue to push for these projects to be funded promptly from the appropriations in this bill. The recovery package also includes $100 million in competitive grants for the cleanup of brownfield sites where redevelopment is complicated because of real or potential environmental contamination. Last year, Michigan was awarded $8 million for 22 such projects, and I am hopeful that a good portion of these grants will be awarded to Michigan communities. Because most of Michigan's grants were awarded for site assessments, rather than actual cleanup projects, I joined my colleagues Senators Cardin and Voinovich in sponsoring an amendment that would allow the grants to be awarded for both assessments and cleanup projects. Both of these uses would quickly put people to work and make these sites attractive for investment and reuse, creating additional new jobs, generating additional tax revenues, and improving communities' overall quality of life. Finally, on the infrastructure front, the bill includes about $750 million for the National Park Service to address the lengthy backlog of maintenance projects and other important needs. I am hopeful that a significant portion of these funds will be used at Michigan's four national park units and the North Country National Scenic Trail. Michigan's park and trail funding needs are great, and numerous projects have been deferred for several years. It is estimated that Michigan's parks and trails could use upwards of $35 million in funding for infrastructure investments that could be started within the next 18 months. I was concerned that the $23 million set aside for deferred maintenance of trails might exclude, for technical reasons, developing scenic trails, like the North Country Trail, which has 1,150 miles that run through Michigan. I obtained assurances on the record from Senator Feinstein, the sponsor of the trail funding language that such trails would in fact be eligible for the trail funding, and I am hopeful that many trail maintenance projects will begin soon, creating jobs and boosting the economy. The recovery bill will provide funds investing in health information technology, computerizing health records to reduce medical errors and save billions of dollars in health care costs. The tax provisions in this legislation will create a refundable tax credit of $500 for working individuals and $1,000 for working families, covering 95 percent of working families. Taxpayers can receive this benefit through a reduction in the amount of tax that is withheld from their paychecks, or through claiming the credit on their tax returns. This will mean direct and immediate relief for nearly 4 million Michigan workers. For many struggling families, this will help them make ends meet in these tough times. By putting extra money in families' pockets, these targeted tax cuts will offer an immediate boost to the economy. This recovery plan includes important measures that will modernize the current unemployment benefits system which includes administrative dollars and funds to incentivize States to modernize their unemployment insurance programs. This would mean more than $90 million for the State of Michigan right off the bat. This plan will also provide a further extension of unemployment benefits which will help the approximately 162,000 unemployed workers in Michigan who are unable to find a job in these hard economic times and whose unemployment benefit will expire. Additionally, it will provide an additional $100 per month in unemployment benefits, pumping money directly into depressed economic areas. Further, the bill temporarily exempts the first $2,400 unemployment benefits from income tax, meaning more of these funds can go to recipients and help grow the economy. Providing job training in new and expanding fields will help to lower the unemployment rate and help today's workers better compete against foreign competition. The bill provides $3.4 billion for job training including State formula grants for adult, dislocated worker, and youth programs, including $1.2 billion to create up to one million summer jobs for youth. The training and employment needs of workers also will be met through dislocated worker national emergency grants, new competitive grants for worker training in high growth and emerging industry sectors, with priority consideration to ``green'' jobs and health care, and increased funds for the Job Corps and YouthBuild programs. Green jobs training will include preparing workers for activities supported by other economic recovery funds, such as retrofitting of buildings, green construction, and the production of renewable electric power. It also provides $500 million for State formula funds for vocational rehabilitation State grants to help individuals with disabilities prepare for and sustain gainful employment; and $400 million for employment services grants to match unemployed individuals to job openings through State employment service agencies and allow States to provide customized reemployment services. The bill includes funding to enhance and expand education initiatives aimed at ensuring that our next generation of Americans is able to meet the challenges of a global economy. It includes a $39 billion State fiscal stabilization fund for local school districts and public colleges and universities, distributed through existing State and Federal formulas, and $7.5 billion to States as incentive grants as a reward for meeting key education performance measures. It also addresses the needs of educationally disadvantaged students served through the Title I program, including $12.4 billion to help close the achievement gap and enable these students to reach their potential. Further, the bill includes $13 billion to improve educational outcomes for children served under the Individuals with Disabilities in Education Act. This level of funding will increase the Federal share of special education services to its highest level ever. Finally, the bill adds $13.9 billion to increase the Pell grant maximum award and pay for increases in program costs resulting from increased eligibility and higher Pell grant awards. The bill supports an increased Pell Grant maximum award of $281 in the 2009-2010 academic year and $400 in the 2010-2011 academic year, which will help 7 million students pursue postsecondary education. A provision was also included to encourage use of the low-income housing tax credit, an important tool for the development of affordable rental housing. Together, the provisions in this bill offer significant hope for our Nation's economic future. Still, a comprehensive economic recovery effort is balanced on a three legged stool consisting of creating jobs, unfreezing credit markets, and addressing the housing crisis, including reduction in the flood of foreclosures. I am assured that the Obama administration is moving towards prompt action on the other fronts. President Obama will soon be putting forward a significant housing measure focused on reducing foreclosures and stabilizing home values. The Treasury Department is working to reconfigure the so-called TARP funds, of which $350 billion remains, to unfreeze our Nation's credit markets. The Treasury is also establishing sensible conditions for financial institutions who receive loans from the government so we can monitor what they do with the funds and get them to resume the flow of credit. This recovery plan represents an essential step toward stabilizing our economy. The infrastructure projects will create Michigan jobs, the tax provisions will help Michigan families and the investments in technology and modernization will pay dividends for years to come. While I am mindful of the further challenges we must address in order to end this recession, I support the Economic Recovery and Reinvestment Act with a sense of real urgency.

Mr. LEVIN

Mr. LEVIN. Madam President, I move to reconsider the vote.

Mr. LEVIN

Mr. LEVIN. Mr. President, as the Senate works to boost our ailing economy, I want to clarify that funding provided to the National Park Service for trail projects would not be limited to only certain trails. The bill provides $158 million for the operation of the National Park System, of which $23 million is recommended in the report for deferred maintenance of trails. I understand this funding could be used for any trails in the National Park System, including the eight National Scenic Trails. Is that correct?

Mr. LEVIN. The North Country National Scenic Trail, the longest scenic trail designed in America, traversing seven States including the State of Michigan, has great needs and could use the funding provided in this economic recovery package. In Michigan alone, the North Country National Scenic Trail has maintenance needs totaling $2.5 million that have been postponed for too many years. These trail upgrades and maintenance projects would put people to work right away and spur additional economic activity. I was concerned the report accompanying the economic recovery bill could be misinterpreted to limit this funding to so-called units of the National Park System. Only three of the eight National Scenic Trails have unit status, and limiting funding in that way would be arbitrary and unfair. I believe this funding should be available for any NPS-administered National Scenic Trail, whether designated as a unit or not, for trail construction, rehabilitation and maintenance. Is that the Senator's intent as chairman of the Interior Appropriations Subcommittee, and I believe the sponsor of the language?

Mr. LEVIN. I thank Chairman Feinstein for including this funding and clarifying its use. wastewater infrastructure funding

Mr. LEVIN

Mr. LEVIN. Mr. President, the Inhofe amendment would, in effect, prevent implementing the President's decision to close Guantanamo and undo the benefits to America's standing that have resulted from President Obama's decision. The Executive order signed by President Obama last month requires Guantanamo be closed within 1 year. The goal of closing Guantanamo has broad support. In this last presidential election, both candidates, then-Senator Obama and Senator McCain, supported closing Guantanamo. Last year, five former Secretaries of State, including Colin Powell, Henry Kissinger, and James Baker, called for closing Guantanamo. President Bush has said he would support closing Guantanamo, as did his Secretary of State, Condoleezza Rice, and Secretary of Defense Robert Gates. No one says that closing Guantanamo will be easy. To achieve this, the Executive order signed by President Obama sets up a Special Task Force to review the status of the approximately 250 detainees still held at Guantanamo and make recommendations on what to do with these individuals. Currently about one-third of the Guantanamo detainees have been cleared for release or transfer to a third country. The State Department is in the process of trying to find countries willing to take these detainees, where they will not be subjected to torture or persecution. For about another third of the Guantanamo detainees, the Defense Department has declared its intention to bring criminal charges and try these individuals. The military commission process is now under review, so it is not clear when these trials will resume or be completed. But we know, right now, that for a certain number of detainees currently at Guantanamo, we will need to continue to hold these individuals beyond the 1-year deadline for closing Guantanamo. These detainees are too dangerous to be released, and yet the Government is not able to charge them criminally. In some of these cases, the Government cannot bring charges because the evidence we have against these detainees is insufficient for purposes of a criminal prosecution. Or, we now know, in some cases the evidence may be inadmissible because it was obtained through torture or coercion. The policies of abuse approved by the Bush administration have damaged our ability to bring these individuals to justice. Those detainees too dangerous to release but unable to be tried, will continue to be held. We will need a place to house these individuals. The Defense Department has already reportedly begun reviewing facilities at military bases in the United States for that purpose. We should await the recommendations of the Special Task Force established by President Obama's Executive order on how to handle these difficult detainees. This amendment would undo the benefits of President Obama's action to close Guantanamo. It would harm America's standing and leave our troops less safe. It prejudges the review of the task force. It doesn't belong in a stimulus package. For these reasons, I urge my colleagues to oppose the Inhofe amendment.

Mr. LEVIN. Madam President, I thank the Senator from Montana. Amendment No. 140 Madam President, I oppose the Feingold amendment which would require that any allocation of funds in an appropriations bill have a prior authorization. There is only one authorization bill that passes here, and that is the Defense authorization bill. There are no other authorization bills that pass. This amendment represents a massive shift of power to the executive branch. It is not a transparency amendment. We did that last year. This is a shift-of-power amendment which should be defeated. Under this amendment, while all earmarks identified in the President's budget could be funded in our appropriations bills without authorization and not be subject to the proposed point of order, congressional projects that are not authorized would require a supermajority vote in order to be included in the legislation. This becomes more extreme because that disparate treatment of Presidential and congressional projects even applies when a Senator seeks to offer an amendment subject to a rollcall vote during debate on the Senate floor. The President's budget each year includes many earmarks to direct spending for targeted projects. The President uses his budget to target Federal expenditures to local areas for projects he supports, most of which are not specifically authorized. Under this amendment, Congress would have to meet a higher standard, a super majority in the Senate, in order to do the same thing. This amendment clearly weakens Congress's power of the purse. The vast amount of funding levels for programs in appropriations bills are the same as those in the President's budget. However, this amendment provides that if an allocation of some of the program funding is rejected on point of order, the overall program funding amount will be reduced, although it is just as likely, and probably more likely, that Congress merely intended to have the relevant agency allocate that funding, thereby keeping the overall funding amount the same instead of allocating it by congressional earmark. The amendment states over and over again that if the point of order is sustained, the unauthorized appropriations shall be stricken from the bill or amendment; and ``any modification of total amounts appropriated necessary to reflect the deletion of the matter struck from the bill or amendment shall be made.'' For example, assume that $100 million is allocated in the President's budget for a State assistance grant program, and an appropriations bill includes a provision to direct that $2 million of this funding go to a specific city or project. If the $2 million allocation is stricken, only $98 million would remain, so even if it were the intent of Congress to provide $100 million for these grants, the funding would be decreased. The requirement for prior authorization means that Congress could only allocate funds for projects if Congress were to take up every Congress authorization bills covering all Federal agencies and programs. In the absence of such authorization bills, all appropriations initiated in Congress would be ``unauthorized appropriations'' subject to a point of order. Congress would be able to appropriate funding for programs and priorities proposed by the President, but Congress would not be able to fund congressional programs or priorities that are not included in the President's budget, or even to shift funding between programs in the President's budget, because all such appropriations would be ``unauthorized.'' The result would be a serious weakening of Congress's power of the purse. At present, the only Senate committee that enacts an authorization bill every Congress is the Armed Services Committee, which I am privileged to chair. So under this amendment, Congress would essentially severely weaken its power of the purse over all Federal agencies other than the Department of Defense. It may be the intent of this amendment to force other Senate committees to go through the same process that the Armed Services Committee goes through to enact an authorization bill every Congress. But I want to warn my colleagues: this is not an easy process. The Armed Services Committee spends most of every year reviewing hundreds of programs and activities in the Defense budget on a line-by-line basis. Subcommittee and full committee hearings and markups take weeks. Our bill then generally consumes about 2 weeks of Senate floor time. There is nowhere near enough floor time available to enact every Congress the dozens of authorization bills that would be necessary to replicate this authorization process for all of the civilian agencies. Moreover, as currently written, this amendment would very likely create a point of order against congressionally initiated Defense appropriations, even if those appropriations are specifically authorized in our bill. The reason is that the amendment provides that an appropriation is not considered to be authorized unless the authorization has already been enacted into law or passed by the Senate. There has not been a case in recent memory in which our Defense authorization bill has been enacted into law before the Senate took up the Defense appropriations bill. While the amendment makes an exception for authorizations that have already passed the Senate, it makes no exception for authorizations that have already passed the House. That means that a point of order would lie against all House-initiated items, but none of the Senate funding items, in a Defense appropriations bill. If the Senate were to sustain the point of order, we would be in the position of sending a bill back to the House which funded all of our priorities and none of theirs--a bill that could not possibly be approved in the House. The bottom line is that this amendment, if enacted, would make it difficult for Congress not only to establish its own spending priorities with regard to the civilian agencies and programs that are not subject to an annual authorization process, but even with regard to the Defense agencies and programs that are subject to such a process. This would include items on the unfunded priorities list submitted to Congress by the Joint Chiefs of Staff each year. This list, which in the past has included items like MRAPs and body armor, reflects the highest priorities of our uniformed military. Congress would place a major obstacle on itself from exercising the power of the purse, placing itself in the position of approving or disapproving programs in the President's budget without the power to establish its own priorities without a super majority. In 2007, Congress passed meaningful ethics and lobbying reform which included strong earmark reform to ensure transparency in the process by providing greater disclosure and requiring information on earmarks to be available to the public online. These disclosures allow the public the opportunity to know where their tax dollars are being spent and will help ensure the quality of the projects which are funded. The sponsors of this amendment have asserted that this amendment would build on and strengthen those reforms. But this amendment goes way beyond that and places extensive hurdles for congressionally directed spending. I don't believe that the executive branch has a monopoly on the wisdom of spending Federal dollars. I believe that the elected representatives of the people in Congress are often in a better position to decide where the people's money is spent than the administration's political appointees in Washington. This is not a transparency amendment. We brought all earmarks into the full light of day in 2007. This amendment attacks the very heart of Congress's constitutional power of the purse. I urge my colleagues to vote against this extreme and unworkable measure that would enhance the spending power of the President and weaken the congressional power of the purse. It is not a transparency measure. It is an extreme power- shifting amendment. Amendment No. 364

Mr. LEVIN

Mr. LEVIN. Mr. President, I commend to the attention of my colleagues the Congressional Research Service report R40178, ``Tax Cuts on Repatriation Earnings as Economic Stimulus: An Economic Analysis,'' that indicates what little evidence there was about new investments from the 2004 decision, which is available at www.crs.gov.

Mr. LEVIN. Mr. President, I have been listening to this debate and I am kind of, let's say, astounded by the arguments of the proponents that somehow or other you can cite the Joint Tax Committee for how much money will come into the Treasury for the next 2 years and then trash the Joint Tax Committee for everything else they say. They are not outside economists, we are told; they are inside economists. Yet the facts that the Joint Tax Committee give us for the years 2009 and 2010 are cited as supporting the proponents' argument because it shows that money comes into the Treasury during those 2 years, but in order to sustain their position, they have to ignore all the rest of the Joint Tax's position, which is that this costs almost $30 billion in 10 years. Is it just that the outside economists take over the Joint Tax for the last 8 years? This argument about outside economists, inside economists--there are economists who differ on things. We rely on Joint Tax. These are independent, objective economists whom we have to rely on, and do rely on, not just for some of the things they say, as some of the proponents want to have it, but for what they tell us about this amendment. This amendment will cost us over the first 5 years, $3 billion--that is Joint Tax--over the 10 years, $28.6 billion. That is a major loss to the Treasury, and we cannot afford it. This is a tax gift to those companies that move operations overseas, and then produce overseas, and then have no tax on their profits because those taxes are deferred until they bring those profits home. Our tax structure says when you bring them home, you should pay the same tax as your competitors pay in the United States. The companies in the United States that do not move operations overseas, they pay up to a 35-percent tax. By the way, the Senator from Nevada has an argument. The basic problem is the size of the tax that we impose on corporations. That is the fundamental issue. But what the proponents are doing is creating a competitive advantage for those companies that move operations overseas because they do not pay the 35-percent tax if they do not bring back those profits. Then, we were told 5 years ago: Let's just, one time--we were assured just once--let them bring back this money and only hit them for 5 percent. We were assured it would be a one-time-only deal. It would not be repeated, to use the words of the conference report. Lo and behold, now the proponents--the same proponents--want to repeat this. And what has happened--and this is not just me saying this; this is the CRS saying this--is the companies wait for this opportunity believing that once again we are going to allow this kind of repatriation at a much lower rate. They hold money overseas, awaiting the time when they can bring it back at a 5-percent rate instead of paying the same tax rate their domestic competitors pay, which is up to 35 percent. So this ends up--with this kind of repatriation, when we repeat it this way--being an incentive to keep the profits overseas, waiting for the time when they can be repatriated at the lower rate. Now, I want to quote some other inside economists since the distinction seems to be important to the proponents, and they are in the CRS. What does the CRS say about the 2004 repatriation package that was passed? The chairman of the Finance Committee has quoted the CRS for some of the data, and I am not going to repeat that. It is pretty powerful as to the lack of impact in terms of jobs and in terms of investments from that repatriation. They are inside economists, yes, but objective economists, independent economists not paid by anybody else to make a study. You can get economists, I am sure, who are going to reach different conclusions on this issue. But these objective, independent economists, whom we rely upon--frankly, I rely on much more than outside economists who have all kinds of connections to all kinds of organizations, and no one knows exactly on whose payroll they are when they make studies--the Congressional Research Service, with independent, objective economists, what does it say about that 2004 bill? They say: Imperial evidence is unable to show a corresponding increase in domestic investment or employment, that the repatriations did not increase domestic investment or employment. That is what they say. You cannot show any empirical evidence. Or put it this way--this is their conclusion, not mine--their conclusion: That empirical evidence does not show an increase in domestic investment or employment from what we did last time. Little evidence, they say, exists that new investment was spurred. Some outside economists, Foley, Forbes, wrote the following: Repatriations--they are talking about in 2004--did not lead to an increase in investment, employment, or R&D, even for the firms that lobbied for the tax holiday stating those intentions. Instead, a one- dollar increase in repatriations was associated with an increase of approximately one dollar in payouts to shareholders. Those are outside economists, for what that distinction is worth. When companies move jobs offshore and they make profits overseas, they have a competitive advantage frequently because labor might be cheaper, and that is something we should not encourage, that movement of jobs. Our Tax Code should not give an incentive to the movement of jobs overseas. It does right now because you defer the profit you make overseas and don't pay tax on it. That is already an incentive in the Tax Code which, frankly, I don't like, and there may be, hopefully, some effort to correct that with this administration and in this body. But at least when they bring back the profits, they ought to pay the same tax their competitors pay. The argument is made that they are not going to bring back the profits, that we lose money to the Treasury. They, the proponents, cite a study--and I believe they are relying on a calculation from the Grant Thornton firm, although I am not sure; that name has not been used here. But I think this is the assessment that is being relied upon. Here is what Joint Tax said about that calculation: It ignored the fact that a significant part of the $18 billion in revenues that it attributed to that 2004 Act would have been collected by Treasury in any event as dividends were paid in the ordinary course of business over the 10-year budget window. Thus, the calculation-- And this is Joint Tax speaking-- is not a revenue estimate at all. When the Joint Committee on Taxation issued its revenue estimate in 2004 on the impacts of the 2004 repatriation--a projection of how much additional tax revenue would be generated or lost by that proposal--it projected $2.8 billion in additional revenue would be generated the first year, but the Joint Committee estimated that for the 5-year budget cycle, 2005 through 2009, the repatriation proposal would cost the Treasury money--a loss of $2 billion, to be exact. The revenue estimate for the 10-year budget cycle of 2005 through 2014 was estimated by the Joint Committee on Taxation to be a loss of $3.3 billion. We have to rely on these independent experts. They may be in-house, they may be ours, we appoint them, but we have to rely on them. This distinction between inside and outside economists, it seems to me, if anything, should work to the advantage of the independent, objective, inside economists on whom we rely. These are nonpartisan experts we put in place to give us the very projections which we have in front of us tonight. Those projections are mighty clear. Those projections show, yes, year 1 and 2, there is going to be additional money coming into the Treasury, but then we start losing money big time, and we cannot afford to do that. Finally, a lot has been said here about the fact that there are going to be audits of this--and, indeed, the amendment does provide for audits--to try to determine whether the money which comes back into the treasuries of these companies is spent for the purposes that are stated in the amendment. But what the amendment does not do is require that those funds be spent. There is no time limit saying that the funds must be spent in year 1 or year 2. What it does say is that if they are spent, an auditor is going to try to determine that they are spent for the enumerated purposes. But what it doesn't do is provide the requirement that those funds be spent in years 1 and 2, and that is the purpose of the stimulus package. The purpose of the stimulus package is to try to get money spent on job creation, and the amendment fails in that very fundamental way. It does not require the funds that are brought back to be spent for the identified purposes. It says if they are spent, it must be for those purposes, but it doesn't require that they be spent in year 1 or year 2 or year 3 or year 4 or whenever. When they are spent, they will be audited. That is an effort on the part of the proponents to avoid the problems discovered the last time we did this, but it doesn't address the fundamental purpose of a stimulus package. So it costs us money--that is Joint Tax. The last time we did this, which was supposed to be the last time we would do this, according to CRS, it did not stimulate the creation of jobs, and it fails to pass the fundamental test that it is not required to be spent for the enumerated purposes. I yield the floor.

Mr. LEVIN. Reserving the right to object, I believe a point of order lies against this amendment. Does that preclude----

Mr. LEVIN

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

Mr. LEVIN. Mr. President, I ask unanimous consent that Senator Dorgan be recognized for 5 minutes and then Senator Grassley, who I expect will be here at that time, be recognized for up to 10 minutes, and then I will be recognized for up to 10 minutes.

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

Mr. LEVIN. Mr. President, Americans are fortunate to have access to some of the best medical facilities and services in the world. Yet, shamefully, 2007 U.S. Census data demonstrated that there are 45.7 million uninsured people in our country, of which, 8.7 million are children, who do not have the access they need to these services. Unfortunately, these numbers will likely increase as the Nation continues to lose more jobs and the ranks of the unemployed continue to rise. How to provide everyone in America access to affordable, quality health care is the subject of extensive debate. Over the years, though, we have made some progress in making sure that the most vulnerable members of our communities--including children--can receive basic medical services. The State Children's Health Insurance Program was created in the Balanced Budget Act of 1997 in recognition of the need to provide medical services for children from middle-income to lower income families and has been widely hailed as a successful program. In the past 12 years, we have seen that CHIP coverage leads to better access to preventative and primary care services, better quality of care, better health outcome and improved performance in school. CHIP currently provides health care benefits to more than 7.4 million children, of which more than 90 percent are from families with incomes below $35,000 a year for a family of three, or 200 percent below the Federal poverty level. Michigan's CHIP program, called MIChild, has had impressive results: Michigan currently has the second lowest rate of uninsured children in the Nation, trailing only Massachusetts, which provides universal health care coverage. While CHIP has been a successful program nationwide, many children who qualify for the program are unable to receive insurance because of inadequate funding. In Michigan, approximately 50,000 children are covered under CHIP every month, but there are still 158,000 uninsured children in my home State, and more than 8 million uninsured children nationwide. To help address this problem, I am pleased that the Senate is taking up a bipartisan bill--the Children's Health Insurance Program Reauthorization Act of 2009--that would increase funding for the program by approximately $32.8 billion over 4\1/2\ years. This bill will allow more than 4 million additional children to enroll beyond the 7.4 million children already in CHIP. For Michigan, this means that more than an estimated 80,000 more Michigan children would have access to much needed health insurance. A hardworking mother from Royal Oak, Michigan, wrote: ``As a single working mother, I could not afford the family insurance that my employer offered, and definitely could not afford private [insurance]. Without this insurance I do not know what I would have done. [CHIP] offered us options, doctors instead of emergency rooms, less time missed at work and school.'' We have a moral obligation to provide Americans access to affordable and high quality health care. No person, young or old, should be denied access to adequate health care, and the expanded and improved Children's Health Insurance Program is an important step toward achieving that goal.

Mr. LEVIN

Mr. LEVIN. Mr. President, in the 4 years since the federal ban on assault weapons was allowed to expire, hundreds of people in this country have died and been injured by previously banned weapons. The Brady Center to Prevent Gun Violence report, ``Assault Weapons: Massed Produced Mayhem,'' details the deaths of 165 people and the injury of 185 people by assault weapons since the ban expired. This includes the death and injury of 38 police officers. The simple fact is, our communities are less safe than they were 4 years ago. The Bureau of Alcohol, Tobacco, Firearms and Explosives described assault weapons in their Assault Weapons Profile as weapons ``designed for rapid fire and close quarter shooting at human beings. That is why they were put together the way they were. You will not find these guns in a duck blind or at the Olympics. They are mass produced mayhem.'' Unlike semiautomatic hunting rifles, which are designed to be fired from the shoulder and rely on the accuracy of a precisely aimed projectile, assault weapons are designed to be fired at the hip and to maximize their ability to rapidly shoot multiple human targets. The report also outlines the dangerous weapons race law enforcement officers have been forced to enter in an effort to counter the increasing likelihood that they will be confronted by a criminal wielding an assault weapon. In addition to the common criminal, assault weapons are highly attractive weapons for terrorists. The ease with which they can currently be purchased, combined with their designed ability to inflict as much damage as possible, make them ideal tools for conspiring terrorists. Just last year five men were arrested in New Jersey with a stockpile of assault weapons, while planning to attack the U.S. States Army base at Fort Dix. Despite the overwhelming support of the law enforcement community, the ongoing threat of terrorism and bipartisan support in the Senate, the assault weapons ban was not allowed to expire. Now, 4 years later, 19 previously banned military-style assault weapons, some capable of firing up to 600 rounds per minute, are once again pervading our streets and neighborhoods. This Congress we must take up and pass sensible gun safety legislation, including reinstating the assault weapons ban.

Mr. LEVIN

Mr. LEVIN. Mr. President, history has proven time and time again that the markets are not self-policing. Today's financial crisis is due in part to the Government's failure to regulate key market participants, including hedge funds that have become unregulated financial heavyweights in the U.S. economy. So I am joining today with my colleague Senator Grassley of Iowa to introduce the Hedge Fund Transparency Act, and I thank Senator Grassley for his leadership on this and in so many other areas involving oversight of our financial institutions. Hedge funds sound complicated, but they are simply private investment funds in which investors have agreed to pool their money under the control of an investment manager. What distinguishes them from other investment funds is that hedge funds are typically open only to ``qualified purchasers,'' an SEC term referring to institutional investors such as pension funds and wealthy individuals with assets over a specified minimum amount. In addition, most hedge funds have 100 or fewer beneficial owners. By limiting the number of their beneficial owners and accepting funds only from investors of means, hedge funds have been able to qualify for the statutory exclusions provided in the Investment Company Act and avoid the obligation to comply with that law's statutory and regulatory requirements. In short, hedge funds have been able to operate outside of the reach of the Securities and Exchange Commission. The primary argument for allowing these funds to operate outside SEC regulation and oversight is that because their investors are generally more experienced than the general public, they need fewer government protections and their investment funds should be permitted to take greater risks than investment funds open to the investing public which need greater SEC protection. Indeed, the ability of hedge funds to take on more risk is the very reason that many individuals and institutions choose to invest in them. These investors accept more risk because that might lead to bigger rewards. The compensation system employed by most hedge funds encourages that risk taking. Typically, investors agree to pay hedge fund investment managers a management fee of 2 percent of the fund's total assets, plus 20 percent of the fund's profits. The hedge fund managers profit enormously if a fund does well, but due to the guaranteed management fee, get a hefty payment even when the fund underperforms or fails. The analysis up to now has been that if wealthy people want to take big risks with their money, all else being equal, they should be allowed to do so without the safeguards normally required for the general public. So what is the problem with allowing their investment funds to operate outside of Federal regulation and oversight? The problem is that hedge funds have gotten so big and are so entrenched in U.S. financial markets that their actions can now significantly impact market prices, damage other market participants, and can even endanger the U.S. financial system and the economy as a whole. The systemic risks posed by hedge funds first became obvious 10 years ago. Back then, Long-Term Capital Management--or LTCM--was a hedge fund that, at its peak, had more than $125 billion in assets under management and, due to massive borrowing, a total market position of $1.3 trillion. When it began to falter, the Federal Reserve worried that it might unload its assets in a rush, drive down prices, and end up damaging not only other firms but U.S. markets as a whole. To prevent a financial meltdown, the Federal Reserve worked with the private sector to engineer a rescue package. That was just over a decade ago. Since then, according to a recent report issued by the Congressional Research Service, the hedge fund industry has expanded roughly tenfold. In 2006, the SEC testified that hedge funds represented 5 percent of all U.S. assets under management and 30 percent of all equity trading volume in the United States. By 2007, an estimated 8,000 hedge funds were managing assets totaling roughly $1.5 trillion. The most current estimate is that 10,000 hedge funds are managing approximately $1.8 trillion in assets, after suffering losses over the last year of over $1 trillion. In addition, over the last 10 years, billions of dollars being managed by hedge funds have been provided by pension plans. A 2007 report by the U.S. Government Accountability Office found that the amount of money that defined benefit pension plans have invested in hedge funds has risen from about $3.2 billion in 2000 to more than $50 billion in the year 2006. That total is probably much higher now. And while most individual pension funds invest only a small slice of their money in hedge funds, a few go farther. For example, according to the GAO report, as of September 2006, the Missouri State Employees Retirement System had invested over 30 percent of its assets in hedge funds. Universities and charities have also directed significant assets to hedge funds. The result is that hedge fund losses threaten every economic sector in America, from the wealthy to the working class relying on pensions, to our institutions of higher learning, to our nonprofit charities. A third key developed is that over the last 10 years, some of the largest U.S. banks and security firms have set up their own hedge funds and used them to invest not only client funds but also their own cash. In some cases, these hedge funds have commingled client and institutional funds and linked the fate of both to high-risk investment strategies. These hedge fund affiliates are typically owned by the same holding companies that own federally insured banks or federally regulated broker-dealers. Because of their ownership, their size and reach, their clientele, and the high-risk nature of their investments, the failure of hedge funds today can imperil not only their direct investors, but also the financial institutions that own them, that lent them money, or did business with them. From there, the effects can ripple through the markets and impact the entire economy. It is time for Congress to step into the breach and establish clear authority for Federal regulation and oversight of hedge funds. That is the backdrop for the introduction of the Grassley-Levin Hedge Fund Transparency Act. The purpose of this bill is to institute a reasonable and practical regulatory regime for hedge funds. The bill contains four basic requirements to make hedge funds subject to SEC regulation and oversight. It requires them to register with the SEC, to file an annual disclosure form with basic information that will be made publicly available, to maintain books and records required by the SEC, and to cooperate with any SEC information request or examination. In addition, the bill directs Treasury to issue a final rule requiring hedge funds to establish anti-money laundering programs and, in particular, to guard against allowing suspect offshore funds into the U.S. financial system. The Bush Administration issued a proposed anti-money laundering rule for hedge funds seven years ago, in 2002, but never finalized it. A 2006 investigation by the Permanent Subcommittee on Investigations, which I chair, showed how two hedge funds brought millions of dollars in suspect funds into the United States, without any U.S. controls or reporting obligations, and called on a bipartisan basis for the proposed hedge fund anti-money laundering regulations to be finalized, but no action was taken. Hedge funds are the last major U.S. financial players without anti-money laundering obligations, and it is time for this unacceptable regulatory gap to be eliminated. Our bill imposes a set of basic disclosure obligations on hedge funds and makes it clear they are subject to full SEC oversight while, at the same time, exempting them from many of the obligations that the Investment Company Act imposes on other types of investment companies, such as mutual funds that are open for investment by all members of the public. The bill imposes a more limited set of obligations on hedge funds in recognition of the fact that hedge funds do not open their doors to all members of the public, but limit themselves to investors of means. The bill also, however, gives the SEC the authority it needs to impose additional regulatory obligations and exercise the level of oversight it sees fit over hedge funds to protect investors, other financial institutions, and the U.S. financial system as a whole. The bill imposes these requirements on all entities that rely on Sections 80a-3(c)(1) or (7) to avoid compliance with the full set of the Investment Company Act requirements. A wide variety of entities invoke those sections to avoid those requirements and SEC oversight, and they refer to themselves by a wide variety of terms--hedge funds, private equity funds, venture capitalists, small investment banks, and so forth. Rather than attempt a futile exercise of trying to define the specific set of companies covered by the bill and thereby invite future claims by parties that they are outside the definitions and thus outside the SEC's authority, the bill applies to any investment company that has at least $50 million in assets or assets under its management and relies on Sections 80a-3(1) or (7) to avoid compliance with the full set of Investment Company Act requirements. Instead, those companies under the bill have to comply with a reduced set of obligations, which include filing an annual public disclosure form, maintaining books and records specified by the SEC, and cooperating with any SEC information request or examination. Finally, our bill makes an important technical change. It moves paragraphs (c)(1) and (7)--the two paragraphs that hedge companies use to avoid complying with the full set of Investment Act Company requirements--from Section 80a-3 to Section 80a-6 of the Investment Company Act. While our bill preserves both paragraphs and makes no substantive changes to them, it moves them from the part of the bill that defines ``investment company'' to the part of the bill that exempts certain investment companies from the Investment Company Act's full set of requirements. The bill makes this technical change to make it clear that hedge funds really are investment companies, and they are not excluded from the coverage of the Investment Company Act. Instead, they are being given an exemption from many of that law's requirements, because they are investment companies which voluntarily limited themselves to one hundred or fewer beneficial owner accepting funds only from investors of means. Under current law, the two paragraphs allow hedge funds to claim they are excluded from the Investment Company Act--they are not investment companies at all and are outside the SEC's reach. Under our bill, the hedge funds would qualify as investment companies--which they plainly are--but would qualify for exemptions from many of the Act's requirements by meeting certain criteria. It is time to bring hedge funds under the federal regulatory umbrella. With their massive investments, entanglements with U.S. banks, securities firms, pension funds, and other large investors, and their potential impact on market equilibrium, we cannot afford to allow these financial heavyweights to continue to operate free of government regulation and oversight. When asked at a recent hearing of the Senate Homeland Security and Government Affairs Committee whether hedge funds should be regulated, two expert witnesses gave the exact same one-word answer: ``Yes.'' One law professor, after noting that disclosure requirements don't apply to hedge funds, told the Committee: ``If you asked a regulator what . . . role did hedge funds play in the current financial crisis, I think they would look at you like a deer in the headlights, because we just don't know.'' It is essential that federal financial regulators know what hedge funds are doing and that they have the authority to prevent missteps and misconduct. The Hedge Fund Transparency Act will protect investors, and it will help protect our financial system. I hope our colleagues will join us in support of this bill and its inclusion in the regulatory reform efforts that Congress will be undertaking later this year.

Mr. LEVIN

Mr. LEVIN. Mr. President, history has proven time and time again that the markets are not self-policing. Today's financial crisis is due in part to the Government's failure to regulate key market participants, including hedge funds that have become unregulated financial heavyweights in the U.S. economy. So I am joining today with my colleague Senator Grassley of Iowa to introduce the Hedge Fund Transparency Act, and I thank Senator Grassley for his leadership on this and in so many other areas involving oversight of our financial institutions. Hedge funds sound complicated, but they are simply private investment funds in which investors have agreed to pool their money under the control of an investment manager. What distinguishes them from other investment funds is that hedge funds are typically open only to ``qualified purchasers,'' an SEC term referring to institutional investors such as pension funds and wealthy individuals with assets over a specified minimum amount. In addition, most hedge funds have 100 or fewer beneficial owners. By limiting the number of their beneficial owners and accepting funds only from investors of means, hedge funds have been able to qualify for the statutory exclusions provided in the Investment Company Act and avoid the obligation to comply with that law's statutory and regulatory requirements. In short, hedge funds have been able to operate outside of the reach of the Securities and Exchange Commission. The primary argument for allowing these funds to operate outside SEC regulation and oversight is that because their investors are generally more experienced than the general public, they need fewer government protections and their investment funds should be permitted to take greater risks than investment funds open to the investing public which need greater SEC protection. Indeed, the ability of hedge funds to take on more risk is the very reason that many individuals and institutions choose to invest in them. These investors accept more risk because that might lead to bigger rewards. The compensation system employed by most hedge funds encourages that risk taking. Typically, investors agree to pay hedge fund investment managers a management fee of 2 percent of the fund's total assets, plus 20 percent of the fund's profits. The hedge fund managers profit enormously if a fund does well, but due to the guaranteed management fee, get a hefty payment even when the fund underperforms or fails. The analysis up to now has been that if wealthy people want to take big risks with their money, all else being equal, they should be allowed to do so without the safeguards normally required for the general public. So what is the problem with allowing their investment funds to operate outside of Federal regulation and oversight? The problem is that hedge funds have gotten so big and are so entrenched in U.S. financial markets that their actions can now significantly impact market prices, damage other market participants, and can even endanger the U.S. financial system and the economy as a whole. The systemic risks posed by hedge funds first became obvious 10 years ago. Back then, Long-Term Capital Management--or LTCM--was a hedge fund that, at its peak, had more than $125 billion in assets under management and, due to massive borrowing, a total market position of $1.3 trillion. When it began to falter, the Federal Reserve worried that it might unload its assets in a rush, drive down prices, and end up damaging not only other firms but U.S. markets as a whole. To prevent a financial meltdown, the Federal Reserve worked with the private sector to engineer a rescue package. That was just over a decade ago. Since then, according to a recent report issued by the Congressional Research Service, the hedge fund industry has expanded roughly tenfold. In 2006, the SEC testified that hedge funds represented 5 percent of all U.S. assets under management and 30 percent of all equity trading volume in the United States. By 2007, an estimated 8,000 hedge funds were managing assets totaling roughly $1.5 trillion. The most current estimate is that 10,000 hedge funds are managing approximately $1.8 trillion in assets, after suffering losses over the last year of over $1 trillion. In addition, over the last 10 years, billions of dollars being managed by hedge funds have been provided by pension plans. A 2007 report by the U.S. Government Accountability Office found that the amount of money that defined benefit pension plans have invested in hedge funds has risen from about $3.2 billion in 2000 to more than $50 billion in the year 2006. That total is probably much higher now. And while most individual pension funds invest only a small slice of their money in hedge funds, a few go farther. For example, according to the GAO report, as of September 2006, the Missouri State Employees Retirement System had invested over 30 percent of its assets in hedge funds. Universities and charities have also directed significant assets to hedge funds. The result is that hedge fund losses threaten every economic sector in America, from the wealthy to the working class relying on pensions, to our institutions of higher learning, to our nonprofit charities. A third key developed is that over the last 10 years, some of the largest U.S. banks and security firms have set up their own hedge funds and used them to invest not only client funds but also their own cash. In some cases, these hedge funds have commingled client and institutional funds and linked the fate of both to high-risk investment strategies. These hedge fund affiliates are typically owned by the same holding companies that own federally insured banks or federally regulated broker-dealers. Because of their ownership, their size and reach, their clientele, and the high-risk nature of their investments, the failure of hedge funds today can imperil not only their direct investors, but also the financial institutions that own them, that lent them money, or did business with them. From there, the effects can ripple through the markets and impact the entire economy. It is time for Congress to step into the breach and establish clear authority for Federal regulation and oversight of hedge funds. That is the backdrop for the introduction of the Grassley-Levin Hedge Fund Transparency Act. The purpose of this bill is to institute a reasonable and practical regulatory regime for hedge funds. The bill contains four basic requirements to make hedge funds subject to SEC regulation and oversight. It requires them to register with the SEC, to file an annual disclosure form with basic information that will be made publicly available, to maintain books and records required by the SEC, and to cooperate with any SEC information request or examination. In addition, the bill directs Treasury to issue a final rule requiring hedge funds to establish anti-money laundering programs and, in particular, to guard against allowing suspect offshore funds into the U.S. financial system. The Bush Administration issued a proposed anti-money laundering rule for hedge funds seven years ago, in 2002, but never finalized it. A 2006 investigation by the Permanent Subcommittee on Investigations, which I chair, showed how two hedge funds brought millions of dollars in suspect funds into the United States, without any U.S. controls or reporting obligations, and called on a bipartisan basis for the proposed hedge fund anti-money laundering regulations to be finalized, but no action was taken. Hedge funds are the last major U.S. financial players without anti-money laundering obligations, and it is time for this unacceptable regulatory gap to be eliminated. Our bill imposes a set of basic disclosure obligations on hedge funds and makes it clear they are subject to full SEC oversight while, at the same time, exempting them from many of the obligations that the Investment Company Act imposes on other types of investment companies, such as mutual funds that are open for investment by all members of the public. The bill imposes a more limited set of obligations on hedge funds in recognition of the fact that hedge funds do not open their doors to all members of the public, but limit themselves to investors of means. The bill also, however, gives the SEC the authority it needs to impose additional regulatory obligations and exercise the level of oversight it sees fit over hedge funds to protect investors, other financial institutions, and the U.S. financial system as a whole. The bill imposes these requirements on all entities that rely on Sections 80a-3(c)(1) or (7) to avoid compliance with the full set of the Investment Company Act requirements. A wide variety of entities invoke those sections to avoid those requirements and SEC oversight, and they refer to themselves by a wide variety of terms--hedge funds, private equity funds, venture capitalists, small investment banks, and so forth. Rather than attempt a futile exercise of trying to define the specific set of companies covered by the bill and thereby invite future claims by parties that they are outside the definitions and thus outside the SEC's authority, the bill applies to any investment company that has at least $50 million in assets or assets under its management and relies on Sections 80a-3(1) or (7) to avoid compliance with the full set of Investment Company Act requirements. Instead, those companies under the bill have to comply with a reduced set of obligations, which include filing an annual public disclosure form, maintaining books and records specified by the SEC, and cooperating with any SEC information request or examination. Finally, our bill makes an important technical change. It moves paragraphs (c)(1) and (7)--the two paragraphs that hedge companies use to avoid complying with the full set of Investment Act Company requirements--from Section 80a-3 to Section 80a-6 of the Investment Company Act. While our bill preserves both paragraphs and makes no substantive changes to them, it moves them from the part of the bill that defines ``investment company'' to the part of the bill that exempts certain investment companies from the Investment Company Act's full set of requirements. The bill makes this technical change to make it clear that hedge funds really are investment companies, and they are not excluded from the coverage of the Investment Company Act. Instead, they are being given an exemption from many of that law's requirements, because they are investment companies which voluntarily limited themselves to one hundred or fewer beneficial owner accepting funds only from investors of means. Under current law, the two paragraphs allow hedge funds to claim they are excluded from the Investment Company Act--they are not investment companies at all and are outside the SEC's reach. Under our bill, the hedge funds would qualify as investment companies--which they plainly are--but would qualify for exemptions from many of the Act's requirements by meeting certain criteria. It is time to bring hedge funds under the federal regulatory umbrella. With their massive investments, entanglements with U.S. banks, securities firms, pension funds, and other large investors, and their potential impact on market equilibrium, we cannot afford to allow these financial heavyweights to continue to operate free of government regulation and oversight. When asked at a recent hearing of the Senate Homeland Security and Government Affairs Committee whether hedge funds should be regulated, two expert witnesses gave the exact same one-word answer: ``Yes.'' One law professor, after noting that disclosure requirements don't apply to hedge funds, told the Committee: ``If you asked a regulator what . . . role did hedge funds play in the current financial crisis, I think they would look at you like a deer in the headlights, because we just don't know.'' It is essential that federal financial regulators know what hedge funds are doing and that they have the authority to prevent missteps and misconduct. The Hedge Fund Transparency Act will protect investors, and it will help protect our financial system. I hope our colleagues will join us in support of this bill and its inclusion in the regulatory reform efforts that Congress will be undertaking later this year.

Mr. LEVIN

Mr. LEVIN. Mr. President, I ask for the yeas and nays.

Mr. LEVIN

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

Mr. LEVIN

Mr. LEVIN. Madam President, there is no question that our Nation's next Treasury Secretary will have a heavy burden: deregulation run rampant has shaken the foundation of our financial system and reverberated through our economy with devastating impact. I will support Timothy Geithner because I believe he has the expertise to meet the enormous challenges posed by this financial crisis and years of regulatory neglect. Last week, Mr. Geithner provided responses to detailed questions that I submitted to him as part of the confirmation process. His answers reflect some important new priorities and policy advances, including placing a priority on ending offshore tax abuses; preserving strong U.S. accounting rules; reinvigorating international anti-money laundering efforts; and imposing a 1-year cooling off period before financial regulators can take a job with a company they regulated. He also recognizes the need to overhaul our financial regulatory structure, including by strengthening regulation of hedge funds, derivative traders, and the over-the-counter derivatives markets; and strengthening capital and liquidity requirements for financial institutions. Despite these positive indicators, I do have some reservations. Mr. Geithner is a strong nominee because of his extensive experience, but while he now indicates support for some regulation of swaps, he has been reluctant to acknowledge that prohibiting regulation of those instruments was a mistake in 2000, and has offered only tepid support for some of the strong regulatory controls needed. Mr. Geithner has also been a key decisionmaker in the flawed financial rescue effort which has failed to track the use of TARP funds and failed to mandate lending of those funds to creditworthy businesses and to addressing the foreclosure flood. He has been reluctant to support requiring TARP fund recipients to track and report on their use of taxpayer dollars and requiring those who receive more than $1 billion in taxpayer assistance to provide written viability plans on how they intend to regain financial stability and repay the funds. Still, Mr. Geithner's apparent willingness to listen to and work with Congress and his openness to compromise is promising for future progress in these and other areas. The job that awaits Mr. Geithner pending his confirmation is an extremely tough one. I hope that he is confirmed, and that he lives up to the promise of the Obama administration, including implementing the transparent, pragmatic, and thoughtful policymaking that is a hallmark of President Obama's approach to government. Our Nation's economic recovery requires nothing less.

Mr. LEVIN

Mr. LEVIN. Assume that on January 1, 2007, a new employee is hired and knows that she will be paid less because she is a woman. She also knows that she is receiving less pay than a male who was hired on the same day for the same job, but she needs the job and is afraid to file suit. Two years go by and on January 15, 2009, she decides to fight the discrimination and files a complaint. Under current law, can she recover the lost 2007-2008 pay?

Mr. LEVIN. Under S. 181, would she be able to recover the 2007-2008 lost wages?