Bob Menendez

Mr. MENENDEZ

Mr. MENENDEZ. Is there still a minute remaining?

Mr. MENENDEZ. I am happy to yield to my colleague from Minnesota.

Mr. MENENDEZ. Mr. President, I wish to thank my distinguished colleague from Washington State. I appreciate it. I rise because the Senate has three choices on how it is going to protect coastal communities from the economic ravages of the oilspills we are seeing in the gulf. We can have fishermen, coastal residents, and tourism-based small businesses endure the suffering of lost revenue caused by a manmade disaster that was no fault of their own, which clearly in my mind isn't fair, we can have taxpayers provide them with a safety net, which I oppose, or we can make polluters pay all the damages they caused from a spill, which is the appropriate course. It is not a hard choice. When I was a kid, my mother taught me all I think we need to know here, and I am sure everybody was taught the same way: You clean up your own mess and you are responsible for it. That is all we are asking BP or any other company to do: Clean up the mess, pay for whatever mess you can't clean up yourself and the damages that flow from what you did. The current law sets a $75 million cap on how much an oil company has to pay for damages. That means BP doesn't have to pay more than $75 million for lost business revenue from fishing or tourism, damage to the environment, the coastline or the lost tax revenues of State and local governments. So I have introduced a bill, along with a number of my colleagues, raising that liability cap for offshore oil well spills from $75 million to $10 billion. Some of my colleagues have objected to this proposal because they are worried it will drive oil drilling companies in the gulf out of business. Well, in the case of BP, that is a little hard to understand. It is a rather strange argument. After all, BP's profits amounted to $5.6 billion for the first 3 months of this year--profits, not proceeds, profits. That breaks down to $94 million in profits each and every day. That means their current damages liability under the law of $75 million is less than one day's profits--less than one day's profits. Not every company drilling in the gulf is as big as BP, but why, I say to my colleagues who raise that issue, should an oil company get such a low liability cap when any average person driving down the street has unlimited liability? Why should a company doing an inherently dangerous and potentially polluting activity such as oil drilling enjoy such a low cap on liability, when the guy installing a solar panel on your roof has unlimited liability? It simply doesn't make sense. The oil companies want it both ways. They want to keep the profits when everything works out well and times are good, but they want taxpayers to bail them out when they spill. It is fundamentally wrong. Our bill is as simple as it gets. It says no bailout for BP. It says BP pays for its own mess, not the Nation's taxpayers. It says either you want to fully protect the small businesses and communities devastated by the spill or you want to protect multibillion-dollar oil companies from being held fully accountable. BP says they are going to be liable for all legitimate claims, but they would not define what ``legitimate'' is. So if they are saying that, why are we hesitant to raise the liability cap to make sure that what they are saying is kept true and that anyone else in the future will have the same responsibility? Does anyone who has been watching the images coming in from the gulf believe we should be protecting multibillion-dollar oil companies instead of the small businesses, fisheries, and coastal residents who are losing their livelihoods? It seems to me it is time this Senate stand up to big oil and make them pay for their own mess, not taxpayers, small business owners, States or the Federal Government. I know a number of my colleagues who have cosponsored this legislation with me wish to speak. At the end of that process, I intend to make a unanimous consent request so we can move forward and make sure now--not years later, now--that all those who are damaged as a result of the spill in the gulf are protected and that taxpayers don't pay one penny toward this liability that BP and others may have. With that, for the moment, I yield the floor.

Mr. MENENDEZ. Would the Senator yield for a question?

Mr. MENENDEZ. If, in fact, it is--I think everybody clearly believes this consequence in damages is at least $10 billion--some have suggested it should be an unlimited cap. If that is the figure, your concern wouldn't stop you from putting it at that figure and making sure all the independents----

Mr. MENENDEZ. Will the Senator yield for one more question?

Mr. MENENDEZ. I would be happy to yield to my colleague from Florida.

Mr. MENENDEZ. I thank the Senator for yielding. So is it my understanding that because of your concern about these other independents, let's call them, you would allow them--if they were the cause of this incident--to limit their liability just because they are small?

Mr. MENENDEZ. Look, I regret that my distinguished colleague from Oklahoma has decided to object. I would simply say that if you are an ``independent,''--and some of these independent companies are valued at $40 billion--does that mean that because you are not the BPs of the world, you should have less liability? If this spill in the gulf was done not by a BP or an ExxonMobil or any of those but by some other entity, should there be less liability for them; therefore, they can take the risk and go ahead and drill, and if it works out, they get all the profits, but if they spill, their liability would be limited under the guise they were going to create a monopoly for the big five? I am for creating that liability across the entire range. If you are involved in a dangerous activity, one that can create enormous environmental and economic damage, then you should face the liability for such whether you are BP or you are some intermediate entity. So I don't quite understand the nature of suggesting that we are going to try to give the big companies some form of monopoly. Actually, it seems to me what we are doing is using that argument--and I have heard this argument several times--to not create the liability that is necessary for everybody, so that regardless of who creates this set of circumstances and has a spill and therefore fishermen, shrimp fishermen, seafood processing companies, tourism, coastal communities, and our environment are damaged, they should be let off the hook because they are not as big as BP.

Mr. MENENDEZ

Mr. MENENDEZ. Madam President, I rise to speak on the pending amendment, the amendment by Senator Grassley. I have a great deal of respect for the Senator from Iowa. Actually, there is a series of things I propose that are in the underlying bill that go to the heart of much of what that amendment is going to do. I would start off by saying I agree with most of what my colleagues are proposing. I agree we need to make sure we have a strong regulatory agency to act as cops on the beat. We need to make sure those cops on the beat are doing their job. I agree we should require financial regulators to respond when inspectors general identify deficiencies in their agencies--either by taking corrective action or explaining to Congress why they are not taking those actions. I agree we should require inspectors general to report to the board of the organization rather than the head of the organization. I agree we should require publication of any negative recommendations from the inspector general's peer review of the work of other inspectors general. I also agree inspectors general should not suffer any reduction in pay and that current inspectors general should keep their jobs until the new Presidential appointment system I included in the legislation kicks in. I think those are great ideas and I proposed them myself. But here is where we have a disagreement. That is that this amendment takes away something I think is incredibly important in the underlying bill. It takes away making these inspectors general at these financial institutions Presidential appointments with Senate confirmation of inspectors general at financial regulatory agencies. In its place, it wants to let the heads of the agencies appoint their own inspectors general. I think that inures to the possibility of conflicts of interest. Look, if I am the head of an agency and I am going to put in the cop on the beat who is going to supervise me, the inclination is to pick someone who is going to give me a lot of flexibility at the end of the day. I want a robust cop on the beat. The way I ensure there is a robust cop on the beat, in terms of the inspector general, is having a Presidentially appointed one, one confirmed by the Senate, to know that in fact this person is worthy of pursuing all of the actions of that particular agency in a robust way so they are independent of the agency, not appointed by the very head of the agency they are now going to supervise and review. I think that is a fundamental weakness, which is why the Banking Committee agreed with me and put the Presidential appointment there and Senate confirmation of inspectors general at financial regulatory agencies. It seems to me what we want an inspector general to do is make sure the agency is doing its job. Being appointed by the head of the very agency I have to criticize, that I have to critique, that I may raise actions about, means it is a lot less likely the inspector general is truly independent. It is like going to court and saying let me pick the judge who is going to decide on my case. We wouldn't tolerate that in a courtroom and I do not see this as being any different. I have so much with which I am in agreement with my distinguished colleague, as I mentioned at the beginning--all of those elements. I think we need to make sure when an inspector general identifies efficiencies, either by taking corrective action or explaining to Congress why they are not, that needs to be responded to by the regulators. I agree we should require inspectors general to report to the boards of organizations rather than the head of the organization. I agree we should require publication of any negative recommendation from the IG peer review of any other inspector general's work. I agree the inspectors general should not suffer any reduction in pay and that those who are there should be able to keep their job until the new Presidential appointment system kicks in. But at the end of the day, if we want a true cop on the beat who is independent of the very agency he or she has to review, I would not want them appointed by the head of the agency and say to themselves, who am I appointing? Am I appointing a robust cop on the beat or am I appointing someone who is far less than robust? We have forum shopping in the court. Trial lawyers try to pick the best judge from their perspective as to who can best look at their case. I want to be honest. I don't think we should be having the agency heads picking the IG and looking at who is going to treat them most lightly. I think that is what is at stake. The underlying bill permits the Presidentially appointed, Senate confirmed. I think we should have that right. I think we need a robust cop on the beat and that is why in that one respect I oppose the Grassley amendment. I hope we can work something out so we can keep the Presidential appointment and Senate confirmation and have all of the other safeguards, many of which I already offered in the bill to be included, and we would have a harmony of view and a robust inspector general regime. If we are going to have an up-or-down vote on the existing amendment without any changes, then I urge a ``no'' vote. But I do hope we can make a change that permits the inspector general to be Presidentially appointed, confirmed by the Senate. That confers the ultimate independence, the ultimate vigilance, the ultimate vigor in pursuing the very same things my colleague from Iowa and I want to see happen. I yield the floor.

Mr. MENENDEZ. Madam President, I appreciate the statement of my colleague from Iowa. I will just make one or two observations. First, if we are talking about someone being beholden to one person, well, under the Senator's view that person is going to be beholden to the department authority that appoints him, the very same department authority that person is going to supervise and review. So it seems to me to the extent that there is always going to be an appointing authority, I would rather have the President of the United States, with the interests of the American people, whatever President that might be, be the appointing authority over an agency where the IG is not going to be beholden to the agency that appointed them. I think that is a much more compelling issue. As it relates to the time, the lapse of time, I would just simply say, well, first of all, if we do not have filibusters and have up-or-down votes on people, then we will not have much of a lapse in time in terms of having an IG come before the Senate for confirmation. I do not know why Senators would want to give up the right they would have under the bill to confirm inspectors general and make sure that person has a robust quality to them, the integrity and the background and the history to make sure they are going to go after this agency when it is appropriate to do so. I would say, to the extent that any lapse of time versus the robust nature of how this person gets appointed is worthy of consideration. So I do not find, while I agree with my colleague on so many of the other points I have already mentioned, this one fundamental issue is one that I find difficult to understand how, when it is like--sort of like having the fox be appointed to watch the chicken coop. If I appoint someone to watch over me, I would like to believe I am going to have the most robust, tough cop on the beat do it. But human nature being what it is, I am not so sure that agency heads are going to do that. I am not so sure they are going to pick the toughest cop on the beat versus actually someone who might have a less vigilant view. I think maybe we can agree that inspectors general have to come for an immediate vote on the Senate floor and not be subject to being filibustered, and this way we could have an up-or-down vote on them and the issue of lapsing time would be taken care of. With that, I yield the floor.

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

Mr. MENENDEZ

Mr. MENENDEZ. I thank my distinguished colleague. I appreciate what my colleague from Alaska had to say. Here are a couple of problems with it. First of all, when we call these companies ``independent drillers,'' some of these independent drillers who are portrayed as small mom-and-pop, some of them are like $20 billion companies. So they are not quite the mom-and-pop view we have of small mom-and-pop businesses, No. 1. If you drill, you need to be able to pay for the damages because otherwise, imagine if this particular spill had been done by a ``small company.'' Then who would be responsible just because they were too small? The risk is what has to be calculated. Also I simply say, I have a problem saying the administration did not say $10 billion is not the right figure by any stretch of the imagination. Quite the contrary. They said they are for lifting the liability cap. When BP makes $5.6 billion in 3 months, when the top five companies make $25 billion in 3 months, $10 billion is a drop in the bucket. Finally, the suggestion that those who are harmed--the fishermen, the commercial fishermen, the tourism companies, and others--ultimately will be in a position to make claims in State court, I know my distinguished colleague from Alaska knows what happened in the Exxon Valdez case. That took 20 years for claimants to try to get their just response. Some of them fell off the way because they just could not keep hanging in there, and they lost everything. I do not want Americans to have to wait 20 years to get their response to what an oil company did. Lifting the liability caps takes care of that circumstance so you do not have to litigate in State courts and then go all the way to the Supreme Court and get turned down at the end of the day.

Mr. MENENDEZ. Is debate on the Sessions amendment now available?

Mr. MENENDEZ. Is that by order?

Mr. MENENDEZ. Mr. President, what is the business before the Senate?

Mr. MENENDEZ. Mr. President, in view of the fierce urgency of now, there is harm already being levied upon these communities, commercial fishermen, tourism, and others, and because $75 million is less than 1 day of BP profits, I ask unanimous consent that the Environment and Public Works Committee be discharged from further consideration of S. 3305, the Big Oil Bailout Prevention Liability Act of 2010, and that the Senate proceed to its consideration; that the bill be read three times, passed, and the motion to reconsider be laid upon the table.

Mr. MENENDEZ. Mr. President, I rise to discuss legislation I have offered with some of my colleagues here: The Big Oil Bailout Prevention Act. It is legislation that would make absolutely certain big oil polluters pay for oilspills and the consequences of those spills, and not the American taxpayer, not small business owners, not States or the Federal Government. For some time now we have been told by big oil companies that what is happening in the gulf simply couldn't happen; that it was impossible; that multiple redundant safety systems were in place to prevent it. Well, we have learned there is no such thing as too safe not to spill. Supposedly, the unthinkable has happened, and not only that, but it has happened before. Last year in Australia, the Montara oilspill began on August 21. By some estimates, the spill sent over 80,000 gallons of oil a day into the waters off the coast of Australia. It was months before they could staunch the flow of oil, and it resulted in one of the largest environmental disasters in Australian history. We should have learned from that experience. But, no; we now have the challenge before the Nation today. In comparison, the deepwater well that is leaking in the gulf is sending nearly 210,000 gallons of oil a day into the gulf; over twice the flow from the Australian spill; several million gallons already; and just like the Australian spill, it could take months to drill the relief well. Two disasters in 1 year, yet big oil companies say over and over again that the technology was simply so safe, a spill such as this could never happen. The reality is much different than industry claims. There simply is no safety system too safe to fail and no rig that is too safe not to spill. There is no doubt the damages that will be caused by this spill will be enormous. Unfortunately, Federal law sets a $75 million limit on how much an oil company has to pay for damages--not the cleanup; that, they are clearly going to have to pay--but for the damages. So BP would not have to pay more than a total of $75 million to small businesses from lost revenues for fishing, tourism, damage to the environment, the coastline, or the lost tax revenues of State and local governments. That is why, along with Senators Nelson and Lautenberg, I have introduced the Big Oil Bailout Prevention Act to raise the liability cap for offshore oil well spills from $75 million to $10 billion. That will make sure that taxpayers, small business owners, States, and local and Federal governments will not bail out big oil polluters for this spill or any other. This spill should serve as a rallying cry for holding big oil accountable for the damages of this disaster and any future one, but it should also be a rallying cry to rethink expanding offshore drilling in places that are not already open to offshore drilling, such as my home State of New Jersey. Instead of expanding drilling and doubling down on 19th century fuels, we should be investing in a new 21st century green economy that will create thousands of new jobs, billions in new wealth, and help protect our oil and water from pollution. We will revisit that debate soon enough, but for now I think we all should be able to agree that when an oil company causes damage by spilling oil into American waters, the oil company bears the responsibility to pay for the damage it caused. My mom taught me growing up that when you mess up, you clean up, and you are responsible for it. Oil companies should get that message as well. This will help make gulf communities whole and it will provide a stronger safety net for our communities along places such as the New Jersey shore who are looking warily at future plans for drilling along the east coast. With that, Mr. President, I plan to ask unanimous consent on this issue, but first I wish to yield to my other colleagues who wish to speak on this issue as well. I yield 5 minutes to Senator Lautenberg and then 5 minutes to Senator Nelson.

Mr. MENENDEZ. Mr. President, if the distinguished Senator from Alabama will yield for a moment, since I chose not to object, would he allow me to take 2 minutes of our time just to follow the sequence of the previous discussion so I will not interrupt the essence of his amendment?

Mr. MENENDEZ. Reserving the right to object, and I am not inclined to object, what is the request? Thirty minutes instead of five minutes?

Mr. MENENDEZ

Mr. MENENDEZ. Mr. President, I wanted to come to the floor to talk about the Shelby amendment. I think we need to be 100 percent clear about one thing; that is, we need to pass a consumer protection bill-- not a Wall Street protection bill--with a strong independent agency that can aggressively defend families in all sectors of the financial industry. That is consumer protection. A weak agency that cannot defend families against commercial banks, investment banks, credit card companies, car dealers, payday lenders, and entities such as AIG, that is Wall Street protection. That is, in essence, what this amendment does. The fact is, the Republicans' proposal on this issue seems to symbolize America's worst fears about how the powerful operate--the powerful protecting the powerful. The problem isn't that families have too much protection on Wall Street; the problem is they have not been protected enough. The Shelby substitute is just the status quo. It is a cynical attempt to pretend they are doing consumer protection. In reality, it is meant to make sure there is no meaningful consumer protection at the end of the day. It willfully ignores the lessons we should have learned: that left to their own devices, there are lenders who can and will take advantage of consumers. That is what the marketplace--as it is right now--has taught us. We absolutely need a muscular, independent agency--however it is configured, wherever it is housed--one that will have full and comprehensive authority to develop and implement real, honest, proconsumer rules so they will no longer be fooled by 30 pages of fine print that no one except bank lawyers could possibly understand; one that has independent rule-writing authority and authority over banks and nonbanks, while maintaining strong State consumer protection laws; one that will stop the ongoing attempts by credit card companies to circumvent the rules this Senate and Congress have already enacted. They are already working at it. As Harvard Law Prof. Elizabeth Warren has noted: Thanks to product safety rules, you can't buy a toaster that would burn down your house. But you can buy a faulty mortgage that could take your house away. The bank regulators have been of no great help because they are looking out for the banks--not for us, not for you, not for unsuspecting families who need the full force protections of robust regulations implemented by a muscular agency that is on your side. In my view, a new independent agency would provide not only the comfort they need but the protection they deserve. We can argue about details, but I doubt there is much disagreement after what we have been through that Wall Street needs a watchdog, one that has jurisdiction over all financial products no matter who offers them, not just the products offered by big banks. Chairman Dodd has worked very hard over many months to craft the details of an agency that strikes the right balance. I was happy to see that finally our Republican colleagues were saying: We are on the Wall Street reform train. But now I begin to wonder--when I see amendments such as this--that they jumped on the train to strike the emergency brake on consumer protection enforcement. The Shelby amendment offers nothing in the way of consumer protection. There is no independence. The CFPB would simply be a division within the FDIC with no autonomy of its own. It could not even finalize a rule without FDIC approval. It will not have any resources. And that is how Republicans want it: no resources, no supervisory authority, no enforcement power. Guess who wins in that scenario. Nonmortgage companies will never be subject to supervision unless they have a pattern or practice of breaking the law within the past 3 years. So what does that mean? ``Let's have a lot of people get hurt before we actually would say we should now give them protection.'' It is not my sense of how the law should operate. The Shelby amendment would establish the Division of Consumer Protection at the FDIC. It maintains, in essence, the status quo. Consumer protection rule writing will still be under the same authority, the same regulators who routinely ignored or opposed the needs of consumers. The amendment provides no safeguards to prevent the FDIC Chair or board from overriding decisions by the division director. The amendment would actually prohibit--prohibit--the proposed consumer division from doing any rule writing under the Federal Trade Commission Act for payday lenders, debt collectors, foreclosure scam operators, mortgage brokers, and other nonbank consumer finance companies. It could only do examinations of nonbank consumer finance companies if they ``demonstrate a pattern or practice of violations'' of consumer law. So only after the consumer has been harmed repeatedly--after they have been harmed repeatedly-- could the consumer division do any examination of the business. This is simply saying: I am going to tell you that I am going to put a cop on the beat. He has no uniform, he has no equipment, and he cannot stop the bad guys. What a falsehood. We need to defeat this amendment, and we need to have a bill that ultimately gives strong consumer protections for millions of families in this country who have already faced the consequences of the system that is going on unregulated in a way that it allows greed and excesses to take place and that puts protections, yes, for Wall Street but not for Main Street. Senator Dodd has struck the right balance. We need to preserve it. I look forward to supporting him and opposing this amendment. With that, Mr. President, I yield the floor.

Mr. MENENDEZ. I wish they had been right and we had been wrong. But I think the chairman hits it right on point. In the context of the rating agencies, they were playing coach and referee. When you are playing coach and referee, somehow the game does not work out quite all that well. I appreciate what the Senator done in that respect here as well. I think the chairman makes the case very clearly that the definition of insanity is doing the same thing time and time again and expecting a different result. If we want to see what has happened to the American consumer in this country continue--facing the same consequences they have had to face over the last couple years--then we adopt this amendment. But if we want to change that, then we would support the underlying provisions in his bill. I thank the Senator for his leadership.

Mr. MENENDEZ. Mr. President, if I may ask my distinguished chairman to yield for a moment, the Chairman is absolutely right. As a matter of fact, when I made that comment that we were going to have a tsunami of foreclosures, the administration witnesses at the time--the previous administration, of course--said, with all due respect, that is an exaggeration.

Mr. MENENDEZ

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

Mr. MENENDEZ. Mr. President, I come to the floor this afternoon to talk about the bill before us. I commend my colleague, the chairman of the Senate Banking Committee, Senator Dodd, for his leadership on this crucial reform. I want to start off by reiterating what I know many of my colleagues have said, that this is a strong bill and it is a necessary bill. There is no doubt that we need Wall Street reform and we need it now. When tens of millions of Americans have lost their jobs, homes, and savings, Americans cannot wait any longer to end the reckless Wall Street practices that caused those problems. I certainly never want to see us again be in a position where we had the Chairman of the Federal Reserve come to us, about a year and a half ago, and say to members of the Senate Banking Committee, you need to act because financial institutions are on the verge of collapse and their collapse would create a consequence to the national economy of enormous proportions. I will never forget the dialog that took place there, in essence when Chairman Bernanke was asked, the Chairman of the Federal Reserve, what happened? Don't you have enough time, some tools at the Federal Reserve to get us through this period of time? He basically said, if you don't act you will have a global meltdown which basically means a new depression in the 21st century. Certainly a depression in the 21st century is much different than the depression this country lived through under President Roosevelt. Since he is someone whose expertise is in Depression era economics, how we got into the Depression, what made it worse, how we got out of it, it was a pretty compelling set of arguments. So here we are. What we want to do is make sure we are never put at that risk again; that there is not anything that is too big to fail because, in doing so, you can make all the wrong decisions knowing that even when you make the wrong decisions, and they are risky, the taxpayers will have to bail you out because we cannot have the country's whole economy go under. At the same time, we want to try to strengthen our regulatory process so we not only not face that reality but we create clear rules of the road. I am for a free market. I believe in a free market. But there is a difference between a free market and a free-for-all market. There is a difference between when someone takes their own capital, whether as a company or as an individual, and makes an investment and when the investment does good, good for them; but when the investment goes bad we all have to pay for it. We cannot have a system where profits are privatized but losses become the general public's responsibility. That is, in essence, the core of what we are trying to do here--to make sure that such a system, which is what we have had, not a free market but a free-for-all market, gets changed so we never face that again. As I said, I think this is an incredibly strong bill. But even a strong bill can have suggestions to make a good bill even stronger. I commend Chairman Dodd for being open to ideas to make this bill even stronger, regardless of which side of the aisle they come from. Now that we have broken the Republican logjam that has been holding this bill up for over a week, I hope we can get to the business of fully legislating in a full and open debate. I know that is what the American people want and expect, that the Senators they sent to Washington actually get to work on the business of fixing these problems; not that they sit on their hands while one party holds up debate because the bill didn't do everything they wanted it to or because we had conversations--some of our colleagues on the other side of the aisle had conversations with Wall Street and basically they don't like a lot of what we are doing here. But, in fact, it is critical to the Nation's economic security. I am glad to see that we have colleagues now on the train. I hope people do not try to pull the emergency brake switch to try to stop us from going to where we need to go. I think this is a great bill but there are some amendments I plan to offer to the bill. I think they make the bill even stronger. I have filed an open books amendment, to require companies to be more transparent in their financial reporting. Many experts believe one of the reasons we got into this mess in the first place was because no one--not investors, not regulators, not counterparties, not even the people running the companies--could actually figure out the true value of these big Wall Street banks. That is because banks hid a significant percentage of their liabilities, their risks, off their balance sheets. For example, Lehman Brothers treated $50 billion in repurchase agreement transactions as sales instead of financing transactions on their balance sheets, misleading everyone about the state of Lehman's finances. The bottom line, you know, may sound very technical but if I can take my liabilities off of my personal balance sheet and put them somewhere else and look as though I am better off than I am, that is fundamentally wrong. Clearly, had there been more transparency we might have dealt with the Lehman situation sooner, thus reducing the repercussions of a catastrophic bankruptcy. The amendment I am proposing is simple. It requires companies that are designated as systemically risky to disclose all their off-balance sheet activities in their annual 10-K report to the Securities and Exchange Commission, and provide detailed justifications for why they are keeping those liabilities off their balance sheets. It also requires disclosure of daily average leverage ratios in quarterly reports. This will prevent companies from moving liabilities off their balance sheets only days before when they are reporting earnings, as Lehman and others allegedly did. It is a step toward transparency. We know capital markets work best when they are transparent. That is the thrust of what this bill is trying to do. Put simply, the largest banks should not be able to deceive regulators, investors, counterparties, and the public, by hiding their liabilities in off-balance vehicles. We need transparency and clarity, not trickery and deception. I also am happy to join with Senator Akaka, who is leading on this particular amendment but I am his prime cosponsor, to require stockbrokers to act in the best interests of their clients. What a revolutionary concept, that stockbrokers act in the best interests of their clients. Brokers are not required to act in the best interests of their clients and can sell clients worse investments because they make more money on them, without the client ever knowing it. Brokers are only required to have reasonable grounds to believe that a property they are recommending is suitable for the customer, even if it is not the best product for the customer. Typically, brokers do not have to make disclosures about conflicts of interest or past infractions. In contrast, investment advisers are legally and ethically bound to put a client's interest ahead of their own--in essence to have a fiduciary duty; and to fully disclose those conflicts they may have. All brokers currently have exactly the same conflict of interest that Goldman Sachs had in its civil fraud case by the Securities and Exchange Commission: financial incentives to steer clients toward bad investment products that brokers made more money on. But retail investors are confused. They commonly think the services that investment advisers and brokers provide are nearly identical. An SEC Commission study in 2008 by the RAND Corporation found that investors were confused about the differences. So I don't think we need further studies. Senator Akaka's amendment and mine would end the confusion. It would require brokers to act in the best interests of their clients, just as investment advisers already do. It requires brokers to disclose conflicts of interest, so brokers would have to tell retail clients if they get more fees for selling a particular mutual fund or annuity product. It gives the FTC discretion to apply a fiduciary duty standard for all types of investors which would include institutional investors who are victimized by the allegations in the Goldman Sachs case. Investment advice should be transparent. If there are conflicts of interest or higher fees for a particular product, investors should know about it. Investors need to know that brokers have a duty to act in their best interest. I also have an amendment to expand the opportunities for women and minorities in banking. Currently, the staff of financial regulatory agencies lags in diversity. According to the Office of Personnel Management, minorities comprise only 18.7 percent of financial institution examiners; women comprise 34 percent. A recent GAO report found that among minority banks, only about one- third thought their regulators were doing a good or very good job of making an effort to protect or promote their interests and less than a third of minority-owned institutions have utilized services offered by the regulators in the last 3 years. Only 5.7 percent of African-American firms and 5.6 percent of Hispanic firms obtained bank loans to start their businesses, compared to 12 percent of nonminority firms. The amendment I am proposing would rectify this by creating the Offices of Minority and Women Advancement at all the major financial regulatory agencies. Those offices would be responsible for all matters of diversity, including diversity in agency employment and contracts. Office directors would provide annual reports to Congress on diversity issues, with recommendations for improvements. The amendment would also require publicly traded companies to provide in annual SEC filings ``diversity report cards'' which would break down by gender and race the percentages of officers and employees who are minorities and women and the percentage of total compensation they receive. Finally, it extends the minority banking requirements under section 308 of the Financial Institutions Reform, Recovery and Enforcement Act to the Federal Reserve and the OCC. A similar amendment has already passed the House of Representatives unanimously. I would certainly hope we could do the same here. Diversity within the Federal banking agencies will help ensure different perspectives are being brought to bear on issues and enhances the likelihood these solutions will be comprehensive and inclusive of a broad range of views. It will make our banking system fairer, more stable, and more just. I also have an amendment with Senator Merkley, to prohibit corporate executives and highly paid employees from hedging against any decrease in the market value of their employer's stock. This amendment is one that I think is very important because I am concerned there are a lot of bad incentives undermining the goals of executive compensation. A recent study found that at least 2,000 cases at 911 firms over an 11-year period in which executives tried to profit by betting against their own company--by betting against their own company. Hedging undermines, in my mind, the whole point of incentive compensation to make sure that executives only benefit when the company does well. If they can hedge their stock, then it does not matter how well the company does, because either way the executive makes money. Tails they win, heads they win. That simply is fundamentally wrong. Worse, it may, in some cases, give executives an incentive to sort of ``throw the game,'' to use their privileged position to take a position that may very well not be in the company and its employees' best interests and then make a killing by selling the company stock short. Not good for the company, not good for the employee, not good for investors. My amendment would place a ban on stock hedging by executives and highly paid company employees, namely those making more than $1 million per year, preventing them from betting against their own company. Put simply: Executives and highly compensated employees should never have financial incentives to act against the best interests of their very own company. I am hoping some of these may very well be able to see their way into a managers' package. I hope we do not have to come to the floor to offer all of them. The recession has hit everyone. Community Development Financial Institutions have been hit hard, especially hard. They are in a tough position because they have got to rely on the big banks for capital, which is neither affordable nor easily accessible. My amendment would authorize the Treasury Department to guarantee bonds issued by qualified Community Development Financial Institutions for the purpose of community and economic development loans. There is also no cost to the taxpayers to do this. CDFIs have a track record of job creation and community development. They are the most effective way to infuse capital in low-income communities because the capital goes directly into those communities and economic development efforts. In focusing on the finances of Wall Street, I think this is an opportunity not to forget about the finances of Main Street, where most of the jobs are and the devastating impact that Wall Street's actions have had on Main Street. Lastly, I wish to talk about whistleblower protections. They are the first and most effective line of defense against corporate fraud and other misconduct, yet because of inadequate protections against retaliation, would-be corporate whistleblowers often keep quiet when they could be protecting the public from illegal activity. As we have seen in the emerging Lehman Brothers scandal, a whistleblower who tried to alert management to illegal accounting tricks was fired. Though the Sarbanes-Oxley Act of 2002 did much to expand protection of corporate whistleblowers from retaliation, it lacks several modern whistleblower protections that have been standard in every piece of legislation since 2006. My amendment updates Sarbanes-Oxley protections against retaliation by giving whistleblowers 180 days to file a claim instead of the 90 that exists right now; giving whistleblowers their day in court with a clearer right to a jury trial; clarifying that whistleblowers are entitled to compensatory damages; strengthening due process rights for whistleblowers by eliminating inconsistencies in current law; preventing employers from gagging whistleblowers by holding them to contractual obligations; ensuring that whistleblowers will be protected for all disclosures of material misconduct. We think those opportunities strengthen a citizen to be able to engage and to come forth in a way that protects the company, that protects the investors, that protects all of us in the economy at large. So, again, I want to commend Chairman Dodd for his leadership in this effort. It has been a pleasure, as a member of the Banking Committee, working with him on some of the underlying provisions that he has already included in the bill that makes it so strong. I stand ready to work together to address these remaining issues, some of which I hope we can work through and get accepted, others which, if necessary, I am ready to come to the floor and seek to offer. At the end of the day, I want a bill that puts New Jerseyans in a position, and all Americans, in which they will never be asked to reach into their pockets to take care of the excessive decisions of companies that privatized the profit but then said, when it went bad and the gamble did not go well, that all of us should pay. We cannot have that. That is what the core of this bill does. That is why I have been proud to work with the chairman. I yield the floor.