Jeff Merkley

Mr. MERKLEY

Mr. MERKLEY. Mr. President, I ask unanimous consent to speak for about 5 minutes.

Mr. MERKLEY. Mr. President, this is a tough time for Americans. We all know families are sitting around at their kitchen tables struggling to figure out how to make ends meet, but those tough times have not extended to the boardrooms of the five big oil companies. In 2011 alone, those companies saw more than $100 billion in profits--a sum that is difficult to get your hands around. It is difficult to understand what $1 billion is, let alone $100 billion, not in revenue but in profits. Exxon is sitting on $8 billion that it has not reinvested. Shell is sitting on $13 billion cash in hand. The five largest companies together--BP, Exxon, Chevron, ConocoPhillips, and Shell--have cash resources of $59 billion and have made nearly $1 trillion in profits over the last decade. Meanwhile, the American taxpayers are not only being forced to hand over larger and larger portions of their paychecks at the pump, they are also being asked to have a share of their taxes go to additional subsidies to these large companies. Let me restate that. When you go to the pump and pay $4 or more, the oil companies make a tremendous profit. There is nothing wrong with making a profit in America, but what seems wrong is that these same companies are then coming to these hallowed Halls and saying: We want a handout from the general fund. Those companies know there are many other pressing needs in America. Indeed, there are many folks who are hungry across our Nation. There are many families who are hoping but cannot save enough money to send their kids to college. Many families who are pressed by the loss of our manufacturing jobs, our middle-class, living-wage jobs, who are providing for their families on service jobs are having a tough time meeting the mortgage. Families are struggling, and certainly they would like to see this body say that we understand the challenges so many face. We understand that the cost of tuition for their children is way outpacing inflation, and they are worried about the possibility of their children not having the full opportunities that should be available within our society. They are worried about keeping their homes. They are worried about finding that next job if their current job goes away. But they are wondering why we aren't helping with those problems with these funds instead of giving these funds away to the oil companies. The only explanation they can come up with is that the oil companies are very powerful; they can come here and talk to this Chamber and say: You know, we just want more. It is more important for us to add to the billions we have in the bank than it is to have basic nutrition programs expanded in this country. It is more important for taxpayers to give us money to add to the money we have in the bank than to address the desperate infrastructure funds that are needed around our Nation. It is more important that they give us a handout rather than give a hand up to struggling families in this Nation. Well, I disagree. I think it is more important to help our families. I think it is more important to help our children. I think it is more important to build our fiscal infrastructure for the economy and for the future. I think it is more important to build the infrastructure through education, the intellectual infrastructure of our Nation that provides both opportunities to individuals and opportunities and strength to our economy as a whole. There are some who say these giveaways reduce the price of oil at the pump and reduce the price of gasoline. Nothing could be further from the truth. We all know what is driving the price of gasoline. Demand is down because people don't have enough to spend, supply is up, so it is certainly not supply and demand. But what we do have is a big increase in speculators. Speculators are going to the Commodity Futures Trading Commission, and they are making bets that because of the crisis in the Middle East, because of the issues with Iran, because of the concern about oil flowing out through the Strait of Hormuz, that others will also buy oil futures, so they will buy them, too, and they will make money on the way up, and the result is, for all of us, a higher price at the pump. So if we want to do something about oil prices, we take on the speculators. That is why in Dodd-Frank we gave the CFTC the ability to exclude speculators from that marketplace, to say they have to have positions, they have to have an end use for oil. But they haven't used that power. Maybe we need to pass a stronger bill to suppress the speculation, since the CFTC is not doing its job. What we know for certain is that giving powerful oil companies the people's money to add to the money they are keeping in the bank, the billions they are sitting on, will not do one thing to drop the price of oil. Let's help American families and not the most powerful who have no need for these funds.

Mr. MERKLEY

Mr. MERKLEY. Mr. President, it is with great pride that I congratulate the First African Methodist Episcopal Zion Church in Portland, OR, on its 150 years of devotion to God and the Portland community. In 1862, the A.M.E. Zion Church convened as the first of its kind in Portland, just 3 years after Oregon became a State. First Church's humble beginnings started in the home of Mrs. Mary Carr on A Street, now Ankeny Street, under the leadership of Rev. J.O. Lodge. Since then, the congregation has grown substantially and has weathered four relocations. It now has settled at its current home on North Vancouver and North Skidmore Avenue. First Church has impacted countless lives over the course of its 150 years. It has provided shelter and clothing for the homeless, food for the hungry, and scholarships to young students chasing their dreams to college. Today, they continue their good work keeping youth off the streets and reducing gang violence. The church is a strong, positive force in the Portland community. To Pastor Robert Nelson Probasco, Sr., and the First African Methodist Episcopal Zion Church of Portland: Thank you for your dedication, conviction, and faithful service to the people of Portland.

Mr. MERKLEY

Mr. MERKLEY. Madam President, I rise to address the amendment on crowdfunding that we will be considering shortly on the floor of the Senate. Specifically, the goal is to create a solid foundation for success of enabling Americans to invest in startup companies, invest in small companies through the Internet, and to do so in a fashion that does not result in predatory scams but results in capital formation that helps small business thrive across our Nation. The House bill, as it came over to us, has crowdfunding provisions that are simply a pathway to predatory scams, a paved highway to predatory scams. What do I mean by that? They say basically that a company seeking to raise investment capital doesn't have to give any financial information of any kind about their company. If they do provide information, they don't have to have accountability for the accuracy of that information. By the way, they can hire people to pump their stock, and that is OK under the law. In other words, everything we associate with the worst boiler rooms, the worst pump-and-dump schemes, is made legal by the House legislation. That is why we need to fix this on the floor of the Senate. We lay out a provision that says, if you raise less than $100,000, you as the CEO assert the accuracy of the information you are putting out--simple financial statements. If you raise a larger amount of funds, you proceed to have an accountant-reviewed statement that you can vouch for. If you raise yet more funds, at a higher level, then you have an audited financial statement. So it is adjusted in degrees and it streamlines it to the appropriate levels, based on the amount of investment you are asking. This amendment says directors and officers should take responsibility for the accuracy of that information. That will give investors a great deal more confidence that what they are reading is actually and truly the case. That is a foundation for successful investment. There are many folks across the country who have looked at these crowdfunding positions, different measures. I thought I would read from Motaavi, a crowdfunding intermediary based out of North Carolina. On the House bill, they say: The crowdfunding language in the [House bill] lacks critical investor protection features. It does not require offerings to be conducted through an intermediary, which opens the door to fraudulent activity. . . . It also does not require appropriate disclosures or inspections. The bill does not require the issuer to inform investors of dilution risk or capital structure. Crowdfunding is premised on openness. Without disclosure, investors cannot protect themselves or accurately price the securities they are buying. If issuers are not willing to provide information over and above what is required, the [House] language does not provide investors with other alternatives short of giving up on crowdfunding altogether. They then comment on the bipartisan amendment we are presenting on the floor of the Senate, and they note: It strikes the right balance between disclosure and flexibility. The language is tightly integrated with existing securities laws to provide investor protection. It places easily met obligations on the issuer and the intermediary to ensure that investors have the information they need to make sound decisions. The bill has many provisions for appropriate rulemaking, and is written in a way that reflects how crowdfunding actually works. Remember, this is a crowdfunding intermediary based in North Carolina--one working to occupy this Internet space and wants a platform, a structure, that works and makes crowdfunding a legitimate strategy for capital formation. The letter continues: We think crowdfunding can be a valuable and integral part of the capital formation process. The Crowd Funding Act is the right bill [the amendment we are considering today] to make this happen. Launcht is a crowdfunding portal provider. They say: For the first time, we have a Senate bill with bipartisan sponsorship, a balance of state oversight and Federal uniformity, industry standard investor protections, and workable funding caps. Let's turn to the startup exemption--three entrepreneurs who have led the charge in our Capitol for flexible provisions for crowdfunding: We write to suggest that if you consider the House version of the bill, you consider adding the following crucial components: 1. Crowdfunding investing intermediaries that are SEC- regulated to provide appropriate oversight. 2. All or nothing financing so that an entrepreneur must hit 100 percent of his funding target, or no funds will be exchanged. 3. State notification, rather than state registration, so the states are aware of who is crowdfunding in their states. This ensures they retain their enforcement ability while creating an efficient marketplace. These provisions are in the amendment we are considering and the amendment they have endorsed. Finally, we have SoMoLend, a peer-to-peer lending site. Here is their commentary, where they say this amendment is: . . . robust enough to provide guidance to a new industry, but will also benefit the crowdfunding industry in the long- term, as compared to a possible race to the bottom with a ``no regulatory'' approach. The disclosure and regulatory requirements will provide adequate information to investors, advising of risk but also deterring fraud. It continues: Again, this has long-term benefits to the industry as a whole. This hits at the heart of why these investor protections are so important. Not only do they deter scams and fraud, not only do they protect vulnerable investors, such as seniors and others, who have little experience in the investing market, but they build a strong capital formation market, a successful platform for capital formation, a market that puts capital where citizens would like to put it--the wisdom of the crowd, if you will--a market that allows good ideas to rise to the top, a market that will create jobs now and in the future. I urge my colleagues to support amendment No. 1884 to provide the right balance of streamlining and investor protection. I yield the floor and suggest the absence of a quorum.

Mr. MERKLEY. Madam President, I have 1 minute?

Mr. MERKLEY. Colleagues, I want to encourage you to adopt amendment No. 1884. The House bill, as it came to us, on crowdfunding is a pathway to predatory scams. It requires no information to be provided by a company; and if the company provides information, it requires no responsibility or accountability for the accuracy of that information. It allows companies to hire people to pump the stocks, which is exactly what we all know, from pump-and-dump schemes, is very devastating to any sort of solid financial foundation for capital aggregation, capital formation. I want to applaud my colleagues Senator Bennet, Senator Landrieu, and Senator Brown of Massachusetts, who have worked together to bring this bipartisan amendment forward. It provides the right amount of streamlining for the companies, the right amount of streamlining for portals on the Internet, and the right set of investor protections, information, and accountability necessary to make crowdfunding fulfill the exciting potential it has. I thank the Chair.

Mr. MERKLEY

Mr. MERKLEY. Mr. President, I rise to speak to amendment No. 1884. Specifically, this is the crowdfunding amendment. That might be a term that is new to many, so let me explain. The Internet provides new opportunities for capital to reach small businesses and startup entrepreneurs, and what this crowdfunding amendment does is to say that when the crowd; that is, all of those who are surfing the Internet, goes to a funding portal on the Internet, a Web site, to support a company, to invest in a company, there is an orderly process that adequately facilitates this type of opportunity while providing fundamental investor protections. So this will be an effective instrument of capital formation because, indeed, if crowdfunding becomes a situation where inaccurate information is put forward, where there is no accountability, where there are pump-and-dump schemes, then the reputation of crowdfunding will be deeply damaged and the opportunity for capital formation will be equally affected. This follows on a model that is already on the Internet in some other contexts. For example, you can visit a Web site called kickstarter.com, and you as an individual can look at a host of concepts that are being put forward for social and artistic activities across this country. You can say: Yes, I want to help that artist build that sculpture or so on and so forth. They may say how much money they want to raise, and you would decide what you want to donate. That is a donation model. You also can go to Web sites such as prosper.com or kiva.com, and these are peer-to-peer lending Web sites. If you go to prosper.com, you will see a whole list of folks who are saying: Yes, I want to consolidate my credit cards, I would like to borrow X amount and I am offering an interest rate of such-and-such, and here is a little bit of background, and you can decide if you want to lend to that individual or not. That is peer-to-peer lending. Well, what crowdfunding does is to create an equal opportunity for folks to invest in early-stage businesses, startup businesses, small businesses. Imagine, for example, you run into someone at a cafe who says: I have this new idea for a coffee shop called Starbucks. I am going to call it Starbucks. Would you like to help me launch this? And you say: Well, another coffee shop--I don't know if the world needs another coffee shop. Maybe you jump in and maybe you don't. Then years later, you say: Oh, I should have seized that opportunity. Well, through a crowdfunding portal, you get to hear those stories. You get to read those stories being presented by folks from across the country about their efforts, and you can decide if you want to participate. Now, crowdfunding is in the larger capital formation bill that comes to us from the House, but that particular formulation is deeply flawed, and I am going to walk through a series of differences between the House bill and the Senate bill for my colleagues so they can understand why we need to pass amendment 1884. The first factor is that the House bill does not require someone listing themselves or asking for startup money to provide any financial information. Well, that is a huge mistake. If there is no information, there is nothing to guide, if you will, the wisdom of the crowd. What we do in this Senate amendment is to create a simplified format. If you are seeking less than $100,000, then your CEO simply certifies what the financials are for the company. If you are seeking from $100,000 to $500,000, then you need to have a CPA review the financial statements. If you are seeking more than $500,000, then you need to have audited financial statements. So, as the amount of money you are asking for increases, the degree to which you need to do due diligence financially and present the details increases as well. There is certainly nothing that would prevent a particular Web site from establishing its own standards above and beyond these particular levels. A second thing is it is critical there be accountability for the accuracy of the information. The House bill not only doesn't even require information, but they put out information and there is no accountability. Basically, it is an invitation to spin any story one likes. What the Senate bill says is, in order for this capital market to work well one has to stand behind the accuracy of their information. It has basic liability accountability; that is, as a director or officer of this organization, they are standing behind the accuracy of what they put out. It has a due diligence protection so this is very balanced. It has a requirement that the information be relevant or germane to the conduct of the company. So that is another protection for the business itself. So it is balanced between the two. But this can give investors a basic belief that what is being set up are reasonable amounts of information proportional to the request and that the officers and directors are standing behind this information. That creates the foundation for an effective marketplace. A third distinction between the House bill and our amendment No. 1884 is the House bill does not require companies to go through an intermediary. In other words, under the House bill, if someone wants to promote their company, they can simply put out an e-mail. An e-mail can say anything they want because they are not responsible for the accuracy, and they can send it to everyone in the world. They can proceed to put up popup ads that simply promote their company--again, with no accuracy required. But by creating an Internet intermediary and that intermediary has to register, we create a streamlined formulation so they have a funding portal registration much simpler than a broker dealer. But in doing so, they agree they are not going to take any position on the various investment opportunities they are listing. So you truly are the marketplace. They are not saying, by the way, that particular offering by that company is a sweet deal. They can't pump it; they can't favor it. So you are a neutral marketplace, again, enabling the investor to know they are getting straightforward information, not something that is spun. Another distinction is the House bill has no aggregate caps. The result of that is that a person could lose their entire life savings in one fell swoop. The Senate bill puts on very reasonable proportional caps that say if one's income is $40,000 or less, their cap is $2,000; if they are between $40,000 and $100,000, their cap is 5 percent of their annual income; if they are over $100,000, it is 10 percent. So it allows for larger amounts of money from those who have much higher incomes but provides basic aggregate cap protections so we don't end up with folks who are on public services because they were swindled out of everything they had. Another key distinction is that under the House bill one can list their offering and close their offering within a single day, which provides absolutely no feedback loop for any type of detected deception. Under the Senate bill, we create a 3-week period from one's listing to their closing. So one lists their idea. If enough people sign up to reach one's funding request level--say one has requested to raise $600,000. If enough people sign up and they are investing $100,000 here, $1,000 there that one reaches their goal, as soon as the 21-day period expires, then they close. So that does give time for some sort of feedback loops regarding any sort of fraudulent activity. Another distinction is that the House bill allows a company to pay promoters and not disclose it. That is called pumping. If one has ever seen the movie ``Boiler Room,'' one can see a basic classic pump-and- dump scheme, where a roomful of folks on the phone are calling people, cold-calling them, and they are saying: Hey, I am calling because I am giving you this incredible investment opportunity and here is the story. They can say anything they want and they can talk people into buying that stock and then the stock is actually being purchased from the folks who own the boiler room. Then, as soon as they sell all the stock they have, they quit making phone calls, the value of the stock drops, and everybody who invested loses out. That is a classic boiler room. That is a classic pump and dump. The House bill allows paid promotion with no disclosure. The Senate bill says if they are going to get on the blog's site within a Web site portal and say favorable things about a stock and if they are paid by the company to do it, they have to disclose that. They simply say: Hey, I am employed by such and such, but I want to bring to your attention some merits of this. But at least the public knows where they are coming from. Another essential issue is the issue of dilution. Dilution is not a solution in this world; it is a problem. Those are folks who get in on the front end and think: I got in on this idea early. I am going to benefit from having made this effort, and find out later a bigger investor came in and the stock was diluted in a fashion in which they are basically written out of their share of the ownership. So the Senate bill directs the SEC to provide investor protections in this area. These are key distinctions. These are the distinctions between a solid foundation for capital formation in this incredibly exciting new opportunity, new market, and simply a path to predatory schemes that the House is providing. That is why I am encouraging my colleagues to support the amendment Senator Bennet, who will be speaking next, and I have put together and a number of our colleagues have joined us, including Senator Landrieu and Senator Scott Brown. This is a credible foundation for an exciting idea. Let me close with this notion; that is, that across America, Americans have $17 trillion invested in their retirement accounts. If they were to put 1 percent of those funds into this type of crowdfunding startup, they would be providing $170 billion of investment potential for small companies and startup companies. That is an incredibly powerful potential form of capital to put America forward. It is small businesses that create most of the jobs, and this capital formation idea will help in that. Let's get it done. I certainly deeply appreciate the contributions of my colleague from Colorado, Senator Bennet, who will make his points.

Mr. MERKLEY

Mr. MERKLEY. Mr. President, I rise today to ask my colleagues to give serious consideration to a major piece of legislation that is a crowdfunding amendment introduced by Senator Bennet and myself and has the support of Senator Landrieu, Senator Brown, and a number of others. I thank Senator Landrieu for the points she has been making and for her fierce advocacy for creating a highway for Americans to build wealth without creating avenues that essentially send people into either blind alleys or over a cliff. That is what this conversation is all about today. We want to enable aspiring entrepreneurs to access capital and to do so in ways that allow new opportunities to create, but to make sure investors have the information they need to make reasonable choices. The amendment I am introducing specifically is a crowdfunding amendment. My colleagues have probably heard this term a number of times. It enables aspiring entrepreneurs to access investment capital via the Internet from small dollar investors across America. This is very exciting stuff. We have seen some similar Internet models. One model, for example, enables individuals across America to look at projects--projects for art and civics, projects across the country--and say: Yes, I want to make a small dollar investment--which is truly, in this case, a donation--to that social project, to that art project. Such a site is kickstarter.com. So on the site is a list of projects, and then people can go in and decide what they want to support to help make it happen. Whereas in the past, someone who wanted to do a documentary film might have had to seek out some substantial dollars, some large dollar funders, now they can go to kickstarter.com, present their project, and possibly raise the capital they need from thousands of small dollar donors. For instance, in 2010, a filmmaker raised $345,000 to make a documentary about jazz from a pool of 3,000 donors, most of whom donated $100 or less. We also have peer-to-peer lending on the Internet where folks can say this is what they would like to borrow money for, and people can get on and say, yes, they will lend that money. But what we do not have is a process in which companies can list themselves on the Internet and say: Do you want to invest in my company? Here is my dream. I am going to make a better coffee shop. I am going to make a small wedding cake company. Do you want to invest in my vision, in my dream? Here are the details. Folks can get on and join and help create that startup capital or create the capital for a small business to expand. So that is what crowdfunding is. It is parallel to these other efforts. What we have in the House bill is basically a provision which says: No rules. Do whatever you want. Now, unfortunately, that does not work. It does not work because if we do not require the company to give information about their company, if we do not provide rules that require accountability for the accuracy of that information, then what we are simply doing is saying here is a Web site where predators can put up a fictitious story about what they want to do, make it as exciting as possible, and run away with people's money--no consequences; pay themselves a salary, dump out the money. The House bill requires no information. If folks do put up information, it does not require that information to be accurate. It legalizes predatory scams. It says people can list and close in a single day. So for those who say: Well, information will get out in some kind of miraculous manner, there will not be the time to get it out because a predator can put up their false story, collect the donations, close the investment in a single day, and walk away, having scammed thousands of Americans out of their hard-earned cash. So we need basic rules of the road. The possibility for capital formation through the Internet through crowdfunding is enormous. In 2011, Americans had invested $17 trillion in retirement funds. Imagine if 1 percent of those investments went into crowdfunding. The result would be $170 billion of investment in our startups and small businesses. That is extraordinarily powerful-- more powerful than loans to small businesses across this country. So it has huge potential. So a small business or startup company would provide basic financial information and vouch for the accuracy of this information. The company would explain its vision of how it is going to invest that money. The projects might range from small- to medium-sized. A small wedding cake company might want to buy an industrial oven. Another company might want to seek a new manufacturing line. And the crowd--that is all of us--surfing the Internet would visit the portal, review the financials, review the vision, and say: I want to be part of that, I am going to invest, and here is the percent of the company I get in return. The key to this is that the companies provide accurate information; otherwise, as I have described, we simply pave the path for predatory tactics. That would destroy the reputation of crowdfunding. That would destroy the ability to create a powerful capital formation market through the Internet. The amendment we are presenting does three things: It streamlines the process for setting up a crowdfunding portal; it streamlines the process for companies to list themselves on that portal; and it provides basic investor protections, the most important of which is to provide basic information about the company and for the company's officers and directors to ensure the accuracy of that information. Let's examine each of the three of these in turn. First, the streamlined registration for Web sites that offer crowdfunding. Our amendment provides two pathways: The first pathway is for a portal to register as a broker-dealer. The second is a streamlined funding portal registration. These portals agree to provide a neutral market environment; that is, they do not solicit purchases, they do not offer investment advice, and they do not handle investor funds. They operate a marketplace, much as the New York Stock Exchange operates a marketplace without recommending particular stocks. It also creates a unified national framework; otherwise, the portal would have to deal with rules from 50 States. That is an untenable structure. So we create a unified national structure for a portal to thrive in. Now, turning to the second piece, which is the streamlined process for companies to register, the amendment allows existing small businesses and startup companies to raise up to $1 million per year. That is a substantial amount for a small business. It also provides flexibility in how a company would do this. A company could basically say: Here is our target. If the target is met, the investment closes. So if they say: I am seeking $550,000 to do X, when Americans across the country have put forward enough small investments to reach that goal of $550,000, the investment would close. But it also allows, if investors decide they are offering more--maybe folks sign up, and they are so excited about this vision, this product, this invention, this strategy, that they say: I am putting up $750,000, even though you only asked for $550,000--it would still enable the small company to say: No, we can use that extra $200,000, thank you very much, if they should choose to do so. It also provides a very important provision so the small investors do not count against the shareholder number that drives companies to have to become a fully public company. That is critical and interrelates with other parts of the crowd formation bill before us. Then, turning to the third area, basic rules of the road to protect investors and ensure the accuracy of information companies post, companies participating in this marketplace must disclose their basic financial information: a business plan, a target offering amount, and the intended use. The Web sites are subject to oversight by the SEC and security regulators of their principal States. There are aggregate annual caps. This is a key predatory protection to prevent pump-and-dump schemes. If you have seen the movie ``Boiler Room,'' you will know what I am talking about, where folks were set to pump up a stock, and the only folks trading it were those who kind of received special information. Then, as soon as they invested--normally they are investing, buying the stock owned by the folks who are doing the pumping--the whole thing collapsed afterwards and their investment was worthless. So this is an essential part of making sure we establish a responsible marketplace that will succeed in being a foundation for capital formation. Also, we get rid of this 1-day, list-and-close process. So there is a 21-day period--a very small amount of time in the course of raising capital to create a startup or to advance a small business--21 days, which allows for the opportunity for the sort of oversight that a portal can provide or the SEC can provide to stop known bad actors and fraudsters. Finally, the officers and directors are accountable for the accuracy of the information. This is essential. Without this sort of accountability, every fraudster out there will spin out a story and try to raise money for their schemes. But by holding them accountable for the accuracy of the information, it says to them: No, I cannot do that. I can be held accountable. This is exactly the right balance because it provides a due diligence safe harbor. It requires that any information in dispute be material. So it does not put the officers and directors at risk. It simply says, when they provide material information they have to do appropriate due diligence to make sure it is accurate. Crowdfunding has enormous potential to bring more Americans than ever into the exciting process of powering up startups and expanding small businesses. I hope in the course of the consideration of the capital formation bill before us, we will have a chance to present a variety of amendments, including this crowdfunding amendment. I certainly encourage my colleagues to listen very carefully to the points Senator Landrieu has been making, Senator Jack Reed has been making, Senator Durbin has been making. The point is this: Let's take and make a powerful tool work. Let's not, however, take and destroy a powerful tool by opening it to all kinds of predatory schemes and scams. Mr. President, I yield the floor.

Mr. MERKLEY

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on March 20, 2012, at 9:30 a.m.

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on March 20, 2012, at 10 a.m.

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Committee on Energy and Natural Resources be authorized to meet during the session of the Senate on March 20, 2012, at 10 a.m., in room 366 of the Dirksen Senate Office Building.

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on March 20, 2012, at 2:45 p.m.

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on March 20, 2012, at 2:30 p.m.

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Committee on the Judiciary, Subcommittee on Administrative Oversight and the Courts, be authorized to meet during the session of the Senate, on March 20, 2012, at 10 a.m., in room SD 226 of the Dirksen Senate Office Building, to conduct a hearing entitled ``The Looming Student Debt Crisis: Providing Fairness for Struggling Students.''

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Subcommittee on Aviation Operations, Safety, and Security of the Committee on Commerce, Science, and Transportation be authorized to meet during the session of the Senate on March 20, 2012, at 2:45 p.m. in room 253 of the Russell Senate Office Building. The Committee will hold a hearing entitled, ``Commercial Airline Safety Oversight.''

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Subcommittee on Clean Air and Nuclear Safety of the Committee on Environment and Public Works be authorized to meet during the session of the Senate on March 20, 2012, at 10 a.m. in Dirksen 406 to conduct a hearing entitled, ``Oversight, Review of the Environmental Protection Agency's Mercury and Air Toxics Standards (MATS) for Power Plants.''

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Subcommittee on Emerging Threats and Capabilities of the Committee on Armed Services be authorized to meet during the session of the Senate on March 20, 2012, at 3 p.m.

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Subcommittee on Fiscal Responsibility and Economic Growth of the Committee on Finance be authorized to meet during the session of the Senate on March 20, 2012, at 10 a.m., in room 215 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Tax Fraud by Identity Theft, Part 2: Status, Progress, and Potential Solutions.''

Mr. MERKLEY. Mr. President, I ask unanimous consent that the Committee on Homeland Security and Governmental Affairs' Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia be authorized to meet during the session of the Senate on March 20, 2012, at 2:30 p.m. to conduct a hearing entitled, ``A Review of the Office of Special Counsel and the Merit Systems Protection Board.''

Mr. MERKLEY

Mr. MERKLEY. Mr. President, reserving the right to object, I am going to explain my concerns. Let me start by quoting George W. Bush. George W. Bush said, ``Free markets are not a jungle in which only the unscrupulous survive, or a financial free-for-all guided only by greed.'' He continued: Tricking an investor into taking a risk is theft by another name. We are in the process of considering taking a health bill related to the production of capital for small and emerging businesses and considering it on the floor of the Senate without due process by the Senate Banking Committee. We need that process because the House bill is full of problems for investors. It will create a marketplace where investors can be deeply damaged. It is our responsibility in this body to make sure that as we produce a streamlined system for small companies and startup companies to access capital that we don't create, basically, a scheme for pump-and- dump operators seeking to defraud American citizens. That is why we need due consideration in committee. I can't speak to the challenges with all the portions of the House bill, but I can speak to a specific section of the House bill called crowdfunding because I have been working with others, including the occupant of the chair, Senator Bennet from Colorado, and Scott Brown from Massachusetts, to say let's utilize this crowdfunding tool but in an effective manner. Crowdfunding is saying let's take the power of the Internet, just as we have person-to-person lending facilitated by the Internet, let's take that and enable people who see small startup companies seeking capital investments and give them a chance to present their ideas and for folks to invest in those companies. So they might receive thousands of small investments enabling them to take their dream forward for the benefit of the investor and the company. But what is wrong with the way the House drafted this bill? I will give short examples. It enables companies to raise up to $1 million by providing no financial information--no financial information. That is not an investment market; that is a scam. Second, companies do not have to go through a registered intermediary. In other words, you or I, tomorrow, could start up a Web site and say: Companies, sign up; investors, sign up--with no sort of protocol for the registering of information and no system required for the protection of investors. That is a major mistake in this legislation. Third, under the House bill, a person could say: Here are 10 stocks, 10 potential companies to put your money into. Through that action they could take 100 percent of your annual income in one fell swoop. So as we create this new, this particularly interesting marketplace, full of potential, we don't want it to be a place where no financial information occurs, no rules for the intermediaries, and people can be taken for their whole annual income in one fell glance. That is no way to build this wonderful potential marketplace. To continue, the House bill lacks any advance public notice. So a company can provide notice to the SEC on the same day they offer the stock, and upon getting 60 percent of the amount they are seeking, the target amount, they can walk away with the investors' cash just like that. In other words, offer it, no chance for the SEC to look at it, collect their $1 million, walk away, and they didn't provide one ounce of financial information. If you haven't seen the movie ``The Boiler Room,'' I encourage you to do so because you will see how scams actually not permitted by law were used to defraud honest American families. In this case, we are just paving the path to predatory investing schemes. So that is a problem. The House bill allows anonymous stock promoters so that it encourages the opportunity for pump and dump. This is a reference to promoters saying how wonderful something is and not identifying themselves to having a connection to the company offering the stock. It doesn't address the issue of delusion. If you had a chance to get in on the start of Starbucks, when they said they wanted to start up a coffee company, wouldn't that have been great to be in on the ground floor? You say: You bet--and you got 1 percent of Starbucks stock as a result. You would be very rich today. But what about a company that proceeds to use a strategy of deluding the original investors so that your initial investment is worth nothing when the company actually gets traction as a successful entity? That certainly is an issue. These issues have all been wrestled with and addressed by the bill Senator Bennet, Senator Brown, and I have put together. The other sections of the House bill have similar problems. I will not speak to those problems because there are other folks who are much more knowledgeable about it. I will stick to my section and use it as an analogy of why this entire bill should go through the Banking Committee. Let me read to you a letter from Motaavi. Their slogan is ``Investment for Everyone.'' Isn't that the perfect slogan for crowdfunding, ``Investment for Everyone''? They address their letter: Dear Senators Reid and McConnell: We are a crowdfunding intermediary based in Durham, NC. We understand the Senate will take up the [House bill] shortly. We are very concerned about language in title III. While we appreciate the broad exemption written by the House, the language does not protect investors and puts the crowd funding industry at risk of significant fraud. However, more responsible language does exist. Then it refers to the bill the Senate has been working on. Then they proceed to list many of the flaws I have just listed. So here are folks out in the private sector who want to see a successful process, and they want to be an intermediary. They don't want to see this potential industry brought to a halt with a terrible reputation because it becomes a predatory industry. I have another letter from Launcht: This latest bill, the CrowdFund Act [the Senate version] is important because unlike previous bills, for the first time we have a Senate bill with bipartisan sponsorship, a balance of oversight and Federal uniformity, industry standards, investor protection, workable funding caps. It lays out what this work should be in this bill. Finally, I want to note the perspective in the New York Times editorial, entitled, ``They Have Very Short Memories''. It is scathing in its critique of this process we are engaged in: House Republicans, Senate Democrats, and President Obama have found they support: a terrible package of bills that would undo essential investor protections, reduce market transparency and distort the efficient allocation of capital. They go on: Of course, the supporters don't describe it that way. They say the JOBS Act--for Jumpstart our Business Startups--would remove burdensome regulations that they claim have made it too difficult for companies to raise money from investors. Never mind that reams of Congressional testimony, market analysis, and academic research have shown that regulation has not been an impediment to raising capital. In fact, too little regulation has been the root of all recent bubbles and bursts--the dot-com crash, Enron, the mortgage meltdown. Those free-for-alls created jobs and then imploded, causing mass joblessness. Wouldn't it have been great if, when those deregulatory efforts that didn't deregulate in a positive way, cutting out unnecessary redtape but in negative ways, which created a Wild West marketplace with all kinds of predatory practices, would it not be nice if the Senate stood in and said we are the cooling saucer--I have heard that term ever since I came here, that we are the ``cooling saucer.'' We cooled our heels for 3 weeks with the Transportation bill on the floor, and we weren't able to consider one single amendment during that 3-week period. That is a deep freeze, not a cooling saucer. Now we have gone from deep freeze to bullet train. We need to slow this train down. We need to have due deliberations to recreate the sort of deregulation that is so important for the future growth of the United States and the future success of American families. I am going to withdraw my objection, Mr. President, because I wanted to make a point now that, hopefully, will help guide our deliberations over the next couple of days. It is not that we should not be getting to this topic; we certainly should. But we need to do so in a manner that works for American businesses, small businesses, startups, and families, and the House bill doesn't do it. I withdraw my objection.

Mr. MERKLEY

Mr. MERKLEY. Madam President, I am rising to speak about the Senate's constitutional duty of advice and consent on judicial nominations. This power is enormously important. In no way did the writers of our Constitution envision that this body would use their power of advice and consent as a method of undermining the ability of the other two branches to perform their responsibilities. Indeed, throughout the history of the United States, Senators from both sides of the aisle have taken this responsibility of advice and consent very seriously. This duty requires us to put aside ideology and partisanship because otherwise our constituents, through our inaction, would be unable to obtain the speedy and public trial that is supposed to be their birthright as Americans. Americans are not thinking of their district courts in terms of red courts and blue courts. They are not thinking of their circuit courts in terms of red courts and blue courts. No, they are thinking about Lady Justice, about justice being delivered in an evenhanded and swift manner. When they see the obstruction of the judiciary that is emanating from the Senate, they are frustrated. They are frustrated. They recognize that when the judiciary is damaged and justices go unappointed, indeed that means delays for cases and that means their right to a speedy trial is taken away. They are thinking about the chaos that results when a case remains in limbo for too long. So why in the past few years have we allowed partisanship to overtake our duty to maintain a functional judiciary? Simply put: Some Senators in this body, motivated by misguided notions of partisan warfare, have decided to abuse the supermajority power of this Chamber in order to undermine the judiciary. This bears little resemblance to the Senate of 1976 when I first came here as an intern, when the power of the supermajority was recognized as an exceptional act of conscience to be used only for the most enormous issues, when a Senator would be willing to stand on the floor of the Senate and make his or her case before the American people as to why the simple majority envisioned in the Constitution for this body to act should be obstructed. Now we see Senators exercising their power to obstruct a simple majority and not coming to the floor to defend their position. They are afraid of public reaction to their obstruction of this body because they know the public expects us to be responsible in reviewing and voting on nominees for the executive branch and for the judiciary. The Senate of 1976 would never have entertained the idea that well- qualified nominees would be routinely subjected to filibusters. Indeed, even throughout most of the last decade, this has not been the case. So imagine my surprise when I came here as a new Senator in 2009, revisiting the Chamber I came to as a youth in 1976, and I discovered the two Senates bore little resemblance to each other; that the reasonably responsive, bipartisan, collaborative body of 1976 had been replaced with a Senate now paralyzed due to the abuse of the filibuster and the supermajority. Instead of debate and deliberation, followed by up-or-down votes, Senators have even been blocking motions to proceed. In other words, they have been blocking the ability to debate whether to get to a bill in order to debate an issue--two levels removed from actual discussion and decisionmaking. In contrast to the image Americans have of the filibuster made famous by Jimmy Stewart, who comes to Washington and stands in the well of the Senate and carries on his fight and his argument in front of the American people until he collapses from exhaustion, now the Senator who filibusters can hide from the American people. They object to the simple majority rule, go off and have a fancy wine dinner, while American justice remains unfulfilled. That is not right. There has been egregious abuse of the filibuster across all areas, but it is particularly destructive in regard to judges. That is because we are often talking about judges everyone agrees are well qualified-- judges who pass out of committee unanimously, and judges who, when they reach a final vote, pass this Chamber with 80 or 90 or 95 Members saying, yes, that person is the right person to fill that judicial vacancy. So why on Earth--why on Earth--are we dragging our feet on these nominees when we have courts in crisis? Lest my colleagues on the other side of the aisle simply think we are raising this now because we are in the majority and they are in the minority, let us revisit the point in 2004, at the exact same point into the administration of George W. Bush that we are now with this administration. Here is a chart that compares the two administrations. We have both the circuit court and the district court. This far into the administration of George W. Bush, the time it took to go from committee to being confirmed was 29 days. The time now is 131 days for a circuit court nominee, and getting longer with every delay we have. And for the district court, at this time in the Bush administration, it took 22 days to go from committee to confirmation, whereas now, under the dysfunction of our current Senate, with the abuse of this current Senate, it is taking 93 days. If these bars were reversed, my colleagues in the minority would come to the floor and say, look what a good job we did previously and what a terrible job is being done now, and I would agree with them, that we have to be able to get folks out of committee and we have to be able to vote on them. We need to work together to change this situation because the result of these delays means there are more and more vacancies, more and more judicial emergencies, and where it has been declared those vacancies are having an emergency impact on the function of the judiciary. Let's take a look at that issue. Here we have judicial vacancies in recent Presidencies. In March 1996, we had 53 vacancies at that time in one administration. In March 2004, there were 47 vacancies under Bush. Now here we are with 94 vacancies in district and circuit courts, so virtually a doubling of those vacant positions that are preventing speedy and responsive trials across our Nation. That is why our Chief Justice has declared there is a judicial emergency in our country; that justice delayed is justice denied; that we, the Senate, must do a better job of fulfilling our responsibility under the Constitution. In many cases, the home State Senators for a particular circuit or district court nominee have done their job. They have vetted the candidates, forwarded the names of nominees, and the administration has picked one of them. Often this is a bipartisan deliberation. Yet here we are, even after clearing the Judiciary Committee in a bipartisan fashion, paralyzed on the floor of the Senate. So we have no one else to blame. We can't blame the home State Senators, we can't blame the Judiciary Committee. It is only the floor of this Chamber where there is obstruction by those who are basically taking an arrow and aiming it at the heart of justice across this Nation. It is time for this body to do its job, and it is time for these nominees to be voted on here on the floor of the Senate. It is time to fill those vacancies and put justices into place in order to fulfill our responsibility to advise and consent and to fulfill the judiciary's responsibility to provide justice across our Nation. Madam President, I yield the floor, and I suggest the absence of a quorum.

Mr. MERKLEY. Madam President, I ask unanimous consent to speak as in morning business for up to 10 minutes.

Mr. MERKLEY

Mr. MERKLEY. Mr. President, I ask unanimous consent that my intern, Andy Hackbarth, be allowed privilege of the floor for the remainder of the day.

Mr. MERKLEY

Mr. MERKLEY. Madam President, I ask to call up the Merkley-Toomey amendment, as modified, that is at the desk.

Mr. MERKLEY. Madam President, transportation projects financed by American taxpayers should, to the maximum extent possible, be built using American materials and American workers. But all too often loopholes have crept in that have resulted in American transportation projects paid for with American taxpayer money being built by Chinese firms with Chinese workers and Chinese steel. It is wrong. Please support this amendment.