Paul Sarbanes

Mr. SARBANES

Mr. SARBANES. I know they make very conservative assumptions, but it seems to be clear that their projection is apart from reality. I have seen projections into the future that don't parallel this assumption of the 1.8 percent. They go low in terms of the assumption of what growth is going to be as we move out into the future.

Mr. SARBANES. Will the Senator yield for a question?

Mr. SARBANES. As I understand this chart, each column is a 5-year period; is that correct?

Mr. SARBANES

Mr. SARBANES. Madam President, let me begin with the rather obvious observation that the budget resolution is the single most important document we deal with in the Congress. The budget contains thousands of decisions that are critical to our national life, and those decisions reflect our priorities as a nation--both those of the President who submits a budget and those of the Congress that passes a budget. Are we more concerned about tax cuts for the wealthy or strengthening Social Security? Are we more concerned with tax cuts for the wealthy or funding important safety, housing, community development, education, and health needs? Are we more concerned with giving tax cuts than holding down the deficit? All of those are decisions that are involved in making the budget. In its composite, the budget is a very important macroeconomic document, because it sets the fiscal path for dealing with the overall economy. Will the budget fund the programs that create jobs and strengthen our economy? Will the budget create longrun structural deficits? What will be the impact of those longrun structural deficits on our economic performance? Will the budget move us toward full employment or away from it? Now, it is asserted that we have to have these very substantial cuts in a number of important domestic programs because we have this large deficit and we have to address the large deficit. On the road to progress, we need to make investments in health, education, and protecting the environment. But we are told, no, no, we have this big deficit and therefore we cannot do these things. Where did that big deficit come from? That is the question that needs to be asked, because once you go behind where the big deficit came from, you get a picture of what the priorities are and what the thinking is of those who have established this budget framework. When President Bush came into office in 2001, he inherited a projected $5.6 trillion surplus over the next 10-year period--a $5.6 trillion surplus. In his first budget proposal, which included an excessive tax cut primarily for those at the top of the income and wealth scale, he said: We can proceed with tax relief without fear of budget deficits. The following year, with the budget already in deficit, the President advocated for another tax cut while promising that ``Our budget will run a deficit that will be small and short term.'' In fact, the President's budget that year stated that deficits would be so short term that by today the Government would be back in surplus. How wrong he was. The President's Office of Management and Budget is projecting a deficit this year of $427 billion. Instead of the $5.6 trillion 10-year surplus projected out when the President took office, when you factor in some of the costs we know are coming, such as the continuing cost of the war in Iraq, the cost of reforming the alternative minimum tax, the cost of some of the President's proposals, including making the tax cuts permanent, and the continuing defense buildup, the projections now are for a deficit over the same period of $3.7 trillion, instead of a $5.6 trillion surplus. Think of that. We have gone from projecting a $5.6 trillion surplus in 2001, to projecting a $3.7 trillion deficit. That is a deterioration in our fiscal position of over $9 trillion--$9.3 trillion, to be specific. As a consequence, the Federal debt has skyrocketed. Back in January 2001, the Congressional Budget Office was projecting that our net debt to the public would decline to $36 billion by 2008. Now the CBO is projecting that publicly held debt will rise to $5.5 trillion in 2008. Of course, with increased debt comes increased interest payments. Net interest payments on our debt are expected to consume more than $1 trillion over the next 5 years, leaving us less able to invest in other priorities. There are a number of reasons for this fiscal reversal. Spending to recover from the attacks of September 11 and to pay for operations in Iraq and Afghanistan has played a part in creating these deficits. But the deficits are not primarily the result of increased spending by the Congress. By far, the greatest factor contributing to the return of deficits is on the revenue side. Madam President, 74 percent of the change from the surplus in 2000 to the projected deficit in 2005 stems from revenue loss, of which the President's tax cuts were a major part. Rather than saving the budget surplus he inherited, thereby helping us to meet our long-term obligations, such as Social Security, the President chose to risk our fiscal future through excessive tax cuts targeted to those who need them the least. Make no mistake about it, this is the priority that this administration set and it continues to follow. Now we are living with the consequences of that choice--deficits and debt as far as the eye can see. These massive and sustained deficits are not simply numbers on paper. They have real consequences in terms of the United States' future economic strength. The structural deficits that are built into this budget will be extremely harmful to the economy as we move ahead. They promise to raise interest rates, reduce economic growth, decrease the number of jobs, and increase our vulnerability to sudden economic crisis. Addressing these deficits becomes even more critical when you consider our international position. As recently as the early 1980s, the United States was a creditor nation. Other countries owed us. Today the U.S. is the world's largest debtor nation. Our external debt in 2003 was $2.4 trillion. Last year we ran a trade deficit in excess of $600 billion, and once that gets included in the figures, we expect our external debt to be over $3 trillion. This sharp deterioration is proceeding as we continue to run enormous trade and current account deficits. Our current account deficit is projected to reach a record high in 2005. There was a story just this weekend in the newspaper, ``Trade Gap Widens on Record Imports. Deficit at Record Level. Trade Gap Expands. The U.S. trade deficit widened in January to $58 billion''--for 1 month--``the second highest monthly gap on record.'' We were warned by the President of the Federal Reserve Bank of New York not long ago about this situation. Let me read what he said: The size and concentration of external imbalances in the system are at an unprecedented scale, between 5 to 6 percent of GDP in the case of the U.S. current account deficit. The counterpart of this deficit is a large inflow of capital from the world's private savers and foreign central banks. The expected trajectory for this imbalance produces a dramatic deterioration in our net international position and cannot be sustained indefinitely. He concluded: What's new is that we are significantly more dependent today on the confidence of the rest of the world in U.S. economic policy for the safety and stability of our financial markets. We are losing our financial independence and running the risk of a crisis of confidence in the dollar. Last summer, the Financial Times in an editorial warned: Like Tennessee Williams' ill-fated character Blanche Dubois, the United States has long been dependent on the kindness of strangers. Foreigners' hitherto insatiable appetite for dollar assets is what has enabled the U.S. to keep running on credit for so long. Like Ms. Dubois' dysfunctional relationships, this one is symbiotic but potentially hazardous. I am very frank to say that I believe this budget is seriously out of line with the needs of America's families. The basic thrust of the President's budget proposal is that we should allow tax cuts for very wealthy people to continue, but programs that help middle-class Americans should be cut and the deficit continue to be a major problem. Let me give a couple of examples to dramatize this contrast in priorities. In 2006, the President's tax cuts are scheduled to give $32 billion to those making over $1 million a year. In other words, all the people making over $1 million a year, who are a very small percentage of our population, will get $32 billion in tax cuts. What might we be able to do with some of this money that is going for tax cuts for wealthy people? We could bring our first responders back up to the budget baseline with $1.6 billion, or 5 percent of this excessive tax cut. We know the needs and challenges faced by those on the front lines of our efforts to provide greater security to communities around the country. We know they need help. Another $1.9 billion would restore full funding for the Community Development Block Grant Program, a program very important to State and local governments, to carry forward the renewal of their communities; that would be 6 percent of the $32 billion tax cut that will go to the millionaires. We could restore funding for the HOPE VI program at a cost of $500 million. HOPE VI has helped eliminate the worst public housing and replaced it with home ownership and has transformed the downtown areas of many cities in the country. I could go on with these examples. The fact is, for a portion of that excessive tax cut we could restore many of these programs, and the other portion could be used to bring down the deficit; in other words, we could have a more balanced fiscal policy, one that responds to the needs of our country and that lays the basis for our long-term strength instead of taking us deeper into the hole with these twin deficits, our internal budget deficit and our external trade and current account deficit, which has taken the United States from being a creditor nation--in other words, others owed us--to where we are now the largest debtor nation in the world. Those are the choices that are being made in this budget. We are being told constantly that we have a deficit; we need to address the deficit. Yet this budget provides $70 billion more in tax cuts for wealthy people, for people who, under any analysis of the case, are not in need of a tax cut. The working people could use a tax cut, but that is not where the tax cut goes. At the same time, when we talk about the programs that are being cut for which there is such desperate need, we are told that we have to do that because we have this deficit problem. If we have this deficit problem, why do we have to do the tax cuts that are in this budget resolution? What is the rationale for doing that? It is a matter of priorities. Very simply, those who have put this resolution together place a greater premium on further tax cuts for those who have already, in my judgment, received excessive tax cuts, than they do in holding down the deficit or funding some of these very important programs that we need for our people. So the basic question as we move ahead is, what are our priorities as a nation? How should we invest our resources to get the best outcome in the future? I do not believe that the priorities represented in this budget reflect the right choices for America, and I urge my colleagues to vote to reject this budget resolution. I yield the floor.

Mr. SARBANES. Will the Senator yield?

Mr. SARBANES. I want to thank my very able colleague from North Dakota. He has been extremely generous in his comments. For me, it has been a great privilege to serve and work with him and to follow his leadership on the Budget Committee, which has just been extraordinary. Senator Conrad has laid out an analysis that spells out all of these issues that we have been talking about, and if the Nation would only listen to him we would improve our fiscal position and strengthen our economic position. I say to my colleague, my term still has 22 months, so I want to assure him I am going to be here with him every day of that 22 months to make this fight as we seek to turn back this radical agenda of the Bush administration, which I think contains great harm to our Nation and to its people. I thank the Senator for his comments.

Mr. SARBANES. I thank the Senator.

Mr. SARBANES

Mr. SARBANES. Chairman Shelby, I share your interest in holding hearings on the credit card industry and would hope that we might hear from all those Senators who have expressed an interest and may wish to testify before the committee.

Mr. SARBANES

Mr. SARBANES. Mr. President, I again commend my able colleague from Vermont for coming forward with this amendment. I am very pleased to join with him in cosponsoring it, and I urge its adoption upon our colleagues. First, I want to underscore, the Senator from Vermont has tried very hard to work out a very reasonable proposal. The existing law prohibits the investment bankers from playing any part in the bankruptcy, if a company for which they were an investment banker goes into bankruptcy. They can't come along and then become an adviser to the bankrupt company. The rationale for that is strong because often the investment bankers, because of their own activity, need to be examined and reviewed, and they may be held accountable. The argument has been made: Well, suppose they were the investment banker 20 years ago and they have not had a connection with this company since. Why should they be precluded from possibly being taken on in the bankruptcy? Recognizing that argument, Senator Leahy's proposal has a 5-year ban period. In other words, if you have been the investment banker in the last 5 years, you can't then be engaged when the company goes bankrupt. The investment bankers are intimately involved in the financial structure of the company. Often, they can be held liable in one way or another for what has taken place. Certainly there is the appearance of impropriety if the very people who were the investment bankers to this company in the recent period, and they then go bankrupt, and they are taken on subsequent to bankruptcy. Only a while back, Gretchen Morgenson, writing in the New York Times--I ask unanimous consent that the statement be printed in the Record at the conclusion of my remarks.

Mr. SARBANES. She said: Do you think Solomon Smith Barney, the brokerage firm that bankrolled WorldCom and advised it on a business and financial strategy that failed rather spectacularly, should be allowed to represent the interests of the company's employees, bondholders and other creditors while WorldCom is in bankruptcy? She said: If you answered no, you win a gold star for common sense and for knowing right from wrong. Elizabeth Warren, a very distinguished professor at Harvard Law School, commenting about this problem--I understand that financial firms are eager to earn money from bankruptcy advice. There is often very big money to be made. They have been lobbying this issue very hard. This doesn't preclude any investment banker, just the ones who have been providing advice to the company leading up to the company's failure, with the Leahy modified amendment, just in the 5-year period prior to the bankruptcy. Elizabeth Warren says: There is reason why the professionals who have worked for a business that collapses into bankruptcy are not permitted to stay on. The company must go back after bankruptcy and reexamine its old transactions. Having the same professionals review their own work is not likely to yield the most searching inquiry. Obviously, having the same professionals review their own work is not likely to yield the most searching inquiry. Arthur Levitt, former Chairman of the SEC, said: I haven't read a single argument made by the investment banks that would persuade me that the prohibition should be changed. What we are talking about is a significant potential conflict of interest, and I think it is outrageous that investment banks would even try to go down this road. This prohibition has existed in law ever since 1938, which has been reaffirmed by the Bankruptcy Study Commission, by all the experts in the field, those who have no vested interest in the outcome, who come objective, people who are in favor of modifying the bankruptcy law, people not in favor of it, but they all come together and agree on this issue. Professor Warren said: It is not a provision to ensure investor confidence, or to enhance protection for employees, pensioners, or creditors of failing companies. This is a provision to enrich an already wealthy interest group, nothing more. It needs to be understood that an investor bank that advised on the creation of a company's capital structure before a bankrupt filing may itself be exposed to potential liability. If it is brought in to work out the deal that permits the company to emerge from bankruptcy, you are opening the door that they may be tempted to prefer the creditors who have a potential claim against the investment bank. Don't open this stable door. The Leahy proposal is an extraordinarily reasonable proposal. It actually is more accommodating than what the experts are telling us because the experts want to continue the complete ban which exists in current law. But what Senator Leahy has done in this proposal--this is a 5-year ban. If you are earlier than the 5 years, you can be considered, but if you are within the 5-year period, it is not going to be permitted because we don't want to run the risk of the inherent conflict of interest which would exist in that situation. When a company goes bankrupt, you need a fresh look at what is going on, and you won't get that from the same investment bankers who represented the company before. This is the point that has been made by the Securities and Exchange Commission. In fact, as Chairman Donaldson expressed his personal view at a hearing--Senator Leahy and I wrote to him, and he conveyed to us the view of the Commission, saying how cautiously Congress should proceed before loosening any conflict of interest restrictions. He noted that they were aware of the arguments of proponents of the amendment that the current statutory exclusion is too broad because it covers firms that participated even if it was years ago and the firms have no further involvement with the debtor. However, if the exclusion is eliminated entirely, we are concerned that the general protection in the statute would be insufficient. It may well be insufficient. That is the problem. I plead with my colleagues, given what we have been through and given what investors have suffered across the country, given the effort now to eliminate these conflicts of interest, don't open this major door to a very severe potential conflict of interest, and the way that we are going to do that is to support the Leahy amendment. I urge it upon my colleagues.

Mr. SARBANES

Mr. SARBANES. Mr. President, I want to take a moment to respond to the Senator from Idaho. I think this is important. Elizabeth Warren, who is a distinguished professor at Harvard Law School and an expert on bankruptcy, has said there is a reason why the professionals who have worked for a business that collapses in a bankruptcy are not permitted to stay on. The company must go back after bankruptcy and reexamine its old transactions. Having the same professionals review their own work is not likely to yield the most searching inquiry. She goes on to say about the provision in the bill: It is not a provision to ensure investor confidence or to enhance protection for employees, pensioners, or creditors of failing companies. Let me make one other point which needs to be understood. To the extent an investment bank--and it needs to be understood that an investment bank has been viewed as integrally related to the financial arrangements of the company, similar to creditors, security holders, and insiders--advised on the creation of a company's capital structure before a bankruptcy filing, it may itself be exposed to potential liability. As it works out the deal that permits the company to emerge from bankruptcy, it may be tempted to prefer the creditors who have a potential claim against the investment bank. Now, that is the very sort of conflict that we simply ought not to permit. We address one point made by the Senator about a connection a long time ago that is no longer relevant in the 5-year provision, and the amendment takes care of that. Beyond that, I think we would be making a grave mistake to allow this radical change to take place. I very much hope my colleagues will support the amendment offered by Senator Leahy, Senator Warner, and myself. I yield the floor.

Mr. SARBANES. It begins: ``Thank you for requesting the Commission's views on section 414 of H.R. 975.''

Mr. SARBANES. In response to a question from me, he expressed his personal views. He writes: Now I am pleased to convey the view of the Commission . . .

Mr. SARBANES. The Chairman writes: Now I am pleased to convey the view of the Commission, which is that, while it may be possible to draft language that would address some of the concerns of the proponents of the amendment, Congress should proceed very cautiously before loosening any conflict of interest restriction. Chairman Donaldson, of course, noted the fragility of investor confidence and the need to be very careful in easing these conflict-of- interest provisions. The existing provision in the law: . . . was adopted at least in part in response to a 1938 study by the Securities and Exchange Commission that provided extensive documentation and analysis of abuses in corporate reorganizations. The study concluded that a firm that served as underwriter for a company's securities should not advise the company about distributions to those security holders in a reorganization plan. It further found that such a firm should not advise the company about potential claims against those involved with the company prior to the bankruptcy, since this often would involve an assessment of transactions in which the firm participated. We have strengthened, of course, bankruptcy practices and procedures over the years. We now have a dedicated bankruptcy judicial system, the establishment of a U.S. Trustees Office, and strengthening of active creditors committees. But, nevertheless, I think we continue to have a very real conflict-of-interest problem here. My colleague has pointed out the letter of Judge Edith Jones of the U.S. Court of Appeals for the Fifth Circuit, a very distinguished member of the 1997 National Bankruptcy Review Commission. She pointed out that they had been asked to modify the disinterestedness standard in order to accommodate the geographic growth and increasing sophistication of professional firms of all kinds involved in Chapter 11 bankruptcy. She said they rejected that in the Commission by a lopsided majority. These were expert people on bankruptcy law. It was the wise and prudent way to proceed when we are considering making important changes of this sort. They noted that in order to protect the integrity of the bankruptcy process, it was important to maintain this disinterestedness standard, so you don't have conflicting loyalties that may undermine the fiduciary duties of the creditors. Furthermore, it was noted--I think this is an important point--that a standard of disinterestedness is necessary to maintain public confidence in the integrity of the bankruptcy system. We ought not to have a situation in which allegations can be made that the conflict-of-interest situation is preventing a fair, reasoned, and objective judgment as to what ought to be done, and then they end up imputing hidden motives to the actors in the case. It has been noted by Dean Rapoport, the Dean of the University of Houston Law Center, that one of the duties of the debtor in a bankruptcy case is to take a good, hard look at the pre-petition behavior of those who dealt with or ran the debtor to see whether that behavior contributed to the downfall of the debtor. Another duty is to see how the debtor can raise new post-petition funds in order to finance an effective reorganization. But those are two very important duties or responsibilities of the debtor in the bankruptcy case. Dean Rapoport goes on to state that both of these duties--taking a good, hard look at the pre-petition behavior of those who dealt with the debtor and also a good, hard look at how the debtor can raise new post- petition funds in order to help finance an effective reorganization-- both of these duties would be compromised if the same investment bankers that were involved with the pre-petition debtor were allowed to serve as the ``objective, post-petition investment bankers.'' Stop and think about that for a moment. Clearly, it highlights a potential conflict of a very significant dimension. There is an argument made that the bankruptcy court would still have to review this and could make a factual finding that there was not disinterestedness present. But she noted, and I quote, ``the current standard saves the bankruptcy court from having to make time-consuming, factual findings regarding the disinterestedness of those categories which by their very nature are rife with conflicts of interest. Removing investment bankers from the exclusion list will increase the time, cost and attorneys fees for every bankruptcy case without increasing the benefits to the estate as a whole.'' The final report of the National Bankruptcy Review Commission pointed out the strict disinterestedness standards are necessary because of the unique pressures in the bankruptcy process. The trustee and his professionals are required to act as a fiduciary to the estate, its creditors, and other parties in interest, and the court. The disinterestedness standard is designed to ensure that all issues relevant to the administration of the estate are properly raised and vented before the court. Therefore, we are trying to avoid a situation in which there could be a perception or an allegation of favoritism to favor one party over another, the charge that they are taking it easy on one group or group of creditors, or to refuse to pursue possible claims or avenues of inquiries because of any indirect or direct pressures. The proponents of the provision that is in the legislation which we are seeking to modify by this amendment argue we should simply give the discretion to the bankruptcy judge to allow investment banks to serve as advisers even if those banks underwrote securities with companies that subsequently filed for bankruptcy, leaving it to him to make a determination in that regard. The SEC in its letter to us on that point said: If the exclusion is eliminated entirely-- Which is what this legislation does---- we are concerned that the general protection in the statute which relies on the judge, at the outset of the proceedings, to forbid those with materially adverse interests to the estate, its creditors, or its equity security holders from advising a company in bankruptcy--may well be insufficient. Dean Rapoport of the University of Houston Law Center pointed out that the current disinterestedness standard saves the bankruptcy court from having to make time-consuming, factual findings regarding the disinterestedness of those categories which by their very nature are rife with conflicts of interest. Removing investment bankers from the exclusion list will increase the time, cost and attorney fees for every bankruptcy case without increasing the benefits to the estate as a whole. The amendment seeks to address one of the arguments that has been raised by the proponents of section 414, which is that the current per se prohibition on investment banks that have underwritten securities of a company in bankruptcy remains in effect as long as those securities remain outstanding, no matter how many years ago it may have taken place. It may well have been many years prior to the bankruptcy and the investment bank involved might no longer have a close connection to the bankrupt company. Senator Leahy and I have modified the original amendment which we planned to offer which would simply go back to the current law prohibition, and instead in this amendment we are offering a prohibition on investment banks that have underwritten securities of a company within 5 years prior to the filing of the bankruptcy petition.

Mr. SARBANES. I was going to say that is absurd, but as far reaching as that sounds, the answer to the question is yes. That is one of the reasons the potential that results from this legislation is so far reaching. Gretchen Morgenson, on April 6, 2003, had an article in the New York Times headlined ``Advisers May Get Second Chance To Fail.'' She starts the article as follows: Do you think Salomon Smith Barney, the brokerage firm that bankrolled WorldCom and advised it on a business and financial strategy that failed rather spectacularly, should be allowed to represent the interests of the company's employees, bondholders and other creditors while WorldCom is in bankruptcy? She goes on to say: If you answered no, you win a gold star for common sense and for knowing right from wrong. We are just trying to get a ``no'' answer put into section 414 of this bill. We have tried to make a reasonable and balanced modification that essentially preserves the basic conflict of interest protection but does allow this greater flexibility for investment banks that have not recently underwritten securities for the company to serve as advisers in the bankruptcy. But to simply remove the existing provision in the law altogether is to open up the possibility for abuses of major dimensions. Therefore, I very strongly support the amendment being sponsored by Senator Leahy and by Senator Warner. There is no public purpose that will be served by allowing section 414 to remain in this legislation as it is currently written. In fact, to the contrary, it runs very counter to important public purposes. Other articles of note include one by Alan Sloan in the Washington Post: ``Proposed Changes In Bankruptcy Law Twist Meaning Of `Reform' Beyond Recognition.'' He goes on to point out the potential implications of this change. There is also an article by Michael Krauss in the Washington Times headed, ``Bankruptcy Reform . . . With a Thorn.'' He goes on to say that he supports bankruptcy reform legislation but does not support section 414 of the bill because it removes from the excluded list of people not allowed to be employed in the bankruptcy the investment bankers who have had a connection with the company. The amendment before the Senate is a reasoned and balanced proposal. We have tried to listen to the arguments being made on the other side and respond to those that we think have some merit to them without completely doing away with the ``disinterestedness'' standard. You have to have confidence in the integrity of the bankruptcy system. The total elimination of the investment bankers in terms of being precluded because they have a conflict of interest situation is not going to bolster consumer and creditor confidence. I urge my colleagues to support this amendment. It is a fair and balanced amendment. It is badly needed. To fail to enact it will carry with it a tremendous risk in terms of how our bankruptcy process functions.

Mr. SARBANES. Mr. President, I thank the very able Senator from Vermont, the ranking member of the Judiciary Committee. I am pleased to join with him in offering an amendment to the Bankruptcy Act. This amendment addresses a provision in the bill that would drastically weaken the conflict-of-interest protections of the Bankruptcy Code in regard to investment banks. Section 414 of this bill makes sweeping changes in the conflict-of- interest requirements of the bankruptcy process in regard to investment banks. These changes are opposed by the Securities and Exchange Commission, by such legal experts as Judge Edith Jones of the U.S. Court of Appeals for the Fifth Circuit, Dean Nancy Rapoport of the University of Houston Law Center. They were rejected by the National Bankruptcy Review Commission of 1997. In my view, section 414, if allowed to stay in the legislation as it is now written, would significantly raise the risk of abuse and therefore I think it is imperative that we undertake to modify the provision in the legislation. I am pleased to join with my colleague in seeking to do so. I ask unanimous consent to have printed in the Record the entire letter from Chairman Donaldson, writing on behalf of the Securities and Exchange Commission to Senator Leahy and myself in response to our letter asking for the views of the Commission.

Mr. SARBANES. Will the Senator yield on that?

Mr. SARBANES. The letter we submitted reflected the opinion of the commission. Chairman Donaldson had indicated a personal view in a hearing, and then I sent a letter asking him for the commission's view.

Mr. SARBANES

Mr. SARBANES. I thank Chairman Shelby and Senator Feinstein. I appreciate their interest in this matter and believe these are serious issues that merit further attention.

Mr. SARBANES. I thank Chairman Shelby for his leadership on this issue. I look forward to working with the Senator on developing a hearing at which the Banking Committee will receive testimony on credit care disclosures and other practices. A number of Senators have raised significant issues regarding the credit card industry and I appreciate the Senator's willingness to examine them and hear all interested Senators.

Mr. SARBANES. I will support the Chairman's efforts.

Mr. SARBANES

Mr. SARBANES. Mr. President, With the death on January 6th, 2005, at the age of 82 of Samuel Thornton Daniels, Sr., my city of Baltimore and the State of Maryland lost a distinguished citizen, a courageous and far-sighted leader, a source of inspiration and, especially, a beloved friend. Sam Daniels, the Grand Master, was known to his fellow members of the Prince Hall Masons simply as ``The Grand,'' and grand he was. A Baltimorean through and through, he was born in the city and educated at Douglass High School and Coppin State College. He married his beloved wife Gladys, a fellow student at Coppin, and together for more than 60 years they went on to raise a new generation of Baltimoreans. Sam made our community a better place for all its people. Service to others came naturally to Sam Daniels. He interrupted his college studies to serve in the Army in World War II, returning to Coppin State to receive his degree in 1948. When the Korean War conflict broke out 2 years later, Sam returned to military service, and reached the rank of captain before receiving his honorable discharge. Soon thereafter he joined Gladys as a teacher in the Baltimore public school system. In the mid-1950s, Sam Daniels set out on the path that was to shape his life's work. It was not just that he joined the civil rights movement; rather, in innumerable ways he shaped it and he led it. His professional commitments tell part of the story: Maryland Commission on Interracial Problems and Relations; Baltimore Community Relations Commission; Baltimore Equal Employment Opportunity Commission; and then, starting in 1967 and continuing for more than two decades, the Baltimore Council for Equal Business Opportunity, or CEBO. During the 1960s, in addition to his other commitments, Sam also worked for the AFSCME local unions representing Baltimore's municipal workers. In 1968 he was named to the city's school board by then-Mayor D'Alessandro, where his intelligence, his principles, his clear vision, and his wise and generous temperament all combined to make him, as the mayor was to observe, ``a calming influence on the board during an unsettling time.'' Sam balanced his professional commitments with his role in The Prince Hall Masons, whose Grand Master he was to become and who knew and loved him as ``The Grand.'' Under his leadership The Prince Hall Masons grew to have 5,000 members and to play a major role in the historic movement toward civil rights. When Dr. King came to Baltimore in October 1964, Sam Daniels stood among the leaders who welcomed him to the Prince Hall Masons Lodge. In everything he did he challenged us to make our Nation live up to its ideals. Of all his many accomplishments, Sam Daniels considered CEBO the most important. It began modestly enough with a grant from the Ford Foundation, but over more than two decades under Sam Daniels' leadership CEBO became one of the first business development organizations in the country, helping to create opportunities for entrepreneurship and business where precious few existed for Baltimore's African-American community and along with those opportunities, new hopes, new plans, and new dreams. Sam Daniels has been described as a ``giant'' and an ``icon,'' and surely these words reflect the critical role he played in expanding the opportunities for African American entrepreneurship and wealth-building, which has meant so much to the city that he served in so many different ways. Sam Daniels was a giant and an icon in other ways as well in character and temperament. Mayor D'Alessandro, who nearly 40 years ago appointed him to the school board, remembers him as ``an absolutely decent human being,'' and his pastor, the Reverend Marion C. Bascom, calls him ``the most giving human being this city has ever known.'' In the words of George L. Russell, the former city solicitor and judge, ``he was a temperate person who conveyed a great deal of wisdom.'' He was a great man and a great citizen, and he has left us all a magnificent legacy. We will miss him, and our thoughts are with his wife Gladys, his children, and his grandchildren. The Baltimore Sun paid tribute to Sam Daniels in an obituary published on January 8, 2005. I ask that it be printed in the Record. The material follows. [From the Baltimore Sun, Jan. 8, 2005] Samuel T. Daniels, 82, Leader in Local Civil Rights Struggle (By Jacques Kelly) Samuel T. Daniels, a local leader in the civil rights movement who championed African-American business enterprise and led the Prince Hall Masons for nearly four decades, died Thursday at Levindale Hebrew Geriatric Center of complications from a fall and a brain illness. The Northwest Baltimore resident was 82. Mr. Daniels had retired in 1989 after more than 20 years as executive director of the Baltimore Council for Equal Business Opportunity, a private organization that encouraged black participation in business. He was also a past grand master of the 5,000-member Prince Hall Lodge, an African- American Masonic organization. ``He was an absolutely decent human being and an integral part of the Baltimore civil rights movement in the 1960s,'' said former Mayor Thomas J. D'Alesandro III, who named Mr. Daniels to the city school board in December 1968. ``He was tough, decent, orderly and competent. He was an articulate spokesman for the black community.'' ``He was the most giving human being this city has ever known,'' said the Rev. Marion C. Bascom, Mr. Daniels' pastor and friend. ``Samuel outstretched his hand to just about everyone I've ever known.'' Born in Baltimore and raised on Druid Hill Avenue, he was a 1940 graduate of Frederick Douglass High School and earned a bachelor's degree in education from what is now Coppin State University. He served in the Army in World War II and the Korean War, attaining the rank of captain. For eight years, he taught in city public schools, including the old Henry H. Garnet School at Division and Lanvale streets. In 1958, he was named executive secretary of the Baltimore Community Relations Commission and simultaneously worked for Baltimore Municipal Employees Local 44 of the American Federation of State, County and Municipal Employees. In 1961, he attended the Harvard Business School's trade union program. Mr. Daniels was a school board member from 1969 to 1971. ``He was a calming influence on the board during an unsettling time,'' said Mr. D'Alesandro. Mr. Daniels became head of the Prince Hall Masons in the early 1960s and was among the leaders who welcomed the Rev. Martin Luther King Jr. to Baltimore on Oct. 31, 1964. Dr. King's visit, including an appearance at the lodge's temple on Eutaw Place, was on behalf of President Lyndon B. Johnson's election campaign. In a 1999 article in The Sun, Mr. Daniels recalled that day and how Baltimore was becoming aggressive in its pursuit of civil rights. The rally filled the temple. ``They became friends after that visit,'' said Mr. Daniels' wife of more than 60 years, the former Gladys Eva Wise. Friends said that Mr. Daniels paid travel expenses so that young civil rights advocates could attend the 1965 marches in Selma, Ala. ``He had been central to the advancement of black people in Baltimore,'' said George L. Russell Jr., a lawyer and former city solicitor and judge. ``He was a man who carried a great deal of dignity. He was a temperate person who conveyed a great deal of wisdom.'' In 1967, Mr. Daniels became director of CEBO, an organization initially supported by the Ford Foundation. A decade later, Mr. Daniels told The Sun that his most important accomplishment had been helping African-American business owners establish relationships with large commercial banks. He also pointed to many black-owned businesses, including the Super Pride grocery chain, as proof that his council was working. In 1982, Mr. Daniels called for voter mobilization in black communities. ``Legislation, more than anything else, influences our lives daily, monthly, weekly and eternally,'' he said at a meeting reported in The Evening Sun. ``If we are not a voting people, those in office are not going to care about us.'' Mr. Daniels was the recipient of many community honors and testimonials. A room has been named after him at Coppin, and Morgan State University awarded him an honorary degree in 2000. Mr. Daniels was a longtime member of Douglas Memorial Church. Mr. Daniels will lie in state from 10 a.m. to 6 p.m. Wednesday at the Willard W. Allen Masonic Temple, 1301 Eutaw Place. Kappa fraternal services will be held at 6:30 p.m. Wednesday and be followed by Masonic services at 7:30 p.m. Mr. Daniels will rest in a sanctuary named in his honor. A family hour wake will begin at 11 a.m. Thursday. The funeral service begins at noon and will be followed by interment at Arbutus Cemetery. In addition to his wife, Mr. Daniels is survived by two sons, Samuel T. Daniels Jr., chief inspector for the city liquor board, and Van B. Daniels, a manager for the Maryland Lottery; a brother, Edward Daniels; and three grandchildren. All are of Baltimore.

Mr. SARBANES

Mr. SARBANES. Mr. President, I rise to underscore the statement just made by the chairman of the Banking Committee. This issue embraced in this amendment is very far-reaching. There have been no hearings on it. The chairman has indicated he intends to do some hearings on issues relating to the matter that is before us. It does not seem to me to be a wise or prudent course to consider what would, in effect, be a very major legislative step in the absence of appropriate consideration by the committee of jurisdiction; therefore, I intend to also oppose this amendment, primarily on those grounds. The substance is a complicated issue, and in any event it is very clear it needs to be very carefully examined and considered. I do not think that has occurred in this instance, and I hope my colleagues would perceive the matter in the same way. I thank the Chair.

Mr. SARBANES

Mr. SARBANES. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. SARBANES

Mr. SARBANES. Mr. President, today it is my privilege to recognize the outstanding accomplishments of the Peace Corps as it celebrates its 44th anniversary this week. Throughout the years, the Peace Corps has endured as one of the most important forces in our Nation's public diplomacy. At its founding in 1961, President Kennedy remarked, ``The initial reactions to the Peace Corps proposal are convincing proof that we have, in this country, an immense reservoir of such men and women--anxious to sacrifice their energies and time and toil to the cause of world peace and human progress.'' Forty-four years on, the tireless efforts of thousands of Peace Corps volunteers have borne out President Kennedy's vision of service to the global community. Today, nearly 8,000 Americans serving in 72 nations around the world play a vital role in the advancement of education, health care, HIV/ AIDS education, and community and agricultural development. And because of its volunteers' ability and willingness to fully integrate into their host communities, the Peace Corps has become a leader in implementing new strategies for development, such as promoting community-based small businesses and microenterprise projects. Aided by these innovations, our volunteers continue to succeed in their mission of helping those most in need while promoting goodwill between Americans and the people they serve. In this time of global adversity, we cannot underestimate the contributions of the Peace Corps toward the causes of equality, opportunity, and peace. As the Peace Corps embarks on its next 44 years, it will no doubt remain in the forefront of our efforts to expand prosperity and mutual understanding. I extend my congratulations to the Peace Corps and wish it every success in the future.