Jon Tester

Mr. TESTER

Mr. TESTER. 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 June 21, 2011, at 10 a.m., to conduct hearing entitled ``Cybersecurity and Data Protection in the Financial Sector.''

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on Agriculture, Nutrition, and Forestry be authorized to meet during the session of the Senate on June 21, 2011, at 4:15 p.m. in room S-216 of the Capitol.

Mr. TESTER. 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 June 21, 2011, at 2:30 p.m., to conduct a hearing entitled, ``Inspiring Students to Federal Service.''

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on the Judiciary, Subcommittee on Crime and Terrorism, be authorized to meet during the session of the Senate on June 21, 2011, at 2:30 p.m., in room SD-226 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Cybersecurity: Evaluating the Administration's Proposals.''

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet during the session of the Senate to conduct a hearing entitled ``Senior Hunger and the Older Americans Act'' on June 21, 2011, at 10 a.m. in room SD- 430 of the Dirksen Senate Office Building.

Mr. TESTER

Mr. TESTER. Madam President, I wish to talk a little bit about the flooding that is going on in Montana and has been going on for basically better than the last month. The picture I have is that of the Musselshell River east of Roundup. The river channel is not in this area. In fact, it is on the far side of this river. My guess is--I have not seen this--this picture was taken about 10 days ago. But my guess is, it is still flowing like this and for a number of reasons I want to address in my speech today. Over the past few months, we have seen severe flooding in Montana that has impacted our homes and businesses. It has devastated farmland and ranch land. It has displaced families across our State. The flooding has tested thousands of Montanans and the basic services and infrastructure they rely on every day. But when disaster hits Montana, we rise to the occasion. When I meet the families and the community leaders affected by flooding and when I tour their towns, I do not see resignation or hopelessness. I see resilience. I see our traditions of hard work and working together. I see communities that are rebuilding and moving forward, ordinary people and local officials working diligently with local, State, and Federal partners to address urgent and ongoing needs they are unable to address alone. Thanks to that spirit of working together, neighbor to neighbor, Montana communities are rebuilding and businesses are reopening. We are looking to account for the severe crop damage and livestock loss suffered by Montana's farmers and ranchers, and we are looking for resources to make up for the $8.6 million in damages to our State's infrastructure. Sadly, that number is only getting bigger. Montana's resiliency is going to be tested because we are not out of it yet--not even close. Given the unusually significant snowpack in the Rocky Mountains that has yet to melt, our rivers and streams will continue to swell. The cost to Montana communities and families will continue to mount, and more and more of them will look to emergency assistance to provide timely services and assistance to those most in need, to help them get back on their feet. That is why I am particularly alarmed by the looming shortfall in FEMA's Disaster Relief Fund, which the House left dangerously unfunded, even amid a string of weather-related disasters across this country that have led us to 45 declared disasters. We are now looking at estimates of a $2 to nearly $5 billion shortfall for fiscal year 2012 alone. The total need is estimated to be as much as $6.6 billion. Montana is still tallying the damage. The risk of further damage is still very high. Yet we do not know right now if there will be enough money left over to meet the needs this disaster has already created in our State of Montana. The House thinks we should pay for past disasters with funding allocated for current and future disasters and by cutting assistance to firefighters and other first responders. In Roundup, Billings, and elsewhere in Montana, the folks who are rescuing stranded residents in boats to take them to get urgent medical care are not from FEMA; they are the same men and women who fight to protect our communities every day--the cops and firefighters who are part of these communities. Taking away the resources they need will not fly. It is irresponsible and unacceptable. I want all my colleagues to understand the importance of what we are facing, not just in Montana but across this country. There are 45 declared disasters around the country. It is time to do our part for communities all across this country that are facing unprecedented disasters from floods, tornadoes, to wildfires. Let's make sure this Nation's emergency responders have what they need to do their jobs. They are doing their part for all of us. Tough economic times have forced us all into some very difficult decisions. There is no doubt about that. But it is critical that we do everything we can on behalf of the communities and families across our Nation who are simply looking to pick up the pieces, to rebuild their homes, their schools and businesses, and to get back on their feet. When small businesses cannot get back on their feet and when our No. 1 industry, agriculture, gets a punch during the growing season, our entire economy will be impacted in a negative way. Montanans will continue to be resilient, and they will continue looking out for one another. But there are some burdens that are simply too big for them to bear alone. It is time for Congress to stand, do its part, and the sooner the better. I look forward to working with Chairman Landrieu and Ranking Member Coats on the Homeland Security Appropriations Subcommittee to make sure that no community from Montana or anywhere else in the country is left wondering if the government will make good on a commitment to help them rebuild. I yield the floor. I suggest the absence of a quorum.

Mr. TESTER

Mr. TESTER. Mr. President, just to clarify, I have 2 minutes, Senator Durbin has 2 minutes, and then we vote?

Mr. TESTER. Mr. President, let me take a moment here to clarify for my colleagues the intent of this amendment. Not surprisingly, a number of groups have made a number of claims about what this amendment ``is'' and ``is not.'' In drafting any regulations required by the amendment, any agencies involved are required to not only abide by the letter of the law but also the congressional intent of its authors. Let me take a minute to try to make crystal clear what exactly the intent of this amendment is. First of all, let me address some of the claims that have been made about the implementation date of debit interchange regulations. My amendment would direct the Fed to implement these provisions on a date of their determination. Why was this language included in this way? The intent of this language is to provide the Fed with the discretion to implement these regulations as quickly as is practically possible for merchants, issuers and networks to prepare for such new regulations. The hope with this language would be to avoid the situation we are in right now where parties impacted by these changes would likely have less than a month to implement significant changes to the debit interchange system. To be clear, the Fed may not disregard implementation of debit interchange regulation, as some have articulated. They also may not arbitrarily decide to implement these rules 5 years from now. Any delay in implementation beyond a reasonable timeline of a few months would need to be justified by the Fed. Let me also take a minute to address concerns that have been raised about the language we have used to describe what considerations the Federal Reserve must make if a determination is made in this amendment and the Federal Reserve is directed to rewrite the debit interchange rules. The language states that the Federal Reserve shall ``consider''-- again, shall ``consider''--all fixed and incremental costs in determining what is a reasonable and proportional interchange fee. Let me say this again. The Fed shall ``consider''--not include, not calculate, but shall consider--all fixed and incremental costs. That word is important because ``consider'' provides the Fed with the discretion to consider and determine, using their judgment, what is reasonable and proportional, meaning any costs considered would need to be justified to the Fed. To further clarify, the language directs the Fed to consider ``all fixed and incremental costs associated with debit card transactions and program operations and allow incentives for a more innovative, efficient and secure payment card network.'' Why did we include all fixed and incremental costs? That is because the original statute limited the costs the Federal Reserve could consider to only those costs associated with the ``authorization, clearance or settlement of a particular electronic debit transaction.'' This language severely limits the costs to issuers that the Fed may consider in calculating reasonable and proportional rates and is in large measure why the Federal Reserve's proposed rule is currently at 12 cents. There are a number of fixed costs associated with debit transactions, chief among them fraud costs, which are also arbitrarily limited in the original statute. The fraud language states that the Federal Reserve may--not must but may--allow for a fraud adjustment for costs associated with fraud prevention. Now, the Federal Reserve draft proposal did not include any fraud adjustment, and we have no idea what an adjustment might look like or whether the final rule would include one. But if it did, it could only include an adjustment related to fraud prevention but not the actual costs or losses associated with fraud. Take for example the recent data breach by Michaels stores--a breach, by the way, which was the fault of the retailer, which had their debit kiosks compromised. What were the costs to the issuer of the cards that were compromised? They were significant. First of all, it was a community bank in Illinois that had a fraud- monitoring program that identified the threat and alerted the retailer their kiosks had been compromised. Then there were the costs to these issuers of making their customers whole again for the losses they sustained by criminals removing funds directly from their bank accounts--$500 at a time. Additionally, issuers had to foot the costs associated with reissuing the cards and opening new accounts for customers with compromised accounts. But none of those costs--those associated with fraud and losses assumed by the issuers--could be calculated in the fraud adjustment under the current statute. That is why we included language directing the Federal Reserve to consider all fixed and incremental costs associated with debit card transactions and program operations to capture those costs. Fraud losses in monitoring programs are not associated with individual transactions, nor is the creation or reissuance of physical cards, account maintenance, or cardholder servicing. Let me also say what we do not believe is included in any reasonable and proportional fixed and incremental costs associated with program operations. As a result of our conversations and consultation with the Feds, we do not believe rewards programs or miles would be nor should be considered as permissible costs, nor would or should any executive compensation, nor should the costs of maintaining ATM machines. Why did we include the language allowing the Federal Reserve, in setting reasonable and proportional rates, to ``allow incentives for a more innovative, efficient and secure payment card network''? We added it because, in conversations with the Federal Reserve about what sorts of costs would be included in reasonable and proportional costs, they indicated that right now they do not have the ability to incentivize savings by issuers to make processing more efficient or secure. It seemed like a pretty good idea to Senator Corker and me that we should give the Federal Reserve this kind of discretion and that issuers should be incentivized to lower costs below whatever the Federal Reserve determines to be reasonable and proportional; otherwise, the fee would likely stay the same for years to come as there would be no incentive to lower costs. In addition to the flexibility provided to the Federal Reserve to set the rates, the amendment also intends to provide discretion to the Federal Reserve to include additional factors in the study, such as the overall impact of regulating interchange fees on small businesses and the economy, as well as discretion in the agencies the Federal Reserve may consult when drafting the study. In addition, it is intended that the findings must be made public and that the Federal Reserve is not required to start from square one. The intent is for the Federal Reserve to be able to build upon the information and insights which they have gathered already and which are a part of the current record. Finally, this amendment doesn't undermine or inhibit the Federal Reserve's ability to implement the routing and network exclusivity provisions in the underlying statute. In fact, it does quite the opposite. We sought to preserve this language and these provisions as they were originally included in the statute. In the last couple of days, several Senators have suggested additional changes that would improve the consumer-related aspects of the study proposed by my amendment. I very much appreciate their concerns and their interest on this critically important point, and the changes they have suggested are certainly ones I and other cosponsors are open to. Unfortunately, the Senator from Illinois filed a second- degree amendment which essentially closed off any chance to make additional changes to the amendment once it was filed. I am more than willing to work with my colleagues to find ways to continue to improve this amendment and to ensure that consumers, small businesses, small banks, and credit unions get a fair deal as we move to a regulated interchange marketplace. And that is what we will get out of this amendment--the same idea of regulation that 64 Members of this body supported last year. The difference between my amendment and the current law is that we will ensure that the Fed's regulations do not set the price below the cost of doing business. The current law prevented the Fed from looking at any number of elements of the cost of interchange. Some fraud costs were allowed to be included but not others. Some technology costs were included but not others. Why? Because the Senate made those arbitrary decisions. The result is a proposed Fed rule that sets the debit interchange rate at 7 or 12 cents for all transactions--a level most folks agree is too low. Let's allow the Fed to find the actual correct number. As a farmer, I can tell you that if it costs me $3 to produce a bushel of wheat, it won't matter if I sell it for $2 or $1 or 50 cents, I will still go out of business because it is below my cost of doing business. And that is precisely what will happen to our smaller banks and credit unions. With that, Mr. President, I yield the floor, and I suggest the absence of a quorum.

Mr. TESTER. Mr. President, I too echo the thoughts of the good Senator from Illinois. Senator Durbin and I are friends. We may not sound like it today, but we are. We just happen to disagree on this particular piece of policy. There is one premise that I think is being taken as a given that is not a given at all. It was in the original Durbin amendment. It said we were going to exempt banks of $10 billion and less and credit unions of $10 billion and less--so we are going to do that. A lot of folks voted for this amendment because they knew the small banks couldn't distribute their costs, and it would have undue harmful effects on the small banks, small credit unions, and community banks. But the facts have borne out something different since the last year. They have not been borne out by stuff that I have made up. It comes from the regulators themselves. I have said many times on this floor that every regulator I have talked to, State or Federal, has said the exemption for small banks and credit unions will not work. It will not work. We voted on something 1 year ago that we thought we had and it does not work. Let me read the quotes: Fed Chairman Ben Bernanke: We're still not sure whether it will work. There are market forces that would work against the exemption. He said it May 12 of this year. Another quote by Chairman Bernanke: It is going to affect the revenues of small issuers and could result in some of the smaller banks being less profitable or even failing. Once again, in the banking area, by FDIC Chairwoman Bair: I do think this is going to reduce the revenues. Let me say that again: I do think this is going to reduce the revenues at a number of smaller banks and they will have to pass it on to their customers in terms of higher fees. What does that mean? Checking, time getting the loan, fees, all that stuff. Money doesn't grow out of air. You have to have it, and if you don't have it and you are doing business, under the cost of doing business you have to make it up somewhere. Another quote from Ben Bernanke, and it is about the two-tiered system that is unlikely to maintain--to protect smaller institutions. This is a quote: A number of networks have expressed their interest or willingness to maintain a tiered interchange fee system, but of course it is not required. Chairwoman Bair again: If the Federal Reserve's view is there is no legal authority to require that, it does become more problematic. The fact is, the two-tiered system is not going to work. Every regulator said it is not going to work. Its impacts are going to be on small community banks, not the Wall Street boys. They are fine. We agree on that. But the community banks and credit unions are going to have incredible impacts on our small businesses that we are trying to help get us out of this recession we are in. This is not a bailout. This will ensure a regulated debit interchange system. By the way, I do not believe in bailouts. I didn't believe in the TARP bailout. I voted against it. I voted against the auto dealers' bailout. Right or wrong or indifferent, I do not believe in bailouts. I would not be supporting this if there were a bailout. I would not be offering it. Wall Street banks are going to be just fine regardless of what happens, but the fact is, the exemption for banks under $10 billion will not work. That is why I am here. It is as simple as that. I wish to close for now with a statement made by the ``Frank'' in Dodd-Frank, whom this bill is named after, Barney Frank, who worked with Chris Dodd to craft this bill in the House and Senate. Here is what Barney Frank says. Is today the 8th, by the way? He said it today, the 8th of June, speaking of the Tester-Corker-Hagan-Crapo-Bennet amendment, this amendment: This is a good, balanced, compromised approach. I support it and I hope it will pass. The author of this bill from the House thinks this is a good policy change to make Dodd-Frank better. I yield the floor.

Mr. TESTER. God bless the U.S.A. Mr. President, let me say this, first of all, to the folks in the gallery and the Members who are still in their offices. Look at me. Do I look like a banker? Senator Corker and I drew up this amendment. The banks did not draw up this amendment. We drew it up with the help of Senators Hagan, Crapo, and Bennet. As is usual, Senator Durbin and I agree on 90 percent, and there is 10 percent on which we disagree. Do I think swipe fees need to be regulated? Of course. But the problem with his amendment is that the exemption on community banks and credit unions under $10 billion does not work. It doesn't work. I have read all the quotes from Bernanke and Bair and the head of the OCC and the NCUA and all of them. They have said that they don't know how to make a two-tiered system work because the free market system will overrule it, and that is the way it ought to be in this country. So the bottom line is, I look at this from a rural perspective and the impact the Federal Government has on rural America, and while we are trying to solve one problem, we are creating two or three others. I could care less about the Wall Street banks. They are going to do fine. But I will tell my colleagues, if we lose the banks in our small towns in Montana or Wyoming or Tennessee, then we can put another nail in the coffin of rural America. With that, I yield the floor to the good Senator from Tennessee.

Mr. TESTER. I ask for the yeas and nays.

Mr. TESTER. Madam President, well, I want to thank Senator Reed for his comments. Senator Reed is one of the leaders on the Banking Committee. I appreciate his comments. I do want to set the record straight on a couple of things though. It is not a 12-month delay plus a 6-month study. It is a 6-month study and then implementation of the rules. The Senator said Chairman Bernanke had plenty of information. The problem is he does not have much information from community banks and credit unions, and that is what this amendment is about. The exemption that is in the amendment that we passed last year, called the Durbin amendment, every regulator at the Federal and State level has said they cannot make the exemption work because market forces will determine where the customers flow. I am glad we are here to vote on the amendment that Senator Corker and Senator Hagan, Senator Crapo, Senator Bennet, and I have worked so hard on. This afternoon we are finally going to have an opportunity to vote for an amendment that has been crafted in the right way. Senators Hagan and Crapo and Bennet came to Senator Corker and I about a month ago to share their interests in fixing the unintended consequences of that amendment that was passed in the Senate about a year ago. The amendment directed the Federal Reserve to issue regulations limiting the cost that banks can charge retailers when consumers use their debit cards to buy things. Based on the law, the Fed intends to limit those costs to 12 cents, even though the actual costs of these transactions may be higher. The big Wall Street banks can handle that. They are not happy about it, but they can live with it. They have plenty of tools that will help them make up the difference. The Main Street community banks and credit unions are a different story. These small guys, who had nothing to do with the financial crisis, do not have that same flexibility the Wall Street banks have. These are the banks in Montana. These are the folks I want to make sure have a fair shake. So folks from both parties came together and said: How can I fix this to make this protect the local banks and credit unions since the original amendment does not? Senator Corker and I suggested initially a 2-year delay, a study, and then more legislating to fix any problems that were identified in the study. The Senators who are here today with me thought we could do better, and we could, and we did. After talking with our colleagues, we worked together to reduce the study period down to, as I said earlier, 6 months. At that point the Fed and other regulators will decide if the rules can adequately prevent the small banks from getting hurt. I do not know what the study is going to find, and I do not think anybody knows. If the agencies find that the rules consider all costs, that consumers would not be harmed, and that the small issuer exemption--those that apply to credit unions and community banks--if that exemption will work, then the pending rules would move forward as passed. I would be the first person in line to tell Senator Durbin that he was right about the two-tiered system. But if the Fed and the other regulators find that the changes must be made to ensure that current rules do not include all costs or that small banks and credit unions and consumers might be harmed, then they will have to issue new rules within 6 months, and every 2 years the Fed would have to tell us in Congress whether these rules are still working for the small banks and credit unions. That is all we are asking. Before the Fed's new rules get implemented, let's make sure we have them correct. Yesterday the good Senator from Illinois said this was not truly a compromise. But when you sit down with folks who think you are on the wrong track and you work together to find the middle ground, well, to me that is the definition of compromise. Some other charges have been made about this amendment, and I would like to take a moment to discuss those. Some say it is a favor to the big banks. Well, it is not. In fact, this amendment corrects a very big problem that only affects the community banks and credit unions. The good Senator from Illinois said yesterday that he crafted this amendment with awareness that a major reduction in interchange fees would kill small banks and credit unions. No one denies that small banks and credit unions would be deeply harmed if they are forced into a system where they can only charge 12 cents per transaction. No one denies that. This is why Senator Durbin tried to establish a two-tiered system. Under his proposal, big banks, the Wall Street banks, could charge one rate, 12 cents per transaction. The small banks, the community banks, credit unions, could continue to charge a percentage of a transaction, 44 cents on average. But there is a big flaw in the plan. The two-tiered system simply will not work. Let me repeat that. The two-tiered system simply will not work. I did not make that up. Here is what the Chairman of the Federal Reserve said: It is possible that the merchants will reject the more expensive cards from smaller institutions, or because networks will not be willing to differentiate the interchange fee for issuers of different size. It is possible that the exemption will not be effective in the marketplace. That was Ben Bernanke saying that. He went on to say that because the exemption will not be effective, small banks could be hurt or even fail. Here is what the head of the FDIC said: The likelihood of this hurting community banks and requiring them to increase the fees that they charge for accounts is much greater than any tiny benefit that the retail customer may get. Again, everyone agrees if the Fed's rules go into effect, the small banks and credit unions will suffer because the exemption simply will not work. So today we can stop and doublecheck to make sure that does not happen or we can just flip a coin and hope for the best and watch as more small banks and credit unions fail, reducing consumer choice and reducing banking options, especially as they currently exist in rural America. These small banks and credit unions are the ones that make the loans to small businesses in rural America. They are in places where folks are still willing to put their money. They are the ones that folks in Montana still trust. They do not trust the big Wall Street banks. We probably will not lose too many banks in Washington, DC, or Chicago, IL, but we will in rural America. I do not want to see that happen. Another good one that I have heard this week is the argument that the amendment will allow banks and credit unions to factor executive compensation into the cost of interchange fees. It will not. In fact, the amendment specifically states that the Federal Reserve and other banking regulators must look at the costs associated with debit card transactions and program operations. We also know how dangerous it is to set a price for a product without understanding all of the costs that go into that product. Home Depot would never allow the Federal Government to set the price of garden hoses simply by looking at the cost of manufacturing a garden hose. No, Home Depot charges us for the cost of manufacturing it, shipping it, keeping it in stock, having someone tell you what aisle it is in, and on and on. Likewise, if we are going to be regulating debit interchange fees, we need to understand all of the costs associated with debit transactions and debit programs. When we voted on this amendment last year, we thought we were voting to allow the Federal Reserve to consider all costs. However, the reality is that last year's interchange amendment limited the costs that could be included. Some fraud costs were allowed to be included but not others. Some technology costs were included but not others. If we are going to be regulating this market, we need to be fair about it. So the amendment directs the Fed to determine what is ``reasonable and proportional'' but it gives the Fed the discretion to look at all of the costs associated with debit transactions. That does not mean executive pay. That does not mean a special rewards program. All costs will still need to be justified, and if they cannot be justified they will not be considered. The Fed has been very clear with me--no executive pay, no bells and whistles. But the decisions about the cost of routing networks, the costs of fraud and other technical details are much better left to the Fed than decided by the U.S. Senate. Finally, Madam President, some have said that this amendment hurts consumers. It does not. As someone who voted against the Wall Street bailout, who wrote part of the credit card reform act, and who voted for the Wall Street reform bill, I can tell you that if this amendment was somehow bad for consumers, I would not offer it. In fact, the amendment requires the regulators to certify that the Fed's rules address consumer concerns. The current law does not require anyone to look at the impact of interchange fee regulation on consumers. They are out of the picture. I am not aware of any specific plans by any retailers to lower prices or provide customer rebates if interchange fees are lowered. I know that one large big box store held an earnings call at the beginning of the year where a company executive called the proposal to lower interchange fees a ``$35 million windfall.'' If I were a shareholder, that would have sounded pretty good to me. But as a customer, it is not clear how I benefit. I understand that there are some folks who wish the amendment could go further to include additional consumer-oriented agencies such as the Federal Trade Commission as agencies that will conduct the study. I would be happy to work with those Senators to see how we best protect consumers in this process. But the only way to make that happen is to get this amendment adopted; otherwise, the Fed's rules go into effect on July 21 regardless of what any consumers think. I am looking forward to today's debate because we have an opportunity to address the unintended consequences of the Durbin amendment. Make no mistake, those unintended consequences will be felt all over rural America--and not for the better. For the folks who think the two-tiered system will work, there is not a regulator out there who will tell you that it will. Some folks will tell you the Durbin amendment has an exemption for community banks under $10 billion and for credit unions under $10 billion. If they think that will work, there is not a regulator out there who will tell you that they can implement it and it will work because the free market system will drive it to the lower price. That is the way it is. I am saying, let's slow down a little bit and make sure we get it right. If we are going to create regulations, we are doing it in a way that is fair and consistent with the intent. Let's not try to solve one problem and create three others. And let's not take shots at the folks in my neck of the woods who were not part of the financial meltdown. That's all I am asking, and I urge my colleagues to support this amendment. I yield the floor and ask unanimous consent that the time during the quorum calls until the vote be divided equally. With that, I suggest the absence of a quorum.

Mr. TESTER. Madam President, I will yield to the Senator from Rhode Island, and then I will make my statement.

Mr. TESTER

Mr. TESTER. Mr. President, I ask unanimous consent that the Subcommittee on Clean Air and Nuclear Safety and the Subcommittee on Children's Health and Environmental Responsibility of the Committee on Environment and Public Works be authorized to meet during the session of the Senate on June 8, 2011, at 10 a.m., in Dirksen 406 to conduct a hearing entitled, ``Air Quality and Children's Health.''

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on Veterans' Affairs be authorized to meet during the session of the Senate on June 8, 2011, in room 418 of the Russell Senate Office Building beginning at 9:30 a.m.

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate, on June 8, 2011, at 2:30 p.m., in room SD-226 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Nominations.''

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate, on June 8, 2011, at 10 a.m., in room SD-226 of the Dirksen Senate Office Building, to conduct a hearing entitled ``The President's Request to Extend the Service of Director Robert Mueller of the FBI Until 2013.''

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on June 8, 2011, at 2:30 p.m.

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on June 8, 2011, at 9:30 a.m.

Mr. TESTER. Mr. President, I ask unanimous consent that the Committee on Commerce, Science, and Transportation be authorized to meet during the session of the Senate on June 8, 2011, at 10 a.m. in room 253 of the Russell Senate Office Building.

Mr. TESTER

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

Mr. TESTER

Mr. TESTER. Mr. President, I have an amendment at the desk I would like to call up.

Mr. TESTER. Mr. President, over the last month, Senator Corker and I have worked with several Senators who are concerned about the unintended consequences of the debit interchange amendment the Senate adopted last year. We voted against that amendment. We were concerned about the impact of those consequences on folks--especially across rural America--who rely on their small local banks and credit unions. The Federal Reserve's rules based on this amendment are about to go into effect, and the result is going to be bad for small banks and credit unions and ultimately for the whole country but especially rural America. Even Chairman Bernanke admits that the rule could ``result in some smaller banks being less profitable or even failing.'' I am proud to be joined in this effort by Senators Crapo, Bennet, Hagan, and several others--all folks who share my concern about the impact of debit interchange fees on our local banks. Senator Corker and I began with a concern that local community banks and credit unions would end up being subject to the same one-size-fits- all regulation designed to address the excesses of some of the world's largest financial institutions. As I have said over and over, those big Wall Street banks are going to be just fine. They have plenty of sources for their revenue. No one needs to shed a tear for them. But the Main Street banks and credit unions will not be OK if these rules are implemented. Let me give you one example. Community First Credit Union has two branches--one in Miles City and one in Ekalaka, MT. Those two towns are about as far away from Wall Street as you can get. Ekalaka, in fact, is pretty far away from just about everywhere. But last year the Senate approved an amendment that was aimed at holding the big banks accountable for the fees they charge when you swipe your debit card at Walmart. Folks were promised we would have a split system where big banks such as Bank of America would get one interchange rate and Community First Credit Union would be able to get a higher rate. The reality is going to be quite different. Without changes, the small guys like Community First will not see this promised benefit. This so-called two-tiered system will not work under the current law. That is not my opinion; it is the opinion of folks who regulate these small banks. What Ben Bernanke, Sheila Bair, and others say is that market forces will inevitably push the rate down to the lowest level. That push has already started. Retailers are seeking laws at the State level to give themselves the freedom to deny purchases with debit cards that have a higher interchange fee. Given the amount of money the big box retailers are putting into their lobbying campaigns, it is only a matter of time before they are successful. So what happens to the consumer who does her banking at a small community bank or credit union? These are the folks I am concerned about because they are the majority of Montanans. Unfortunately, they are going to get stuck with higher fees, with no access to capital or, even worse, no banks at all. Let's be clear: If any single one of the regulators--whether it be the Chairman of the Federal Reserve or the Chair of the FDIC or the Comptroller of the Currency--had told me the interchange system proposed last year would actually protect small banks and credit unions, we would not be here. But that is not what happened. The Chairman of the Federal Reserve said that without changes, the system that will be implemented on July 21 will cause small institutions--the kinds of banks that serve most Montanans--to suffer and some could even fail. The Chair of the FDIC said that unquestionably these banks would be hurt. The credit union administrator agrees. Perhaps they will make up for those losses by raising rates on checking accounts. Maybe it will be higher fees when a small business comes in looking for a loan to expand. That will surely help the biggest banks to capture more of the market share at the expense of the smaller banks like Community First. This week, we have a chance to stop and rewrite these rules before they hurt those small banks, before they hurt those small credit unions, before the new rules hurt the consumers and the small businesses in rural America that prefer to do their banking business with folks who know them and who are a part of their communities. Rural America is what I know. It is where I am from. As I have watched consolidation in the agriculture industry and have watched rural America get smaller and smaller, I am not about to let this happen in the financial services industry. Fewer banking options in rural America is a death knell for rural America, and that is where we are headed today. One way to stop this from happening is for us to slow down and fix the debit interchange regulations so the small banks that serve rural America do not get hit. We also know how dangerous it is to set a price for a product without understanding all the costs that go into that product. Small business owners certainly could not stay in business if they did not understand their own costs. Likewise, if we are going to be regulating debit interchange fees, we need to understand all the costs associated with debit transactions and debit programs. When we voted on this amendment last year, we thought we were voting to allow the Federal Reserve to consider all costs. However, the reality is that last year's interchange amendment limited the costs that could be included. Some fraud costs were allowed to be included but others were not. Some technology costs were included but others not. The result is a proposed Fed rule that sets the debit interchange rate at 7 or 12 cents for all transactions--a level most folks agree is too low. I am sure the big box retailers think 7 cents or 12 cents is too high. In fact, they have argued that the rate should be closer to 4 cents. I have heard from many of my retailers in my home State, and some have said 12 cents is probably too low, and they understand you absolutely cannot set the price of doing business below what it costs to do business. If we are going to be regulating this market, we must do it in a way that is fair, in a way that still directs the Fed to determine what is ``reasonable and proportionate'' but gives them the discretion to look at all of the costs associated with debit transactions. That does not mean executive pay. That does not mean the cost of a corporate jet or a special rewards program. All the costs will still need to be justified, but the Fed will not be limited arbitrarily in what they can look at. That is why my friend Senator Corker and I are offering this amendment today. This amendment is a compromise, and that is how we do business in Montana. We find the common ground and we work together to do what is best. Senator Corker and I first proposed a 2-year delay of the Fed's rules to allow adequate time to study the impact on small banks and rewrite the rules based on what we learn in that study. The Fed tells us now that it may be able to do this joint study in 6 months. So that is what our amendment proposes--just 6 months to study whether the rules that will govern the debit interchange marketplace can protect small banks. In this amendment, we outline the topics the study should address, including taking a closer look at all of the actual costs associated with debit card transactions, the impact on consumers, and whether an exemption for small banks as proposed in the interchange amendment last year will actually work. If, after the study, at least two of the agencies involved determine that the current rules do not take into account all costs, that the rules may harm consumers, or that the exemption meant to protect small banks and credit unions will not work, then the Fed has 6 more months to rewrite the rules considering all costs. That is 1 year to address our concerns and to make sure rural banks do not get wiped out by this rule. If the agencies find that the rules consider all costs, consumers would not be harmed, and that the small issuer exemption will work, then the current rules pending would move forward. What about the little guys? We put into place a process that will address any potential impact on small issuers. My contention has long been that market forces would drive fees for small issuers to the lowest rate. Since we cannot fully understand how the market will operate until interchange regulation is enacted, we direct the Fed to report the actual impact of the market on small issuers a year after the rules are implemented. The Fed has to present a report to Congress and every other year thereafter on the impact of a regulated market on small issuers. Most importantly, the report will include recommendations for how to resolve any potential harm to small issuers and to enforce the exemption. This will help make sure that when Congress acts, we will have the facts about how we would impact small banks. That means the regulatory process is over in 12 months, and Congress does not have to revisit this issue. Let me say it again. Congress does not have to revisit this issue. At the end of the entire process, there is still a regulated market for debit interchange fees. That is what the Senate voted for last year, loudly and clearly, and we preserve the regulated marketplace, which is what Senator Durbin and others have been calling for. We will have regulated the marketplace once we fully understand all the costs relative to debit transactions and the impact of these rules on consumers and small issuers. That is what the majority of the Senate voted for last year, and that is what we will get. But it will be a regulatory framework that does not penalize small banks and credit unions and is fair by not setting prices below costs. When every banking regulator who has a role in overseeing the debit interchange market tells you that Congress has created a system that will not work in the way that was intended, then we ought to listen. Today's debit interchange market is not fair for some retailers, so I understand their desire to see it fixed. But the answer is not to create a new system that is unfair to the small banks in Montana and other parts of rural America. The amendment the Senate approved last year was designed to punish Wall Street. But the result may be the bank in Ekalaka and the other banks all over rural America that will lose customers and potentially even fail. Let's measure twice and cut once. Let's do it quickly, but let's make sure we get this right and that if we are going to create regulations, we are doing it in a way that is fair and consistent with the intent. I urge my colleagues to support the amendment. I yield the floor.

Mr. TESTER. Mr. President, is it appropriate that I speak for 2 minutes?

Mr. TESTER. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.