Mark Warner

Mr. WARNER

Mr. WARNER. I thank the Senator from Illinois. Madam President, I think we have had more than a dozen Senators speak this afternoon. I appreciate all of them coming out on relatively short notice. We raised these issues before we went on recess, because we want to be respectful not only of traditions but to our colleagues on the other side. We recognize, as the Senator from Colorado has said, that there are rules that allow us to ask unanimous consent to bring these folks up, and in future days and weeks we will use those rules to try to urge a full-fledged debate, and not just on judicial nominees. As the former CEO of a business, and the former CEO of a State, I know there are a whole host of administrative nominees which are part of the administration that this President needs to get in place. I thank the Presiding Officer for the time we have had to share our concerns about this process. Again, I encourage my colleagues and friends on the other side to allow us to get this fixed, to get back to the substantive debates that are so important--financial reregulation, energy, and jobs--and that the American people deserve and demand. With that, Madam President, I yield the floor, and I suggest the absence of a quorum.

Mr. WARNER. I thank the Senator from Delaware for his comments and perspective. Again, while many of my colleagues talk about this related to judges, we have, as the Senator from Minnesota said, members of the DOJ who are held up. We have a very qualified and talented individual up for Treasury Under Secretary for International Affairs. They are enormously important positions. I know my friend and colleague, the Senator from Maryland, wishes to speak on this subject matter.

Mr. WARNER. Madam President, again, this should not fall on partisan lines. We welcome those Senators on the other side of the aisle who are frustrated by this process and want to bring, while respecting the traditions of the Senate, rationality back to the process. My good friend from Delaware, while he is a freshman Senator, has served in this institution longer than most of us and has watched the transformation of this institution. I would love to have Senator Kaufman's comments on this issue.

Mr. WARNER. I thank my colleague from Minnesota. In his case in point, we had a judicial nominee endorsed by a Republican Governor, reported out unanimously, filibustered, and then she was confirmed 99 to 0. I respect the traditions of the Senate, but something is broken. I now ask the Senator from Colorado to speak. He is actively talking with the people of Colorado who hired him for this position. He hears the frustration they express about why can't you get things done.

Mr. WARNER. Madam President, I thank the Senator. She realizes the importance of getting a team in place, whether it is judicial or administrative. Somebody who feels very passionate about this and a lot of other issues is the Senator from Vermont. He wishes to speak.

Mr. WARNER. Mr. President, I thank the Senator from Maryland for his comments. Again, we want to be respectful of Senate traditions, but it just seems at this moment in time, with so many issues our country is confronting, we need a rational process. We need to be able to explain, as the Senator from Colorado said, to the American folks why we are not getting business done. Part of the reason we are not getting business done is the President does not have his team in place, judges are not in place, and a lot of time is wasted on the Senate floor with needless filibusters. There is another freshman Senator with whom I have had a number of conversations, my good friend from North Carolina. This is a little different from the way she operated as State senator in Raleigh, NC. I would love to hear her comments.

Mr. WARNER. Madam President, I appreciate the opportunity to get back into morning business. A number of my freshman and sophomore colleagues and I have come to the floor to discuss an important issue. We also came to the floor during the final throes of the health care debate. We are here to raise the issue that, while we are enormously proud to be Members of the Senate and respect the traditions of the Senate, something seems a little strange when 15 months into this President's administration, we still have approaching 100 nominees who have not been voted up or down so that they can serve in these most important positions to make sure we get our country back on the right path. We are going to reiterate these issues, and we will come back to try to urge Senators who have concerns about nominees to come to the floor and make their case against the nominees. They ought to be voted up or down, and if they are not approved, the administration can move on to someone else. But 15 months is a long time. As a former CEO in business and a former Governor, I think this President ought to have his team in place. First, this is an issue that a number of us have raised over a period of time. We all have previous experience before coming on this body. I call on my colleague, the Senator from Minnesota, Senator Klobuchar, to make a few comments.

Mr. WARNER. Mr. President, I thank the Senator for her comments, again recognizing that some of the judges she is talking about have had bipartisan support. If this was a question of qualifications, it ought to be legitimately questioned and debated. I know there are other colleagues showing a little bit of the radical transformation we are making. Having freshmen Senators speak is part of that. I now call on my good friend from Pennsylvania to add his comments. I believe the Senator from Pennsylvania has judges in Pennsylvania and other appointees who have been pending.

Mr. WARNER. I thank the Senator from Colorado for his comments and his great perspective on this issue, and again, part of what he is raising is that we want to consider the rules and traditions. Today, we have all these freshmen and sophomore Members coming to the floor and saying the process seems to be broken. We want to urge our colleagues on the other side to allow the process to move forward and to suggest that we are not going to let business as usual continue to go on. We want to give them appropriate notice. There is no attempt to ambush on process here, but we are saying enough is enough. We owe it to this body and we owe it to the folks across the country. Madam President, someone who comes to this floor regularly to talk about health care and a series of other issues has these same issues facing him in his great State of Ohio, and he wishes to make some comments on this as well.

Mr. WARNER. I thank the Senator from Ohio. A lot of my colleagues and I talk about judges, but this goes way beyond judges. As a matter of fact, a Senator who has been a leader on this issue, my friend, the Senator from Montana, has come to this floor on other occasions by himself to talk about certain other nominees the President has put forward, and my understanding is that some of these nominees were held up because of totally unrelated issues. I don't know about the folks in Montana, but the folks in Virginia are scratching their head and saying: What do Canadian tobacco laws have to do with a Presidential nominee for a totally different type of job that has nothing to do with Canada or tobacco? So I would like my good friend, Senator Tester, to speak to these issues.

Mr. WARNER. I thank the Senator for those comments, and in the interest of full disclosure, I might try to use that line about idle hands--as a matter of fact, in a speech later this afternoon. I know we have been joined by one more of our freshman colleagues who may not have grown up as a farmer but who understands equally as well the importance of this body getting its work done, and that is my friend, the Senator from Illinois, Senator Burris.

Mr. WARNER

Mr. WARNER. Mr. President, I ask unanimous consent that the Subcommittee on Strategic Forces of the Committee on Armed Services be authorized to meet during the session of the Senate on april 14, 2010, at 2:30 p.m.

Mr. WARNER. Mr. President, I ask unanimous consent that the Subcommittee on Readiness and Management support of the Committee on Armed Services be authorized to meet during the session of the Senate on April 14, 2010, at 2:30 p.m.

Mr. WARNER. 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 April 14, 2010, at 2:30 p.m. to conduct a hearing entitled ``Deployed Federal Civilians: Advancing Security and Opportunity in Afghanistan.''

Mr. WARNER. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on April 14, 2010, at 2:40 p.m., to hold a European Affairs subcommittee hearing entitled ``Unfinished Business in Southeast Europe.''

Mr. WARNER. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet during the session of the Senate, on April 14, 2010, at 9:30 a.m., in room SD-226 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Oversight of the Department of Justice.''

Mr. WARNER. Mr. President, I ask unanimous consent that the Committee on Finance be authorized to meet during the session of the Senate on April 14, 2010, at 10 a.m., in room 215 of the Dirksen Senate Office Building, to conduct a hearing entitled ``Using Unemployment Insurance to Help Americans Get Back to Work: Creating Opportunities and Overcoming Challenges.''

Mr. WARNER. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on April 14, 2010, at 10:30 a.m.

Mr. WARNER. Mr. President, I ask unanimous consent that the Committee on Environment and Public Works be authorized to meet during the session of the Senate on April 14, 2010, at 10 a.m. in room 406 of the Dirksen Office Building.

Mr. WARNER. 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 April 14, 2010, at 2:30 p.m., in room 253 of the Russell Senate Office Building.

Mr. WARNER

Mr. WARNER. Mr. President, I also rise to discuss financial reform and, to be blunt, to try to set the record straight about some misleading statements that have been made on this floor about both the process and the substance of the bill that the Banking Committee reported out recently. Under Chairman Dodd's leadership and working with ranking minority member Senator Shelby, I have worked hard, since coming to the Senate, to understand the root causes of the crisis we are only now beginning to emerge from economically but to recognize that we have to have a robust solution in place to make sure we are never again confronted with the type of crisis and the lack of preparation this Nation faced back in the fall of 2008. I also come to this body, as you know, as someone who spent an awful lot of time around the capital markets. Quite candidly, I will put my free market, procapitalist credentials up against anybody's in this body. But I come to the floor as well as someone who has tried to recognize that the financial crisis--perhaps more than any other issue we have addressed--doesn't have a Democratic or a Republican root of origin, nor does it have a partisan solution set. We have to recognize that, perhaps on this piece of legislation more than ever, we have to have a bipartisan basis to establish a long-term financial framework for the next hundred years. I am very proud of the fact that we have worked so far in a bipartisan way. I have particularly appreciated, over the last year, the partnership I have built with Senator Corker of Tennessee, where we both recognize that while we both have backgrounds in business and both have experience and exposure to the capital markets, there is a great deal of complexity in trying to rewrite the financial rules in the sense that it will be not only for this country but because the rest of the world will follow what America does, for the whole world. So it will require a great deal of humility and a recognition that we have more to learn. Because of that, Senator Corker and I, starting early in 2009, began holding a series of seminars, in fact, where we brought in established financial leaders and invited members of both parties to come and learn with us as we tried to put in place rules and regulations governing the financial system. While I have been disappointed, particularly by the Republican leader's comments yesterday, I am not naive. I still believe there is a path to a bipartisan bill. What we need to do is to simply lower the rhetoric and do what is needed for the American people. Let's put in place a robust set of rules and a robust regime of reform that will ensure that never again will the American taxpayer have to bail out firms that are too big to fail. While there were differences that we had on how we approached health care reform, this is one area where--whether it is a liberal blogger group or a tea party convention--there is a unanimity of opinion that never again should the taxpayers be put at risk because of the financial interconnectedness of large firms. Soon, the Senate will consider the bill Chairman Dodd has put together. While there are bits and pieces that different folks will disagree with, this is a strong bill that vastly improves regulation and the structure of our financial markets. Let me repeat that Senator Dodd has put together a strong bill. One part of the bill Senator Corker and I have been particularly engaged in deals with systemic risk in ending the notion of too big to fail. That was the subject yesterday of some wildly inaccurate statements on this floor, which I am here to address. I have to admit I am deeply invested in this section, and that investment comes in no small part because of the months of work Senator Corker and I put into this area. Let me acknowledge at the front end that there are parts of this section that both Senator Corker and I will want to change and amend. Those changes and amendments we would probably reach agreement on in perhaps 5 or 10 minutes, but the basic structure we set up is one I believe will lead to meaningful financial reform. Now, let's go to what we are talking about. We recognized at the outset that never again could we allow the financial system and the interconnectedness of this financial system to come to the brink of crisis and, in effect, the regulatory system and the legal system have no recourse and rules on how we deal with an impending crisis. One of the things we recognized at the outset was that in the past there was very little collaboration and coordination between different regulators. You might have a Prudential supervisor who is looking at the depository institution and having one view of an institution; and you might have the regulator looking at the bank holding structure and having another view. Because these complex institutions may also have security aspects, the SEC is over here. But there was no coordinated place where this collaborative view, beyond the stovepipes and beyond the silos, could all come together and recognize that while the institution's single actions in a single sector might not pose a systemic risk, that in toto these risks, when aggregated together, put our financial system in jeopardy. So what do we propose? Along with Senator Corker and experts from the industry, we propose creating a Systemic Risk Council that would, in effect, be the early warning system for our overall financial system to spot these large, systematically important institutions and, in effect, put some speed bumps in their path. I may not even agree with some of the Members of my own side of the aisle that we ought to go out proactively and break up these institutions just because they are too large. Size, in and of itself, was not the problem. It was the interconnectedness of their activities and the fact that if you started to pull on the string of some of these activities, the effect that had basically collapsed the whole house of cards. It was not size alone, it was interconnectedness and recognizing how to spot that interconnectedness at the front end, and putting some speed bumps on these systemically large institutions that is important. One of the things we found was that oftentimes the regulators did not have current, real-time data on the extent of these transactions and this interconnectedness. So a part of the bill that has received very little attention is the creation of the Office of Financial Research, which will aggregate, on a daily basis, all the status of transactions of all these institutions and allow us to have at least the transparency at the regulator level to know what is going on and allow the regulators never again to say: Well, the last piece of data we had was the last quarterly report. This information will flow up to the Systemic Risk Council, and the Systemic Risk Council will then be able to put in place what I call speed bumps on these systematically large institutions. Increase capital. One of the questions that comes back time and again from financial experts, we need to increase the capital reserve levels of many of these large institutions. We have to look at their liquidity ability. In many cases the institutions that failed during the crisis were not insolvent but there was a rush because of fear in the system and the liquidity crisis this caused, so how do we be sure we use liquidity in a better way? Leverage, traditional additional financial institutions--I look at our neighbors in Canada, about a 20-to-1 leverage ratio. We saw on some of the off-balance sheet operations not 10- or 20-to-1 traditional ratios, but 50- or 100-to-1 leverage ratios. We put in place as well something that has been advocated by folks at New York Fed--it originally comes out of the University of Chicago--a whole new set of financial structure in these large institutions that will convert to equity in the precursor, before a crisis takes place. In effect, shareholders will be diluted by this contingent capital requirement, putting again more pressure on management not to make undue risks. We believe these speed bumps, while they may not prevent any future crisis, will be huge impediments to these large systemically risky institutions taking undue risks and outrageous actions. We have also put a new requirement in place, one that again has not gotten a lot of review. We will literally require the management of these large institutions to put in place their own funeral plans, their own plans on how they will unwind their institutions through an orderly bankruptcy process. I believe there were large systemically important institutions in the fall of 2008 that in effect came to the regulators and in effect said we are so big and interconnected that we do not know how to unwind ourselves. Never again should we allow that to happen. We allow the regulators to work, and in effect bless the funeral plans these systemically large institutions will put in place. We think we have put in place these appropriate barriers that will restrict some of the unduly risky activities from these large institutions, but you cannot predict and cannot foresee every crisis. So what we need to do is set a framework on how we would address the crisis if these speed bumps and this early warning system does not fully function. I do not, actually, candidly, completely agree with my colleague from Delaware. I do believe we need a strong, robust bankruptcy process that gives predictability to investors so they know what will happen through the normal dissolution of a firm that has made mistakes in the marketplace. We need to ensure that bankruptcy becomes the normal default process. Again, as I mentioned, having these large firms write their own funeral plans, write their own bankruptcy plans that have to be approved by the regulators, will give us guidance on that path. But we also have to realize when there may be a management team that does not see the handwriting on the wall or when a firm is, even with all of these checks, falling into the potential of its failure causing systemic risk, we still have to have the ability to act. Let me state very clearly, the resolution process that was put in the Dodd bill, no rational management team would ever elect to choose because resolution will not lead to conservatorship, resolution will lead to receivership and extermination of the firm. The firm's common share equity will be wiped out, the firm's management will be wiped out--resolution will never be chosen as a preferred route. Bankruptcy will be the preferred route. Even in that case, we still put additional protections in place so that no future administration, having seen the blowback from the public on using resolution in 2008--I cannot imagine any future administration actually wanting to use this mechanism, but to ensure, again--Senator Corker and I spent a great deal of time on this--that we have, again, protections so resolution is not misused, we put very strict criteria in before it can be implemented. We require three keys, in effect, to be turned simultaneously--in effect the nuclear option analogy of different keys being turned before this tool could be used. We require the Chair of the Federal Reserve, the FDIC, and the Treasury Secretary in consultation with the President to all agree that we have to act, to move a firm into resolution rather than going through bankruptcy. But that, again, is not all. Senator Corker, I think rightfully, pointed out that we need, in case there were an overly aggressive administration, a judicial check as well. So we put an additional judicial check in place before resolution could be implemented-- resolution only as the last resort, only as a path that makes sure that the parts of this systemically important firm can be transferred to some other existing entity, not preserved. The firm will be wiped out, but the functions that are important do not bring down the overall financial system. One of the most curious comments of the Republican leader yesterday was the critique that, if you invoke resolution, the question becomes where is the money going to come from and who is going to pay for it? What I found very curious in the Republican leader's comments yesterday was that we--and this was by no means set in stone--put in place a $50 billion fund that would be prefunded by the industry; not the $150 billion that was in the House bill that could rightfully create moral hazard, but in effect a dollar amount up front. It could go down lower. That would basically keep the lights on at these institutions until the FDIC could go out and, in effect, borrow against the unencumbered assets of this firm to get the real dollars in place to keep the resolution process going in an appropriately functioning way. Is $50 billion the right number? It may not be. Reasonable people can disagree; $25 billion might be the right number. There might be other paths. Senator Corker and I worked on the notion of a trust that could be created. But what I find curious is no one in the financial sector that we have spoken to thinks this dollar amount is a bailout. No one in the financial sector has said this will be an adequate amount of capital to resolve a whole crisis. The funding to resolve the whole crisis will come from the ability we give the FDIC to borrow against the unencumbered assets. If there is a better way to get there, we are all for it. At least I can say for my side, I am willing to look at any other option. But what I find curious is, I believe if we had not put up this industry prefunded amount, in effect a bridge until we can actually get the FDIC process in place, we would hear criticisms, at least from some, saying not putting up any industry prefunding would allow taxpayer exposure. One of the things we want to make sure is that taxpayers, again, are never, ever exposed to the kind of risk that took place in 2008. I would also add that whatever these prefunds, trust instruments, or even the funding that would come from borrowing against the unencumbered assets, we need to buy a little time so it is not done in a haphazard way so any of these funds will be ultimately recouped after the crisis from the industry based on those institutions that benefited, those institutions that also were part of the causation. Again, let me stress all of these funds, whatever will be repaid--and again whatever funds that are invested in these institutions in the interim will not go in, as what happened in 2008, as common equity as an effort to, in effect, prop up the systemically important firms. But it will go in as, in effect, top in the creditor process, debtor-in- possession financing. Did we get this perfect? No, perhaps not. There are ways, again, that we can improve. But the framework we put in place, the almost uniform response we have received, has been we have taken a gigantic step toward ending too big to fail in a rational, thoughtful approach. I see my colleague, the Senator from Tennessee, has arrived on the floor. I again compliment him for his work, for the fact both of us said at the outset for neither of us was this religion. We just need to get it right. If we have to ruffle a few feathers on both sides of the aisle so that never again are the American taxpayers put in the position they were in 2008, then so be it. I appreciate the good work of the Senator from Tennessee on this effort. I appreciate our working together on the preference toward bankruptcy, on the recognition that we have to have that judicial check, that we cannot go out and grab firms willy-nilly that are not depository, that are systemically important. I think we have taken giant steps forward. I ask my colleagues from both sides of the aisle to lower the rhetoric a bit, to recognize this can and still should be a place where this Senate can work in a bipartisan fashion to put in place a set of rules so we can, with the appropriate speed bumps in our financial system for those firms that are systemically important--that we do put in financial rules of the road for the 21st century, that we do allow America to continue to be the financial capital of the world and the innovation in financial products capital of the world. I think we can still get there. I look forward to work not only with my friend from Tennessee but colleagues from both sides of the aisle to get it right. I yield the floor.

Mr. WARNER

Mr. WARNER. Let me just acknowledge that we may--the Senator from Tennessee and I may differ slightly on how large some of the things the Treasury and FDIC put in at the end--because clearly one of the things that I think the Senator from Tennessee--and we can very quickly get into the weeds, but the weeds are important on this--the so-called 13-3 authority of the Fed would no longer be used for specific institutions, but the ability to help supplement around a liquidity crisis so that we don't have firms move from a liquidity crisis into a solvency crisis was an important tool, but it was perhaps misused in the past in terms of targeted at specific firms rather than issue-wide. There are certain other aspects that I believe can be corrected, but the overriding point that I think Senator Corker and I both want to make is I think we put together, at least in title I and title II--and I think there has been good work done in other parts of this bill as well, but in title I and title II, systemic risk, too big to fail resolution--we have put the framework in place that while some on both ends of the political extremes may be attacking, the overwhelming response has been that this is a good framework. Like any piece of legislation, it needs some fine-tuning, but the fine-tuning ought to be preserving this framework, perhaps moving back from some of the pieces the FDIC and Treasury put in place. But we can get there, and this is too important to allow this piece of legislation to be drawn by the aisle that separates this body into Republican and Democratic camps. We need to put a piece of legislation and solution in place that sets the financial framework and predictability for the next century, and I think we have gone a long way toward doing that.

Mr. WARNER

Mr. WARNER. I thank Senator Hagan. I appreciate her leadership on this issue. Again, I also appreciate her recognition of not only the Members who have been struggling with the bill for almost a year, but the staff members who help us put together the facts, put together the case studies, who help us crunch the numbers, as we try to make sure we get this right. I now want to call on my friend, the Senator from Alaska. One of the things the freshmen have always said, as we have come to the floor over these months--as we have pointed out--is that the price of doing nothing is extraordinarily high to our economy, to our families, to our businesses, and that the status quo is not sustainable. I know this has been a theme Senator Begich has echoed repeatedly on the floor. As we come to the closing hours of this debate, if you could share with us one more time why you think the status quo is unacceptable. What is the price of doing nothing? How would that affect the people and businesses in the great State of Alaska? Senator Begich.

Mr. WARNER. I thank the Senator. Thank you for your comments. Thank you for your leadership, particularly on a series of freshmen amendments that dealt with cost containment. And if time exists after my colleagues speak, I am going to go back to that issue. But I now want to ask my good friend from Oregon a question. No one has come to this body with more passion about making sure working families get a fair break, not only in health care but in the world of financial reform and issues that cut across the spectrum. I know one of the issues Senator Merkley has worked on tirelessly throughout this whole conversation is how to make sure the Oregon families get that fair break, get that fair shot, how to make sure health care is affordable. I would like you to share with our colleagues and those Americans who are at home watching what this health care bill does to help those middle-class Americans, middle-class Oregonians to make sure they get that fair shot, fair break in health care reform. Senator Merkley.

Mr. WARNER. I thank Senator Merkley. Thank you for sharing those stories from real folks who are dealing with the current broken health care system. There are enormous stress, challenges, and burdens that our current system places on those families. I think we are taking a giant step forward. The President already has by signing into law the bill yesterday. We will continue that step with passing this reconciliation bill later this week. I now wish to call on another one of my colleagues, Senator Tom Udall of New Mexico. Senator Udall has, again, along with all the other freshmen colleagues, been a leader in this fight. He has particularly taken on the issue of prevention and the fact that we have a health care system in this country that is more a sick care system than it is a wellness and prevention system. I want to hear from Senator Udall about how the bill is going to affect the good folks of New Mexico. Senator Udall.