Mark R. Warner

Mr. President:

 Today I would like to continue a tradition that our former colleague, Ted Kauffman of Delaware, began in 2009 during the 111^th Congress. 

Senator Kauffman would appear here on the Senate floor on a regular basis to highlight the great work performed every day by members of our federal workforce.

It is a tradition I proudly carried through the last Congress, and one that I will carry forward into the current session.

And the two great federal employees I wish to celebrate today – both Virginians, I might add -- also serve as excellent role models. They represent the thousands of professionals who work quietly every day across our intelligence community to keep our nation safe.

Very often, these professionals work in anonymity, and many risk their lives in trouble spots far away from the limelight. And this is as it should be.

Mr. President, for their service - for the late nights and early mornings away from their families - for the risks they take and the sacrifice they make every day -  and because they do not hear this nearly enough – allow me to say, “Thank you.”

Today, I would like to briefly tell the remarkable stories of two extraordinary women who built their careers at the Central Intelligence Agency.

Jeanne Vertefeuille passed away on December 29th at the age of 80, after a brief illness. 

In announcing her death to the CIA family, Acting Director Michael Morell appropriately described Ms. Vertefeuille as “an icon” within the agency.

If her story were not true, it would read like something from a spy novel.  

Jeanne joined the CIA when she graduated from college in 1954. At a time when America’s intelligence community could best be described as a “boys club,” she was hired at CIA as a GS-4 typist.

But over a career that stretched nearly a half-century, Jeanne Vertefeuille  blazed a trail for women in the national clandestine service.  

She methodically worked her way up to leadership positions. There were overseas postings in Ethiopia, Finland and The Hague. She became an expert in Soviet intelligence and spycraft, and she retired as a member of the Senior Intelligence Service in 1992.  

But even after her retirement, she continued her work for the Agency as a contractor, making still more valuable contributions and working without a day’s break in service until she became ill last summer.

As her obituary reads, “She remained a quiet agency soldier… purposefully nondescript and selflessly dedicated.

“She lived alone and walked to work. 

“But if she was a gray figure at the agency, Ms. Vertefeuille was also a tenacious and effective one, and in October 1986 was asked to lead a task force to investigate the disappearance of Russians whom the CIA had hired to spy against their own country.”

Together with her colleagues at the CIA, she invested years in the methodical and painstaking hunt for a mole.

And it was through her efforts, and the good work of many others, that we ultimately unmasked the notorious traitor Aldrich Ames in 1994.

Aldrich Ames turned out to be one of the most dangerous traitors in the history of our nation.  

Thanks in large measure to Ms. Vertefeuille’s efforts, he was convicted of espionage and he is now serving a life prison term without parole.

But Jeanne Vertefeuille’s story does not end here.

The Washington Post recently described how one of her colleagues, Sandy Grimes, another Virginian who worked with her on the Ames task force, stepped-up over the past year to care for Jeanne as she was battling cancer.

Sandy Grimes, a career CIA employee whose parents worked on the Manhattan Project, ultimately served as Jeanne’s primary caregiver. 

She sat with her each day during the final three months of her remarkable life.

She monitored Jeanne’s care, and tried to make sure she remained comfortable. She often brought personal messages of support and appreciation from their former CIA colleagues.

‘I felt an obligation to be there with her,’ Grimes said.  ‘I can’t imagine not doing it. I was the one Jeanne would accept. I owed it to her as a friend.’”

Now, by all accounts, Jeanne Vertefeuille was an intensely private woman, and she doubtless would recoil at the attention she is now receiving.

But one cannot help but be inspired by this true-life story of service – and patriotism -- and friendship -- demonstrated by these two great federal employees, Sandy Grimes and the late Jeanne Vertefeuille.

Their service reflects well on the work of thousands of other intelligence professionals whose names can never be revealed. Both of them deserve our recognition and thanks.

Mr. President, during the last Congress, I joined 14 Senators in a Joint Resolution to mark U.S. Intelligence Professionals Day. 

This was an effort to bring respectful attention to these quiet professionals who keep our nation safe every day, without any thought of recognition. 

I look forward to working with my colleagues to reintroduce this resolution here in the new Congress.

And, Mr. President, I would like to conclude my remarks today by once again expressing my deep respect and sincere appreciation for the service of Sandy Grimes and the late Jeanne Vertefeuille.

Each of these women has earned the thanks of a grateful nation. 

Thank you, and I yield the floor.

Madame First Lady, President Steger, members of the Board of Visitors, Virginia Tech faculty and staff, parents, friends:

Today, we gather to acknowledge and celebrate the success of over 5,000 college graduates – students who know that orange and maroon always look good together -- the Virginia Tech graduating class of 2012.

I understand Governor McDonnell is also here today, celebrating the graduation of a daughter. Congratulations, Governor and Mrs. McDonnell.

Mrs. Obama, I want to assure you, I ate a healthy breakfast, exercised for an hour before coming up on stage … and I am ready to take you on in a sack race right after this ceremony.

@michelleobama just accepted @markwarner's challenge to a sack race after commencement. Best graduation ever

— Alice Park (@LOLcouch) May 11, 2012

… Welcome to your first visit to Virginia Tech.

I recall the first time I was here, in this very stadium.

It was a Saturday night football game, and there’s nothing quite like it.

The atmosphere -- the band -- the students -- the noise: I was hooked.

It is always good to be back among friends in Blacksburg.

* * *

When President Steger announced in March that I would be one of your commencement speakers today, an engineering student named Miles Goff tweeted this:

“I am honored to have you speak at graduation. I hope it’s a good speech – not too awful long, though…”

Thanks, Miles.

With that in mind, I will follow Winston Churchill’s advice to public speakers: ‘Be clear, be concise -- and then be seated.’

* * *

On the day that I sat where you are, I was the first person in my family to graduate from college. And I knew that I would be able to do things and go places that my parents only dreamed about.

Today, you share that promise – and you can realize those dreams.

You have been well prepared with a Virginia Tech degree, but that investment brings a responsibility.

Your obligation is to strive – to reach – and to not be afraid to fail.

Remember, you graduate from a university whose first student walked 13 miles simply to enroll.

So you, too, must be brave, and daring and courageous. That is what drives our nation.

This is the unique spirit of America.

I know the challenge can be daunting. For me, some of my most important life lessons have come from moments most people would consider failures:

• I failed in two businesses before I was 30 years old: my first business failed in six weeks, and the second one went bust after six months.
• I was sleeping on friend’s couches and living out of my car when a friend told me about this new technology – technology that just might lead to an entirely new industry – the cellular telephone.
• My Harvard Law School classmates who were practicing at big fancy law firms laughed. “Warner, you’re crazy,” they said. “Who’s going to want a telephone in their car? Go get a real job!”

Those friends? Most of them are still practicing law, and billing by the hour.

* * *

Going for it, and being willing to fail, but then picking yourself up and getting right back in the game – that’s what is so great about America.

Never forget that.

But remember: along with that responsibility to yourself, you also have an obligation to your community.

You’re graduating during an election year, and the political and policy debates already are pretty intense.

I urge you to participate in our nation’s debates in a respectful manner, because today we’re living in a nation that engages in too much confrontation and too little conversation.

And we wonder why Americans have become cynical, distrustful and alienated from their government?

While we’ve become better connected, we seem to be even more divided.

You graduates can access more information on your smartphones every day than your grandparents could access in a year – maybe even their entire lifetimes.

Yet in this age of the iPhone and the iPad, we seem to find it harder and harder to look beyond the “I.”

Don’t misunderstand me: Disagreement and rigorous debate about the big issues of the day and the challenges we face is both healthy and proper.

But we should be able to debate these critical issues without questioning each other’s motives or our shared commitment to America’s success.

No one in politics – and I mean no one – has a monopoly on virtue, or patriotism, or on the truth.

For America to remain a nation of great destiny, your generation must step forward and embrace the motto of this university – “That I may serve” -- a motto that many of you already have accepted in your everyday lives:

• For instance, we know that almost all of the members of the Corp of Cadets who graduate today will enter America’s military service. We honor their commitment to our freedom.
• Let me just add, Mrs. Obama, that all of us applaud your personal commitment to America’s military men and women and their families. You and Dr. Biden have set a great example for the nation in encouraging stronger community support for our returning veterans and our military families.

Graduates, your time here at Virginia Tech has been marked with great moments of celebration and awful moments of reality.

In the months that followed that tragic April day in 2007, when some people were asking “Who will go to Virginia Tech now?” -- you raised your hands and said, “I will.”

And time and time again, America has watched you – and each time, we have been impressed.

It is that spirit – and your example – that will lead the way forward.

So no matter the distance you travel in the days ahead, remember the lessons you learned on this campus.

“That I may serve:” Always stay true to the Hokie spirit that makes this such a great university.

* * *

And now I come to my final piece of advice, and this might be the most important lesson I leave with you today:

Call your mother.

Because, if you’re honest with yourself, you know you did not get here alone.

So call your mother. Call your father. Call your grandparents, girlfriends, boyfriends, husbands and wives.

Seek-out that special person who has encouraged and supported you on this journey, and tell them “thank you.”

Don’t just text them, or tweet it, or post it on Facebook: call them and tell them.

You should cherish your friends and your family as if your life depends on it -- because it does.

* * *

Graduates, as you reflect today on the past four, five or six years of your life, you no doubt have memories of very special moments you will carry for a lifetime.

But to me, this year provides one vivid Hokie memory in particular:

Danny Coale -- I don’t care what the officials said -- you caught that ball!

So, Virginia Tech Class of 2012, as you prepare to leave this great campus, let me summarize my advice today:

• First: Don't spend a lot of time worrying about your failures. I've learned a whole lot more from my mistakes than from all of my successes.
• Second: Always remember that, as a nation, we are at our best when we work together, and when we are honest and respectful of each other.
• And, finally, there’s this: never, ever, forget to call your mother.

Congratulations graduates.

Now, let’s go Hokies!

Senator Warner's biggest piece of advice "Call your mother." #useyourcellphone #kachingkaching

— Josh Freda (@jfreda12) May 11, 2012

Remarks as prepared for delivery: 

Mr. President, I rise today to add my voice in support of the reauthorization of the Violence Against Women Act, of which I am proud to say I am a cosponsor.

In Virginia, this Act has doubled the resources available for prevention and intervention of sexual violence in communities and on campus. The funding provides crisis services in nearly every locality in Virginia.

Funds have helped develop state databases like the protective order registry in the Virginia Criminal Information Network (VCIN) and the I-CAN system housed with the Virginia Supreme Court. These databases have helped improve responses across the Commonwealth to sexual and domestic violence.

I would like to share some startling Virginia domestic and sexual violence incidence statistics, which highlight just how critical this legislation is to anyone in my state and across the country who may find themselves in need of help.

Virginia has seen a 12% increase over the past two years in the number of men, women and children staying in domestic violence emergency shelters on an average night.

Nearly 1 million women and more than 600,000 men in Virginia have experienced rape, physical violence, and/or stalking by an intimate partner and a third of Virginia’s homicides involve family and intimate partner violence.

According to the State’s medical examiner, 1 in 3 homicides in Virginia are due to family or intimate partner violence.

As these statistics show, the services authorized through VAWA continue to be a necessity. It is important that we continue to support access to these vital services that will provide significant benefits to those most in need of assistance.

For the Violence Against Women Act to truly work as intended, we must have effective accountability. Particularly in times of tight budgets, it is important to ensure that taxpayer dollars are spent wisely.

It is critically important that we continue to advance effective, comprehensive policies that will provide appropriate preventive and supportive services that many in my state, as well as across the country, will benefit from.

The accountability measures included in this bill are patterned after proposals offered by my Republican colleagues for other grant programs, and these accountability measures have been tailored to VAWA to make sure that funds are efficiently spent and effectively monitored.

The bill authorizes the Department of Justice’s Inspector General to audit grantees to prevent waste, fraud and abuse. It gives grantees a reasonable amount of time to correct any problems that were not solved during the audit process, but imposes severe penalties on grantees that refuse to address the problems identified by the Inspector General.

Rather than Congress mandating a set number of audits, the Office of Inspector General will have the ability to set the appropriate number. This will give the experts in the Inspector General’s office the ability to more effectively perform important oversight.

The Department of Justice has taken significant steps to improve monitoring of VAWA grant awards by updating grant monitoring policies and incorporating accounting training for all grantees.

The bill has also taken the important step of holding the Department of Justice accountable when using Federal funds to host or support conferences.

These new accountability provisions are an integral piece in this process and a meaningful additional check to ensure the appropriate use of taxpayer dollars for these important programs.

I encourage you to join me in support of the reauthorization of the Violence Against Women Act.

Mister President, just 72 hours ago, a bipartisan majority of the members of the National Commission on Fiscal Responsibility and Reform endorsed a package of proposals to reposition our nation on a more responsible fiscal course.

I want to commend my legislative colleagues who served on the Commission -- Senators Baucus, Coeburn, Conrad, Crapo, Durbin and Gregg.

I also want to thank the other economists, policymakers and thinkers who invested the time and effort and courageously grappled with these difficult choices.

On Friday, 11 of the 18 members of the Commission voted to support a tough, bipartisan prescription for fiscal health. I regret that the 11 “yes” votes fell just short of the 14 votes required to forward this plan to Congress for our consideration.

In the hours leading up to Friday’s vote, I was proud to work with 13 of my Senate colleagues to draft a joint letter to the White House and to the bipartisan Congressional leadership.

This letter, ultimately signed by 14 Senators and distributed before the Commission’s final meeting on Friday, requested that the panel’s recommendations come to Congress for our consideration regardless of the outcome of the Commission’s final vote.

Mister President, I ask consent to place a copy of this joint letter in the Record.

I have a reason for coming here to the floor today and drawing attention to our letter once again, and it is this.

The seriousness of our nation’s fiscal challenges – the compelling need to address these issues in a responsible and bipartisan way -- did not suddenly dissipate or magically disappear over the course of the weekend that just ended.

In fact, since the Commission’s final meeting ended on Friday afternoon, the national debt – the running tally of what the U.S. government owes -- has increased by at least $15 billion - and our national debt totals a staggering $13.8 billion.

Let me repeat that: our national debt is now approaching $14 trillion.

Remarkably, we’re still writing checks. That we’re still allowed to have a checkbook may be even more remarkable.

You know, every day you can listen to a lot of talk from people in this town about deficit reduction.

But as I said when the Commission first unveiled its proposals one week ago, while I would have made some different choices, we were being presented with a unique opportunity to finally get real about deficits and debt.

Actually, I was more blunt than that: I said that the time had come to put up -- or shut up.

This Commission earned credibility by describing our fiscal challenges in stark and honest terms.

They deserve our respect for crafting a clear roadmap to help steer our nation back to a more responsible fiscal path.

The Commission’s leaders and its members made difficult decisions, and they did not shy-away from examining both expenditures and revenues.

They concluded, correctly, that our nation’s fiscal challenges are too serious, and the fiscal hole we’ve dug for ourselves is too deep, to be solved by looking at only one side of the ledger.

To be sure, there is something for everyone to dislike in these recommendations, but that is simply a reflection of how large the problem really is.

Whether you look at this report and are concerned about the viability of Social Security, or tax rates, levels of defense spending or any other specific government program or service, it becomes clear our options ultimately only get worse with time.

Nonetheless, the Fiscal Commission produced a bipartisan plan that could strengthen our economic recovery today -- and help stabilize our long-term debt tomorrow.

They came forward with a framework for improving our country’s global economic competitiveness while still maintaining our shared commitment to protect our most vulnerable citizens.

And they deserve credit for recognizing that the hard work of getting our nation’s fiscal house in order also is an urgent matter of national security.

Because it is clear that America cannot be a leader in the world, projecting strength and promoting democracy, if we are weakened at home by our own deficits and debt.

Mister President, ever since this economic downturn began, individual Americans and their families have been required to make tough choices of their own about how to make ends meet.

It is time for those of us here in Washington to do the same.

Many of you know that I came to public service after a pretty successful career in business. In the business world, investors and shareholders have a reasonable expectation that, at the end of the day, a healthy company’s books will be balanced.

I also had an opportunity to serve as Governor of Virginia, where I worked in a bipartisan way with an opposition legislature to make the tough choices required to balance our state budget during tough economic times.

Now, I’ve only served in this body for about two years so far, but one thing I’ve already learned is this: if Washington can find an excuse to punt on a difficult decision, it almost always will.

And, most days, it’s a lot easier to just retreat to our partisan corners and default to the political gamesmanship you see every day on cable TV.

But Mister President, as the current economic upheaval in Europe so clearly demonstrates, we cannot simply ignore this challenge because it’s inconvenient -- or because the choices are just too tough.

Our competitors around the world certainly are not waiting for America to get its act together.

Now is the time to make these tough choices – not when the bond markets finally lose their patience, and their confidence, in our long-term economic viability, which is what recently happened to Greece and Ireland.

The fact is, if interest rates were not at historic lows today, we truly would be in a world of hurt right now. As it is, if we do not take action soon to stabilize our debt, we could be spending upwards of one trillion dollars a year just on debt service by the year 2020.

So now is the time for us to agree that we will not allow the perfect to be the enemy of the good.

And our own political discomfort should not be used as an excuse to delay holding an honest and long-overdue discussion about the complicated fiscal choices confronting us today.

Every day, every week, every month that we put-off that discussion, our options become more limited and the choices get even tougher.Resolving America’s fiscal problems must be our top priority.

Yes, it will require difficult decisions. No, there is no quick fix, no easy way out.

But those of us who are sent here to serve must be willing to step-up and lead the way.

Thank you.

Thank you for that kind introduction.

I appreciate that the Virginia Chamber has always represented the voice of business in Virginia. The Chamber also has not been willing to be viewed as a partisan entity, and you have supported folks in both parties who are working to get the job done.

I also want to thank the Virginia Chamber for standing with our gubernatorial administration back in 2004 as we worked to get Virginia’s balance sheet fixed. Our actions helped lead to Virginia’s designation as the nation’s ‘best managed state,’ the ‘best state for business,’ and the ‘best state for a child’s education.’

I think most of you know that I’ve spent most of my career in business, trying to meet a payroll. But you may not know that my first two businesses failed. If it hadn’t been for the opportunities offered by this country and our free enterprise system, I don’t’ know if I would have had a third chance.

It just so happened that my third shot came in the early 1980’s in the brand new cell phone industry, and I managed to eke out a nice living from that.

But I want you to know that I completely understand what it takes, and what it means, to build and maintain a successful business.

And let me just say, since we are in a candid forum, that there are issues on which I disagree with this President. But it’s also important to keep in mind that America’s problems – the deficit we have dug, the lack of appropriate oversight, in a variety of areas – did not begin in January of 2009.

When we look at how we got to this position, there is plenty of blame to go around: Democrats, Republicans, the regulators and, if we’re going to be completely honest, many Americans who took out mortgages they could not afford.

For the last decade, our economy has been based on an inflated housing market and exotic financial instruments. Our economy stood on top of a financial house of cards that allowed governments, businesses and American consumers to get dangerously overleveraged.

When the music finally stopped, we almost had a complete financial collapse.

As someone who’ll match my business credentials with anybody in this room, it stunned me when I started digging in, and learned just how close we came to a complete financial catastrophe – a fiscal disaster that could have been exponentially worse than it ultimately turned out to be.

That has resulted in a wild 20 months here in Washington. Let me briefly touch on some highlights – the good, the bad and the ugly.

I actually believe that history will treat President Bush and Secretary Hank Paulson well for their courage on the TARP legislation in the Fall of 2008. As ugly as that bank bailout was, I think it was necessary. In retrospect, it could have been better defined. But when the house was burning down, they demonstrated remarkable courage in taking those actions.

I also think that history will conclude that President Obama and Secretary Tim Geithner were right that last year’s stimulus bill was necessary. I will be the first to acknowledge that it was probably the worst piece of political marketing in history, but I believe the stimulus prevented an even worse economic catastrophe.

The stimulus package fell into three buckets.

The first bucket - $280 billion – represented the third largest tax cut in American history. Families got it, businesses got it, home and car buyers got it. Virginia families, in fact, have seen an average of $1,100 in payroll tax relief since last year.

The second bucket propped-up the states, and was crucial in preventing even deeper spending cuts and potential layoffs of teachers and deputy sheriffs. I remember being down in Richmond last January and a number of Republican legislators came up to me and said, ‘Governor, we’ll keep kicking you for all of this Washington spending, but please keep those stimulus checks coming!’

Because of the stimulus package, Virginia public schools have received nearly $2 billion. And it’s fair to say just about any highway or bridge project underway in Virginia today is the direct result of the stimulus program.

The third stimulus bucket probably represents good policy, but I’m not sure it was necessarily stimulative. This final third is funding a series of things that most of us in the room would consider to be worthwhile -- things like the clean-energy industry, building-out the national power grid, expanded broadband access and health IT and work on high-speed rail. These are areas in which we as a nation have fallen behind, and these are smart investments --but they are not immediately stimulative.

I want to be clear: no one is happy about where our economy is today.

But it is important to remember where we were in the Spring of 2009. The Dow was at 6,500, we were losing 700,000 jobs a month, we were not sure if we would ever see any money paid back from the TARP and we weren’t sure when we were going to see positive growth in the GDP.

Well, here we are in September 2010, and the Dow is back to 10,500, we’ve had three quarters of positive GDP and job growth, and we’re getting 80-to-90 cents repaid for every dollar spent through the TARP bank bill. 

Let's get serious about innovation and competitiveness 

America’s leading corporations have a combined two trillion dollars in cash sitting on their corporate balance sheets right now. But if you are a small business owner in America today, it continues to be extremely tough to get credit.

Last week, the Senate finished work on a package of new tools and significant tax breaks for small businesses – legislation that I’ve been working on for almost a year now.

It raises Small Business Administration loan limits and eliminates SBA fees. It builds-out what’s called the Capital Access Program, a small business lending program that’s proven effective in Virginia and 25 other states. It is estimated that a $1.5 billion investment in the Capital Access Program will leverage up to $30 billion dollars in lending to small businesses.

The small business package also provides about $12 billion in tax breaks for entrepreneurs and small business owners.

All of you know that small businesses are the lifeblood of any economy, and two-thirds of all jobs coming out of a recession come from small businesses. I think these new tools and tax breaks will help, at least around the margins.

The second thing I want to mention today is exports. We all know the statistics: yes, there are a billion people in China and a billion people in India, and they’re all competing for our jobs. But there are a billion people in China and a billion people in India that also want to buy our stuff.

Exporting may be the single biggest economic opportunity that we have.

We need to exponentially increase U.S. exports. The Administration is trying to do this. And my office recently hosted an export summit in Richmond to provide expertise and networking opportunities for almost 200 Virginia businesses.

The third issue I’ll mention today is the continuing need for our nation to adopt a portfolio approach to energy. I’m talking about renewable energy, like wind and solar. I’m talking about modern, safe nuclear power. Yes, it also means more natural gas and offshore oil production, once we’ve incorporated the lessons learned from the Gulf oil rig accident. A portfolio approach also includes clean coal technology and increased research and development into biofuels.

I happen to think the greatest job and wealth creator in this country over the next 25 years will be in the energy space. And right now, China is eating our lunch. I don’t believe the government should be picking the winners and losers, but I do believe we need to have a broad energy mix.

Fourth: we must work to strengthen our manufacturing base. You know, we could use fewer financial engineers and a few more real engineers that actually make stuff in this country.

There’s no reason we cannot have a strong manufacturing base once again in America. Germany has higher wages and higher taxes than us, yet Germany has climbed out of this worldwide recession based almost entirely on its manufacturing and its exports.

Here in America, the federal government has used just about all of the bullets we have available through fiscal stimulus and monetary policy. Now we must look for ways to provide more predictability and consistency to encourage corporate America to begin spending or investing some of the combined $2 trillion in cash that’s sitting on corporate balance sheets today.

I believe we need to look for ways in which we can adjust our tax policies to help jump-start research and development, encourage innovation and promote this new investment.

Over the longer-term, what looms out there is the federal budget deficit. Frankly, the rhetoric that both parties have offered -- that we either are going to solve the deficit by soaking those people at the very top, or that we are going to get rid of our deficits simply by cutting waste and fraud around the edges – doesn’t make any sense.

And it’s time for some straight talk about Social Security. As recently as 1950, eight workers supported every Social Security beneficiary. In just a few years, we will be down to two workers for every Social Security recipient.

That’s not politics: it’s math.

Tune out the hyperpartisanship

One thing that frustrates me is, as recently as three or four years ago, most of the major daily newspapers in Virginia had reporters up here covering Congress. They routinely reported on the work of Virginia’s congressional delegation for the folks back home.

Today, no Virginia newspaper has a presence on Capitol Hill. Everything you read and hear about Congress is mostly confined to the partisan noise you can find on cable TV at every hour of the day. And that’s true whether you choose to watch Fox News or MSNBC.

So you probably are not aware that, during last year’s health reform debate, I was one of only four Democrats to vote with 30 of the 40 Senate Republicans for medical malpractice tort reform. And while the overall health reform package was far from perfect, I can tell you it is neither as bad as the critics claim -- nor as good as many of its supporters might say.

You also may not know that I spent more than a year working on Wall Street reform with a strong Republican partner, Tennessee Senator Bob Corker. Our assignment, as junior members of the Banking Committee, was to come up with a series of tripwires to prevent any financial firm from becoming ‘too big to fail.’ We also agreed on an orderly resolution process that ends taxpayer bailouts. And our piece of the Wall Street reform bill received 95 votes in the Senate.

I recognize I am the only thing standing between you and lunch, so I’d like to leave you with this final thought on the hyper-partisan tone here in Washington.

I often tell people that, if you watch Fox News, you ought to turn on MSNBC every once in a while. And if you watch MSNBC, you ought to sample what’s on Fox News from time to time. Recognize that there are alternative views out there, and it’s not always just about the loudest voices on either extreme.

I urge you, as members of Virginia’s leading business organization, to seek out and support those individuals -- from both political parties -- who readily acknowledge that neither side has all the right answers.

And you should try to support those of us here in Washington who are working to find commonsense, bipartisan consensus. Resist the urge to simply follow that crowd which instinctively says ‘no.’

I would welcome that kind of partnership with you. And I stand ready, as always, to work with you as we try to get our country back on the right track.

Thank you very much.

Mr. WARNER. Mr. President, I appreciate the opportunity to join my colleague and friend, the chair of the Small Business Committee, the Senator from Louisiana, in support of this very important piece of legislation. Let me first of all say: In her inimitable style, she has been relentless on this issue. The Presiding Officer and I are both new Members. I think we have seen, in our short time here, certain Members who get that bit in their mouth and just will not let it go. On this issue, Senator Landrieu has truly been a leader. It is an issue of paramount importance.

I wish to answer the question of the Senator, but I wish to first of all preface it by saying what I hear in Virginia--and I know what the Senator hears in Louisiana, with all the other challenges Louisiana has--is our constituents want us to focus on jobs. On any historic basis coming out of recession, 65 to 70 percent of all the new jobs created come from small businesses.

And while we can point to certain positive signs in our economy right now--the Dow at 10,500 from a low of 6,500, 15, 16 months ago; corporate balance sheets, large Fortune 500 companies with more money on their balance sheets than at any point in recent history--good news. But if they are not hiring--and I hear from corporate CEOs, as well, their concern that the small businesses that are in their supply chain are going out of business, not just the small businesses that would normally go out with a traditional recession, but this recession has been so deep and so hard that we have now cut through the fat and we are into the muscle and bone. And if we continue to lose small businesses at the rate we are, then the ability to create a robust recovery will be dramatically stymied.

So what do we do? There is no single silver bullet. And what the Senator from Louisiana has crafted is a menu of options for small businesses, to get them that additional assistance, particularly in terms of access to credit, that will allow them to get back and do what they do best--continue to innovate, grow, and create jobs.

The Senator asked me what I am hearing from other Governors. Other Governors, Democratic and Republican alike, are saying that we in Congress have to focus on jobs. The issue of credit and access to credit to small businesses is paramount to all of them, and they want to see this legislation passed.

I was a former chair of the NGA. This is the kind of issue where Governors of both parties come together because we don't see these issues simply through Democratic or Republican partisan lenses. And sometimes this is the kind of bill that, candidly, as I remember as Governor, you kind of scratch your head and say: This is kind of a no-brainer. This bill is paid for. Why would not the Congress do all it can to support small business?

The Senator has outlined, and I know I was repeating some of the items, but I want to reinforce again--I want to particularly focus on one part of this legislation, but there are really four buckets here. They are, how can we expand some of the initiatives within the Small Business Administration that were put in place, particularly in the trough of the down turn, to make sure that these SBA programs, which have been vitally important to small business lending, are maintained--the 90-percent matches, some of the other loan guarantee programs?

I should acknowledge right here that I think the Administrator of the SBA, Karen Mills, has done a remarkable job in streamlining a lot of the processes. I have heard from banks for years about their challenges in dealing with SBA. Well, the current SBA team realizes this is a moment of crisis, and they have done everything possible to streamline their procedures. They need to have these tools put back in place so that the SBA can continue to do the very important work and, candidly, work that goes much broader in terms of a portfolio of small businesses that they are now attracting to their programs than in the past.

I would also acknowledge the dramatic increase in the number of particularly independent and community-based banks that are now accessing and using SBA programs. If we don't pass this legislation, these programs will be dramatically cut back, No. 1.

No. 2, the Senator has crafted, again, at her committee, in a bipartisan way, a whole series of targeted small business tax cuts, a kind of accelerated depreciation that will have the ability to write off core investments, the ability to focus on these job creators. How can we give them a little bit of a break right now, during these challenging times, in our Tax Code?

The third bucket in this program is building on a proposal the Senator and I and others had. We actually suggested this to the administration last October, but they have now built in a $30 billion lending program. The interesting thing about this lending program is it actually, on CBO scoring, scores as a net positive. So this is money not only that we will recover, but we will make--albeit a small one--a profit on it, to shore up particularly independent and community-based banks and give them a direct incentive in terms of increasing their small business lending.

Then a fourth bucket, one that I have been working on--and I wish to commend both my colleagues from Michigan, Senator Levin and Senator Stabenow. They have been very active in this as well--which is saying: Can we take what is already working in the marketplace at a State level and build upon it? This is the so-called Capital Access Program. Twenty-six States in America already have this program in place, and those States that do not have it can, in effect, piggyback on other State programs. So there is no need to create new bureaucracy. There is no need to create tons of new paperwork.

I hear, I say to the Senator, from my banking community that this particular initiative is one that they are perhaps even the most supportive of because they know how to do it, they know how to access it, and it can immediately generate a great deal of additional lending.

Let me take a moment, at the Senator's discretion and time--I know this is her hour, but I wish to take one moment to explain it because I think we have focused on the lending facility, we focused on SBA, we focused on some of the tax cuts, but the Capital Access Program has not received as much attention. Each State has slight variations, but let me describe how this initiative works.

Basically, the independent bank, frankly, at this point is probably a little leery of making a loan, even to a relatively healthy small business because chances are, most small businesses coming out of this recession, their cash flows are down, and if they have real estate as collateral, it has perhaps declined in value. So while I have great sympathy for the small businesses that cannot get their credit lines renewed, I also understand the bankers' predicament in that small business credit isn't quite as good as it was, perhaps, in 2007.

So how does this program work to benefit these small businesses? What it basically does is it creates a separate loss reserve pool for small businesses that fall into this category. What does that mean? If a small business was coming to a bank, a local bank in Baton Rouge or a local bank in Martinsville, VA, wanting to borrow $100,000, the bank would charge that small business a couple of extra points--$2,000 or $3,000 out of that loan that would go into a separate loss reserve pool. We, with this Capital Access Program, would then match that separate loss reserve pool for, again, a matching amount of points, 2 or 3 additional points. So on a $100,000 loan, you would have $6,000 that would be absorbed, first dollar loss, if this loan went into default. Now, the bank still has to do its due diligence because if you eat through that $6,000, the bank has to bear the burden. But it gives you a little cushion there. It takes that marginal credit and makes it creditworthy during these challenging times.

Think about this $100,000 with that $6,000 loss reserve pool taken times a hundred or times a million. You could have a $100 million basket of small business loans with a $6 million reserve, and suddenly you have a very valuable tool that can be used by banks across the country.

The roughly $1.4 billion, $1.5 billion that is in the legislation in this program, it has been estimated it will be leveraged. And I know ``leverage'' is a bad word in this Hall at this point, and I particularly have pointed out some of the concerns of overleveraging. But because the person who is receiving the loan is putting up money and we from the government side are putting up money, we actually double every dollar we put out, and on an actual dollar basis, we are going to be leveraging the Federal dollar commitment 20 to 30 times. So that means this $1.4 billion, $1.5 billion can create $50 billion of additional small business lending. Think about the power of this tool, a tool that banks are familiar with, a tool that already exists in 26 States, a short-term shot in the arm for an awful lot of small businesses that might not prefer to use the SBA program, might not want to go through a bank, that might want to access the lending facility. It just gives us one more tool.

So I hope my colleagues and folks who are watching and listening will recognize that what the Senator from Louisiana has tried to create is a menu of options because there is no one-size-fits-all in the case of small businesses. Their needs are different. The banking community's desires are different. I think she has crafted a great tool that will dramatically help small business lending.

If we want to go back to our constituents in the month of August and talk about a real, live deliverable, if we want to talk about what we have done in a tangible way that will get credit back into the small business lending pool, that could be delivered by Labor Day, we need to make sure we move forward on this important piece of legislation.

I again commend the chair of the Small Business committee for her relentless work on this issue. I hope our colleagues from the other side of the aisle will hear all of the various business organizations across the political spectrum that are supporting this legislation. My hope is that we can deal with the amendments, get those amendments dispensed with at some point during the day, and pass this bill today because it is very important to making sure this recovery we are just starting to creep into is actually not a jobless recovery but a recovery that creates jobs. To do that, we have to have these small businesses healthy.

I rise today to mark a sad day for the National Capital Region. On the eve of the one year anniversary of the deadliest accident in Metro’s history, I would like to extend my deepest condolences to the families of the nine victims who perished on June 22, 2009. On that day at 5:02 pm, a Red Line train collided with another train that sat stopped between the Takoma and Fort Totten stops as it waited for the Fort Totten station to clear. The first car of the moving train, an outdated model over 30 years old, sustained tremendous structural damage which resulted in significant casualties. As a Virginian, this issue is especially important to me because one of the nine victims who died – the train’s operator – as well as fifteen of the eighty people injured were fellow Virginians.

The unfortunate events of that day shed light on some glaring problems with our nation’s public transportation systems, and should provide us with a sense of urgency to accomplish the task of ensuring the safety of public transportation users.

Metro itself and its oversight agency (the Tri-State Oversight Committee – TOC) are both in dire need of reform. While it has taken steps towards addressing the problem, Metro needs to continue to make safety its top priority. Full analysis of potential hazards and safety concerns needs to be done, and Metro must start regimented data collection efforts so that safety problems can be tracked and prioritized. Top Metro executives – those with decision-making authority – need to be involved in critical safety conversations, and need to have the relevant information in their hands when making important safety decisions.

I am proud that we have been able to provide $1.5 billion in federal funds over 10 years to make capital improvements to Metro, but this cannot be a blank check. Replacing the outdated 1000 series rail cars is a huge priority, and Metro is poised to sign the contract that will enable them to phase out the older cars with newer, safer models. But more needs to be done. Metro also needs to demonstrate safety improvements it has been making and ensure that it will continue to make safety its top priority if it expects continued financial support.

More broadly, this accident has highlighted that the safety of our public transportation systems should be a priority nationwide. We have been working in the Senate to develop a legislative approach to that will ensure proper safety standards are in place. Incredibly, FTA currently has no authority to regulate our nation’s transit agencies or establish national safety standards. Senators Dodd, Shelby and Menendez are currently drafting new legislation that will give FTA the tools to develop a national transit safety plan while also providing states the resources and flexibility to put in place more robust transit safety oversight practices. The Banking Committee, of which I am a member, will soon consider this legislation and I am pleased that we are moving towards making progress in this area so that preventable tragedies, such as the one that occurred a year ago, will be a thing of the past.

Mr. WARNER. I appreciate the opportunity to follow the chair and the ranking member of the Banking Committee and the chair and the ranking member of the Agriculture Committee on this critically important debate.

I commend their work, the great amount of work that has been done, actually, in a bipartisan fashion already on this important piece of legislation. There are differences. But an awful lot of work has gone into getting this product that now can be fully aired on the floor of the Senate.

I want to pay particular compliments to my dear friend, someone I had the opportunity to actually work for close to 30 years ago, the chairman of the Banking Committee, who, while I am a new guy in the Senate, seems to me, on this bill, has kind of done it the old-fashioned way. He has had an open door to any Member of both sides of the aisle.

As this issue got more and more complex, he asked various members of the committee to roll up their sleeves and take on portions. Senator Corker and I--and nobody has been a better partner than Bob Corker for me during this process--took on a major portion of the bill. Then, as we kind of got to the Senate floor, time and again--and I will come back to certain specific examples--he has said: How can we find that common ground that seems to be so often missing from this debate?

I also commend the ranking member, Senator Shelby. Nobody has been kinder and no one has spent more time with me kind of helping me learn the ropes of this institution than Senator Shelby. But I also have to say that as we get into the substance, some of the comments that have been made from my colleagues, particularly on the other side, do not resemble the bill we are actually starting debate on, particularly some of the portions in which I personally have been very involved.

I want to try to address some of those briefly. In some of the comments we have heard from my colleagues, they have talked about that we did not put in too big to fail. If there was one overriding challenge that we were all tasked with--I believe my colleagues from the other side of the aisle would completely concur with this--it was ending too big to fail and never again exposing taxpayers to the financial mistakes made by large systemically important institutions, made by Wall Street.

What I have not heard from my colleagues--and I guess this will be assent--is that a lot of the things that we have put in this legislation, bipartisan, take us down that path. We have created a systemic risk council so for the first time the regulators can actually get above their silo-like focus, so they can look ahead of the crisis and create early trip wires to make sure we do not get to the kind of catastrophic place we ended up in September of 2008.

This systemic risk council will make sure that these systemically important firms--and there will be systemically firms no matter what we do--but that the price of getting so large will actually be borne by those institutions and not by the taxpayers.

So what are those speed bumps, as I have called them? Increased capital requirements, making sure there is a better management of leverage, making sure they actually have in place risk management plans.

Then we have created two brand new tools that regulators have never had before. In fact, the price of getting so large, one is a whole new--and I apologize to my colleagues and those who are viewing because some of this is in the weeds, but the weeds are where billions of dollars are made or lost.

But we are creating a whole new area of capital that is called contingent debt, that any of these firms will have to put in place. That debt will convert to equity and dilute shareholders and dilute management if any firm even gets close to getting into trouble.

It will be an immediate check by current management on not getting too far over the edge, because we believe the bankruptcy process should be the way that firms unwind themselves; if they get into trouble, go into bankruptcy. They may or may not come out at the other end, but you have to have a plan in place.

We have spent an awful lot of time looking back, back to the Bear Stearns crisis, the Lehman crisis, AIG. All of the stories show there was no plan in place for how to unwind these firms.

So we have given this risk council the ability to require these systemically important firms to basically put forward a plan on how they will unwind themselves in bankruptcy at no risk to taxpayers. If the regulators do not approve, they have the ultimate sanction of actually being able to break up these firms.

Now, time and again, in this legislation--and I hear some of my colleagues saying: We are going to always default to resolution. If this works, resolution should rarely and hopefully never, ever have to be called upon. But who would have ever predicted that we would have ever gotten to the point of complete financial meltdown of September 2008? So we cannot go responsibly forward without also having--and we heard this from people across the spectrum--without having some form of a resolution plan in place.

There has been a great deal of comment made about the notion that the chairman's bill says we ought to go ahead and in effect ask these financially important firms to pony up a little bit of the resources so that if one of them gets into trouble and has to be unwound, there is some capital available to, in effect, keep the firm operating so the market doesn't lose faith in that institution and then create a financial run. We saw institutions that seemed to be very well capitalized but, because the market lost faith in them, their capital disappeared virtually overnight. You have to make sure there is an assurance that the firm can continue to operate and be out of business.

Senator Corker and I looked at different options, but we thought perhaps the best way is to have some resources available, whether the number is $50 billion, as the chairman proposed, or a lesser amount, subject to valid debate, and perhaps the industry ought to be paying for that.

I have heard others criticize that, but what I have not heard from my colleagues on the other side is, if the industry is not going to pay to keep these firms alive through the process of being put out of business--again, resolution means your firm is going out of business, your management is gone, your shareholders are gone, your unsecured creditors are gone. No rational management team would ever want this to happen. They would always prefer bankruptcy. That is how we have tilted this process. But if you are going to do that, you need to put them out in an orderly way. You don't want to have what happened when there was no plan to unwind Lehman. What I would ask is, if they don't like the prefund from industry--and some even in the Treasury don't like it--then who will pay and how do we make sure taxpayers are not exposed?

My two goals are--and I know Senator Corker agrees--that taxpayers should not be exposed, and you have to have some liquidity operating so you can keep the firm operating so you can put it out of business.

I have also heard critiques that somehow in this process there would be some preference for one creditor over another. Nothing could be further from the truth in terms of what the Dodd bill proposes. It is as if somehow a whole new process was created out of whole cloth where somehow the firm that was going to be put out of business was going to be choosing which creditor was going to be paid or not paid. Nothing could be further from the truth. The model I believe the chairman's bill adopted was basically the model the FDIC uses as it puts banks out of business through the normal resolution process.

The fact is, the FDIC is charged, as this resolution authority is charged, to say you have to maximize value as you put the firm out of business. So, yes, you may have to pay the electric bill to keep the lights on, but there will be a recoupment process at the end so that creditors balance out. It is not some new process. This has been used for decades relatively effectively.

I also heard comments made about some new bureaucracy in the Office of Financial Resolution. Nothing could be further from the truth. One thing we heard time and again as institutions came in, as regulators came in, was that too often they didn't have current real-time data. So when AIG was going down, nobody knew the extent of the interconnectedness. When Lehman went down, nobody understood the state of their transactions. The Office of Financial Resolution that is proposed is to make sure that the regulators--experts from all across the field, not Wall Street--have real-time data on the state of interconnectedness of all the transactions that take place on a daily basis. To me this could be one of the most effective tools in this whole piece of legislation, making sure we have an immediate snapshot of the market.

In the consumer area, I think there is, again, broad agreement that we need to improve consumer protections; that we ought to make sure financial products are regulated by the nature of the product, not by the charter of the organization that is issuing the product.

There are still parts we need to work on. We need to make sure, particularly for community-based banks, that a community-based bank, a smaller institution that didn't create the crisis in the first place, doesn't have one regulator come in on a Monday on a consumer issue and another come in on a Wednesday on safety and soundness, and get conflicting advice. How we get enforcement right is an issue we have to work through. But again, common ground can be found on this issue.

I commend the Agriculture chair and Senator Chambliss on the issue on derivatives. There has been a lot of discussion. There is an agreement that derivatives, while they have been oftentimes appropriately vilified as some of the tools that created the crisis, are also a useful way that legitimate businesses hedge risk. At the same time, as we try to put in place new rules around derivatives, we don't want to push the whole derivatives market offshore. While I commend the end-use exemption that was created and the goal of trying to get everything cleared and on exchanges, my hope is we can put some penalties in place. Some of the penalties the Agriculture Committee has put in place perhaps could be triggered if the banks do not end up meeting what they basically said, not overusing the end-use exemption or not getting all their products cleared or on the exchanges. My concern is that no matter how good the end-use exemption we write, there will always be more resources on Wall Street to find ways around even the best written legislation on something where as much money was put in place. So putting in place trip wires that might then cause a Draconian response would help self-police the industry.

One more example of the approach Chairman Dodd has taken on this bill. In my background, I spent 20 years in the finance industry before I was Governor. I was in the early stage capital formation business, something that is very important in the tech community. A lot of firms that are thrown around on this floor and elsewhere I have been a client of, worked with, worked against. One of the areas I had great concerns about in an earlier draft was anything that might stop or slow the ability for startup companies to access capital. There were some provisions in the bill that looked at the definition of a qualified investor that could hurt the creation of angel investors which are so critical to creating new jobs. There were perhaps provisions put in around the SEC in terms of new deals that might have to be vetted for a long period.

If you are a startup company, you don't have 120 days before you can raise your dollars to kind of get to the next step to stay alive. I cite these two examples because instead of simply saying no to the chairman, I said: Yes, you raise good points. Others have raised these points. They are changing the bill. I think that spirit is what the chairman is going to bring to the debate.

In the 20 years of being in the finance business or around the finance business, I came to this body thinking I might know a little something about this subject. There was probably a month in which I realized that whatever I knew was incremental and that the last year and a half I have had to go back and retest all of my assumptions. It has been an enormously challenging and exciting experience. I come away from this year and a half--again, particularly working with Senator Corker, where we had everybody from across the political spectrum talk to us to get us up to speed on these issues--with a couple conclusions.

One, there is no Democratic or Republican solution to financial regulatory reform. If there is ever an area that should not be broken down on partisanship, it is this issue. Second, what the market craves most is predictability. Sometimes it is overstated: if you do this, oh, my gosh, it will be the death knell of American capitalism--there has to be balance. But oftentimes those statements are overstated. At the end of the day, what the market wants is a good, commonsense bill that will set the tone, not just for the next year or two but for the next 20 to 30 years.

Finally, because of the good work of Chairman Dodd, Senator Shelby, and many others, common ground is attainable. I look forward to spending as much time as needed and appreciate in particular those on the Republican side who agreed to bring this bill to the floor and no longer are there going to be political shenanigans; let's air these issues back and forth.

There is a lot more to say about some of the critiques that are made of the bill. I look forward to that discussion and look forward to working toward that common ground so we end up with 21st century financial rules of the road.

I yield the floor.

The PRESIDING OFFICER. The Senator from Connecticut.

Mr. DODD. Mr. President, before we hear from my colleague from California, I thank Senator Warner of Virginia. He is a relatively new Member of this body and a new member of the committee, but I can't even begin to aptly characterize his contribution to this product. Since day one, he has been at every meeting, been involved in almost every conversation about this bill, particularly the focus that he and Senator Bob Corker agreed to take on in working out title I and title II of the bill dealing with resolution authority and too big to fail. His background, his experience, his knowledge made a wonderful contribution to this product. His interest in other matters is valued as well, because he brings two decades of living in a world in which these matters were something he absolutely grappled with. We have a long journey in front of us in the coming weeks to get through all of this, but his continuing involvement in this Chamber on this subject matter will be invaluable to all of us as we go forward. I thank him for that.

Mr. WARNER. Mr. President, I rise today to urge my colleagues to support bringing forward Chairman Dodd's regulatory reform bill. The chairman has just spoken with great passion about how we got here. I want to take perhaps somewhat of a similar tack and describe, as a new Member, why I think this legislation is so terribly important.

I have had the opportunity today and on other Mondays, as is often noted, to sit in the chair and listen to my colleagues come in and talk about this issue. I heard today my colleagues talk about health care, talk about stimulus, talk about unemployment, as somehow reasons why we should not start a debate about financial regulatory reform. I am not sure I understand the connection.

Candidly, the American people could do with a little less political theater and a little more action. Regardless of what happens this afternoon at the vote at 5 o'clock, I hope--and I honestly believe most of my colleagues on both sides of the aisle hope--that we will get to that agreement in a bipartisan new set of rules of the road for the financial sector that will stand the test of time for not a year or two but for decades to come.

Before I get into a substantive discussion about how we got here and how I believe the Dodd bill takes dramatic steps forward, there is one other issue I need to address. I have sat in the chair as the Presiding Officer and have heard--and I know as Presiding Officer we have to bite our tongues sometimes--colleagues come forward and somehow portray this piece of legislation as a partisan product.

I have only been here for 15 months but in the 15 months I have had the honor of serving this body, I have not seen any piece of legislation that anywhere approaches the type of bipartisan input, discussion, and ongoing dialog that Chairman Dodd's bill has. Literally, in the 15 months I have had the honor of serving on the Banking Committee, we held dozens if not hundreds of hearings on the objectives of this legislation, objectives, again, that I think colleagues on both sides of the aisle agree upon: making sure there is never again taxpayer bailouts for mistakes made by too large financial institutions, making sure we have more transparency and, as the chairman said, a return of a sense of fairness to our whole financial product system and, third, that ultimately the American people, the consumers of this Nation, will make sure there is somebody watching out for the financial products that sometimes they have been purchasing without appropriate knowledge or appropriate recourse, when these products explode in their faces.

Again, unlike the Presiding Officer who served around this body for many years, I am a new Member. But I saw where the chairman did something I thought was somewhat unusual with a major piece of legislation. Rather than saying he had all the knowledge and all the input, he actually invited in the members of the committee, junior members, senior members of both parties to set up working groups to take on some of the challenging aspects of this bill--consumer protection, systemic risk, corporate governance, the whole question of derivatives. Let me state absolutely, because I can state from the systemic risk/too big to fail portions, the products we developed that are critical parts of this legislation are bipartisan in nature, bipartisan in ideas, and find that common ground that has been so absent from so many of the previous debates we have had over the last 15 months--I think particularly about the fact of the systemic risk, too big to fail, and resolution authorities Senator Corker and I worked on. There has been no better partner I could have had than Senator Bob Corker, grinding through hundreds of hours, recognizing there was no Democratic or Republican response to systemic risk and too big to fail, but we had to get it right. While there may be parts of this bill that can still be tightened and need to be tweaked here and there, and the Senator and I may add a few improvements, on the overarching goal of making sure the taxpayers never again would be on the hook, I believe we have taken giant steps forward.

As you heard from the chairman already, those conversations are ongoing even today. Please, while we kind of get sometimes subject in this body to hyperbole, anyone who makes the claim that this legislation is partisan only doesn't recognize the facts or has not seen the experience of the members of the Banking Committee over the last 15 months.

Let me also acknowledge--and I recognize I have a number of things I want to say and maybe other Members want to come, but let me acknowledge something else about this discussion. Sixteen months ago, when I came to this body, I actually thought I knew something about the financial services sector. I spent 20 years prior to being Governor around financial services, taking companies public. I had some ideas about how we would sort through these issues. I have to tell you what I quickly found was that oftentimes my original idea, or oftentimes the simplistic sound bite solution that I thought might be the solution, more often

than not proved not to be the case and that trying to sort our way through this labyrinth of financial rules and regulations in a way that brings appropriate regulation but maintains America's preeminent role as the capital markets' capital of the world has been challenging.

Again I thank my colleague Senator Corker. I think we both realize there is no Democratic or Republican way to get this right but we had to get it right. Over the last year we have set up literally dozens of seminars where we invited members of the Banking Committee to come in and kind of get up to speed as well. Fifteen months later, with this legislation now before the floor, I think we have taken giant steps forward in getting it right.

I also want to revisit for a moment, before we get to the substance of the bill, how we got here. I have actually been stunned sometimes, sitting in the Presiding Officer's chair, hearing colleagues come in and try to cite as the causation of the crisis that arose in 2007 and 2008 a single legislative action back in the 1970s or a single individual's activities over the last two decades. The claims are so patently absurd, sometimes they do not even bear recognition or bear rebuttal. But it is important to take a moment to look back on the fact that none of us comes with clean hands to this process of how we got to such a mess in 2008 that we were on the verge of financial meltdown.

Think about the fact back in the early 1990s, back in 1993, Congress actually passed legislation to give the Federal Reserve the responsibility to regulate mortgages--responsibility that we have seen time and again they didn't take up the challenge to meet.

The Presiding Officer spoke very eloquently earlier this afternoon about the actions of Congress in 1999, the Gramm-Leach-Bliley bill, that basically broke down the walls between traditional depository bank and investment banking that had been set up by the Glass-Steagall Act in the early 1930s. Where the Presiding Officer and I may differ now is I am not sure we can unscramble those eggs, but clearly we needed a little more thought back in 1999, as we internationalized our financial markets and turned these large institutions into financial supermarkets, which was one of the precipitating factors in this crisis as well.

Candidly, bank regulators were not given the tools to regulate, and oftentimes regulators of both depository institutions, their bank holding companies, and their securities firms, had no collaboration or coordination.

During our hearings in the Banking Committee when we looked into one of the most egregious excesses in the last few years, the Bernie Madoff scandals, we heard regulators had started down the path to try to find out the source of some of the criminality that took place in the Madoff case, only to find because of our mismatch of regulatory structure they got to a door they couldn't open because that was the purview of another regulator.

Regulators, under our existing rules, were actually prohibited from looking at derivatives. Derivatives, as the Chairman mentioned, in the last decade have gone from what seems like a large number--$90-plus billion--to literally hundreds of trillions of dollars in value.

Responsibility continues, again, in some of our monetary policy. In the early part of the 2000s--and again, not many people sounded the alarm at that point. We over-relied on low interest rates and monetary policy to pull us out of the 2001 recession. But as we came out of that 2001 recession, we left those monetary policies in place, which led to a housing bubble for which we are still paying the price.

I know some of my colleagues on the other side said this bill does not take on the GSEs, Fannie Mae and Freddie Mac. And, yes, to a degree, they are right. And then, in a subsequent action, we will have to make sure we have a new model in place for these institutions. But that should not be used as an excuse to not put in place major financial regulatory reform.

Candidly, if we are going to be really truthful with each other and the American people, we have to acknowledge that everyone--not just the banks but everyone--got overleveraged. Quite honestly, we all, the American people, probably need to take a look in the mirror as well. I think, as we bought those adjustable rate mortgages; took out that second and third loan on our home; ended up getting that deal that seemed too good to be true; moved away from the conventional idea that you ought to go ahead and, before you get a mortgage, be able to put 20 percent down and be able to show you can pay it back, we all got swept up in this ``who cares about tomorrow; let's just borrow for today.''

We also saw innovations, and American capitalism has worked pretty well, particularly in the last 100 years. But we particularly saw innovations in the last 5 or 6 years alone, innovations that originated on Wall Street that were supposed to be about better pricing risks: derivatives and all of their cousins, nephews, and bastard offspring. But these tools that were supposed to be a better price risk we have now found were more about fee generation for the banks that created them and, instead of lowering overall risk, created this inter-tangled web that, once you started to put the string on, potentially brought about the whole collapse of our markets.

Time and again, we saw, rather than transparency in the market, opaqueness and regulators who never looked beyond their silos.

I think most all of our colleagues want reform. Colleagues on both sides of the aisle want to get it right. But I believe there are two real dangers as we go down this reform path. One is to resort to sound-bite solutions that at first blush sound like an easy way to solve the problem but in actuality may not get to the solution we need.

I know we are going to have a fervent debate on this floor--and I look forward to it--about the question of whether the challenge with some of our institutions was their market cap or was it really putting pressure on the regulators to look at their level of interconnectedness and the level of risk-taking that was taking place. I look forward to that. There are valid points on both sides. When we get to that debate, I will point out the fact that in Canada, where there is actually a higher concentration of the banking industry than in the United States, because there was greater regulatory oversight and actual restrictions on leverage, those Canadian banks didn't fall prey to the same kind of excess we found here in the United States.

I know the chairman and Chairman Lincoln are working through the question of derivatives, where they should be housed, because they do provide important tools when used properly. And there will be a spirited debate on whether we should break off derivatives functions from financial institutions. I look forward to that discussion. By simply breaking off these products into a more unregulated sector of the industry, we could, in effect, if we do not do it right, create an even greater harm down the road than we have right now.

So the first challenge is to make sure we don't fall prey to the simple solutions and recognize the complexities of these issues.

The other challenge we have to be aware of is the converse. I know the chairman has heard, I know the Presiding Officer has heard--any of us who have tried to get into this issue have had folks from the financial industry come in and talk to us about the unforeseen consequences of any of our actions. Some of those arguments are valid, but oftentimes those arguments are simply--they always start the same: We favor financial reform, but don't touch our portion of the financial sector because if you do this, the unintended consequences would be enormous.

Because the knowledge level and the complexity of these discussions are so challenging, what we also have to fight against in this body is the more easy process to default to the status quo because timidity in this case will not solve this crisis and will not provide the new 21st-century financial rules of the road we need.

We can't be afraid to shine the light on markets or, for that matter, to raise the cost of certain activities, because the unforeseen consequences of the interconnection of these activities, as we saw in 2007 and 2008, pose grave risk to our financial system--and as we have seen with the 8 million jobs lost and literally trillions of dollars of value lost from the American public.

So what does S. 3217 do to accomplish this? I spent most of my time on the two titles that Senator Corker and I worked on and the chairman and his staff adopted and changed a bit but that still provide the framework and, I believe, the right structure.

First--the chairman has already mentioned this--we create for the first time ever an early warning system on systemic risk. If there is one thing that has become clear from all of the hearings that have been held, not just at the Banking Committee but under Senator Levin's Investigations Committee and Chairman Lincoln's Agriculture Committee, it is that there was very little combination and sharing of information between the regulatory silos.

The chairman's bill creates a nine-member Financial Oversight Council chaired by the Treasury Secretary and made up of the Federal financial regulators. This group will bear the responsibility, both good and bad, if they mess up, of spotting systemic risk and putting speed bumps in place because we can never prevent another future crisis, but to do all we can to slow and minimize the chance of those crises. The most important part of this systemic risk council is it will actually share information, so no longer will we have one regulator who is looking at the holding company, another regulator looking at the depository institution, a third looking at the securities concerns and not sharing that data.

We will place increased cost on the size and complexity of firms. The largest, most interconnected firms will be required--not optional but required--to have higher capital, lower leverage, better liquidity, better risk management. Those have all been traditional tools that have already been in our regulatory system, but this systemic risk council will require those large institutions to meet all of these higher costs--in effect, their cost of being so large and interconnected.

But what we are also bringing to the table are three brand new tools that I think, if executed and implemented correctly, will provide tremendous value in preventing that next financial crisis. Those three tools are contingent debt, our so-called funeral plans, and third, the Office of Financial Research. Since these are new tools, let me spend a moment on each.

One of the things we saw in the 2007, 2008 crisis was that as these firms got to their day of reckoning, it became virtually impossible for them to raise additional capital and shore up their equity. Once they start going down the tubes, the ability to attract new investors, particularly from a management team that sometimes doesn't recognize how far and how close they are coming to the brink, is a great challenge.

So working with folks from the Fed and experts across the country, this bill includes a whole new category within the capital structure of those large institutions: contingent debt. There will be funds within the capital structure that will convert into equity at the earliest signs of a crisis. Why is this important? This is important because if this debt converts into equity, the effect it has on the existing shareholders is it dilutes them. It takes money right out of their pockets. So existing shareholders will have a real incentive to hold management accountable, not to take undue risks, because long before bankruptcy or resolution we will be able to have this trigger in place that will convert this debt into equity, diluting existing shareholders and, candidly, diluting management as well. How effectively we use this tool has yet to be seen, but it will provide another early warning check on these large institutions.

The second new addition to the chairman's bill is basically funeral plans for these large institutions. What do I mean? I mean a management team will have to come before their regulators and explain how they can unwind themselves in an orderly way through the bankruptcy process.

We heard stories--I will not mention the institution--we heard stories in the height of the crisis in 2008 about how certain very large international institutions in effect came before the regulators and said: You have to bail us out because we cannot go through bankruptcy; it is just too hard. Never again should any institution be allowed to be in that position. And if we use this tool correctly--this is an area where I know the Presiding Officer has great interest--if the regulator does not sign off on the funeral plan for this institution, on how it can unwind itself, even with many of its international divisions, through an orderly bankruptcy process, then the regulator can, in effect, make this institution sell off or dispose of parts that can't be done through a regular order of bankruptcy. By doing this, we create the expectation in the marketplace that bankruptcy will always be the preferred option.

Never again will there be an excuse that, we are too big and too complicated to go through that orderly process. Creditors and the market will know there is a plan in place that has to have been approved by the regulator and constantly updated so we have a way out.

The third area--again, I was very pleased to hear the chairman mention this because within the press and the commentary, it has gotten no information or no focus at all--is the creation of a new Office of Financial Research within the Treasury.

One of the things we heard time and again from regulators as we kind of went back and looked at how we got in the crisis of 2007 and 2008 was that the regulators didn't realize the state of interconnectedness of some of the institutions they were supposed to be regulating. No one had a current, real-time market snapshot of all of the transactions that were taking place on a daily basis, so nobody knew what would happen if you pulled the string on AIG, even though it was their London-based office, what would happen if those contracts suddenly all became suspect.

By creating this Office of Financial Research, we will give the regulators and the systemic risk council, on a daily basis, the current state of play across all the markets of the world.

This tool, if used correctly, would be another terribly important early warning system. But as the chairman has mentioned, with all this good work, we still can't predict there will never be another financial crisis. Chances are Wall Street and others, creativity being what they are, will find some way, even with all this additional regulatory structure and oversight. We can never predict there might not be another crisis. So what do we do?

First and foremost, what this bill puts in place is a strong presumption for bankruptcy so that creditors and the market alike will know what happens if they get themselves in trouble. Particularly for these largest institutions that are systemically important, they will have to have their preapproved, in effect, bankruptcy funeral plan on the shelf so that we can pull that off in the event of a crisis and allow the institution to go through an orderly bankruptcy process. Again, bankruptcy will be the preferred option of any reasonable management team because through bankruptcy there is at least some chance they may emerge on the other side in some form or another. They may be able to keep their job, if they are part of management. Some shareholders may still have some equity remaining.

What happens if we have a firm that doesn't see the inevitable and isn't willing to move to bankruptcy? What happens if we have a circumstance where the failure of an institution could cause systemic risk and bring down the whole system?

With an appropriate check and balance--and again, I commend Senator Corker for his additions--in effect, simultaneous action of three keys: the Treasury Secretary, the head of the Fed, the FDIC, and additional oversight--all of these actions taking place, there then is an ability to say, how do we resolve an institution, in effect put it out of business--unlike in 2008 where the government invested, in effect, in a conservatorship approach that said: We will prop you up to keep you alive because we don't know what to do with you to keep you alive because you are so large and systemically important.

We have created in this bill a resolution process that says: If you as a management team are crazy enough not to go into bankruptcy, but actually allow resolution to take place, you are going out of business. Senator Corker said: You are toast. Your management team is toast. Your equity is toast. Your unsecured creditors are toast. You are going away.

Again, we are going to put this institution out of business in a way that does not harm the overall financial system. We have to have an orderly process.

We saw during the crisis of 2008 what happens when one of these institutions fails without any game plan. We saw the value of these institutions disappear overnight as confidence in the market, confidence within the market in the institution was lost. So working with my colleagues and experts from the FDIC and others, we said: What you have to do is, you have to have some dollars available to keep the lights on so that you can sell off the portions of the institution that are systemically important and unwind this in an orderly way that doesn't have an effect, the equivalent of a run on the bank or a run on the financial system.

Again, we have heard critiques of the approach Senator Corker and I came up with in this resolution fund, this ``how do you put yourself out of business in an orderly way'' fund. We actually thought it ought to be paid for by the financial industry, with the ability then to have that fund, in effect, replenished after the crisis is over.

I saw polling today that shows the overwhelming majority of Americans actually think the financial sector ought to bear the cost of unwinding one of these large, systemically important firms. Let me say, if there are other ways to do it--as a matter of fact, some in the administration have suggested other ways--I am sure we can find common ground as long as we do have at least two principles: First and foremost, the taxpayer must be protected, and industry, not the taxpayer, has to take the financial exposure. Second, funding has to be available quickly to allow resolution to work in a way to orderly unwind the process. But it ought to be done in a [Page: S2618] GPO's PDF way--again, this is where some of the judgment comes in--where there is not so much capital available that we create a moral hazard, but a bailout fund is created.

Personally, I believe the House legislation goes too far in creating a fund of that size. I think the chairman's mark strikes a much more appropriate balance. But if there are ways to do this that protect the taxpayer, allow speedy resolution with funds that will be available so we don't have a run on the market, a run on the institution that creates more systemic risk, as long as the industry at the end of day is going to pay for it, I am sure there are other ways and we can find that common ground.

What we did in this process of resolution is we said: Let's take what is working. Let's see what is best from the FDIC process which currently resolves banks on a regular basis. One of the things I have heard from some of my colleagues on the other side--I don't know about their community banks, but my community banks in Virginia; I would bet the community banks in Delaware and the community banks in Connecticut--we don't want to get stuck paying the bills for the large Wall Street firms that bring the system to the brink of financial catastrophe. So, again, one of the aspects of the chairman's bill is to make sure any resolution process does not burden, charge, or in any way otherwise interfere with community banks.

What we think we have struck is a process that puts costs on those institutions that make the business decision to get large and systemically important. We think we have put in place abilities for the regulators, with the funeral plans, to make sure if this interconnectedness is so large that they can't go through bankruptcy, then we can stop them from taking on these new activities. But because we can't always predict eventuality, we have then said: If you need to use a resolution process, let's make sure it is orderly, paid for by industry, and that you have stood it up in a way that no rational management team would ever expect or want to choose resolution.

I know my colleague from New Hampshire has been a great partner in this legislation and is on the Senate floor. I will end with just a couple more moments. There are other parts of this bill that have not received a lot of attention. In this bill, the chairman has included an office of national insurance.

One of the things we saw in the crisis in the fall of 2008 was that nobody knew how entangled AIG's activities were with the whole financial system. This doesn't get to the question of who should regulate insurance companies, but it does create at the Federal level at least the knowledge within the insurance sector of its interconnectedness. The chairman has mentioned that he and Chairman Lincoln are working to grapple through one of the toughest parts of the bill--again, an area I know my colleague, Senator Gregg, has been working on: How we get it right around derivatives.

Again, there is no policy difference. Both sides agree derivatives are an important tool when used appropriately. Particularly industrial companies need to use the derivative to hedge against future risk within their business. The challenge is, how do we not draw that end user exemption so large that every institution on Wall Street suddenly transforms itself into an industrial end user. Secondly, while these contracts are unique, they have to have more light shown on them in terms of clearing and exchanges.

I know Chairman Dodd and Chairman Lincoln and Senator Reid and Senator Gregg will be working through this. One suggestion I would have--because as someone who has seen Wall Street act time and again, I wish them all the luck--part of my concern is that whatever rule we come up with, there is so much financial incentive on the other side that a year or two from now, we may be back because they found a way around it that we again need to give the regulators certain trip wires. I, for one, believe we ought to take the industry at its word. The industry says end users are only going to be 10 percent of total derivative contracts. Then let's put that in as a regulatory goal. If they end up exceeding that, then we can bring draconian consequences to bear. Or if they say, yes, we can make most of these transactions and most of these contracts transparent through clearing or exchange, great; let's accept them at their word.

But if they don't get to those totals, then perhaps some of the actions that particularly Members on my side of the aisle would like to take can be put in place. But, again, folks of goodwill can find common agreement.

Finally, the area around consumer protection, where the chairman and the ranking member have worked at great length to kind of sort this through, everybody agrees on the common goal. There needs to be enhanced consumer protection, particularly for the whole nonregulated portion of the financial industry that now exceeds the regulatory half. Too often it was the community bank that was chasing the mortgage broker on some of the bad financial products because there was no regulation on the mortgage broker to start with. So, again, there will be differences, but I think the approach of the chairman, which is to keep this with the appropriate rulemaking ability but to make sure, particularly for those smaller banks, that we don't end with conflicting information of a consumer regulator showing up on Monday and a safety and soundness regulator showing up on Wednesday, to do that in a combined fashion so there is commonality of message, particularly to smaller banks, that strikes that right balance.

Again, I can only say for the banks in my State of Virginia, those smaller banks who oftentimes have said they didn't cause the crisis--and they didn't--they are the first to say: We need enhanced consumer protection to make sure that our financial products are regulated by the type of product, not by the charter of the institution that issues the product. There may be ways to improve on this section. But, again, I think Senator Dodd and Senator Shelby are working to get it right.

We have seen, as well, major action on the rating agencies, questions around underwriting. There are tremendous parts of this bill that haven't been the subject of great criticism because they are that common ground that, I think Senator Shelby has said in earlier quotes, 80 or 90 percent of both sides agree on. Where we don't agree, we ought to debate and offer amendments.

I look forward to candidly working with a number of colleagues on the other side of the aisle on technical amendments to this bill where we think we can make it slightly better. But if we are going to get there, we have to get to the debate.

I hope we move past procedural back-and-forth that, as a new guy, I still don't fully understand. I think it is time to fully debate this bill out in the open. The chairman made mention of what has been taking place in the last few weeks in Greece. I know the Presiding Officer has helped educate me on a whole new activity that is taking place in the financial markets right now around high-speed trading and co-location that could be the forbear of the next financial crisis.

How irresponsible would we be, 18 months after, again, the analogy of the chairman, after our house was broken into, when we haven't even put new locks on the door, if we ended up with another robbery, whether it was caused by international action or whether it was caused by high-speed trading, because we don't have new rules of the road in place?

In the 15 months I have had the honor of serving in the Senate, I can't think of a piece of legislation that better represents what is good about the Senate, folks on both sides of the aisle coming forth with their ideas, trying to fashion a good piece of legislation. I can't think of an area where there is less traditional partisan, left versus right, Democrat versus Republican divides. I can't think of an applause line better, whether I am talking to a group of liberal bloggers or folks from the tea party, than the notion that we have to end taxpayer bailouts.

I urge my colleagues on both sides of the aisle, let's get through the procedural wrangling. Let's find that common ground that I think we are 90 percent of the way there. Let's pass a bill that gets 60, 70, 80 Members of the Senate and set financial rules of the road that will last not just for the next congressional session but for decades to come.

I yield the floor.

Senator Warner spoke on the Senate floor to explain his efforts to prevent taxpayer-funded bailouts and correct misleading characterizations over the past several days about proposed Wall Street reforms.  

Mr. WARNER: Mr. President, today 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 recently approved.

Under Chairman Chris Dodd’s leadership, and working with Ranking Member Richard Shelby, I’ve worked hard since coming to the Senate to understand the root causes of this crisis, the crisis we are beginning to emerge from economically and to recognize that we’ve got to have a robust solution in place to make sure that we never again are confronted with type of crisis and the lack of preparation that this nation faced back in the Fall of 2008.

I also came to this body, Mr. President, as somebody who spent a lot of time around the capital markets -- quite candidly, I’ll put up my free market and pro-capitalist credentials up against anybody in this body. And I come to the floor today as somebody who’s tried to recognize that the financial crisis, perhaps more than any other issue that we address, doesn’t have a Democratic or Republican origin or solution set, that we’ve got to recognize that perhaps on this piece of legislation, more than ever, we’ve got to have a bipartisan basis to establish a long-term financial framework for the next hundred years.

I’m very proud of the fact that we’ve worked so far in a bipartisan way. I have particularly appreciated the partnership I’ve built over the last year with Republican Senator Bob Corker from Tennessee. We both recognized that while we both had backgrounds in business and both had experience and exposure to the capital markets, the complexity of trying to rewrite the financial rules -- not only for this country but, because the rest of the world will follow what America does, for the whole world – would require a great deal of humility and recognition that we have got more to learn. So Senator Corker and I, starting early in 2009, started holding a series of seminars where we invited established financial leaders and members of both parties to come and just learn with us as we tried to put in place rules and regulations governing the financial system.

While I’ve been particularly disappointed in the Republican leader’s comments yesterday, I still believe there is a path to a bipartisan bill. What we need to do is simply lower the rhetoric and do what is needed for the American people: put in place a robust set of rules and a robust regime of reforms that will ensure that the American taxpayer will never again have to bail-out firms that are too-big-to-fail. This is one area – whether it’s a liberal blog site or a Tea Party convention – where you get unanimity of opinion that never again should the American taxpayers be put at risk because of the interconnectedness of large financial firms.

Soon, the Senate will consider the bill that Chairman Dodd has put together. And while there are bits and pieces that different folks will disagree with, this is a strong bill that vastly improves the regulation and structure of our financial markets. Let me repeat: Senator Dodd has put together a strong bill.

One part of the bill that Senator Corker and I have been particularly engaged in is on systemic risk -- in ending the notion of too-big-to-fail. And that was the subject yesterday of some wildly inaccurate statements on this floor. I have to admit that I’m deeply invested in this section because of the months of work that 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 amend. Those changes and amendments -- we could probably reach agreement on within five or ten minutes. But the basic structure that we set up is one that I believe will lead to meaningful financial reform.

Now let’s get to what we’re talking about. At the outset, we recognized that the regulatory system and the legal system have no recourse or rules on how we deal with an impending financial crisis and there was very little collaboration and coordination between different regulators. You might have the prudential supervisor that’s looking at the depository institution having one view of an institution, and you might have another regulator that’s looking at the banking holding structure have another view, and, because these complex institutions may also have securities aspects, you could have the S.E.C. have a third view. There was no coordinated place beyond the stove pipes and beyond the silos where all the regulators could come together and recognize that while an institution’s single actions or a single sector might not pose a systemic risk, these risks, when aggregated together, put our financial system in jeopardy.

So what do we propose? Working with Senator Corker and experts from the industry, we propose creating a systemic risk council that would, in effect, be the early warning system to spot these large systemically risky institutions and put some speed bumps in their path.

I may not agree with some of the members on my own side of the aisle that say we ought to go out and proactively break up these institutions just because they’re too large. Size in and of itself was not the problem in certain cases. It was the interconnectedness of these institutions’ activities and the fact that if you started to pull on the string of these activities, you would in effect collapse the whole house of cards. It was not size alone; it was interconnectedness and recognizing how we spot that interconnectedness at the front end and put speed bumps on these large, systemically risky institutions.

One of the things that we found in our investigations was that the regulators often do 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 transactions of these interconnected institutions and provide the regulators with the transparency to know what’s going on beyond the last quarterly report. This information will go to the systemic risk council. This systemic risk council will then be able to put in place what I call speed bumps on these systemically large institutions.

Increased capital: One of the questions that comes back time and again from financial experts is that we need to increase the capital reserves levels of many of these large institutions. We’ve got to look at their liquidity. In certain cases, the institutions that failed during the crisis were not insolvent but, this can be addressed because of new sets of financial structures we will require in these large institutions will convert to equity in the precursor before a crisis takes place. In effect, shareholders will be diluted by this contingent capital requirement, putting more pressure on management not to take 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 risk and outrageous actions.

We’ve also put a new requirement in place, one that again has not gotten a lot of review. But we will require the managements of these large institutions to put in place their own “funeral plans,” their own plans on how they will unwind their institution through an orderly bankruptcy process. I believe there were large, systemically important institutions in the Fall of 2008 that came to the regulators and said, “We’re so big and interconnected that we wouldn’t even know how to unwind ourselves.” Never again should we allow that to happen. We allow the regulators to work on and bless the “funeral plans” that these systemically large institutions will put in place.

Now, we think that we have put out these appropriate barriers that will restrict some of the unduly risky activities on these large institutions, but you can’t predict and can’t 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 doesn’t fully function.

I don’t 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 normal dissolution of a firm that’s made mistakes in the marketplace. And we need to ensure that bankruptcy becomes the normal default process. Having these firms write their own bankruptcy plans that have been approved by the regulators will give us guidance on that path.

We also have to realize that when there may be a management team that doesn’t see the handwriting on the wall or when a failing firm, even with all these checks, becomes systemically risky, we have the ability to act. But let me state very clearly: with the resolution process that was put in the Dodd bill, no rational management team would ever elect to choose it because it will lead to extermination of the firm. The shareholder’s equity 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 no future administration – and, having seen the blowback from the public on using resolution in 2008, I can’t imagine any administration actually wanting to use this mechanism -- but Senator Corker and I have spent a great deal of time on this so that resolution is not misused. We put in place very strict criteria before it can be implemented. We require three keys, in effect, to be turned simultaneously. It’s 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, again, that’s not all. Senator Corker, I think, rightfully pointed out that we need, in case there was an overly aggressive administration, a judicial check, as well. So we put an additional judicial check in place before resolution could be implemented. So resolution -- only as a last resort, only as a path to make sure that the parts of systemically important firms can be transferred to some other existing entity, not preserved. The firm will be wiped out, but the functions that are important don’t 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’s the money going to come from and who’s going to pay for it? What I found very curious from the Republican Leader’s comment 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. It’s not the $150 billion that was in the House Bill that potentially could create what’s called a moral hazard. But a dollar amount up-front -- and it could go down lower -- would keep the lights on at these institutions until the FDIC could get in and, in effect, borrow against the unencumbered assets of the 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 may be even 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 will be an adequate amount of capital to resolve the 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’re all for it. At least I can say from my side that I’m willing to look at any other option. But what I find curious is I believe that if we had not put up this industry-prefunded amount to, in effect, bridge until we can actually get the FDIC process in place, we would hear criticisms from some who would say that not putting up any industry-prefunding would allow taxpayer exposure. And one of the things we want to make clear is that taxpayers are never, ever exposed to the kind of risk that took place in 2008.

Did we put in place something that is perfect? No. There are ways we can improve. But the framework we put in place, the almost uniform response we have received has been that we have taken a gigantic step towards ending too-big-to-fail with a rational, thoughtful approach.

I see my colleague, the Senator from Tennessee, has arrived on the floor, and again I want to compliment him for his work. Both of us have said at the outset that, for neither one of us, has this been 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 same position they were put in in 2008, then so be it.

I appreciate the Senator from Tennessee’s good work on this effort. I appreciate our working together on a preference toward bankruptcy, that we have to an initial check, that we don’t go out and grab firms willy-nilly. I ask my colleagues on both sides of the aisle to lower the rhetoric a bit, to recognize that this can and still should be the place where this Senate shows it can work in a bipartisan fashion to put a set of rules in place so that we can put the appropriate speed bumps in our financial system for those firms that are systemically important -- that we do put in place financial rules of the road for the 21st Century -- that we do allow America to continue to be the financial capital and financial innovator of the world. I think we can still get there, and I look forward to working not only with my friend from Tennessee but also colleagues on both sides of the aisle to get it right.

I yield the floor.