Fraud Enforcement And Recovery Act Of 2009

Floor Speech

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Mr. SANDERS. Mr. President, I now wish to speak in support of S. 386, the Trade Enforcement Recovery Act. I commend Senator Leahy, my colleague from Vermont, the chairman of the Judiciary Committee, for introducing this important piece of legislation.

As a result of the greed, recklessness and, in my view, illegal behavior of a handful of executives on Wall Street, we are suffering today from the most severe economic crisis that we have experienced since the Great Depression.

Millions of people have lost their homes, their jobs, their life savings, their ability to send their kids to college, and their sense of hope that their children will follow the American dream and have a higher standard of living than they do.

It is critical that we provide the FBI, the Justice Department, and all our Federal agencies the tools and resources they need to hold those responsible for the financial crisis accountable and throw those who engaged in fraud in jail where they belong. That is what the Fraud Enforcement and Recovery Act is all about. It is imperative we pass this bill as soon as possible.

Under President Bush, the Federal Government basically turned a blind eye to white-collar crime. After September 11, about 100 FBI white-collar fraud investigators had their job responsibilities shifted to focus on terrorism, which is understandable. But the problem is, they were never replaced to do and continue the work on white-collar crime. As a result, literally thousands of allegations of financial and mortgage fraud are going unexamined this day.

Chairman Leahy's bill will turn this abysmal situation around by providing the resources necessary for the FBI to hire 160 additional special agents and more than 200 professional staff and forensic analysts dedicated to investigating white-collar crime.

This bill also provides the resources necessary for the Justice Department to add up to 200 prosecutors and civil enforcement attorneys nationwide, as well as 100 support staff to focus on fighting fraud. This bill provides the resources necessary for the U.S. Postal Inspection Service, the U.S. Secret Service, and the inspector general at HUD to hire several hundred additional fraud agents, analysts, and investigators to combat fraud.

This bill is desperately needed. It is important that we take a very aggressive look at the fraud that is going on in that area. I hope very much that all our colleagues will support this legislation

With regard to this issue of what has been going on on Wall Street, there is no question but that the American people are furious--and rightly so. The American people want answers. What I wish to do now is say a word above and beyond this legislation, some of the areas that I think we have to go after we pass this bill. I think the American people are demanding an investigation to understand how we got into this financial crisis in the first place. Who are those people responsible? Some people say: Well, it is all of us. We are all responsible for this financial crisis. That simply is not accurate. The truth of the matter is, there are probably a few hundred people who, through their greed, their recklessness, their illegal behavior, have pulled our Nation and much of the world into a deep recession.

We need to know who they are. We need to know what they did. We need to make sure this never happens again. And where illegal activity has taken place, we need to hold them accountable.

One other area I wished to touch on, to look at another issue that is of concern to people in the State of Vermont--and I get e-mails on this virtually every day, I know it is true nationwide--at the same time as we are bailing out huge Wall Street financial institutions, at the same time as these financial institutions are getting zero interest loans from the Fed, you know what they are saying to the American people. They are saying: Thanks,
chump. We appreciate all your help. Now we are going to charge you 20, 25, 30 percent interest rates on the credit cards we gave you.

Recently, I have been receiving many e-mails from people who have seen the Bank of America, for no particular reason, doubling their interest rates all over this country. People are using their credit cards to pay for their groceries, to pay for basic needs. College kids, they are using credit cards to pay college expenses, and they are being charged outrageous rates.

The reality is, today in America, if you can believe it, one-third of all credit card holders in this country are paying interest rates above 20 percent, and as high as 41 percent, which is more than double what they paid in interest in 1990.

What we are looking at right here is a situation in which the American people are bailing out these large institutions and in return what we get are outrageously high interest rates. I have introduced, along with Senators Durbin, Levin, Leahy, Harkin, and Whitehouse, legislation that will require any lender in this country to immediately cap all interest rates on consumer loans at 15 percent, including credit cards.

The reason we have selected that number is, it is precisely what credit unions all over the country are operating under and have operated under for 30 years, and they have done well. They are not coming to Washington for hundreds of billions of dollars in bailouts.

I think if it has worked well for the credit unions, it can work well for financial institutions. I hope we can get that bill on the floor and see it pass to protect millions of credit card holders all over this country.

There is another issue I think we have to address. The reason Congress has provided $700 billion to bail out Wall Street, against my vote I should say but that is what happened, the reason the Fed has lent out over $2 trillion to large financial institutions has a lot to do with the phenomenon of ``too big to fail.''

The thought is, if a large financial institution goes under, it will bring systemic damage to our entire economy, and it has to be propped up. As I said on the floor of this Senate more than once, if an institution is too big to fail, it is too big to exist.

I will be introducing legislation soon to require that the Federal banking regulators examine every bank in this country to make sure no bank is too big to fail over a reasonable period of time. In other words, I think we have to take a look at what Teddy Roosevelt did 100 years ago, over 100 years ago. If an institution is too big to fail, let's start breaking them up right now so we do not find ourselves back in the same place some years from now.

It goes without saying, in another area, we have clearly got to end the deregulation of banking laws that were passed over the last decade that helped cause this crisis. There was a belief that if we let Wall Street do all the wonderful things they are capable of doing, well, they are going to provide and create prosperity, not only for their people but all over our country.

Clearly, we have learned a lesson: When you leave Wall Street alone, they will do what they do best; that is, act in a very greedy way to maximize their profits. For them, 20 percent, 30 percent were not enough. They needed 40 percent, they needed 50 percent rates of return. Their CEOs needed not $20 million, not $50 million, in some cases they needed $1 billion.

I think it is now widely understood that we have to reverse the deregulation that took place over the last decade, and we have to move forward with sensible regulation. That means we have to revisit certainly Gramm-Leach-Bliley, we have to restore the firewalls that were imposed by the Glass-Steagall Act in 1934 and that were repealed as a result of deregulation.

On another issue, I think there is growing concern that the Federal Reserve has taken on new responsibilities and that there is a clear lack of transparency in the Fed. The American people have a right to know what is going on there, and today we are kept in the dark.

Regardless of one's views on the merits of the $700 billion financial rescue package that was signed into law by President Bush on October 3, one thing we can say is that if the taxpayers and the citizens of this country want to know who received this money, all they have to do is go to a Web site and they can find that.

On the other hand, if you want to know who received $2.2 trillion from the Fed, if you want to know what the terms are of those agreements, you will not find any information whatsoever. All of that information has been kept secret from the American people.

I am grateful that as part of the budget debate, the Senate voted 59 to 39 in favor of an amendment I offered to the budget resolution with Senators Bunning, Webb, and Feingold, calling on the Fed to release this information. In my view, it is time for the Fed to listen to the will of the Senate and the American people and release this information as soon as possible.

Let me conclude by simply saying I think today we are debating a very important piece of legislation, the Fraud Enforcement and Recovery Act, introduced by my colleague from Vermont. This is an extremely important legislation. Let's get it passed as soon as possible with as large a vote as we can.

After we do that, let's start turning our attention to other aspects of this Wall Street crisis so we can respond to the frustration and the anger of the American people, create a new Wall Street, create accountability, lower interest rates, and do many of the things the American people want to us to do.

I yield the floor.

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