Restoring American Financial Stability Act of 2010

Floor Speech

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Mr. SANDERS. Madam President, let me begin by thanking my colleague from Louisiana, Senator Vitter, not only for his remarks today but for his excellent work throughout this process. I have enjoyed working with him. What we have tried to do in this whole process is to bring together people who come from very different ideologies to basically make the point that the time is now to end the secrecy at the Fed.

Madam President, I would like to yield myself 15 minutes, if the Chair can let me know when 15 minutes has expired.

The ACTING PRESIDENT pro tempore. The Senator will be so notified.

Mr. SANDERS. Madam President, at a time when the Federal Reserve has been provided the largest taxpayer bailout in the history of the world, to the largest financial institutions in this country--trillion-dollar institutions--without the approval of Congress, without the real knowledge of the American people, the Sanders amendment makes it clear that the Fed can no longer operate forever in the kind of secrecy in which it has operated. Under the Sanders amendment, for the first time the American people will know exactly who received over $2 trillion in zero, or virtually zero, interest loans from the Fed, and they will know the exact terms of those financial arrangements.

Under the Sanders amendment, for the first time, the GAO will be required to conduct a top-to-bottom comprehensive audit of every single emergency action the Fed has undertaken since the financial crisis began. Under the Sanders amendment, for the first time, the GAO will investigate whether there were conflicts of interest surrounding the emergency actions of the Fed.

Madam President, the Fed has been fighting all the way to the U.S. Supreme Court to keep this information secret. Well, this amendment says, in no uncertain terms, this money does not belong to the Fed; it belongs to the American people, and the American people have a right to know where their taxpayer dollars are going. That is not a difficult concept to get one's arms around. The American people have a right to know.

Specifically, the Sanders amendment does two things: First, it requires the Fed to put on its Web site by December 1, 2010, the names of all of the financial institutions, corporations and foreign central banks--let me repeat, foreign central banks--that received trillions of dollars in taxpayer assistance from the Fed since the beginning of the financial bailout period.

Second, the Sanders amendment requires the GAO--the Government Accountability Office--to conduct a top-to-bottom comprehensive audit of all of the emergency actions the Fed has taken since the beginning of the financial crisis, with a particular focus on all of the potential conflicts of interest within these secret deals. And that, Madam President, is an extremely important point which, by the way, was not in my original amendment.

The fight for a GAO audit of the Fed and to require more transparency has been a long and arduous struggle. There are many people to thank for being at the point we are today. Partisan politics aside, this has been a joint effort on the part of some of the most progressive Members of Congress and some of the most conservative, and some of the most progressive grass roots organizations and some of the most conservative.

I specifically want to thank, in the Senate, Majority Leader Reid, Majority Whip Durbin, Senators Dorgan, Feingold, Boxer, and Leahy and many others for their leadership on this issue on my side of the aisle, and to thank Senators DeMint, Vitter, Brownback, McCain, Grassley, and others on the other side of the aisle.

Last week, a number of Senators--Democrats and Republicans--indicated to me they were uncomfortable with my original amendment, which they believed would have allowed Congress to be involved in the day-to-day monetary operations of the Fed. That was never my intention, and I still do not believe my original amendment would have done that. Nonetheless, that is what a number of Senators believed and were concerned about and they came to me about. The chairman of the Banking Committee, Senator Dodd, indicated to me if we could clarify this issue, he would not only be supportive of this amendment, but he would cosponsor it. That is exactly what he did, and I very much appreciate his support.

Let me just very briefly speak to what the principles of this amendment are. No. 1, the Sanders amendment, in terms of transparency, is clear we need to make sure the Federal Reserve releases the names of every single financial institution, corporation, and foreign central bank the Fed provided over $2 trillion in taxpayer assistance to since the financial crisis started and what the exact details of those arrangements were. This information, as a result of this amendment, will be on the Fed's Web site on December 1, 2010, and every single American who has a computer will be able to access that information. That is a major step forward.

Secondly, in terms of the audit, I have always believed the main purpose of this audit was for the GAO to conduct a top-to-bottom comprehensive review of every single emergency action the Fed has undertaken since the start of the financial crisis. That is exactly what this amendment does.

In addition, let me be clear, the modified amendment--the amendment I am offering today--is stronger than my original amendment on one very important point, a point I think millions of Americans are concerned about; that is, it requires the GAO to investigate whether there were conflicts of interest in the establishment of the emergency lending programs at the Fed.

My original amendment would have allowed the GAO to look into conflicts of interest at the Fed but did not require it. This amendment requires it. We are very specific about that.

For example, I want to know--and I think the American people want to know--why Lloyd Blankfein, the CEO of Goldman Sachs, attended a meeting at the New York Fed when the Federal Government decided to bail out AIG to the eventual tune of $182 billion, allowing Goldman Sachs to pocket $13 billion of that money. My original amendment would have allowed the GAO to look at this. The new amendment makes it clear this kind of conflict of interest must be looked into by the GAO.

Further, I want to know--and I think the American people want to know--why the head of the New York Fed, Stephen Friedman, was allowed to serve on the board of directors at Goldman Sachs and was allowed to purchase over 37,000 shares of Goldman stock at the same time the New York Fed was approving Goldman's application to become a bank holding company. My original amendment would have allowed the GAO to look into this. The new Sanders amendment requires the Fed to investigate whether conflicts of interest existed in these types of financial deals.

Some 35 members of the Fed's Board of Directors are executives at banks which received over $120 billion in TARP money. I want to know--and I think the American people want to know--how much these financial institutions received from the Fed and if this represents a conflict of interest. My original amendment would have allowed the GAO to look at this. The new Sanders amendment requires the GAO to take a look at those potential conflicts of interest.

What is important to point out is, in terms of transparency, I am not the only person--other Members of the Senate are not the only people--who is demanding that the Fed tell us to whom they lent money. I would point out that Bloomberg News has gone to court and, in fact, has won two Federal court decisions against the Fed in which the courts have said the Fed has to release that information. But the Fed persists in saying no. They want to keep that information secret.

So that is where we are today. We are on the verge of lifting the veil of secrecy at perhaps the most important government agency in the United States--an agency which has control of and expends trillions of dollars. They do it behind closed doors, and they do it in ways the American people know very little about. So I ask for strong support for the Sanders amendment so we can go forward and break this veil of secrecy.

With that, Madam President, I reserve the remainder of my time.

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Mr. SANDERS. Mr. President, let me summarize again what the Sanders amendment does. Let me take my colleagues back to a meeting of the Budget Committee, on which I serve, about a year ago. Chairman Bernanke came before that committee. I asked him: Will you tell the committee, me, and the American people which large financial institutions received trillions of dollars of zero or near zero interest loans? I thought that was a reasonable question.

Mr. Bernanke said: No, I will not do that. I will not release that information.

On that day, I introduced legislation to compel him to release the information. This amendment, if passed, on December 1, 2010, would, in fact, contain that information. It is a major step forward.

Secondly, many Americans are beginning to catch on--and some Senators have referred to that today--to the immense power of the Fed. People are demanding transparency at the Fed. People want to know what happens behind closed doors when some of the leaders of the largest financial institutions sit down with the Fed and, lo and behold, programs are developed which benefit those very same large financial institutions. Wouldn't it be nice, wouldn't it be great if small businesses in Vermont could end up with zero interest loans? They can't. But somehow or another, some of the largest financial institutions in this country manage to do that, and we don't know how this process goes on.

Passage of the Sanders amendment is a step forward. I congratulate all those people from both political parties, with very different political ideologies, for coming forward, for pushing this issue forward. This is not the end. This is a beginning. As Senator Dodd said a moment ago, this is historic. We are beginning to lift the veil of secrecy on what is perhaps the most important agency in the government.

I urge passage of the Sanders amendment.

I reserve the remainder of my time and yield the floor.

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