Restoring American Financial Stability Act of 2010--Continued

Floor Speech

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Mr. WHITEHOUSE. Mr. President, I wish to join my colleagues in expressing our support for Senator Wyden's continued efforts to get this rule changed.

The circumstances in which these secret holds take place are quite remarkable. Over and over again we see a committee vote clearing a nominee for the floor, often unanimously, or by heavy, huge bipartisan majorities; clearly qualified candidates; clearly candidates who enjoy bipartisan support and, in many cases, candidates who are unanimously supported. Even in this contentious and cantankerous time in this body, they come through the committee with that kind of support.

Then they come through on the floor in some cases 98 to 0, 100 to 0. But between that unanimous committee vote and the unanimous floor vote is an endless, endless, endless delay. Many of them stack up and never get that floor vote. We have had as many as 100 stacked up, waiting for that floor vote on the Executive calendar.

What is happening between a unanimous committee vote and a unanimous floor vote that creates all this hassle and delay and leaves people in limbo for months and months, 100 at a time on the Executive calendar, all of whom are in responsible positions in our Federal Government that we need to have staffed? It is the secret hold. It is the secret hold where you don't have to disclose who you are so you don't have to disclose why you are holding. Because you don't have to disclose who you are or why you are holding, you don't have to have a good reason. You could have a downright nefarious reason and you could still use the hold. It is pretty widely known that deeds that are done in the dark are not the deeds we are proud of, and this is a deed that is by definition always done in the dark. Senator Wyden and Senator Grassley's long efforts to get rid of it are very commendable. We are going to work very hard to make sure we have their back on this rule.

In this particular circumstance, Senator Wyden has been here 14 years. He has never seen a stunt like this one. I have only been here 3 years; I can't say that. But 14 years of service in the Senate and he has never seen a stunt like this particular one.

The idea that this is on the merits, the idea that this is about trying to get a vote on that second-degree amendment, seems mighty improbable. Of all of the amendments on this bill, of all of the amendments we have voted on, of all the amendments that are pending, of all the amendments people are arguing for to get on the floor, which is the one amendment that somebody chose to drop this second-degree amendment on and jam up its passage through this body?

Which is the one? It is the secret hold. In kind of a perverse way, it is actually sort of appropriate that a procedural vehicle, the secret hold, that has such an odor of mischief around it--that the reform of that should itself be blockaded by a procedural trick that also has that same odor of mischief about it.

But what we want to do is get through that mischief so that the business of this body no longer wreaks of the odor of mischief and instead gives off the healthy air of open debate and public process and transparency. I thank Senator Wyden and Senator Grassley, who is not on the floor. We will continue to push on this.

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Mr. WHITEHOUSE. I very much hope this can go with bipartisan support. Senator Cochran on the Republican side is a cosponsor as well. It is a bipartisan amendment. This is a situation that the Congress never voted on, the situation that is here to cure. We never made a decision that an out-of-State bank should be able to come into your State and violate your State's law about interest rates. We could have. That is within Congress's power to say. But we never did. We are in that circumstance, however, for an unusual reason--because many years ago, 30 years ago, the Supreme Court made a technical decision about the National Banking Act, determining that when you have a transaction between a bank in one State and a consumer in another, where is the transaction located for regulatory purposes? They decided to locate it where the bank is. They had to pick one or the other.

That didn't seem very systemically important at the time. But the big banks--the Wall Street banks--have very crafty lawyers. The very crafty lawyers saw the loophole that this innocent technical decision opened. So they started moving their credit card businesses, their divisions, into States that had the worst consumer protection laws--the ones where you could charge any interest rate you wanted, where there was the worst protection for the consumer. From that base of the worst consumer protection in the country, they could move out and sell their products and do business in all of the other States, whose laws were still on the books, whose laws still protected their citizens, whose laws had stood since the founding of the Republic, since the establishment of the States, and they could get around those laws because of this loophole that the Supreme Court decision opened.

It is way past time that we close this loophole. In Illinois, Connecticut, and Rhode Island, over and over and over we hear from people who are suffering because they were late with a payment or they fell into one of the tricks and traps in the credit card contract or for no reason at all, just because they can do it, the credit card company jacked the interest rate up to or over 30 percent. Suddenly, boom, they are in what one expert called the ``sweat box.'' They cannot pay what they owe. It is all they can do to stay even all the time. The big company milked them and charged an interest rate that would be illegal under the laws of that State. Before 1978, the solicitation for that credit card that had the tricks and traps, and that hidden 30-percent penalty rate, would have been a matter for the authorities. Now it is the way they do business.

This amendment will put that back. For 202 years of this Republic, that was the way things were. States could protect their own citizens from unfair and excessive interest rates. That is the way it should be. That is what federalism is all about. That is what States rights are all about. So I hope that my amendment will go forward.

People believe in history--the more than two centuries of history of the States protecting their consumers, and a tradition of protection against abusive rates that goes back before the founding of our country, back to ancient Roman law, and all of the world's major religions. This is a longstanding tradition with a very strange little loophole that created a peculiar historic anomaly that allows these big corporations to take terrible advantage of ordinary Americans. Not only are Americans being taken advantage of, but local banks suffer as well because they have to play by the rules. If you haven't played that stunt of headquartering your bank in another State so you can work your way back and market in that same State, but under the nonexistent consumer protections of the home State, then you are stuck, and it is not fair.

I ask my colleagues to protect consumers in your home States and be true to history and States rights, protect your local banks have to follow local State laws. Let's put this brief moment in history into the ash heap of history, where it belongs as an anomaly where Americans, for the first time, had no protection from giant corporations gouging them with 30 percent and higher interest rates. That is not the way America was founded. That is not what we stood for for centuries. It is only because of this peculiar loophole that we have this situation. We have it within our power to change that. We have it within our power to go back to our home States and say to the people in our home States: We have done you a real good deed. We have allowed your State government, your Governor and legislature in the home State, to protect its own citizens against abusive out-of-State interest rates.

A lot of this bill is very technical. It is preventive medicine to rebuild the Glass-Steagall firewall, to regulate collateralized debt obligations, to enhance leverage requirements--things that are hard for people to grasp if they have not been steeped in these technicalities for these many weeks. It is important stuff, but if you want a clear, deliverable way to explain about this bill when you go back to your home State--when Senator Cochran, my cosponsor, goes back to Mississippi, if this amendment passes, he will be able to say to his fellow Mississippians: Ladies and gentlemen, the State of Mississippi is empowered to protect you now. An out-of-State company can no longer take your interest rates, and for a lousy reason, or for no reason at all, suddenly jack them up to 30 percent or more. It is simply wrong to leave ordinary Americans subject to that kind of abuse, to all the crafty, heavily lawyered, carefully designed, socially engineered tricks and traps they have built into these complicated, complex, tricky credit card agreements.

Now 50 States can stand against it. Attorneys general can proceed to defend these laws. It puts the government of this country back where it should be--in the hands of the people. Some people here would rather have the big corporations rule over the States. I believe that the States should trump even the big corporations when it comes to matters of protecting their citizens. That is the way it should be. That is the way the country was founded and, if this amendment passes, that is the way it will be again.

I yield the floor.

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