Restoring American Financial Stability Act of 2010

Floor Speech

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Mr. WARNER. Mr. President, I want to commend the chairman of the Small Business Committee, and my colleague and friend, Senator Landrieu, and Senator Isakson for this amendment. I am proud to be part of it.

I think those of us on the committee when we were drafting the legislation wanted to make sure that the mortgage security securitization process, the originators of mortgages, had skin in the game. I think as we went through this process, and working particularly with the expertise of the Senator from Georgia, we realized that while skin in the game is important, it is more the underlying quality of the mortgage.

If we have mortgages that have that 20 percent down, with a high FICO score, the same level of skin in the game is not required. I think this amendment stays true to the intent of the Banking Committee bill.

I am glad the chairman of the Banking Committee is supportive of it. I think this is an amendment that refines and improves the legislation. I am proud to be a cosponsor of it, and grateful for the expertise of the Senator from Georgia and the Senator from Louisiana.

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Mr. WARNER. Madam President, I thank my friend, the Senator from Arkansas, for her statement today about the sacrifice of folks not only from Arkansas but across the country--Virginia, Delaware, and from North Carolina.

Madam President, I wasn't planning on speaking, and I will only do so briefly because my friend, the Senator from Delaware, is going to speak much more extensively on this issue. But I think many of us who have had the opportunity to preside have heard--and in particular on Monday afternoons--the Senator from Delaware come down on a regular basis, for months, to speak on what, until last Thursday, was a pretty esoteric issue--an issue that, for somebody who spent 20 years around the finance sector before I got into politics full time, I thought I might have some knowledge of.

But as the Senator started talking about high-frequency trading, collocation, sponsored access, and flash trading, I realized this was a whole realm of new terms that actually even makes derivatives look simple.

The Senator from Delaware sounded an early warning signal that the massive amounts of investments that have been made by certain firms to try to get what appears to be a fractional millisecond advantage in the trading process might come back to haunt us all. Last Thursday afternoon we saw potentially--and we still don't know, and the regulators were up testifying on the Hill yesterday on the House side--what could have been the first warning shot across the bow of what could be the next systemic risk crisis when the stock markets in the United States lost over $1 trillion of value in a dramatic downsweep of about 16 to 20 minutes.

The market recovered, but almost a week later we still don't know the real cause, and I don't think we can blame the regulators. I have had conferences with the head of the SEC, and she acknowledges the difficulty in keeping up with the technology and having the oversight for all of this proliferation of new exchanges--electronic exchanges--many that didn't even exist a few years back.

Most investors probably think they trade on the New York Stock Exchange, the American Stock Exchange, or the NASDAQ. They don't realize the majority of trades are now on electronic exchanges they have probably never even heard of. The Senator from Delaware has consistently raised this issue, and whether we simply need additional speed limits, system brakes, or whether we need to make sure there is not an unfair advantage that is being created, these are all issues we need to come back to.

I want to personally say I am proud of the fact the Senator from Delaware and I contacted the chairman of the Banking Committee and we have spoken out. But he has been the leader on this issue, and I have been proud to follow his lead. I know he is going to speak more about this issue today, and I am sure in the coming weeks. I don't have all the knowledge, I don't know the right answer yet, but I know in my gut that the Senator from Delaware is onto something here; that we all need to make sure we take a better examination of it.

The last thing the market needs right now, particularly for that small-time investor, is some sense that somebody on Wall Street is getting even one further advantage through the use of technology or that there is not appropriate system brakes in the event of a mistake made.

So as I yield the floor, I commend my friend, the Senator from Delaware, and look forward to working with him and the chairman of the Banking Committee, who has said the committee will be taking up this issue. It is something I think we all need to take heed of to make sure in this very important legislation that Chairman Dodd is working on we not only make sure we fix the last crisis but we potentially get ahead of the next crisis.

With that, I yield the floor.

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