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VOTE.
I JUST HOPE AND PRAY THAT PEOPLE
WILL THINK ABOUT THIS VERY HARD
BEFORE THEY CAST THEIR VOTES.
THANK YOU VERY MUCH,
AND I YIELD THE FLOOR AND NOTE
THE ABSENCE OF A QUORUM.
THE CLERK
WILL CALL THE ROLL.
MR. PRESIDENT, I ASK
THAT THE QUORUM CALL BE
WITHOUT
OBJECTION, SO ORDERED.
MR. PRESIDENT, I
HAVE 12 UNANIMOUS CONSENT
REQUESTS FOR COMMITTEES TO MEET
SENATE.
THEY HAVE THE APPROVAL AND THE
MAJORITY AND MINORITY LEADERS
AND I ASK UNANIMOUS CONSENT THAT
THESE ASKS BE -- REQUESTS BE
AGREED TO, THESE REQUESTS BE
PRINTED IN THE RECORD.
OBJECTION, SO ORDERED.
THANK YOU VERY MUCH.
I NOTE THE ABSENCE OF A QUORUM.
THE CLERK
WILL CALL THE ROLL.
QUORUM CALL:
TODAY -- THIS MORNING OUR FORMER
NATIONAL SECURITY ADVISER,
CHAIRMAN OF THE JOINT CHIEFS OF
STAFF AND SECRETARY OF STATE,
COLLIN POWELL, WILL VISIT THE
WHITE HOUSE AND I EXPECT THEY
WILL DISCUSS THE CURRENT MISSION
DICTATORSHIP.
WHEN WE LOOK AT THIS MISSION, I
THINK IT'S IMPORTANT TO REVIEW
THE WISE WORDS OF GENERAL
IN HIS WEMTION IN CONSIDERING --
RECOMMENDATION IN CONSIDERING
ANY MILITARY MISSION FOR THE
UNITED STATES IN HER COMING
YEARS.
WHEN WE THINKABOUT HIS VIRGINIA, MANY TIME
IT'S BEEN CALLED THE POWELL
AND IT WAS MEMORIALIZED IN A
1992 ARTICLE CALLED "U.S.
FORCES, THE CHALLENGES AHEAD."
THIS ARTICLE BECAME KNOWN VERY
MUCH AS THE POWELL DOCTRINE,
WITH TWO EDITIONS THAT THE
PUBLIC AND PRESS OFTEN PUT ON
HIS THOUGHTS ABOUT MILITARY
MISSIONS FOR THE UNITED STATES.
IN SHORT, THE POWELL DOCTRINE
INCLUDES ANSWERS TO A NUMBER OF
QUESTIONS THAT ANY PRESIDENT,
SECRETARY OF STATE, OR SECRETARY
OF DEFENSE SHOULD ANSWER PRIOR
TO OR AT THE VERY LEAST DURING A
MILITARY MISSION INVOLVING THE
UNITED STATES.
THOSE QUESTIONS ARE, AS FOLLOWS:
IS THE POLITICAL OBJECTIVE WE
SEEK IMPORTANT, CLEARLY DEFINED
AND UNDERSTOOD?
NEXT, HAVE ALL OTHER NONVIOLENT
POLICY MEANS FAILED?
THIRD, WILL MILITARY FORCE
ACHIEVE THE OBJECTIVE?
AT WHAT COST?
NEXT, HAVE THE GAINS AND RISKS
BEEN ANALYZED?
AND FINALLY, HOW MIGHT THE
SITUATION THAT WE SEEK TO ALTER,
ONCE IT IS ALTERED BY FORCE,
DEVELOP FURTHER?
AND WHAT MIGHT BE THE
CONSEQUENCES?
ADDED TO THIS, THE PRESS AND
PUBLIC HAVE OFFERED TWO MORE
ADDITIONS OFTENLY CALLED PART OF
THE POWELL DOCTRINE.
OVERWHELMING FORCE?
AND CAN WE DEMONSTRATE THE
SUPPORT OF THE AMERICAN PEOPLE
FOR THE MISSION, AS SHOWN BY A
VOTE OF THE UNITED STATES
CONGRESS?
WHEN WE LOOK AT THE CURRENT
LIBYAN MISSION AND APPLY THE
POWELL DOCTRINE, WE SEE A MIXED
PICTURE, ONE THAT SHOULD BE
FIXED BY A RIGID APPLICATION OF
ITS QUESTIONS AND ANSWERS TO
THEM REPORTED BACK TO THE
AMERICAN PEOPLE.
NOW, I SUPPORT OUR MISSION IN
LIBYA AND I THINK THE
PRESIDENT'S ADDRESS TO THE
NATION WAS A GOOD START.
BUT I THINK WE WOULD SERVE OUR
TROOPS WELL IF WE PROCEEDED TO
ANSWER THE POWELL DOCTRINE
QUESTIONS RIGIDLY.
FIRST, IS THE POLITICAL
OBJECTIVE THAT WE SEEK TO
ACHIEVE IMPORTANT, CLEARLY
DEFINED, AND UNDERSTOOD?
I THINK THE END OF THE QADHAFI
REGIME IS IMPORTANT.
I THINK THE PROTECTION OF
CIVILIANS FROM AN IMPENDING
MASSACRE IS ALSO IMPORTANT.
AND I THINK IT WOULD BE CLEARLY
UNDERSTOOD BY THE AMERICAN
BUT IN PRACTICAL TERMS, WE
CANNOT PROTECT, FOR EXAMPLE, THE
PEOPLE OF BENGHAZI UNLESS WE
STOP THE KILLER.
AND THE ONLY WAY TO STOP HIM IS
TO DISARM HIM AND REMOVE HIM
FROM POWER.
I THINK THAT OBJECTION WOULD BE
BE--
BE-- OR OBJECTIVE WOULD BE
CLEARLY UNDERSTOOD, WOULD BE
WELCOMED BY OUR EUROPEAN ALLIES
AND WOULD BRING ABOUT THE
LONG-TERM PROTECTION OF THE
CIVILIAN COMMUNITY BY WHICH THE
ADMINISTRATION FIRST JUSTIFIED
THIS ACTION.
SECONDLY, HAVE ALL NONVIOLENT
POLICY MEANS FAILED?
THERE IS A 30-YEAR RECORD OF
DIPLOMACY WITH REGARD TO THAT
LIBYAN DICTATORSHIP.
MOAMMAR QADHAFI HAS SHOWN
HIMSELF TO BE ONE OF THE MOST
VIOLENT AND CORRUPT AND AT TIMES
EVEN CRAZY LEADERS FROM THE
CONTINENT OF AFRICA.
WHILE THE UNITED STATES HAS HAD
DIFFICULTIES WITH HIM FOR THREE
DECADES, WHILE SECRETARY GATES
HAS REFERRED TO THE IMPOSITION
OF JERSEY BARRIERS HERE IN
WASHINGTON, D.C., AS EARLY AS
1983 WHEN THERE WERE REPORTS OF
POTENTIAL QADHAFI THREATS TO OUR
PRESIDENT -- AT THE TIME
PRESIDENT REAGAN -- IT TOOK
SEVERAL DECADES FOR THE REST OF
THE WORLD TO LOSE PATIENCE WITH
THE DECISION BY THE UNITED
NATIONS AND ARAB LEAGUE AND
SURROUNDING NATIONS, NOT JUST TO
SUPPORT RESOLUTIONS IN
INTERNATIONAL FORUM BUT THEN FOR
SOME OF THOSE NATIONS, NUMBERING
OVER A DOZEN, TO TAKE MILITARY
ACTION, SHOWS THAT FINALLY THE
INTERNATIONAL COMMUNITY HAS
BROKEN WITH MOAMMAR QADHAFI AND
FEELS THAT DIPLOMACY OF
NONVIOLENT MEANS CAN NO LONGER
WORK WITH REGARD TO MANAGING HIM
AND THE THREAT HE POSES.
WILL MILITARY FORCE ACHIEVE THE
OBJECTIVE?
AND I THINK IT CAN.
BUT HERE THE SITUATION IS
SOMEWHAT MIXED.
IF AIR POWER IS ONLY APPLIED TO
A COMBAT AIR PATROL TO ENFORCE A
NO-FLY ZONE, THERE IS THE
POTENTIAL FOR LIBYAN ARMOR AND
ARTILLERY TO OVERWHELM WHAT IS A
VERY DISCOURINGED AND --
DISORGANIZED AND RAG-TAG
CIVILIAN ARMY THAT INITIALLY
MADE GAINS AGAINST QADHAFI, THEN
LOST THEM AND STOOD AT THE GATES
OF BENGHAZI, THEN RETOOK KEY
COMMUNITIES AND CAME TO THE
OUTSKIRTS OF SIRTE, THEN RESORT
WEEK.
WHEN WE LOOK AT HOW WE SHOULD
SUPPORT THE END OF THIS
DICTATORSHIP AND THE FINAL
PROTECTION OF CIVILIANS IN
LIBYA, WE SHOULD UNDERSTAND THAT
THE PROVISION OF CLOSE AIR
SUPPORT, TO TAKE OUT LIBYAN
ARMOR AND ARTILLERY, IS
ESSENTIAL TO THIS MISSION AND
THAT WE SHOULD DEVELOP THE MEANS
TO COMMAND, CONTROL, AND DIRECT
THIS EFFORT.
I'M CONCERNED THAT TODAY I'M
UNSURE, MAYBE UNINFORMED BUT
UNSURE AS TO HOW THE CLOSE AIR
SUPPORT MISSION IS HANDLED.
ORIGINALLY WHEN THIS MISSION WAS
UNDERTAKEN, IT WAS FALLING UNDER
THE COMMAND AND CONTROL OF
STANDARD U.S. MILITARY DOCTRINE.
SINCE LIBYA IS PART OF THE
AFRICOM COMBATANT AREA OF
OPERATIONS, THIS AREA OF
OPERATION, AS I UNDERSTOOD IT,
FELL UNDER THE COMMAND OF THE
PRESIDENT OF THE UNITED STATES
TO EQUITY SIMPLIFY OF DEFENSE TO
GENERAL CARTER HAMM, COMMANDER
OF AFRICA.
AS THE UNITED STATES THEN MOVED
TO INTERNATIONALIZE THE MILITARY
EFFORT, IT SOUGHT TO TRANSFER
COMMAND TO THE NORTH ATLANTIC
TREATY ORGANIZATION, NATO, AND
ITS COMMANDER, WHO ALSO HAPPENS
TO BE AN AMERICAN, ADMIRAL
STAVRIDIS, WHO STANDS NOT ONLY
AGES THE COMMANDER OF THE U.S.
FORCES IN EUROPE BUT AS THE
SUPREME COMMANDER OF NATO.
I UNDERSTAND THAT THE
ADMINISTRATION HAS PUT FORWARD A
TASK FORCE TO BE COMMANDED,
POTENTIALLY, BY A SENIOR
CANADIAN GENERAL WHO WOULD
COMMAND THIS OPERATION.
I UNDERSTAND THAT DIPLOMACY WENT
WE WILL WITH REGARD TO THE
COMMAND OF THE -- WELL WITH
REGARD TO THE COMMAND OF THE
ENDEAVOR.
BUT NEGOTIATIONS WITH REGARD TO
THE PROVISION OF CLOSE AIR
SUPPORT WERE MUCH MORE
TODAY I'M NOT EXACTLY SURE WHO
IS IN COMMAND OF THOSE
OPERATIONS.
IS IT GENERAL HAMM AT AFRICOM IS
IT ADMIRAL STAVRIDIS AS THE
SUPREME ALLIED COMMANDER OF
EUROPE?
MY HOPE IS THAT WE IDENTIFY ONE
KEY ALLIED COMMANDER WHO IS NOT
JUST IN CHARGE OF COMBAT AIR
PATROL ENFORCING A NO-FLY ZONE
BUT ALSO CLOSE AIR SUPPORT TO
ENSURE THAT THE REBELS ARE NOT
DEFEATED TO A TRITE ARMOR AND
ARTILLERY FROM MOAMMAR MOAMMAR QADHAFI'S
ARMY AND TO ACHIEVE A LASTING
VICTORY WHICH IN MY MIND COULD
ONLY MEAN THE END OF THE QADHAFI
I AM PARTICULARLY CONCERNED
TODAY ABOUT KEY WEAPONS SYSTEMS
THAT ARE AVAILABLE TO THE UNITED
STATES AND NOT TO OTHER
COUNTRIES.
PARTICULARLY THE A-10 WART HOG
AND THE WARSHIP.
THESE ARE CRITICAL ASSETS
CRITICAL TO TAKE OUT LIBYAN
TANKS AND ARTILLERY.
IF WE INTERNATIONALIZE THIS
CONFLICT AND, AS I'VE HEARD
POTENTIAL TALK OF REMOVING
COMBAT PLATFORMS OF THE UNITED
STATES FROM EXECUTING CLOSE AIR
SUPPORT MISSIONS, MY QUESTION
IS, WOULD AC-130 GUNSHIPS AND
A-10'S BE AVAILABLE FOR THESE
MISSIONS?
THEY ARE UNIQUELY EFFECTIVE AND
WOULD MAKE THIS CONFLICT SHORTER
AND MORE LIKELY END TO
VICTORIOUSLY AND MY HOPE IS THAT
THEY WOULD CONTINUE TO BE
PROVIDED TO THE ALLIED COMMANDER
SO THAT THE PROGRESS COULD MOVE
FORWARD ON EVENTUALLY ENDING
THIS CONFLICT.
GENERAL POWELL ALSO ASKED THAT
WE ESTIMATE THE COST OF THIS
OPERATION.
MY UNDERSTANDING THIS MORNING IS
THAT THIS OPERATION HAS COST
ROUGHLY ABOUT $500 MILLION AND
WOULD LIKELY ENTAIL GREATER
TIME.
WE SHOULD ESTIMATE THIS COST,
AND WE SHOULD ALSO TELL THE
CONGRESS HOW WE'RE GOING TO PAY
FOR IT.
T-MY UNDERSTANDING RIGHT NOW IS
THAT THE ADMINISTRATION WILL NOT
SEEK A SUPPLEMENTAL AND WILL
TAKE THIS OUT OF THE CORE BUDGET
OF THE DEPARTMENT OF DEFENSE.
WHAT IMPLICATIONS DOES THIS HAVE
FOR PROCUREMENT, FOR MILITARY
CONSTRUCTION, FOR PAY AND
BENEFITS, AND FOR OTHER CRITICAL
OPERATIONS OF THE UNITED STATES
LED IN ORDER OF IMPORTANCE: THE
AFGHANISTAN MISSION, THE IRAQ
MISSION, AND THE PLUS DOZEN
SHIPS THAT ARE NOW PROVIDING THE
CRITICAL HUMANITARIAN RELIEF AND
NUCLEAR RECOVERY OF OUR ALLIES
IN JAPAN?
GENERAL POWELL ALSO ASKS US TO
ASK THE QUESTION, HAVE THE GAINS
AND RISKS BEEN THOROUGHLY
ANALYZED?
WELL, THEY MAY NOT HAVE BEEN
THOROUGHLY ANALYZED, I AM
ADMINISTRATION'S ANSWERS TO
THESE QUESTIONS.
HAD QADHAFI TAKEN BENGHAZI, HAD
HE DEFEATED THE REBEL
GOVERNMENT, I THINK HE WOULD
HAVE THEFN MOVED OVER TIME TO
DESTABLIZE THE NEW GUEST IN --
THE FLU GOVERNMENT IN EGYPT.
AN END TO THE CAMP DAVID PEACE
ACCORDS WOULD NUT JEOPARDY THE
OPERATIONS OF THE SUEZ CANAL.
IT WOULD ENDANGER ISRAEL, AND I
THINK THE ADMINISTRATION WAS
WISE TO SEE A TREMENDOUS
ADDITIONAL RISK HAD QADHAFI WON
THIS WAR.
NOW, AT LEAST WE KNOW THAT THE
REBELS ARE LIKELY NOT TO BE
DEFEATED BUT A STALEMATE IS ALSO
NOT IN OUR INTEREST, AND I WOULD
HOPE THAT WE WOULD RECALL THE
ADVICE OF GENERAL SHERMAN WHO
SAID THAT WE SHOULD MAKE THIS AS
ROUGH AND AS DIFFICULT AS
POSSIBLE TO THE ENEMY, SO THAT,
IRONICALLY, IN MOST HUMANITARIAN
TERMS, IT ENDS AND IT ENDS ON
THE TERMS OF THE UNITED STATES,
OUR ALLIES AND THE NEW REBEL
GOVERNMENT.
POWELL ALSO ASKS US HOW WE MIGHT
SEE THE SITUATION ONCE IT IS
ALTERED BY FORCE TO FURTHER
DEVELOP AND WHAT CONSEQUENCES
ARE THERE.
MY SHOP THAT WE WOULD QUICKLY --
MY HOPE IS THAT WE WOULD QUICKLY
FOLLOW THE DIRECTION OF THE
FRENCH GOVERNMENT AND RECOGNIZE
THE GENTLEMAN LEGAL GOVERNMENT
TO -- THE JALIL GOVERNMENT TO
SEE THAT GOVERNMENT AS A GROWING
PARTNER FOR THE UNITED STATES
AND ALLIES SO THAT THE PEOPLE OF
LIBYA WOULD SEE WHO THEIR
POTENTIAL TRANSITIONAL LEADERS
ARE AND SO THAT WE WOULD HAVE
THEM.
MY HOPE IS THAT A U.S. ENVOY
WOULD DEAL DIRECTLY WITH THE
JALIL GOVERNMENT AND THAT WE
WOULD FOLLOW THE SUIT OF OUR
ALLIES AND WE WOULD MAKE SURE
THAT THEN THERE IS CLEAR LINES
OF AUTHORITY, NOT JUST ON THE
MILITARY SIDE FOR COMBAT PATROL
AND CLOSE SUPPORT BUT ALSO FOR
THE LEADERS OF LIBYA.
POINTS:
CAN WE HIT THE ENEMY WITH
OVERWHELMING FORCE?
I STRONGLY SUPPORT THE
ADMINISTRATION'S LIMITATION ON
NO COMBAT BOOTS ON THE GROUND.
I THINK THAT IS A WISE DECISION
BY THE UNITED STATES, AND I
THINK THAT WE CAN STILL DIRECT
TERRIFIC, TREMENDOUS,
OVERWHELMING AND DECISIVE FORCE
TO END THIS CONFLICT AS QUICKLY
AS POSSIBLE.
MY UNDERSTANDING IS THAT OTHER
ALLIED GOVERNMENTS MAY NOT BE SO
COMPLETELY CONSTRICTED ON THEIR
ABILITY TO PROVIDE, ESPECIALLY
THE CRITICAL ROLE OF FORWARD AIR
KROLLERS WHO WILL -- CONTROLLERS
WHO WILL DIRECT AIR POWER TO THE
MOST IMPORTANT TARGETS TO
ELIMINATE THE LIBYAN MILITARY.
MY HOPE IS THOUGH, THAT WE BRING
ALL COMBAT SET AS TO BEAR OF THE
UNITED STATES AND OUR ALLIES SO
THAT WE QUICKLY ELIMINATE
ESPECIALLY QADHAFI'S ARMOR AND
ARTILLERY FORCE AND SO THAT HE
COMES TO A QUICK END ON THE
MILITARY BATTLEFIELD.
FINALLY, THE POWELL DOCTRINE
OFTEN HAS INCLUDED A FINAL
POINT, WHICH IS CAN THE SUPPORT
OF THE AMERICAN PEOPLE BE
DEMONSTRATED?
AND I THINK IN THIS CASE WE HAVE
FALLEN SHORT.
WHILE THE CONGRESS AND WHILE THE
SENATE HAS ADOPTED A RESOLUTION
CALLING FOR A NO-FLY ZONE IN
LIBYA, COSPONSORED BY MYSELF AND
THE SENIOR SENATOR FROM NOTHER
-- OR SENIOR TO ME, THE SENATOR
FROM NOTHER, SENATOR MEN NEN
DERKSZ I THINK THIS IS --
SENATOR MENENDEZ, I THINK THIS
IS INAADEQUATE TO SUPPORT WHAT
OUR TROOPS ARE DOING OVER LIBYA.
I THINK IT IS CLEAR THAT OUR
MISSION IS SUSTAINED AND THAT
THE CRITICAL WILL OF THE UNITED
STATES IS ENHANCE FUNDAMENTAL WE
COULD FORMALLY EXPRESS SUPPORT
FOR WHAT OUR MEN AND WOMEN ARE
DOING OVERSEAS.
THIS HAS BEEN DONE IN SOME
PRETTY TOUGH CONFLICTS IN THE
PAST, PARTICULARLY AFGHANISTAN
AND IENCHT AND FOR THIS
CONFLICT, THE ADMINISTRATION
SHOULD CALL FOR A RESOLUTION OF
APPROVAL AND THE ELECTED
REPRESENTATIVES OF THE AMERICAN
PEOPLE SHOULD VOTE.
IN GENERAL, I SUPPORT THE
PRESIDENT'S POLICY AND WOULD
VOTE FOR THIS RESOLUTION, BUT I
THINK IT IS ESSENTIAL FOR THOSE
WHO ARE ON THE FIELD TO
UNDERSTAND THAT THE CONGRESS IS
FORMALLY WITH THEM IN A VOTE
CALLED TO CAST UP OR DOWN FOR
THIS MISSION AND FOR ALL OF ITS
UNINTENDED CONSEQUENCES,
POTENTIAL UP SIDE, OR DOWN SIDE.
AS COLIN POWELL LEAVES THE WHITE
HOUSE TODAY, I HOPE HE CARRIES
THIS ADVICE.
I HOPE THAT ALL OF US RECALL THE
KEY POINTS THAT HE LAID OUT.
I THINK HE HAS WISELY PUT
FORWARD FOR PAST PRESIDENTS AND
THIS PRESIDENT A KEY CHECKLIST
THAT ALL OF US, AS CITIZENS OR
THOSE OF US WHO ARE SENATORS, AS
POLICY-MAKERS, CAN HAVE IN
REVIEWING THE DOCTRINE.
IN THE END, THE POWELL DOCTRINE
IS A KEY EASY DHEKLIST TO USE TO
MAKE SURE WE REAVIS THE CALL FOR
MILITARY ACTION UNTIL ABSOLUTELY
NECESSARY.
BUT ONCE NECESSARY, THAT WE HIT
THE ENEMY WITH EVERYTHING THAT
WE GOT.
THAT WE MAKE THE CONFLICT AS
SHORT AND THEREFORE AS
HUMANITARIAN AS POSSIBLE.
THAT WE DEMONSTRATE THE FULL
SUPPORT OF THE AMERICAN PEOPLE
FOR THE MEN AND WOMEN OF THE
ARMY, NAVY, AND AIR FORCE.
AND THAT WE GIVE THEM A CLEAR
MISSION WITH ONE ALLIED
COMMANDER.
I HOPE THE PRESIDENT GETS THIS
ADVICE DIRECTLY FROM THE GENERAL
TODAY AND I HOPE THAT THE
PRESIDENT AND THE SENATE FOLLOWS
AND WITH THAT, MADAM PRESIDENT,
I YIELD BACK AND WOULD SUGGEST
THE ABSENCE OF A QUORUM.
THE CLERK
WILL CALL THE ROLL.
QUORUM CALL:
A SENATOR: MR. PRESIDENT?
THE
SENATOR FROM COME COME.
WE IN A QUORUM CALL?
CORRECT.
I ASK UNANIMOUS I ASK UNANIMOUS
VITIATED.
I ALSO ASK UNANIMOUS CONSENT TO
MINUTES.
OBJECTION.
MADAM PRESIDENT.
MADAM PRESIDENT, I'M HERE AGAIN
TO URGE THE SENATE TO FREE UP
CAPITAL FOR SMALL BUSINESSES TO
ALLOW THEM TO GROW, EXPAND AND
BEGIN HIRING AGAIN.
NOW, UNFORTUNATELY THERE'S A
BURDENSOME FEDERAL REGULATION
THAT CURRENTLY LIMITS THE NUMBER
OF SMALL BUSINESS LOANS CREDIT
UNIONS CAN MAKE TO FAMILY
ENTREPRENEURS.
CREDIT UNIONS HAVE MONEY TO LEND
AND THEY KNOW SMALL BUSINESSES
IN THEIR COMMUNITIES AND THEY
KNOW THAT THESE BUSINESSES
DESPERATELY WANT TO JUMP-START
OUR ECONOMY BY TAKING OUT NEW
LOANS TO GROW THEIR ECONOMY --
THEIR COMPANIES, I SHOULD SAY,
AND HIRE MORE WORKERS.
TWO WEEKS AGO, I CAME TO THIS
VERY FLOOR TO ASK CONSIDERATION
OF A BIPARTISAN AMENDMENT,
SENATE AMENDMENT 242, WHICH I
OFFERED TODAY UNDERLYING BILL TO
RAISE THIS CAP THAT I'VE ALLUDED
TO ON SMALL BUSINESS LOANS.
THE AMENDMENT WOULD SIMPLY GET
GOVERNMENT OUT OF THE WAY AND
ALLOW CREDIT UNIONS TO INCREASE
SMALL BUSINESS LENDING IN THEIR
COMMUNITIES WITHOUT COSTING
AMERICAN TAXPAYERS A DIME.
AND I WANT TO REPEAT THAT,
MADAM PRESIDENT, WOULD NOT COST
DIME.
NOW, WHEN I'VE SPOKEN ON THE
SENATE FLOOR PREVIOUSLY IN
SUPPORT OF THIS AMENDMENT AND
ASKED FOR THE AMENDMENT TO BE
CONSIDERED, THE CHAIR OF THE
SMALL BUSINESS COMMITTEE,
SENATOR LANDRIEU, OBJECTED TO MY
REQUEST AND INDICATED THAT
SENATOR JOHNSTON, THE NEW
CHAIRMAN OF THE SENATE BANKING
COMMITTEE, OPPOSED THE
AND I WANT TO CLEAR UP SOME
MISINFORMATION THAT THE AMERICAN
PEOPLE MIGHT HAVE HEARD AT THAT
TIME AND THANK SENATOR LANDRIEU
REMOVING FROM THE "CONGRESSIONAL
RECORD" HER ASSERTION THAT
CHAIRMAN JOHNSON OPPOSED MY
AMENDMENT.
I UNDERSTAND THAT AS THE NEW
CHAIRMAN OF THE BANKING
COMMITTEE, SENATOR JOHNSON HAS
AN INTEREST IN REVISITING THIS
LEGISLATION, WHICH I NEGOTIATED
WITH THE TREASURY DEPARTMENT,
THE NATIONAL CREDIT UNION
ADMINISTRATION, AND THE PREVIOUS
CHAIRMAN OF THE BANKING
COMMITTEE, SENATOR CHRIS DODD.
BUT I WOULD LIKE TO MAKE IT
CLEAR IN THE "CONGRESSIONAL
RECORD" THAT CHAIRMAN JOHNSON
DOES NOT, IN FACT, OPPOSE THIS
AMENDMENT.
AND I ALSO WOULD LIKE TO TAKE
THIS OPPORTUNITY TO CLEAR UP
SOME CONFUSION RELATED TO THE
$30 BILLION SMALL BUSINESS
LENDING FUND ESTABLISHED AS A
PART OF THE SMALL BUSINESS JOBS
ACT WHICH AROSE WHEN I TRIED TO
CALL UP MY AMENDMENT TWO WEEKS
AGO.
AS I POINTED OUT IN MY ORIGINAL
REMARKS, BANKS WERE GIVEN ACCESS
TO THE SMALL BUSINESS LENDING
FUND BUT CREDIT UNIONS HAVE NOT
BEEN ALLOWED TO EXPAND THEIR
SMALL BUSINESS LENDING BECAUSE
OF THE VERY CAP ON LOANS MY
IN OUR DISCUSSION HERE ON THE
SENATE FLOOR, IT WAS POINTED OUT
TO ME THAT CREDIT UNIONS HAD
BEEN ASKED IF THEY WANTED TO
PARTICIPATE IN THE SMALL
BUSINESS LENDING FUND BUT THAT
THE CREDIT UNION INDUSTRY HAD
TURNED DOWN THAT INVITATION.
I WAS UNAWARE OF SUCH AN OFFER
AND I APPRECIATE BEING TOLD OF
IT, BUT I WOULD ALSO POINT OUT
THAT UNLIKE MANY BANKS, MOST
CREDIT UNIONS DO NOT NEED EXTRA
CAPITAL IN ORDER TO MAKE LOANS,
WHICH IS WHAT THE SMALL BUSINESS
LENDING FUND INTENDED TO PROVIDE
PROVIDE.
RATHER, LIKE I'VE SAID, MOST
CREDIT UNIONS CURRENTLY HAVE
CAPITAL TO LEND TO SMALL
BUSINESSES BUT UNFORTUNATELY
THEY ARE BEING PREVENTED FROM
MAKING THOSE LOANS DUE TO THE
ARBITRARY CAP LIMITING THEIR
SMALL BUSINESS LENDING TO NO
MORE THAN 12.25% OF THEIR ASSETS
ASSETS.
SO IT'S NO WONDER THAT CREDIT
UNIONS DIDN'T HAVE AN INTEREST
IN THE $30 BILLION BANK FUND,
BECAUSE THEY DON'T NEED THE
MONEY AND COULDN'T USE IT ANYWAY
BECAUSE OF THIS BURDENSOME CAP
THAT'S PUT ON SMALL BUSINESS
LOANS.
SO, MADAM PRESIDENT, I
APPRECIATE THE OPPORTUNITY HERE
TODAY TO MAYBE -- MAYBE HAS
ARISEN AROUND CONFUSION
REGARDING MY AMENDMENT, SENATE
I THANK THE SMALL BUSINESS
COMMITTEE CHAIR AND RANKING
MEMBER FOR THEIR GREAT WORK ON
THE UNDERLYING BILL, WHICH IS
VERY IMPORTANT TO MY HOME STATE
OF COLORADO.
NOW, I REALLY WISH MY AMENDMENT
WOULD GET A VOTE TODAY, BUT
REGARDLESS OF WHAT HAPPENS
TODAY, I'M GOING TO CONTINUE TO
WORK WITH CHAIRMAN LANDRIEU,
RANKING MEMBER SNOWE, AND THE
REST OF MY COLLEAGUES TO FIND
INNOVATIVE MEANS TO FREE UP
CREDIT FOR SMALL BUSINESSES IN A
RESPONSIBLE WAY.
AND ON A FINAL NOTE,
MADAM PRESIDENT, YOU HAIL FROM A
GREAT STATE THAT HAS A
SIGNIFICANT BANKING AND CREDIT
UNION SECTORS BOTH.
WE KNOW THAT THEY DON'T ALWAYS
SEE EYE TO EYE, WHICH IS THE
ROOT OBJECTION TO MY AMENDMENT.
THEY STILL MANAGE TO OPERATE
SIDE BY SIDE TO SERVE THEIR
COMMUNITY'S CREDIT NEEVMENTDZ
WELL, -- CREDITNEEDS.
WHY?
BECAUSE THEY BOTH MAKE UP THE
FABRIC OF AMERICA, AND CONTINUE
TO GROW OUR ECONOMY IS SIMPLY
UNITED STATES OF AMERICA.
AND I'D LIKE TO HIGHLIGHT THAT
SPIRIT WHICH IS IN STARK
CONTRAST TO THE KIND OF DIVISIVE
POLL THAT'S A HAVE BEEN BREWING
IN AMERICA.
ONE THAT FURTHER DISAGREES,
DRAWS IDEOLOGICAL LINES IN THE
SAND, AND, FRANKLY, SOWS
DISRESPECT AT THE EXPENSE OF
SHARED INTEREST AND
DISRESPECTFUL PROSPERITY.
SEEING THAT TODAY.
THERE'S A BULK OF MINORITY
OUTSIDE THIS VERY CAPITOL
DEMANDING ACRIMONY AND A BETTER
APPROACH FROM MEMBERS OF
CONGRESS, WHICH I BELIEVE, AND
MANY OF US BELIEVE IN THE END,
WHICH WILL FURTHER DISABLE OUR
CAPACITY TO GET OUR ECONOMY BACK
ON ITS FEET.
NOW, WHILE THIS IS HAPPENING
OUTSIDE, MANY OF US HERE ARE
BUSINESS.
WE TREAT EACH OTHER WITH RESPECT
AND WE'RE HERE WORKING ON A BILL
TO HELP SMALL BUSINESSES INVEST
IN R&D AND WE'RE ALSO
NEGOTIATING A COMPROMISE TO KEEP
OUR GOVERNMENT RUNNING.
THAT'S THE AMERICAN WAY I'VE
ALWAYS KNOWN AND I APPLAUD MY
COLLEAGUES WHO REMAIN COMMITTED
TO WORKING TOGETHER.
THANK YOU, MADAM PRESIDENT, AND
I YIELD THE FLOOR.
MADAM PRESIDENT, I
SUGGEST THE ABSENCE OF A QUORUM.
THE CLERK
WILL CALL THE ROLL.
QUORUM CALL:
QUORUM CALL:
THE
SENATOR FROM ILLINOIS.
I ASK CONSENT TO
SPEAK AS IF IN MORNING BUSINESS.
A QUORUM CALL.
I ASK CONSENT THAT
THE QUORUM CALL BE SUSPENDED.
WITHOUT
OBJECTION.
MADAM PRESIDENT, I
RISE TODAY TO SPEAK ABOUT THE
ISSUE OF SWIPE FEES.
MOST PEOPLE DON'T KNOW WHAT A
SWIPE FEE IS, BUT IT'S ALMOST
PART OF YOUR DAILY LIFE.
THE NEXT TIME YOU REACH INTO
YOUR WALLET OR PURSE AND PULL
OUT A PIECE OF PLASTIC TO PAY
FOR SOMETHING, LIKE MY DEBIT
CARD HERE, AND PRESENT IT AT A
RETAILER OR A RESTAURANT OR
HOTEL OR A GAS STATION,
UNDERSTAND THAT WHAT IS
HAPPENING IN THAT TRANSACTION,
THERE ARE SEVERAL THINGS THAT
ARE NOT EVEN VISIBLE.
WHAT IS HAPPENING IN THAT
TRANSACTION IS YOU ARE PAYING
THAT MERCHANT AND YOUR BANK IS
GOING TO HONOR THAT PAYMENT ON
YOUR ACCOUNT FROM YOUR DEBIT
CARD, BUT THEN THE BANK AND
CREDIT CARD COMPANY ARE GOING TO
TRANSACTION.
NOW, IN DAYS GONE BY, IF YOU
PAID IN CASH, OBVIOUSLY, THERE
WAS NO FEE INVOLVED.
IF YOU PAID WITH A CHECK, WHICH
WAS DONE FOR A LONG TIME AND IS
DONE LESS AND LESS NOW, THERE
WERE PENNIES CHARGED TO PROCESS
THE CHECK.
WHETHER THE FACE AMOUNT OF THE
CHECK WAS $1 OR $100, PENNIES TO
PAY FOR THE PROCESS THROUGH THE
SYSTEM.
NOW A MUCH MORE EFFICIENT SYSTEM
IS BEING USED WITH DEBIT CARDS
WHERE YOU ARE ACTUALLY
WITHDRAWING MONEY FROM YOUR OWN
ACCOUNT TO THE CREDIT OF THE
RESTAURANT OR THE RETAILER.
AND, UNFORTUNATELY, THERE IS A
FEE INVOLVED CHARGED TO THE
MERCHANT OR RETAILER CALLED THE
SWIPE FEE.
ACCURATELY CALLED THE SWIPE FEE.
BECAUSE WHAT HAS HAPPENED IS
THESE MAJOR COMPANIES, VISA AND
MASTERCARD AND THE BANKS THAT
ISSUE THEIR CARDS HAVE
ESTABLISHED HOW MUCH EACH
TRANSACTION WILL PAY IN THIS
SWIPE FEE OR INTERCHANGE FEE.
AND THE FEDERAL RESERVE JUST
RECENTLY DID AN ANALYSIS AND
FOUND SOMETHING INTERESTING.
THEY FOUND THAT THE AVERAGE
SWIPE FEE ACROSS AMERICA IS 44
CENTS FOR EACH TRANSACTION.
THEN THEY SAID, WELL, WHAT DOES
IT ACTUALLY COST TO PROCESS THIS
DEBIT ACCOUNT MOVEMENT OF MONEY
FROM ONE PLACE TO ANOTHER?
AND THE COMMONSENSE WAS 10
CENTS -- AND THE ANSWER WAS 10
CENTS OR LESS.
SO THERE IS A SUBSTANTIAL CHARGE
IN THE MILLIONS OF TRANSACTIONS
THAT GO ON EVERY SINGLE DAY AND
IT HAS A DIRECT IMPACT ON THE
PLACE YOU DO BUSINESS.
IT MEANS THAT THERE IS AN ADDED
COST TO THE RETAILER OR MERCHANT
THAT YOU'RE DOING BUSINESS WITH
FOR THE USE OF THIS DEBIT CARD
THAT GOES BEYOND THE ACTUAL COST
TO THE COMPANY AND THE BANK
WELL, YOU SAY TO YOURSELF, WELL,
THAT'S BUSINESS, ISN'T IT?
IF YOU'RE GOING TO TAKE THESE
CARDS AND YOU WANT THE
CONVENIENCE OF USING THESE
CARDS, YOU'VE OBVIOUSLY
NEGOTIATED 44 CENTS AND THAT'S
WRONG.
THERE IS NO NEGOTIATION
INVOLVED.
THE RETAILERS AND MERCHANTS
LITERALLY HAVE NO BARGAINING
POWER IN WHAT THAT FEE WILL BE.
AND OVER THE YEARS THAT SWIPE
FEET OR INTERCHANGE FEE HAS BEEN
CREEPING HIGHER AND HIGHER.
FOR MANY BUSINESSES ACROSS
AMERICA IT IS A SECOND OR THIRD
MOST EXPENSIVE ITEM IN DOING
THAT'S RIGHT.
BEYOND THE COST OF PERSONNEL AND
WORKERS AND BEYOND THE RENTAL
AND UTILITIES PAID OR HEALTH
INSURANCE COMES THE SWIPE FEE.
THE FEE IS CHARGED BY CREDIT
CARD COMPANIES FOR THE USE OF
DEBIT CARDS AND CREDIT CARDS.
SO WHAT WE SAID LAST YEAR WHILE
WE WERE DEBATING FINANCIAL
REFORM WAS THIS PRICE FIXING BY
THE CREDIT CARD COMPANIES, AND
THERE ARE TWO GIANTS, VISA AND
MASTERCARD, THAT CONTROL 80% OF
THE CREDIT CARDS IN AMERICA,
THESE SWIPE FEE CHARGED BY THEM
SHOULD BE REASONABLE AND
PROPORTIONATE TO THEIR ACTUAL
THEY SHOULDN'T BE ABLE TO FORCE
FEED A SWIPE FEE ACROSS AMERICA.
AND WE SAID TO THE FEDERAL
RESERVE, TAKE A LOOK AT THIS AND
TRY TO FIGURE OUT A WAY TO
ESTABLISH A REASONABLE
PROPORTIONAL FEE SINCE THE
CREDIT CARD COMPANIES AND THE
NEGOTIATE IT.
THEY'RE IN THE PROCESS OF DOING
IT.
AND WE ALSO SAID THAT ANY BANK
OR CREDIT UNION WITH LESS THAN
THAN $10 BILLION IN ASSETS WILL
NOT BE AFFECTED BY THIS.
OUR OBJECT WAS TO MAKE SURE THAT
THE HOMETOWN BANKS, THE LOCAL
BANKS, THE LOCAL CREDIT UNIONS
COULD CONTINUE TO CHARGE
INTERCHANGE FEES WITHOUT ANY
TYPE OF OVERSIGHT BY THE FEDERAL
SOME PEOPLE SAID, WELL, WHY
DIDN'T YOU INCLUDE THEM?
WELL, WE TRIED TO GIVE THEM AN
OPPORTUNITY TO CONTINUE TO DO
BUSINESS BECAUSE I THINK,
FRANKLY, THOSE THAT ARE CLOSEST
IN THE COMMUNITIES ARE THE ONES
THAT WE OUGHT TO BE MINDFUL OF
AND PROTECTIVE OF.
PREJUDICE INVOLVED TOO.
THE BIGGEST BANKS IN AMERICA,
THE TOP 1% OF BANKS IN AMERICA
ARE THE ONES THAT DO ALMOST 60%
OF THIS CREDIT CARD BUSINESS.
I'M TALKING ABOUT THE SAME WALL
STREET BANKS THAT ENDED UP
GETTING A BAILOUT FROM THE
FEDERAL GOVERNMENT TO THE TUNES
OF HUNDREDS OF BILLIONS OF
I DON'T HAVE A LOT OF SYMPATHY
FOR THEM.
THEY MADE SOME STOOP I HAD
MISTAKES -- STOOP I HAD
MISTAKES.
WE SHOULDN'T CREATE AN
OPPORTUNITY FOR THEM TO FIX
PRICES WHEN IT COMES TO
MERCHANTS AND RETAILERS ACROSS
WELL, THIS PASSED LAST YEAR WITH
A STRONG BIPARTISAN VOTE OF 64.
AND THE BIGGEST BANKS IN AMERICA
AND THE BIGGEST CREDIT CARDS --
CREDIT CARD COMPANIES IN AMERICA
HAVE BEEN WORKING NONSTOP EVER
SINCE TO STOP THIS FROM GOING
INTO EFFECT.
THEY HAVE POURED MORE RESOURCES
INTO THIS EFFORT THAN I'VE SEEN.
AND I'VE BEEN AROUND THIS PLACE
FOR A WHILE.
THEY WANT TO STOP THIS BECAUSE
THEY HATE SWIPE FEE REFORM LIKE
THE DEVIL HATES HOLY WATER.
FOR THEM IT IS A DRAMATIC LOSS
OF MONEY.
HOW MUCH?
EACH MONTH -- EACH MONTH IN
AMERICA THESE SWIPE FEES
GENERATE $1.3 BILLION --
LLION FOR THE BANKS.
AT THE EXPENSE OF MERCHANTS AND
SMALL BUSINESSES AND LARGE
BUSINESSES TOO, FOR THAT MATTER,
ACROSS AMERICA.
BUT NOT JUST AT THEIR EXPENSE.
THESE SWIPE FEES ARE BEING PAID
EVERY TIME A PERSON USES A DEBIT
CARD OR CREDIT CARD TO PAY THE
GOVERNMENT -- TO PAY A
UNIVERSITY.
TO MAKE A CHARITABLE
CONTRIBUTION.
NOW, THAT'S A REALITY.
AND $1.3 BILLION A MONTH, MOST
OF IT GOING TO THE BIGGEST BANKS
AND CREDIT CARD COMPANIES IN
FIGHTING FOR.
AND SO THE FIGHT HAS BEEN
JOINED.
AND SENATORS HAVE COME TO THE
FLOOR AND INTRODUCED AN
AMENDMENT TO POSTPONE THIS SWIPE
FEE REFORM FOR TWO YEARS.
TWO YEARS TO STUDY IT.
LET ME SEE, 24 MONTHS TIMES
TIMES $1.3 BILLION.
OVER $30 BILLION THEY WANT IN A
HANDOUT TO THE BIGGEST BANKS AND
CREDIT CARD COMPANIES IN
AMERICA.
I DON'T THINK THAT'S FAIR.
IT'S SURE NOT FAIR TO THE SMALL
BUSINESSES THAT HAVE ASKED ME TO
INTRODUCE THIS AND ASKED ME TO
CONTINUE TO FIGHT FOR IT.
IT'S NOT FAIR TO THESE
BUSINESSES OR THEIR CUSTOMERS.
YOU SEE, OUR EFFORTS ARE NOT
JUST SUPPORTED BY THE
BUSINESSES, THEY'RE SUPPORTED BY
THE CONSUMER FEDERATION OF
AMERICA, THE LARGEST CONSUMER
STATES.
THEY UNDERSTAND THAT IF YOU'RE
DEALING WITH A COMPETITIVE
BUSINESS -- LET'S ASSUME YOU
HAVE GAS STATIONS ACROSS THE
STREET FROM ONE ANOTHER AND YOU
MAKE MORE PROFITABILITY AT ONE
GAS STATION, THEY CAN LOWER
PRICES AND BE MORE COMPETITIVE
WITH THE GAS STATION ACROSS THE
THE SAME ISN'T TRUE WHEN IT
COMES TO BIG BANKS AND CREDIT
WHEN IT COMES TO CREDIT CARDS WE
DON'T HAVE A MONOPOLY, BUT A
DUOPOLY, TWO COMPANIES, VERY
LITTLE COMPETITION BETWEEN THEM.
THERE IS A LOT OF COMPETITION IN
SMALL TOWN AMERICA.
SOME PEOPLE ASK MY TACKLE SOME
OF THESE ISSUES THAT INVOLVE THE
BIG BANKS AND CREDIT CARD
COMPANIES AND OTHERS.
THEY SAY, DON'T YOU UNDERSTAND
THAT THESE OPERATIONS THAT
YOU'RE FIGHTING ARE PRETTY LARGE
IN TERMS OF THEIR RESOURCES AND
THEIR POLITICAL MIGHT.
THERE'S TRUTH TO THAT.
THE BANKS ARE A $13 TRILLION
INDUSTRY IN AMERICA, ACCORDING
TO THE AMERICAN BANKERS
ASSOCIATION, $13 TRILLION.
AND LAST YEAR THE BANKING
INDUSTRY IN AMERICA MADE OVER
OVER $87 BILLION IN PROFITS.
VISA AND MASTERCARD WERE SPUN
OFF FROM BIG BANKS A FEW YEARS
AGO AND NOW ARE MULTIBILLION
DOLLAR COMPANIES THAT CONTROL
NEARLY 80% OF THE PAYMENT CARD
MARKET.
PEOPLE TELL ME THESE FINANCIAL
INDUSTRY GIANTS HAVE UNLIMITED
RESOURCES AND THEY'RE GOING TO
FIGHT WHEN THERE'S A BILLION
DOLLARS A MONTH ON THE TABLE.
WELL, I DON'T THINK THE PEOPLE
OF ILLINOIS SENT ME OR SENT FROM
THEIR OWN STATES OTHER SENATORS
TO HAND THE KEYS TO THIS COUNTRY
OVER TO THE BIG BANKS AND CREDIT
CARD COMPANIES.
THEY SENT ME HERE TO MAKE SURE
THAT WALL STREET BANKS FOLLOW
THE SAME RULES OF THE ROAD THAT
MAN STREET BUSINESSES FOLLOW
EVERY SINGLE DAY.
THERE'S NOTHING WRONG WITH FEES
CHARGED FOR SERVICES PROVIDED AS
LONG AS THOSE FEES ARE
TRANSPARENT AND ARE SET IN A
COMPETITIVE MARKET ENVIRONMENT.
DON'T TELL ME YOU'RE FOR A FREE
MARKET AND THEN SAY, BUT VISA
AND MASTERCARD CAN FIX PRICES.
DON'T TELL ME YOU'RE FOR A FREE
MARKET AND THEN SAY, THOSE
PRICES THAT THEY FIX HAVE TO BE
PUBLIC.
WHEN MARKETS ARE CHARACTERIZED
BY TRANSPARENCY, COMPETITION,
AND CHOICE, CONSUMERS GET A
BENEFIT.
BUT CONSUMERS DON'T BENEFIT WHEN
FEES ARE HIDDEN, CHANGED WITHOUT
WARNING OR SET BY AGREEMENT
BETWEEN COMPETITORS.
SADLY, THAT DESCRIBES MANY OF
THE FEES THAT BANKS AND CARD
COMPANIES HAVE CHARGED IN RECENT
YEARS.
WE PASSED THE CREDIT CARD ACT IN
AND THEN THE DODD-FRANK WALL
STREET REFORM ACT LAST YEAR.
AND THE CONSUMER PROTECTION ACT
WAS ALSO INCLUDED.
WE TARGETED MANY OF THE HIDDEN
PRES THAT -- FEES THAT CONSUMERS
PAY IN AMERICA, AND IF WE DON'T
DO IT, LADIES AND GENTLEMEN, IF
THE UNITED STATES SENATE DOESN'T
DO IT, I WILL SAY TO MY
COLLEAGUES, IT WON'T BE DONE.
THESE POWERFUL ECONOMIC BUSINESS
ENTITIES IN AMERICA NEED TO BE
WATCHED CLOSELY.
DON'T TAKE MY WORD FOR IT.
TAKE THE WORD OF THOSE WHO
ANALYZE THE RECESSION WHICH
WE'RE DEALING WITH.
LEFT TO THEIR OWN DEVICES, THEY
WILL GO TO EXTREMES WHEN IT
COMES TO PROFIT TAKING.
AND THAT'S WHAT'S HAPPENING WHEN
IT COMES TO THESE BIG BANKS AND
CREDIT CARD COMPANIES TODAY.
IF WE DON'T STAND UP FOR
CONSUMERS AND SMALL BUSINESSES
RIGHT HERE ON THE FLOOR OF THE
SENATE, SHAME ON US.
WHO ELSE IS GOING TO DO IT?
BY MAKING FEES TRANSPARENT AND
HELPING TO INFORM CONSUMERS, OUR
LAWS WILL HELP THE FINANCIAL
SERVICES MARKET WORK BETTER FOR
ALL AMERICANS.
THIS SWIPE FEE OR INTERCHANGE
FEE REFORM AMENDMENT THAT I
ADDED TO THE DODD-FRANK BILL
ALSO ADDRESSED AN
ANTICOMPETITIVE MARKET FAILURE
IN THE DEBIT CARD SYSTEM.
FOR YEARS THE BANKING INDUSTRY
HAS ENGAGED IN A HE COULD
LOSIVE -- EXCLUSIVE PRACTICE,
THEY HAVE ALLOWED VISA AND
MASTERCARD TO FIX THE
INTERCHANGE FEE EVERY TIME A
DEBIT CARD IS SWIPED, THE BANKS
GET THE FEES, BUT THEY DON'T SET
THE FEES, THEIR FRIENDS AT VISA
AND MASTERCARD SET THE FEE
THAT'S WILL BE CHARGED.
THIS IS PRICE FIXING PURE AND
SIMPLE BY VISA AND MASTERCARD ON
BEHALF OF THOUSANDS OF BANKS.
AND THIS PRICE FIXING IS
CURRENTLY UNREGULATED.
OF COURSE EVERY BANK IN THE
COUNTRY IS GOING TO TELL YOU
THAT THE INTERCHANGE SYSTEM IS
WORKING JUST FINE SENATOR,
THAT'S BECAUSE WITH SENATORIALLY
FIXED INTERCHANGE RATES BANKS
DON'T HAVE TO WORRY ABOUT
COMPETITION MUCH EACH BANK KNOWS
THE BANK DOWN THE STREET IS
GETTING THE SAME FEE THEY ARE.
THERE ARE TWO FUNDAMENTAL
PROBLEMS WITH VISA AND
MASTERCARD FIXING OF THESE
INTERCHANGE RATES AND SWIPE
FEES.
FIRST, CENTRALIZED RATE FIXING
GIVES THE HARD-ISSUING BANKS NO
INCENTIVE TO MANAGE THEIR
OPERATIONAL AND FRAUD COSTS
ALL BANKS IN THE VISA NETWORK
ARE GUARANTEED THE SAME VISA
FIXED -- PRICE FIXED INTERCHANGE
RATE WHETHER THEY'RE EFFICIENT
OR NOT.
THERE'S NO COMPETITION AND THE
FEES LITERALLY SUBSIDIZE
INEFFICIENCY.
SECOND, BECAUSE VISA AND
MASTERCARD, THE CREDIT CARD
GIANTS, CONTROL NEARLY 80% OF
THE DEBIT CARD MARKET AND
MERCHANTS CAN'T REALISTICALLY
REFUSE TO ACCEPT THEM, VISA AND
MASTERCARD HAVE THE INCENTIVE TO
CONSTANTLY RAISE INTERCHANGE
RATES TO ENCOURAGE BANKS TO
ISSUE MORE OF THEIR CARDS.
SO FEE RATES KEEP GOING UP AND
THE MERCHANTS ARE HELPLESS TO DO
I HAVE HEARD SO MANY SPEECHES ON
THE FLOOR OF THE UNITED STATES
SENATE HERE ABOUT OUR LOVE FOR
SMALL BUSINESS, AND WE SHOULD.
IT IS THE BACKBONE OF THE
ECONOMY OF AMERICA.
THIS INTERCHANGE FEE GOES TO THE
BASIC SURVIVAL OF SMALL BUSINESS
ACROSS AMERICA.
AND IF THIS SENATE IS GOING TO
DECIDE THAT IT'S MORE IMPORTANT
TO PROTECT THE BIG BANKS AND
CREDIT CARD COMPANIES THAN SMALL
BUSINESS, SHAME ON US.
AND WE SHOULD ACCEPT THE REALITY
THAT IT MEANS THAT THESE SMALL
BUSINESSES WILL STRUGGLE, WILL
NOT BE AS PROFITABLE, WILL NOT
HIRE AS MANY PEOPLE.
COUNTRY?
RECESSION?
MERCHANTS CAN'T SAY "NO" TO VISA
OR MASTERCARD BECAUSE OF THE
MARKET POWER OF THESE TWO CREDIT
CARD GIANTS AND BECAUSE SWIPE
FEES ARE FIXED BY THE NETWORKS.
A MERCHANT DOESN'T EVEN HAVE THE
OPTION OF NEGOTIATING A BETTER
DEAL.
SO MERCHANTS ARE STUCK WITH
EVER-INCREASING SWIPE FEES
PASSED ALONG TO THE CONSUMERS IN
THE QUOFT OF GAS -- IN THE COST
OF GASOLINE AND GROCERIES.
CONSUMERS PAY FOR THE DEBIT
INTERCHANGE SYSTEM TO THE TUNE
OF $16 BILLION A YEAR.
DO YOU KNOW WHAT THE INTERCHANGE
FEE IS IN CANADA, CHARGED BY
VISA AND MASTERCARD, THE SAME
FEE I'VE BEEN TALKING ABOUT
HERE, THROUGH THE BANKS IN
ZERO.
THERE'S NO INTERCHANGE FEE.
YOU KNOW WHAT IT IS IN EUROPE?
A FRACTION OF WHAT IT IS IN THE
UNITED STATES.
NOW WHY IS THAT THE CASE?
WHY WOULD THESE CREDIT CARD
GIANTS SAY THAT THEY CAN'T
SURVIVE OVERSIGHT OF THEIR
INTERCHANGE FEES IN THE UNITED
STATES AND CHARGE ZERO IN CANADA
AND PENNIES IN EUROPE?
BECAUSE THE CANADIAN GOVERNMENT
CAME TO THEM AND SAID, WE ARE
NOT GOING TO LET YOU RIP OFF OUR
SMALL BUSINESSES.
WE WILL REGULATE YOU.
THEY SAID, NEVER MIND.
WE WON'T CHARGE ONE IN CANADA.
IN EUROPE THE SAME THING
IF WE ARE SILENT, EXACTLY THE
SAIM OPPOSE -- EXACTLY THE
OPPOSITE WILL OCCUR.
SOME PEOPLE OUT THERE APPARENTLY
TRUST VISA AND MASTERCARD TO
PRICE-FIX IN A FAIR AND
BENEVOLENT WAY.
WE DON'T SEE THE NEED FOR
IF YOU BELIEVE THAT THE GIANT
CREDIT CARD NETWORKS CAN BE
TRUSTED TO FIX INTERCHANGE
PRICES IN A WAY THAT'S FAIR FOR
BANKS, MERCHANTS AND CONSUMERS,
THEN YOU SHOULD BE FINE WITH THE
STATUS QUO.
THAT IS EXACTLY WHAT THE
DO.
IT WILL POSTPONE FOR TWO YEARS
AND PUT INTO A STUDY THIS ISSUE.
WELL, WE SHOULD STUDY THINGS
BEFORE WE ACT ON THEM.
THAT'S FOR SURE.
WE'VE HAD NINE DIFFERENT
CONGRESSIONAL HEARINGS ON THIS
ISSUE, AND THREE SEPARATE
STUDIES ALREADY.
WE'VE STUDIED THIS ONE TO DEATH.
WHAT THE BANKS AND CREDIT CARD
COMPANIES WANT US TO DO IS TO
KEEP ON STIEWDZING SO THAT THEY
CAN COLLECT $1.3 BILLION EVERY
SINGLE MONTH.
THAT'S WHAT THEIR STRATEGY IS.
I DON'T PLACE MY TRUST IN VISAS
AND MASTERCARD, AND I'M NOT
ALONE.
LAST YEAR A STRONG BIPARTISAN
MAJORITY IN CONGRESS SAID, WE
BETTER STAND UP FOR CONGRESS AND
RETAILERS AND CONSUMERS.
AND WE PASSED THIS LAW.
AND NOW THE BANKS AND CREDIT
CARD COMPANIES ARE PULLING OUT
ALL THE STOPS.
I LEARNED YESTERDAY THAT CHASE,
WHICH IS ONE OF THE MAJOR
ISSUERS OF THESE DEBIT CARDS
ACROSS AMERICA, SENT A LETTER TO
THEIR CUSTOMERS IN A NUMBER OF
STATES AND SAID, YOU KNOW, IF
YOU DON'T REPEAL THE DURBIN
AMENDMENT, WE'RE GOING TO END UP
IN A POSITION WHERE WE WON'T BE
ABLE TO GIVE YOU ALL OF THE
REWARDS WHICH WE'RE OFFERING YOU
ON YOUR DEBIT AND CREDIT CARD.
WELL, FIRST, THIS JUST RELATES
TO DEBIT CARDS, WHICH DON'T
CARRY THE BIG REWARD PROGRAMS.
AND, SECONDLY, THIS KIND OF
VEILED THREAT FROM THESE CREDIT
CARD COMPANIES SHOULD NOT BE
TAKEN SERIOUSLY BY ANY CONSUMER
ACROSS AMERICA.
THE LAST TIME WE HAD CREDIT CARD
REFORM, WE UNFORTUNATELY WAITED
MONTHS BEFORE IT BECAME LAW.
THE CREDIT CARD COMPANIES SAW IT
SO WHAT DID THEY DO?
THEY DRAMATICALLY RAISED THEIR
INTEREST RATES ON CONSUMERS
ACROSS AMERICADURED THAT PERIOD
OF TIME.
ZOO EXPECT ANY FAVORS -- DON'T
EXPECT ANY FAVORS FROM THIS
INDUSTRY.
IF WE DO NOT REGULATE THE CREDIT
CARD INDUSTRY AND THE BANKS THAT
ISSUE THESE CARDS, TRUST ME, THE
CONSUMERS WILL CONTINUE TO LOSE
TIME AND TIME AGAIN.
AND AS FOR CHASE, I DON'T THINK
THEY'RE GOING TO BE ANY -- THERE
ARE GOING TO BE ANY POPPY
FLOWERS SOLD ON THEIR BEHALF ON
ANY STREET CORNERS.
IN I RECALL CORRECTLY, THEY HAD
A 48% INCREASE IN PROFITS OVER
THE LAST YEAR.
THEY'RE DOING QUITE WELL.
NOW IT IS TIME TO GIVE SMALL
BUSINESSES AND CONSUMERS ACROSS
AMERICA A BREAK.
CONGRESS SAID IF BANKS ARE GOING
TO LET SCREES IS A AND
MASTERCARD FIX THE INTERCHANGE
RATES, THEY MUST BE REASONABLE
AND PROPORTIONATE.
REASONABLE AND PROPORTIONATE.
THAT'S NARROWLY TARGETED REFORM
THROUGH THE FEDERAL RESERVE.
THE NEW LAW WILL PROVIDE A
CONSTRAINT ON EVER-RISING
INTERCHANGE FEES THAT THE
CURRENT BROKEN MARKET DOES NOT
PROVIDE.
RESERVE.
THEY PUT OUT DRAFT RULE MAKING
AND ARE SLGT COMMENTS FROM
ACROSS THE COUNTRY.
CHAIRMAN BERNANKE CALLED ME AND
SAID, THEY NEEDED AN ADDITIONAL
FEW WEEKS TO COME OUT WITH THE
RULE THAT WILL GO INTO EFFECT IN
JULY OF THIS YEAR.
I WANT HIM TO DO HIS BEST.
I WANT HIM TO FOLLOW WHAT THIS
LAW SAYS, EXCEPTING CREDIT
UNIONS, COMMUNITY BANKS ARE LESS
THAN $10 BILLION IN ASSETS.
THE FED IS TAKING THIS JOB
I AM GLAD THEY ARE.
THE FED KNOWS THAT MANY SMALL
BANKS ARE CONCERNED THAT THE
REFORM MIGHT AFFECT THEM, EVEN
THOUGH THE LAW CLEARLY CHEMENTS
LAST WEEK -- CLEARLY EXEMPTS
THEM.
LAST WEEK CHAIRMAN BEER -- LAST
WEEK BARON BERNANKE SAID HE
UNDERSTANDS THEIR CONCERN.
WE DON'T NEED ANOTHER STUDY.
A STUDY IS AN EXCUSE FOR A
DELAY, AN EXCUSE FOR CREDIT CARD
COMPANIES AND THE BIGGEST BANKS
IN AMERICA TO TAKE $1.3 BALANCE
MONTH OUT OF THE ECONOMY AND
AWAY FROM SMALL BUSINESSES.
I WANT MY COLLEAGUES TO KNOW
THERE IS BROAD SUPPORT FOR DEBIT
INTERCHANGE REFORM.
I'VE RECEIVED MANY LETTERS IN
RECENT DAYS FROM INDIVIDUALS,
SMALL BUSINESSES, AND
REFORM.
NOW, I WILL READILY CONCEDE THAT
THE BIG-BOX RETAILERS ARE ALSO
I AM NOT TRYING TO HIDE THAT.
THAT'S FAFNLGT BUT FACT.
THIS HAS BEEN GENERATE BY A LOT
OF LOCAL PEOPLE AND LOCAL
LET ME TELL YOU, THIS IS
HARDBALL AS FAR AS THE BIG BANKS
CONCERNED.
I HAPPEN TO MENTION THAT I WAS
BROUGHT TO THIS ISSUE FOUR OR
FIVE YEARS AGO BY A GOOD FRIEND
OF MINE, VERY CONSERVATIVE
GENTLEMAN WHO HAS BEEN VERY
SUCCESSFUL IN DOWNSTATE ILLINOIS
NAMED RICH NEIMAN.
HE'S EXPANDED IN ALL THE
MIDWEST.
HE AND I AGREE ON A LOST
POLITICAL ISSUES.
BUT I ALWAYS TURN TO HIM WHEN I
HAVE A BUSINESS ISSUE BECAUSE I
KNOW HE WILL GIVE ME AN HONEST
RICH TOLD ME WHEN HE STARTED
ACCEPTING PLASTIC AT HIS GROCERY
STORES, IT WENT FROM JUST A
SMALL NUMBER OF TRANSACTIONS TO
WITH PLASTIC.
THEY'RE KILLING BHEE THIS
INTERCHANGE FEE.
THE CREDIT CARD COMPANIES AND
DEBIT CARD COMPANIES ARE
CHARGING HIM THESE FEES AND HE
HAS NO VOICE OR BARGAIN IN THE
PROCESS.
THEY CHARGE WHATEVER THEY WANT
TO CHARGE AND HE PAYS T AS A MAN
WHO IS TRYING TO CREATE JOBS IN
SMALL-TOWN AMERICA, I THOUGHT HE
HAD THE RIGHT APPROACH TO THIS.
THEY SHOULD BE ABLE TO RECOVER
THEIR REASONABLE, PROPORTIONATE
COST FOR USING A DEBIT CARD.
BUT WHY SHOULD THEY BE ALLOWED
TO PENALIZE A BUSINESS LIKE
RICH'S.
WE WILL, I SAID THIS PUBLICLY A
COUPLE DAYS AGO AND NOT
SURPRISINGLY, SOME FOLKS ON THE
OTHER SIDE DECIDED TO GO AFTER
BUSINESSMAN.
I AM GOING TO STAND WITH HIM.
FROM MY POINT OF VIEW, HE IS A
GOOD MAN.
I DON'T THINK HE VOTES FOR A
LOST DEMOCRATS.
I HOPE ONCE IN A WHILE #E MIGHT
VOTE FOR ME.
BUT NOTWITHSTANDING THAT, I
RESPECT HIM SO MUCH.
AND I'M SORRY THAT HE HAD TO
TAKE THIS BEATING IN THE PRESS
FROM THE OTHER SIDE.
HE CAN TAKE IT, THOUGH.
HE'S BEEN A TOUGH GUY WHO STADES
STOOD UP FOR HIS FAMILY AND
BUSINESS ALL HIS LIFE.
ON MARCH 18 I RECEIVED A LETTER
FROM THE AMERICAN COUNCIL ON
EDUCATION, MR. PRESIDENT.
ASSOCIATIONS REPRESENTING
COLLEGES AND UNIVERSITIES --
HERE'S WHAT THEY SAID.
"DEBIT CARD SWIPE FEES HAVE BEEN
A HIDDEN EXPENSE FOR STUDENTS
AND FAMILIES PAYING FOR COLLEGE
FOR WHICH THEY RECEIVE NO
AS A RESULT OF THE LAW ENACTED
LAST YEAR, THE FEDERAL RESERVE'S
PROPOSED RULE, WE BELIEVE
COLLEGES AND UNIVERSITIES WILL
SEE REDUCED DEBIT CARD COSTS
WILL BE ABLE TO PASS ON TO
STUDENTS THROUGH LOWER COSTS AS
WE WILL AS INCREASED RESOURCES
FOR INSTITUTIONAL GRANT AID AND
STUDENT SERVICES."
YOU DON'T THINK ABOUT T YOU
THINK ABOUT GAS STATIONS.
BUT THE FACT IS STUDENTS USE
PLASTIC FOR EVERYTHING.
AND THE UNIVERSITIES AND
COLLEGES END UP PAYING THESE
SWIPE FEES TO THE BIG BANKS AND
THE CREDIT CARD COMPANIES AND
RESULT.
MARCH 15, I GOT LETTER FROM THE
CONSUMER FEDERATION OF AMERICA.
SOME OF THE FOLKS ON THE OTHER
SIDE SAID, THIS WILL NEVER HELP
THESE BUSINESSES ARE GOING TO
TAKE ALL THE SAVINGS THAT WOULD
OTHERWISE GO TO THE BIG BANKS
AND CREDIT CARD COMPANIES AND
THEY'RE GOING TO JUST TAKE THOSE
AND GO HOME.
WELL, I DISAGREE AND SO DOES THE
CONSUMER FEDERATION OF AMERICA.
HERE'S WHAT THEY SAID ON MARCH
"THE CURRENT INTERCHANGE SYSTEM
IS UNCOMPETITIVE,
NONTRANSPARENT, AND HARMFUL TO
CONSUMERS.
C.F.A. DOES NOT SUPPORT DELAYING
IMPLEMENTATION OF THE NEW LAW,"
WHICH IS WHAT THE AMENDMENT
SUGGESTS.
MARCH 15 I RECEIVED A LETTER
FROM THE CONSUMER GROUP PUBLIC
WHAT THEY SAID.
"THE DURBIN AMENDMENT WAS
DESIGNED TO CURB ANTICOMPETITIVE
PRACTICES IN THE PAYMENT CARD
MARKET.
WE DO NOT SUPPORT LEGISLATION
CALLING FOR DELAY OF THE DURBIN
SWIPE FEE AMENDMENT."
YESTERDAY I RECEIVED A LETTER
REFORM.
A COALITION OF OVER 250 FLAT,
STATE, AND LOCAL GROUPS
INCLUDING CONSUMERS, CIVIL
RIGHTED, INVESTOR, RETIREE,
LABOR, RELIGIOUS, AND BUSINESS
GROUPS.
SAID.
FROM A CONSUMER POINT OF VIEW,
THE CURRENT INTERCHANGE SYSTEM
IS NOT DEFENSIBLE.
FEEBLE COMPETITION IN THE
PAYMENT CARD MARKETPLACE HAS LED
TO UNJUSTIFIABLY HIGH DEBIT
INTERCHANGE FEES THAT THE
POOREST AMERICANS, GENERALLY
CASH CUSTOMERS, ARE REQUIRED TO
SUBSIDIZE AT THE STORY AND AT
THE PUMP.
WE OPPOSE EFFORTS TO DELAY
IMPLEMENTATION OF THE DURBIN
AMENDMENT THROUGH CONGRESSIONAL
THEY WANT TO STOP THIS RULE
BEFORE IT IS ISSUED.
BECAUSE THEY'RE AFRAID THAT ONCE
IT IS ISSUED AND ONCE PEOPLE
REALIZE THE SAVINGS TO BUSINESS
AND CONSUMERS ACROSS AMERICA,
THEY'LL NEVER GO BACK.
SO THEY ARE PULLING IT ON TRYING
TO MOVE THIS AMENDMENT AS
QUICKLY AS POSSIBLE TO STOP THE
FEDERAL RESERVE FROM ISSUING THE
RULE WHICH THE LAW REQUIRES THEM
TO ISSUE.
ON MARCH 17 THE HISPANIC
INSTITUTE SENT ME A LETTER.
"16 COUNTRIES AND THE EUROPEAN
UNION REGULATE SWIPE FEES AND
THEIR EXPERIENCE DEMONSTRATES
THAT REGULATION BENEFITS
CONSUMERS IN LOWER FEES AND
LOWER COSTS OF GOODS.
THERE IS NO EVIDENCE THAT SWIPE
FEE REGULATION WILL LEAD TO AN
INCREASE IN OTHER CONSUMER
THE NATIONAL SMALL BUSINESS
ASSOCIATION -- AND I SAID, WE
SPEND MORE TIME ON THE SENATE
VENERATING -- SENATE HAVE EN
VATTING SMALL BUSINESS ANYTHING
OTHER THAN OUR TROOPS.
"THE DURBIN AMENDMENT AND THE
PROPOSED FED RULE ARE BENEFICIAL
TO AMERICA'S SMALL BUSINESSES.
FURTHER DELAY AND EAR AND ANOTHER
BIG BANK HANDOUT ARE NOT."
I ALSO RECEIVED A LETTER FROM
185 STATE AND NATIONAL STATE
TRADE ASSOCIATIONS REPRESENTING
2.7 MILLION STORES AND 50
MILLION EMPLOYEES.
LET ME SAY AT THE OUTSET, THE
COALITION I'M REPRESENTING IS
NOT NEARLY AS POWERFUL OR AS
LARGE POLITICALLY AS THE BIG
BANKS AND THE CREDIT CARD
COMPANIES.
WE CAN'T MATCH THEM IN TERMS OF
THEIR POLITICAL POWER, THE
NUMBER OF LOBBYISTS THEY HIRE,
THE NUMBER OF LETTERS THEY SEND
AND ALL THE REST.
FOR THE MOST PART, THEY
REPRESENT A LOT OF SMALL
BUSINESSES WHO ARE TRYING THEIR
BEST TO GET FAIR TREATMENT.
"WE HAVE ROAPTEDLY SOUGHT TO
NEGOTIATE WITH THE CARD
COMPANIES TO REFORM THIS BROKEN
MARNLGT AND BRING SAVINGS TO OUR
15 YEARS LATER, WE HAVE
CONCLUDED THAT NORMAL MARKET
FORCES CANNOT AND DO NOT WORK
AND A BROKEN MARKET WITH
PRICE-FIXING WITH BANKS
CONTROLLED BY A DUOPOLY."
THEY URGE CONGRESS TO OPPOSE ANY
EFFORTS TO DELAY SWIPE FEE
REFORM.
WORKERS.
THE UNION WHICH I USED TO BELONG
TO WHEN I WAS GROWING UP.
HERE'S WHAT THEY WHROAT AND
SAID.
"DELAYING SWIPE FEE REFORM WILL
ALSO DELAY THE CREATION OF
THOUSANDS OF JOBS EACH YEAR THAT
WOULD RESULT FROM REDUCED
THIS REFORM IS LONG OVERDUE FOR
WORKING AMERICANS EVERYWHERE."
THE NATIONAL COMMUNITY
PHARMACIST ASSOCIATION, THE
NATIONAL ASSOCIATION OF CHAIN
DRUG STORES SENT ME A LETTER AND
SAID, "WE REQUEST ANY ASSISTANCE
YOU CAN PROVIDE IN ENSURING THE
TIMELY COMPLETION OF THE FINAL
REGULATIONS AND ENFORCEMENT OF
THE DURBIN AMENDMENT."
THE NATIONAL ASSOCIATION OF
COLLEGE STORES AND 20 STATE
ASSOCIATIONS WROTE AND SAID,
"CREDIT AND DEBIT PURCHASES
ACCOUNT FOR MORE THAN $1 00
MILLION ANNUAL EYELY IN
INTERCHANGE FEES PAID BY COLLEGE
BOOKSTORES AND THEIR STUDENT AND
PARENT CUSTOMERS."
LET ME REPEAT, MR. PRESIDENT.
$100 MILLION A YEAR PAID BY
COLLEGES STUDENTS AND THEIR
STUDENT AND PARENT CUSTOMERS.
CONVECTION SSESSIVE SWIPE FEES
THAT WOULD OTHERWISE BE RETURNED
TO STUDENTS THROUGH LOWER PRICES
ARE BEING MISDIRECTED TOWARD
CREDIT CARD COMPANIES AND LARGE
EVERY MONTH OF DELAY MEANS
HIGHER COSTS FOR STUDENTS AND
PARENTS AT A TIME WHEN SCHOOLS
ARE BEING ASKED TO DO MORE WITH
LESS FUNDING."
I'D LIKE TO ASK UNANIMOUS
CONSENT THESE LETTERS BE
INCLUDED IN THE CONGRESS ON AT
THIS POINT.
TIRPT.
OBJECTION.
UP AGAINST HERE.
YOU DON'T TAKE ON CHASE AND ALL
THE BIG BANKS IN AMERICA, THE
ONES THAT HAVE THE LION'S SHARE
OF THESE DEBIT CARD.