10.01.08

Colloquy Between Senator Patrick Leahy And Senator Christopher Dodd

Senator LEAHY:  As the Senate considers extraordinary legislation to address the current economic crisis I believe it is imperative for the record to reflect the intent behind the provisions I worked with Senator Dodd to include in this legislation.  In an effort to ensure that there is no doubt about what we intended, I would ask the Banking Committee Chairman, Senator Dodd whether it is his understanding that our efforts to ensure that any actions taken by the Treasury Secretary, under the authority of this legislation, be reviewable under the Administrative Procedures Act.

 

Senator DODD:  I would say to the distinguished Chairman of the Judiciary Committee that is what we intend. 

 

Senator LEAHY:  And the provision we have included in Section 119 of the Senate’s legislation, to ensure that this review is available, the word “law”, as it is used, means any State or Federal law, or common law interpreting such State and Federal laws? 

 

Senator DODD:  Yes.  The Senator from Vermont is correct.  My understanding and intent is that this section would allow for review in the event any action by the Treasury Secretary was in violation of any state or Federal statute, or common law interpreting a statute.

 

Senator LEAHY:  I thank the Senator.  It is not our intent to permit the Treasury Secretary to quash or alter any private right of action on the part of shareholders of entities from which the Secretary purchases assets, nor allow the Secretary to confer immunity from suit on any participating financial institution. 

 

Senator DODD:  I would say to the Senator from Vermont that is correct as well. 

 

Senator LEAHY:  And with the savings clause we have added to the legislation, we also intend to prohibit the Treasury Secretary from interfering with or impairing in any way the claims or defenses available to any other person.  For example, no person’s claims in relation to any assets purchased by the Treasury Secretary under the Truth in Lending Act should be impaired, and no person who has been harmed by the conduct of a financial institution should have their claims affected in any way.  Is this the Senator from Connecticut’s understanding as well? 

 

Senator DODD:  It is.  That is what we intend. 

 

Senator LEAHY:  And by agreeing with the Administration’s request to automatically stay on appeal injunctions issued against the Treasury Secretary for actions taken under the authority of this legislation, we have assured that existing waivers of sovereign immunity under the Tucker Act, the Contracts Dispute Act, the Little Tucker Act, the Federal Tort Claims Act and relevant civil rights laws would apply to the Treasury Department’s new responsibilities, just as these laws have applied to the Treasury Department’s actions prior to the bailout measure.  Is that correct? 

 

Senator DODD:  I say to the Chairman of the Judiciary Committee that is what we intend with the savings clause. 

 

Senator LEAHY:  We also included a provision to make sure that mortgagors whose mortgages are purchased by the Treasury maintain all of the claims and defenses they have in relation to those loans, whether pursuant to their contracts, or under state or Federal consumer protection law.  It is not our intent to deprive homeowners of any recourse they may have against lenders who committed fraud or other violations of law in inducing any homeowner into taking a mortgage.  Does the Chairman of the Banking Committee agree with me on this point? 

 

Senator DODD:  I do. 

 

Senator LEAHY:  And finally, I ask as a general matter whether the Senator from Connecticut agrees with me that civil litigation brought by shareholders, or by or on behalf of financial institutions that purchased troubled assets, against officers, directors and in some cases counterparties whose alleged misconduct caused or contributed to their losses, are matters for the justice system to resolve?

 

Senator DODD:  I agree with the Chairman of the Judiciary Committee. 

 

Senator LEAHY:  I thank the distinguished Chairman of the Banking Committee, Senator Dodd, for engaging in this colloquy.  And I thank him for consulting me early in this process to ensure that any legislation the Senate considers contains appropriate safeguards to ensure that the extraordinary authority given to the Treasury Secretary is reviewable, and that the rights of American citizens are preserved. 

 

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