[Congressional Record Volume 141, Number 42 (Tuesday, March 7, 1995)]
[House]
[Pages H2749-H2759]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONSIDERATION OF H.R. 1058, SECURITIES LITIGATION REFORM
ACT
Mr. DREIER. Mr. Speaker, by direction of the Committee on Rules I
call up House Resolution 1058 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
[[Page H2750]] H. Res. 105
Resolved, That at any time after the adoption of this
resolution the Speaker may, pursuant to clause 1(b) of rule
XXIII, declare the House resolved into the Committee of the
Whole House on the state of the Union for consideration of
the bill (H.R. 1058) to reform Federal securities litigation,
and for other purposes. The first reading of the bill shall
be dispensed with. General debate shall be confined to the
bill and shall not exceed one hour equally divided and
controlled by the chairman and ranking minority member of the
Committee on Commerce. After general debate the bill shall be
considered for amendment under the five-minute rule for a
period not to exceed eight hours. The bill shall be
considered as read. During consideration of the bill for
amendment, the Chairman of the Committee of the Whole may
accord priority in recognition on the basis of whether the
Member offering an amendment has caused it to be printed in
the portion of the Congressional Record designated for that
purpose in clause 6 of rule XXIII. Amendments so printed
shall be considered as read. Points of order under clause 7
of rule XVI against the amendments printed in the report of
the Committee on Rules accompanying this resolution are
waived. At the conclusion of consideration of the bill for
amendment the Committee shall rise and report the bill to the
House with such amendments as may have been adopted. The
previous question shall be considered as ordered on the bill
and amendments thereto to final passage without intervening
motion except one motion to recommit.
Sec. 2. H. Res. 103 is laid on the table.
The SPEAKER pro tempore. The gentleman from California [Mr. Dreier]
is recognized for 1 hour.
Mr. DREIER. Mr. Speaker, for purposes of debate only, I yield the
customary 30 minutes to my friend, the gentleman from Texas [Mr.
Frost], pending which I yield myself such time as I might consume. All
time yielded will be for debate purposes only.
(Mr. DREIER asked and was given permission to revise and extend his
remarks, and include extraneous material.)
Mr. DREIER. Mr. Speaker, this is a modified open rule providing for
consideration of H.R. 1058, the Securities Litigation Reform Act, with
1 hour of general debate. Following general debate, the bill will be
open for amendment under the 5-minute rule for a period not to exceed 8
hours.
While there is no requirement that amendments be printed in the
Record prior to their consideration, priority in recognition can be
accorded by the Chair to Members who have had their amendments
preprinted.
Mr. Speaker, the rule waives clause 7 of rule XVI relating to
germaneness for two amendments. One is the amendment offered by my
friend from the other side of the aisle, the gentleman from Oregon [Mr.
Wyden], which establishes audit procedures to detect financial fraud in
securities matters. The second amendment is offered by a Member of the
majority, the gentleman from California [Mr. Cox], to exempt securities
fraud from the RICO statute.
Upon completion of the consideration of all amendments to the bill
the rule provides for one motion to recommit to the minority.
Mr. Speaker, this is a fair rule, providing for an open amendment
process. While there is a cap on total time for amendments, the
minority is able to give priority consideration to whatever germane
amendments their leadership considers most important. Let me repeat:
that they are able to give priority consideration to whatever germane
amendments they consider most important.
The Committee on Rules majority is not shutting particular amendments
out of the process. Securities litigations reform is a critical step in
our effort to help create more high-quality private-sector jobs right
here at home.
Private securities legislation is undertaken today in a system that
encourages meritless cases, destroys thousands of jobs, undercuts
economic growth, and raises the prices that American families pay for
goods and services.
Mr. Speaker, the defenders of the status quo in the minority have
said on issue after issue this year: ``If it ain't broke, don't fix
it.'' Well, this is one time there is no doubt that the current system
is broke, and we are very fortunate that the bill being reported
forward from the committee will fix it.
H.R. 1058 creates a system that swiftly finds and punishes real fraud
and allows the victims of fraud to be fully compensated for their
losses. At the same time it will free innocent parties from wasteful
and baseless litigation designed to enrich litigators alone. While
Chairman Bliley of the Commerce Committee and Chairman Fields of the
Subcommittee on Telecommunications and Finance have done tremendous
work in bringing this bill to the floor, I would like to note the
tireless efforts of my friend from Newport Beach, CA [Mr. Cox].
Mr. Cox is a former securities lawyer and has been involved in
securities litigations reform since his days at Harvard Law School. He
has pushed this important reform effort throughout his 6 years in the
House, and was ready to move forward when the new majority in the
Congress made real reform possible. His hard work and leadership has
been critical to this effort.
Mr. Speaker, presenting this modified open rule to the House reminds
me of a report that I heard last week on National Public Radio's
Morning Edition. It was about a graduate school course offered by
American University here in Washington, DC. The subject of the course
was lobbying. As I listened to the trials and tribulations faced by
those in the lobbying community with all of the changes occurring here
in Congress, I was very proud to hear that the professional lobbyists
under the new majority's policy of open rules find the issue of dealing
with open rules extraordinarily difficult.
In the words of the lobbyist that has taught the course for years,
and I quote:
A position of more open rules is a detrimental thing to a
lot of lobbying interests. One of the lobbyist's commandments
is ``keep it off the floor.'' If you can get something done
in committee and have it sealed and come out with a closed
rule, then you're safe. If everything is amendable on the
floor, that makes the job of the lobbyist that much harder
because then you're dealing with 218 folks instead of just 22
or 23.
Mr. Speaker, lobbyists know that the new Committee on Rules has
brought a new openness to the House, and they do not like it. The new
majority on the Committee on Rules and the many Members of Congress
that are supporting the more open rules are doing right by the American
people.
House Resolution 105, this rule, is no exception. It is another in a
growing series of rules that do not pick and choose amendments to
stifle debate. I urge my colleagues to support this very fair,
balanced, modified open rule as we proceed with debate on the
Securities Litigations Reform Act.
Mr. Speaker, I include for the Record material on the amendment
process under special rules reported by the Rules Committee, 103d
Congress versus the 104th Congress.
THE AMENDMENT PROCESS UNDER SPECIAL RULES REPORTED BY THE RULES COMMITTEE,\1\ 103D CONGRESS V. 104TH CONGRESS
[As of March 7, 1995]
----------------------------------------------------------------------------------------------------------------
103d Congress 104th Congress
Rule type ---------------------------------------------------------------------------
Number of rules Percent of total Number of rules Percent of total
----------------------------------------------------------------------------------------------------------------
Open/Modified-open\2\............... 46 44 18 86
Modified Closed\3\.................. 49 47 3 14
Closed\4\........................... 9 9 0 0
---------------------------------------------------------------------------
Totals:....................... 104 100 21 100
----------------------------------------------------------------------------------------------------------------
\1\This table applies only to rules which provide for the original consideration of bills, joint resolutions or
budget resolutions and which provide for an amendment process. It does not apply to special rules which only
waive points of order against appropriations bills which are already privileged and are considered under an
open amendment process under House rules.
\2\An open rule is one under which any Member may offer a germane amendment under the five-minute rule. A
modified open rule is one under which any Member may offer a germane amendment under the five-minute rule
subject only to an overall time limit on the amendment process and/or a requirement that the amendment be
preprinted in the Congressional Record.
\3\A modified closed rule is one under which the Rules Committee limits the amendments that may be offered only
to those amendments designated in the special rule or the Rules Committee report to accompany it, or which
preclude amendments to a particular portion of a bill, even though the rest of the bill may be completely open
to amendment.
\4\A closed rule is one under which no amendments may be offered (other than amendments recommended by the
committee in reporting the bill).
[[Page H2751]]
SPECIAL RULES REPORTED BY THE RULES COMMITTEE, 104TH CONGRESS
[As of March 2, 1995]
----------------------------------------------------------------------------------------------------------------
H. Res. No. (Date
rept.) Rule type Bill No. Subject Disposition of rule
----------------------------------------------------------------------------------------------------------------
H. Res. 38 (1/18/95) O................... H.R. 5.............. Unfunded Mandate Reform.. A: 350-71 (1/19/
95).
H. Res. 44 (1/24/95) MC.................. H. Con. Res. 17..... Social Security.......... A: 255-172 (1/25/
H.J. Res. 1......... Balanced Budget Amdt..... 95).
H. Res. 51 (1/31/95) O................... H.R. 101............ Land Transfer, Taos A: voice vote (2/1/
Pueblo Indians. 95).
H. Res. 52 (1/31/95) O................... H.R. 400............ Land Exchange, Arctic A: voice vote (2/1/
Nat'l. Park and Preserve. 95).
H. Res. 53 (1/31/95) O................... H.R. 440............ Land Conveyance, Butte A: voice vote (2/1/
County, Calif. 95).
H. Res. 55 (2/1/95). O................... H.R. 2.............. Line Item Veto........... A: voice vote (2/2/
95).
H. Res. 60 (2/6/95). O................... H.R. 665............ Victim Restitution....... A: voice vote (2/7/
95).
H. Res. 61 (2/6/95). O................... H.R. 666............ Exclusionary Rule Reform. A: voice vote (2/7/
95).
H. Res. 63 (2/8/95). MO.................. H.R. 667............ Violent Criminal A: voice vote (2/9/
Incarceration. 95).
H. Res. 69 (2/9/95). O................... H.R. 668............ Criminal Alien A: voice vote (2/10/
Deportation. 95).
H. Res. 79 (2/10/95) MO.................. H.R. 728............ Law Enforcement Block A: voice vote (2/10/
Grants. 95).
H. Res. 83 (2/13/95) MO.................. H.R. 7.............. National Security PQ: 229-100; A: 227-
Revitalization. 127 (2/15/95).
H. Res. 88 (2/16/95) MC.................. H.R. 831............ Health Insurance PQ: 230-191; A: 229-
Deductibility. 188 (2/21/95).
H. Res. 91 (2/21/95) O................... H.R. 830............ Paperwork Reduction Act.. A: v.v. (2/2?/95).
H. Res. 92 (2/21/95) MC.................. H.R. 889............ Defense Supplemental..... A: 282-144 (2/22/
95).
H. Res. 93 (2/22/95) MO.................. H.R. 450............ Regulatory Transition Act A: 252-175 (2/23/
95).
H. Res. 96 (2/24/95) MO.................. H.R. 1022........... Risk Assessment.......... A: 253-165 (2/27/
95).
H. Res. 100 (2/27/ O................... H.R. 926............ Regulatory Reform and A: voice vote (2/28/
95). Relief Act. 95).
H. Res. 101 (2/28/ MO.................. H.R. 925............ Private Property A: 271-151 (3/1/
95). Protection Act. 95).
H. Res. 104 (3/3/95) MO.................. H.R. 988............ Attorney Accountability A: voice vote (3/6/
Act. 95).
H. Res. 103 (3/3/95) MO.................. H.R. 1058........... Securities Litigation ...................
Reform.
H. Res. 105 (3/6/95) MO.................. .................... ......................... ...................
----------------------------------------------------------------------------------------------------------------
Codes: O-open rule; MO-modified open rule; MC-modified closed rule; C-closed rule; A-adoption vote; PQ-previous
question vote.
Source: Notices of Action Taken, Committee on Rules, 104th Congress.
Mr. Speaker, I reserve the balance of my time.
{time} 1500
Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I must rise in opposition to this rule. Legislation of
this complexity and which may ultimately have an enormous impact on
securities markets and investor transactions in this country deserves
informed and considered debate. H.R. 1058 was not thoroughly examined
in the Commerce Committee, and now, this rule does not give the House
an opportunity to thoroughly consider this legislation. In fact, Mr.
Speaker, there is ample proof that in the haste to send this
legislation, along with the other pieces of H.R. 10, to the full House,
a significant issue was left out, or perhaps forgotten.
That issue, relating RICO to securities transactions only came to the
attention of the Rules Committee yesterday afternoon--2 days after the
original rule, H.R. 103, had been reported to the House. In order to
provide for the consideration of the RICO issue, it was necessary for
the Rules Committee to meet and report yet another rule on H.R. 1058.
Yet, in spite of the fact that another issue was added to the debate on
H.R. 1058, the Rules Committee did not see fit to allow the House any
more time to debate these important issues through the amendment
process.
Mr. Speaker, House resolution limits consideration of all amendments
to H.R. 1058 to 8 hours. That 8 hours includes time for voting--which,
in effect, places strict limits on the consideration of amendments. I
opposed this limit during the debate on this rule in the Committee on
Rules last Friday and last night and I bring my opposition to the floor
today. Limiting the time to consider amendments ultimately limits the
debate and the number of amendments which may be offered. This
limitation is contrary to the stated objectives of the Republican
majority to open the House to free and unfettered debate. Considering
the complexity of this legislation and the potential impact it may have
on our economy, I question whether 8 hours is really an adequate amount
of time to debate this matter in a free and unfettered manner.
In fact, Mr. Speaker, the gentleman from Michigan [Mr. Dingell]
originally requested 12 hours for consideration of amendments on this
bill. The majority has asked that the Democrats on the Rules Committee
confer with our leadership to determine the number of hours that we
feel would be adequate to cover the anticipated amendments to
legislation scheduled for the floor. The Democratic members of the
Rules Committee made a responsible request last Friday: that request
was based on our best estimates of the time needed to thoroughly debate
this legislation. Our request was based on our discussions with the
ranking minority member of the Commerce Committee after his
consultations with his members.
Last week, the majority of the Rules Committee saw fit to only grant
66 percent of the requested time. And, last night when an additional
issue, some say a major issue, was added to the issues to be considered
by the House, the majority refused to grant any additional time for
consideration of amendments to H.R. 1058. Mr. Speaker, it is for this
reason that I must oppose this rule. Last week we made a good faith
offer under the terms articulated by Chairman Solomon and last night we
reiterated our position.
Mr. Speaker, the Democratic members of the Rules Committee believe
the 8-hour time limit is inadequate for the consideration of this
legislation because of the enormity of the issue, as well as the
addition of the RICO amendment. We support efforts to deter those who
abuse the judicial system by filing meritless lawsuits. We support
efforts to provide substantive sanctions on those who engage in these
activities. The desire to make corrections in the process is indeed
bipartisan--the only question is how to accomplish those corrections.
Members need time to consider all the options.
Democratic members have made a good faith effort to participate in
the deliberations on the rule for this bill, but again our efforts have
been rebuffed. In spite of bipartisan desires to end frivolous lawsuits
while protecting average investors and honesty in the securities
market, this is not a bipartisan rule. For this reason, I urge defeat
of the rule.
AMOUNT OF TIME SPENT ON VOTING UNDER THE RESTRICTIVE TIME CAP PROCEDURE
IN THE 104TH CONGRESS
------------------------------------------------------------------------
Time
Bill No. Bill title Rollcalls Time on
spent amends
------------------------------------------------------------------------
H.R. 667.. Violent Criminal Incarceration 8 2 hrs. 7 hrs.
Act. 40 20
min. min.
H.R. 728.. Block Grants..................... 7 2 hrs. 7 hrs.
20 40
min. min.
H.R. 7.... National Security Revitalization. 11 3 hrs. 6 hrs.
40 20
min. min.
H.R. 450.. Regulatory Moratorium............ 13 3 hrs. 6 hrs.
30 30
min. min.
H.R. 1022. Risk Assessment.................. 6 2 hrs. 8 hrs.
H.R. 925.. Takings.......................... 8 2 hrs. 9 hrs.
40 20
min. min.
H.R. 988.. Attorney.........................
------------------------------------------------------------------------
members shut out by a time cap--104th congress
This is a list of Members who were not allowed to offer
amendments to major legislation because the 10 hour time cap
on amendments had expired. These amendments were also pre-
printed in the Congressional Record. This list is not an
exhaustive one. It contains only Members who had pre-printed
their amendments; others may have wished to offer amendments
but would have been prevented from doing so because the time
for amendment had expired.
H.R. 728--Law Enforcement Block Grants: 10 Members.
Mr. Bereuter, Mr. Kasich, Ms. Jackson-Lee, Mr. Stupak, Mr.
Serrano, Mr. Watt, Ms. Waters, Mr. Wise, Ms. Furse, Mr.
Fields.
H.R. 7--National Security Revitalization Act: 8 Members.
Ms. Lofgren, Mr. Bereuter, Mr. Bonior, Mr. Meehan, Mr.
Sanders (2), Mr. Schiff, Mrs. Schroeder, Ms. Waters.
H.R. 450--Regulatory Moratorium: 15 Members.
Messrs. Towns, Bentsen, Volkmer, Markey, Moran, Fields,
Abercrombie, Richardson, Traficant, Mfume, Collins, Cooley,
Hansen, Radanovich, Schiff.
H.R. 1022--Risk Assessment: 3 Members (at least three other
Members had amendments
[[Page H2752]] prepared but were not allowed to offer them:
Mr. Doggett, Mr. Mica, Mr. Markey).
Mr. Cooley (2), Mr. Fields, Mr. Vento.
Mr. Speaker, I reserve the balance of my time.
Mr. DREIER. Mr. Speaker, I yield 4 minutes to my friend and
classmate, the gentleman from Humboldt, TX [Mr. Fields], the
distinguished chairman of the Telecommunications Subcommittee.
(Mr. FIELDS of Texas asked and was given permission to revise and
extend his remarks.)
Mr. FIELDS of Texas. Mr. Speaker, I rise in support of the rule on
H.R. 1058, the Securities Litigation Reform Act.
Today's votes will bring to an end the debate on one of the least
understood and potentially most important legal reforms the Congress
will address this year. The arcane subject of securities litigation
reform concerns a great many more people than just the nine law firms
that dominate this practice. It concerns more than the handful of law
school professors who seem intent on examining the individual trees and
missing the forest. It concerns more than the accountants and the
brokers and the lawyers.
H.R. 1058 concerns desperately needed reforms that focus on the need
to protect the employers of American workers from being abused by a
handful of lawyers. It concerns protecting American shareholders who
invest their savings and use them to provide for their own welfare, the
education of their children, and to insure they have a secure
retirement. American investors are entitled to see us protect them from
watching their hopes and confidence disappear when the companies in
which they invest their savings are victimized by those who file
abusive and frivolous lawsuits.
Perhaps the greatest contribution to the debate on this subject has
been to help people understand there are shareholders on both sides of
these cases, and that in most cases they all lose. Even SEC Chairman,
Arthur Levitt, has noted:
there is a sense in which class action lawsuits simply
transfer wealth from one group of shareholders, those who are
not members of the plaintiff class, to another group of
shareholders. Large transaction costs accompany this
transfer, as the total amount paid to attorneys on both sides
may equal or even exceed the net amount paid to the plaintiff
class.
Something is very wrong with a civil litigation system in which only
the lawyers win.
H.R. 1058 is about Congress removing the incentives that exist in the
current system for lawyers to sue a company because the price of its
stock has dropped. It is about protecting the corporations that play so
large a role in this country's economy from having to divert resources
that are used to run and expand their businesses into defending
frivolous lawsuits. This legislation is sorely needed, it is not an
academic exercise. Witnesses have testified before the Commerce
Committee for the last two Congresses that abusive litigation costs
have led their companies to contract their business, to cancel research
and development, and to be less forthcoming with financial information
to their shareholders.
This is an open and fair rule, that allows consideration of all
legitimate amendments. Let us cure this sickness, Mr. Speaker, and
restore the health of America's employers. I urge my colleagues to
support the rule.
Mr. FROST. Mr. Speaker, for the purposes of debate only, I yield 6
minutes to the gentleman from Massachusetts [Mr. Moakley].
Mr. DREIER. Mr. Speaker, I yield 2 minutes to the gentleman from
Massachusetts [Mr. Moakley].
The SPEAKER pro tempore. The gentleman from Massachusetts [Mr.
Moakley] is recognized for 8 minutes.
Mr. MOAKLEY. Mr. Speaker, I thank the gentlemen for yielding.
Mr. Speaker, the rule we are considering today adds another
Republican broken promise to that ever growing heap. The Republicans
promised to let the American people have their say in Government by
granting 70 percent open rules. They are breaking that promise.
Republicans promised to consider every single contract item under an
open rule. Mr. Speaker, they are breaking that promise also.
I guess, Mr. Speaker, legislating is not as easy as it looks. In
their hurry to finish the contract and begin the April recess, the
Republicans forgot to put the civil RICO amendment offered by the
gentleman from California [Mr. Cox] in H.R. 10. They also made a series
of mistakes in the committee report which would have opened all sorts
of points of order.
But they decided to throw away the old bill and come up with a new
one that has never seen the inside of a congressional committee room.
That way they protect the bill from all types of points of order.
Once again, the Republicans sang the praises of a deliberative
democracy. Where is that chorus now, Mr. Speaker? It certainly was not
in committee. In fact, the amendment this rule adds was not even
considered by a congressional committee. It had no hearing, and it was
never reported out.
How is that for sunshine? Mr. Speaker, this restrictive rule will
keep the people's representatives from improving this bill by capping
the time allowed for amendments. Democrats asked for 12 hours for
amendments, and the Republicans said they had time only for 8 hours,
because they did not want anything to interfere with their April 8
recess.
Well, I cannot help it, Mr. Speaker, if the Republicans put
themselves on schedules, but we at least, if we are not part of the
schedule, we should not have to abide by all of the schedules.
Then they added the controversial rewrite of the civil RICO laws, and
they still refused to increase that 8 hours to 10 or 12 hours.
I would add, Mr. Speaker, that Republican time caps are even worse
than they look, and all the time caps that we had issued in the last
couple of Congresses, not one person was ever frozen out of bringing
their amendment forward.
Under the Republican time caps, they include
actually the voting time. That means an 8-hour rule or an 8-hour
debate time is only about 6 hours, and once again, they have broken
their promises.
Mr. Speaker, just so I can show you what they mean by moderate open
rules, H.R. 728, law enforcement block grants, shouted to the rafters,
``This is an open rule, this is a moderate open rule,'' they froze out
10 Members with their amendments.
Let me tell you, the Members frozen out were the gentleman from
Nebraska [Mr. Bereuter], the gentleman from Ohio [Mr. Kasich], the
gentlewoman from Texas [Ms. Jackson-Lee], the gentleman from Michigan
[Mr. Stupak], the gentleman from New York [Mr. Serrano]; at least this
is an equal opportunity freezing out of all kinds of Members.
On H.R. 7, the National Security Revitalization Act, moderate open
rule, ``This is what we promised you,'' eight Members, and their
amendments died on the altar down there.
The Regulatory Moratorium Act, H.R. 450, 15 members were not able to
bring their amendments forward; 1022, H.R. 1022, risk assessment, three
Members, and at least three other Members had amendments prepared but
were not allowed to offer them. And even the Attorney Accountability
Act, four Members were frozen out, the gentlewoman from California [Ms.
Harman], the gentleman from Michigan [Mr. Smith], the gentleman from
Mississippi [Mr. Parker], and the gentleman from Ohio [Mr. LaTourette].
``These are open rules.''
Mr. DREIER. Mr. Speaker, will the gentleman yield?
Mr. MOAKLEY. I am happy to yield to the gentleman from California.
Mr. DREIER. Mr. Speaker, I thank my friend from south Boston, the
former chairman of the Committee on Rules, for yielding.
The reason I underscore the fact he is the former chairman of the
Committee on Rules, Mr. Speaker, is that it is so apparent the
disparity that one must look at between the 103d Congress and the 104th
Congress.
The gentleman from Massachusetts [Mr. Moakley], Mr. Speaker, has just
said that these Members were knocked out, prevented from having the
opportunity to offer these amendments. The Committee on Rules did not
have a single thing to do with that, Mr. Speaker. The Committee on
Rules said that we will provide a process that is open and accountable.
We made it very clear this is a modified open rule. This is a modified
open rule.
[[Page H2753]] Mr. MOAKLEY. Reclaiming my time, the Committee on
Rules had everything to do with this, because the Committee on Rules
could have given more time in order that those Members who struggled to
get those amendments in proper form could have brought them forward.
Mr. DREIER. If the gentleman would yield further, the point is very
clear, and that is the Committee on Rules did not make the decision
which amendments could and could not be offered, as has been the case
in past Congresses. It is up to the leadership of each party to
establish their priorities.
We are not trying to say that an idea cannot be considered here on
the House floor. What we are saying is that with this outside time
constraint of 8 or 10 or 12 hours, which we have had, what we have said
is you all establish your priorities and then bring them to the House
floor and have an up-or-down vote on them.
Mr. MOAKLEY. It is really up to the Committee on Rules to offer the
amendments, to offer the time to bring these amendments to the floor,
and I do not care how my friend cuts it and talks about leadership.
Being on the Committee on Rules, you can make a bill, if it is a
germane bill, or you waive points of order, and you bring it to the
floor, if you give it time, it can be heard.
{time} 1515
Last year we had time caps on half a dozen bills. Not one person was
frozen out from the debates. Under their time caps, there is not a bill
that goes by that people are not frozen out.
Mr. DREIER. Mr. Speaker, will the gentleman yield?
Mr. MOAKLEY. I yield to the gentleman from California.
Mr. DREIER. I thank the gentleman for yielding.
Mr. Speaker, not one person was frozen out in debate. What happened
in the 103d Congress was that Members were frozen out from the third
floor, frozen out because they were told their amendments could not
even be offered because we had so many closed rules.
Down here we are saying any amendment that is germane can be offered.
We have an outside limit of sometimes 8 to 12 hours.
Mr. MOAKLEY. Mr. Speaker, reclaiming my time----
The SPEAKER pro tempore. (Mr. Dickey). The gentleman from
Massachusetts has 5 seconds remaining.
Mr. MOAKLEY. Five seconds? Well, thank you.
Mr. DREIER. Mr. Speaker, I yield an additional 5 seconds to the
gentleman from Massachusetts.
Mr. MOAKLEY. I am overwhelmed. I want to make the point that the
Republican Party came down and said, ``What happened in the 103d
Congress will never happen again. We are going to give out open
rules.'' Well, where are they?
Mr. DREIER. Mr. Speaker, I am happy to yield 2 minutes to my friend
and classmate, the gentleman from Findlay, OH [Mr. Oxley], Chairman of
the Subcommittee on Commerce and Trade.
(Mr. OXLEY asked and was given permission to revise and extend his
remarks.)
Mr. OXLEY. I thank the gentleman for yielding this time to me, and I
rise in support of the rule as well as H.R. 1058.
Our committee has worked long and hard on providing for a reasonable
set of rules that these kinds of debates can take place. I think we
have achieved that.
I want to pay particular tribute to the gentleman from Texas, the
chairman of the Subcommittee on Telecommunications and Securities, and
also to the gentleman from California [Mr. Cox], and my friend from
Louisiana, who has really been the godfather of this provision for a
number of years. We appreciate his ability to work with the majority in
crafting what I think is a very effective bill that will start to get
some common sense back into our legal process and at the same time
permit people who are truly aggrieved to pursue their claims in court.
I thought the debate in the committee was lively, informative, and I
suspect the same thing will occur on the floor during general debate
and the amending process.
Securities litigation reform is a bill whose time has come. It is a
provision that will allow for, I think, some dealing with securities
litigation that is long overdue. Numerous groups throughout the country
support this effort. We think that those companies that are just
starting out, entrepreneurial companies particularly, are highly
vulnerable to these kinds of strike lawsuits. That is exactly what this
bill tries to mitigate and to change.
I think the gentleman is correct, the rule is proper, and the bill is
a good step in the right direction and true commonsense legal reform.
Mr. Speaker, today I rise in strong support of H.R. 1058, The
Securities Litigation Reform Act.
Is there a person in this Congress or in this country who honestly
believes that our current system of securities fraud litigation does
not require serious and immediate reform?
H.R. 1058 is the answer.
As we speak, a strike suit plague is devastating our Nation and
crippling American competitiveness.
Unprincipled lawyers are spreading this plague at an alarming rate.
One firm in particular files a strike suit every 4.2 business days, and
1 of every 8 companies listed on the New York Stock Exchange has been
crippled by strike suits.
While these lawyers claim to sue in the name of the investor, a
number of recent studies show otherwise. For example, the National
Economic Research Association has concluded that investors recover just
7 cents on every dollar lost.
Their actual recovery is even lower. Plaintiffs' lawyers usually take
one-third of all the settlement proceeds.
The strike suit plague is forcing our companies to squander resources
rather than devoting them to productivity and job creation. It stifles
innovation and adds tens of millions of dollars to the cost of doing
business. It is time we rid our countryside of this disease and cure
our Nation's economy.
Strike suits are devastating our Nation. A study by the Rand
Institute of Civil Justice says excessive litigation--largely designed
to coerce settlements from successful defendants--may cost our economy
as much as $36 billion each year.
All Americans pay a hidden litigation tax to subsidize the massive
cost of strike suits. Some pay with their jobs, as workers are laid off
in the wake of extorted settlements. Scores of other able-bodied
Americans are never hired in the first place. Research and development
and other investments that spur economic growth are slashed. Consumers
pay higher prices for their goods and services. All of us pay the price
for strike suits as the lawyers quietly walk away with fortunes in
extorted settlements.
It is time to rid our Nation of this strike suit epidemic. It is time
for a litigation tax cut.
I urge you all to support H.R. 1058 in the name of the fiscal health
of all Americans.
Mr. FROST. Mr. Speaker, for purposes of debate only, I yield 5
minutes to the gentleman from Michigan [Mr. Dingell].
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, make no mistake of it, H.R. 1058 will
encourage securities fraud. It is a bad bill. Milken, Boesky, people
like that would have been delighted to have functioned under the
provisions of this legislation.
The rule is a bad rule; it is unfair, and it does not give sufficient
time for the matters involved in this legislation to be properly
addressed. Both should be rejected by the House.
Now, I am no water or spear carrier for trial lawyers. I began
pushing product liability over 10 years ago. Two weeks ago I voted for
legislation to reform product liability laws. I have long felt there
was a real need for reforming medical malpractice and for dealing with
securities litigation, which does happen to constitute a problem.
But this legislation goes well beyond meeting needs. It does what the
old Chinese story tells about: It burns down the barn to cook the pig.
H.R. 1058, in its zeal to eliminate abuses, goes too far. It creates
shelters, it creates loopholes, and it creates incentives for
securities fraud. It will impair the transparency, the fairness of our
marketplace, and it will make it more difficult for the SEC to deal
with problems of securities fraud, and it will raise real questions
about whether Americans can continue to trust and to believe that their
securities markets are the best and fairest and most open in the world.
[[Page H2754]] This legislation is opposed by a large number of
people and agencies that should be listened to carefully.
It is opposed by the Securities and Exchange Commission, the State
securities regulators, Attorney General of the United States, the U.S.
Conference of Mayors, the Government Finance Officers Association,
individual investors and all major consumers groups--all opposed.
The American Association of Retired Persons, the Gray Panthers,
Consumers Union, Consumer Federation of America--all oppose it.
Citizen Action, Public Citizen, and the U.S. Public Interest Research
Group all oppose this legislation.
Why? Because it is bad legislation, because it does not adequately
protect the interests of the honest, innocent and small investors, and
because it
threatens the trust of the American people in the American securities
market.
I need to remind my colleagues on the Republican side of the aisle
that one of the reasons the United States is regarded as the wonders of
the world in terms of our securities markets and capital-raising system
is the fact that our system is known to be fair and people know they
can trust it. This is a peculiarity not found elsewhere in the world.
The bill suffers from multitudes of defects, and these reveal the
extreme goals of the supporters, goals like ``losers pays,''
establishing a defense against recklessness that allows a miscreant to
get off by the simple statement of, ``Ooops, I forgot the law,'' and
imposing harsh pleading requirements that are impossible to meet for
real-life plaintiffs with good cases.
I would observe that under the requirements for Scienter in the
pleadings in this legislation a person who has been wronged by
securities fraud will need not only a layer but he will need a
psychiatrist and a psychic to tell him what was going on inside the
mind and head of the wrongdoer who skinned him and thousands of other
Americans of their hard-won and thousands of other Americans of their
hard-won and hard-earned savings.
The process? The process was intolerable. Neither I nor the ranking
member of the relevant subcommittee were included in the discussions on
the bipartisan compromise.
Members and staff received markup documents the night before markup.
That is insufficient time to review and prepare amendments and
statements. We were then presented with totally different documents and
totally different legislation the next day, without time to review or
to understand the changes.
Debate was inexplicably and unfairly shut down at 2:30 p.m. on
Thursday, February 16, in a markup which had already been shortened by
prolonged recesses for negotiations and by a process which permitted
neither adequate hearings nor opportunity to amend or to ask questions
or witnesses.
This was dictated by the Republican leadership because of scheduling
the bill on the floor. Originally, it was not even intended for the SEC
to be heard. The SEC came forward and said that the bill, as originally
drafted, would even foreclose their anti-fraud actions at the
Securities and Exchange Commission.
This legislation still has significant defects. It ought to be
recommitted, it ought to be defeated, it ought to be amended, but it
should not be passed.
Mr. DREIER. Mr. Speaker, I am happy to yield 3 minutes to the
distinguished gentleman from east Petersburg, PA [Mr. Walker], chairman
of the Committee on Science.
Mr. WALKER. I thank the gentleman for yielding.
Mr. Speaker, I have been fascinated by the series of speeches that
have been made on this rule and several others that seem to basically
complain about the fact that things are actually getting done in the
U.S. Congress these days.
Now, they are not things that the Democrats want to have done, so
they bleed and bray out here on the House floor about the nature of the
process.
But the fact is that we are moving legislation they do not happen to
agree with, and particularly a lot of the left-wing special-interest
groups they are beholden to do not agree with, several of whom were
named by the gentleman from Michigan.
It is true those groups probably do not agree with what we are doing,
but then they always were for big-government solutions to virtually
everything that comes down the pike.
But I am particularly fascinated by the discussions that we have had
on the floor today about the process by which we are passing
legislation and particularly the concept of open rules.
I have consistently come to this floor over a period of years and
talked about need for open rules. I made those points within the
leadership of the House of Representatives. I would prefer things come
out here under an open rule. But I must say that I was somewhat
disappointed in the earliest days of this process when apparently the
Democrat leadership decided to sabotage open rules and were part of a
process that called adjournment votes and a variety of other things in
order to try to undermine that process, simply so they could come to
the floor now and complain about the fact that the rules are not open
as they would like.
I think that is a nice tactic, it makes for good legislation. It
makes, though, for a very difficult process to defend.
I would also say that I think the complaints about the fact that it
is done under a period of time is also a rather interesting argument.
The period of time, of course, forces the Democrat leadership to
actually pick amongst their Members who have amendments to bring
forward, or to refuse to pick among them, which is what they are really
doing now, in an act of total ineffectual leadership they are refusing
to pick among their Members.
So, against what you give them a full day to debate, 8 hours, 10
hours, 12 hours, and so on, and they cannot manage their time well
enough to figure out how to get various amendments to the floor, which
leaves them then in the position of being able to go to the floor and
say, ``This Member, somehow during a 10-hour period, was unable to work
his amendment in.''
I would suggest that at the very least what we are doing is debating
these issues under a 5-minute rule and having a free and open debate
about the issues, a debate which is much better than the system the
Democrat leadership would like to go to, which picks the members in the
Rules Committee.
You see, what the Democrat leadership would really like to have done
is they would like to go up to the Rules Committee and have the
Republicans choose the Democrat who will be able to offer amendments.
That gets them off the hook. Then they get a chance to complain about
the fact that this Member was knocked out and it was the terrible
Republicans who did not allow this Member to have his amendment.
Well, actually I think it is a better system to allow Members to come
to the floor freely and offer their amendment and debate them under the
5-minute rule. And if the Democrats want to do the job of picking and
choosing amongst their Members, they can certainly do that. But the
system is far better than the closed system operated by the Democrats
for all too many years.
Mr. FROST. Mr. Speaker, for purposes of debate only, I yield 3
minutes to the gentleman from Massachusetts [Mr. Markey].
Mr. MARKEY. Mr. Speaker, I rise in opposition to this rule for one
very simple reason: It is not going to allow us enough time to debate a
very complex and important issue that will potentially affect every
single American.
At the subcommittee level we debated only from 1 until 7, with many
rollcalls on the floor during that markup. At full committee we started
in the morning, but it was the day we were breaking for Jefferson/
Jackson weekend. As a result, with many rollcalls on the floor, we only
had, again, a couple of hours to debate these very important issues.
We went before the Committee on Rules and we asked, quite reasonably,
I think, for an open rule with unlimited time so we could bring these
issues out on the floor.
The problem now, as we know, is that the majority is limited by their
Contract With America in allocating any time to any of these very
important issues. So, as a result, despite the fact we are given 8
hours here on the floor, 1 hour is on the rule, 1 hour is on general
debate, 6 hours are left over. And
[[Page H2755]] to add insult to injury, the Republicans on the Rules
Committee have now reported out a second rule allowing for a nongermane
amendment to be made by the gentleman from California [Mr. Cox], and
that will also come out of the time of the consideration of this
legislation.
Let me say quite simply that there are four good reasons to oppose
the legislation substantively as well. One, an English rule which the
very conservative----
Mr. DREIER. Mr. Speaker, will the gentleman yield?
Mr. MARKEY. I would be happy to yield on the gentleman's time.
{time} 1530
Mr. DREIER. Mr. Speaker, I yield 1 minute to the gentleman from
Massachusetts [Mr. Markey].
The SPEAKER pro tempore (Mr. Dickey). The gentleman from
Massachusetts has an additional minute.
Mr. DREIER. Mr. Speaker, will the gentleman yield?
Mr. MARKEY. I yield to the gentleman from California.
Mr. DREIER. Mr. Speaker, I simply wanted to inquire of my friend, the
gentleman from Massachusetts; did he say that the 1 hour that the rule
is being considered is out of the 8 hours that is considered for the
amendment process?
Mr. MARKEY. Mr. Speaker, I have been informed that that is, in fact,
accurate, and I thank the gentleman from California for his
clarification.
Mr. DREIER. And the 1 hour of general debate is also----
Mr. MARKEY. Mr. Speaker----
Mr. DREIER. Eight hours is an amendment process----
Mr. MARKEY. The staff of the Committee on Rules has just informed me
of that.
Mr. DREIER. I want my friend to enjoy his entire additional 30
seconds.
Mr. MARKEY. I thank the gentleman very much, but at the same time we
have to note that all the rollcall time does come out of that 8 hours,
and the time for the additional amendment that the Committee on Rules
has put in order to allow a nongermane amendment is also coming out of
the time of our ability to consider this legislation.
A English rule is built into this law which puts the burden on the
loser in any lawsuit. It makes it almost onerously impossible for
anyone to bring a lawsuit against a large financial institution in this
country. It, second, imposes an I-forgot defense. That is, if any of
the people who are engaging in any of this fraud say, ``Well, I
forgot,'' then they are protected.
Remember the old Saturday Night Live skit where Steve Martin would
stand up at the end and say, ``Well, I've got a sure-fire, guaranteed
defense.''
I say to my colleagues, ``Anytime you're stymied for an answer to any
charge which is being made against you, just say, `I forgot,''' and
that is our defense here today.
Mr. Speaker, we are going to allow that as a defense in these
important cases, and, third, we have the depleting requirements which
require a specific pleading at the get-go of any of this legislation
requiring any plaintiff to be Carnac in terms of their ability to know
what was going on in the intent of the defendant's mind at that time,
although they know with some certainty that some fraud has been
perpetrated, and finally the fraud on the market----
The SPEAKER pro tempore. The time of the gentleman from Massachusetts
[Mr. Markey] has expired.
Mr. DREIER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I think it is important to clarify that we have 8 hours
of time on amendments, an hour of general debate, and an hour on this
rule, a total of 10 hours.
Mr. Speaker, I yield 2 minutes to my friend and another classmate
from Richmond, VA, the gentleman from Virginia [Mr. Bliley], the
chairman of the Committee on Commerce.
(Mr. BLILEY asked and was given permission to revise and extend his
remarks.)
Mr. BLILEY. Mr. Speaker, I rise in support of this rule to provide
for consideration of H.R. 1058, the Securities Litigation Reform Act.
This bill is title II of H.R. 10, the Common Sense Legal Reforms Act,
as reported by the Commerce Committee. It is ground breaking
legislation, part of the original Contract With America.
As we said in the contract, America has become too litigious a
society. We sue each other too often, too easily, and regrettably, too
well. The burden on the Federal courts is enormous. The number of
lawsuits filed each year has almost tripled in the last 30 years.
President Bush's Council on Competitiveness concluded the American
litigation explosion carries high costs for the American economy. We
see it everyday as manufacturers withdraw products from the market, or
discontinue product research, reduce their work forces, and raise their
prices.
There is a problem even more insidious than an increase in the number
of lawsuits filed. It is the realization that an increasing number
should never have been filed in the first place. The Congress has been
petitioned repeatedly over the last few years by executives of some of
America's fastest growing high tech companies, as well as the
accounting and securities professions, who believe the civil liability
system is broken. In case after real case, they can show from their
experiences that the system no longer recovers damages for investors
who are actually wronged and it unfairly focuses the enormous costs of
litigation on reputable public companies and not upon those who engage
in fraud.
The subject of litigation reform has been before our committee under
both Democrat and Republican control. Late in the 103d Congress the
committee held two hearings on the subject, and early in the 104th we
held two more. Empirical studies show that virtually all claims in 10b-
5 class actions, meritorious and frivolous, are settled. Unfortunately,
the settlement amounts bear no relationship to the underlying damages,
but instead are related principally to the amount claimed, or the
defendants' insurance coverage.
Much of H.R. 1058 is no longer controversial, despite the continuing
cries of the plaintiffs' bar and their supporters in the State
securities commissions. Most Members of Congress now understand and
agree with us that lawyers should not pay referral fees to brokers who
send them clients, or that named plaintiffs should be barred from
receiving bounty payments. Most Members are appalled that the current
system is a race to the courthouse which rewards the first to file,
regardless of how little merit the case has. Only the most strident
supporters of plaintiff lawyers disagree with the provisions of H.R.
1058 that require disclosure to class members of settlement terms or
that private plaintiffs legal fees should not be paid out of SEC
disgorgment pools.
H.R. 1058 will not cure all the ills of a litigious society that
looks to the courts to solve its problems. But it will help to restore
some balance between plaintiffs and defendants and to constrain that
small group of plaintiff securities lawyers who have gamed the
procedure and turned our judicial system into a weapon against American
businesses, workers, and shareholders.
This rule is drafted to provide for an open and constructive debate
of the problems and the solutions proposed in H.R. 1058. I urge my
colleagues to support the rule.
Mr. FROST. Mr. Speaker, for the purpose of debate only, I yield 2
minutes to the gentlewoman from California [Ms. Harman].
(Ms. HARMAN asked and was given permission to revise and extend her
remarks.)
Ms. HARMAN. Mr. Speaker, this is a bad rule for a good bill, a bill I
will probably support.
We have just concluded a frustrating debate on the Legal Reform Act
under a bad rule, and many ideas that could have perfected that bill
could not be considered. I, for one, had hoped to change the fee
shifting mechanism in that bill to make it identical to the fee
shifting provisions in this bill. A bipartisan group wanted to make the
change, but the inadequate time for debate elapsed before we could
offer our substitute. Had the substitute been considered, I believe it
would have passed, and this Member and many others would have supported
that bill.
H.R. 1058, to which this rule pertains, includes important and
meritorious steps to reform securities litigations to
[[Page H2756]] reduce the costs and distractions of unwanted
litigation. Several amendments to be offered by the gentlewoman from
California [Ms. Eshoo] and the gentleman from California [Mr. Mineta]
will further ensure that high technology companies, which are essential
to U.S. competitiveness, are reasonably and properly protected by its
provisions.
In true bipartisan style, Mr. Speaker, I would like to commend the
gentleman from California [Mr. Cox], my friend and colleague, for his
leadership on this issue. He described himself yesterday as a
recovering corporate attorney. Not only did he and I attend the same
law school, but I suffer from the same affliction. I, too, am a
recovering corporate attorney.
Securities litigation needs reform. This is a good bill. It is a
shame debate will be so truncated.
Mr. Speaker, the future of our Nation's future competitive advantage
lies in our ability to develop products and services that are on the
leading edge of technology and research. The business ventures which
undertake such activities are among the fastest growing sectors of our
economy. Indeed, they are the pride of our economy.
Regrettably, many of these business ventures are saddled by the costs
and distractions of unwarranted and meritless lawsuits, filed when
stock prices fluctuate for reasons often beyond the control of business
management. The consequences of these abusive suits are settlements and
costly legal proceedings unconnected to the merits of the underlying
case. Despite the absence of wrongdoing by managers, corporations are
essentially forced to pay large sums to avoid even larger expenses
associated with legal defense. Advocates of litigation reform cite
empirical studies that show virtually all claims in 10b-5 class
actions, meritorious or not, are settled.
Let me share an example from the world's leading manufacturer of
computer workstations, Sun Microsystems.
Founded in 1982, the company now has annual revenues in excess of $4
billion with over 13,000 employees world-wide, including many in my
district.
Since it's initial public offering in March 1986, the company has
been profitable every quarter except June 1989. In that quarter, as the
result of the introduction of new technology and the switch-over to a
new internal management system, the company reported a loss.
When it issued a special public advisory it was hit with three
securities class actions within days.
And, when the company actually announced its earnings results, two
more class actions quickly followed. The five suits were consolidated
into a single suit seeking over $100 million.
In September 1990, despite the fact that Sun Microsystems had a
profitable quarter, two more suits followed the company's announcement
that earnings were about 10 cents per share less
than what analysts expected. These two suits were consolidated into a
suit seeking over $200 million.
Mr. Speaker, these suits have drained a staggering amount of money
from Sun Microsystems--money that could have been devoted to product
development, research, even a return on earnings. In the period from
June 1989 to January 1993, Sun Microsystems spent over $2.5 million on
attorney's fees and expenses. And this does not include the value of
the time lost by management.
Because of the possible exposure of $300 million, and with only $35
million covered by insurance, the company agreed to settle the first
suit for $25 million and the second suit for $5 million.
Amazingly, after these settlements were announced, Sun was hit with
an unprecedented derivative action in State court alleging that the
settlements were too generous. These actions were also settled, with
Sun paying plaintiff's attorney $1.45 million and its own attorneys
$500,000.
Mr. Speaker, what did shareholders get because of these suits?
Nothing more than minor changes to Sun's internal policies.
Mr. Speaker, the record is replete with such examples. Examples like
Silicon Graphics, Inc. of Mountain View, CA and Rykoff-Sexton, Inc. of
Los Angeles. Examples that do not even begin to measure the huge waste
in resources spent defending as well as prosecuting such suits.
These are resources which companies, like small high-technology and
emerging growth companies, can better devote to research, and product
development and promotion.
The bill, and the improvements that will be offered through the
amendments, will reform securities litigation, end abusive lawsuits,
and lift the unwarranted burden placed on companies that provide the
competitive edge of America's economy.
Mr. DREIER. Mr. Speaker, I yield 3 minutes to my friend, the
gentleman from Newport Beach, CA [Mr. Cox], the foremost congressional
authority on securities litigation.
Mr. COX of California. Mr. Speaker, I will reserve for general debate
most comments on the substance of the legislation, but I would like to
speak a little bit about the process by which this bill came through
subcommitte, came through committee, after two hearings and is coming
to the floor.
I found, when I first was elected to Congress, that the House and the
Senate were in the business, rather routinely, of producing thousand-
page epics that nobody read. The S&L bailout bill comes to mind.
Nineteen hundred and eighty-nine it came up here, drafted by the
administration. Nobody in the House or Senate read it. We know that
because it was not printed in the Record until after the vote took
place. It happened that when we did the 6-year transportation
reauthorization bill, even though I was on the Subcommittee for Surface
Transportation, we did not get a markup for the 6-year transportation
reauthorization, not in subcommittee, and in committee we got the whole
bill the first time, and for the record my hands are probably a foot or
so apart. The whole bill got plunked down on our desks the very day of
the markup, and that was the first time we saw that bill, and then,
when it went to conference, it was changed so dramatically that nobody
knew what was going on. It was produced, I think, about three in the
morning, or something, and we voted on this huge bill without anybody
having read it or understood it. This has become rather routine.
Contrast with the way the Congress used to run what we have been
doing with securities litigation reform. We had two hearings, this
Congress. We have had hearings in prior Congresses as well. The bill
was bottled up in committee, and, after those hearings, we went to
subcommittee markup, and we had a very long subcommittee markup that
was so long that we were arguing about adjectival modifiers of words in
particular lines. The bill itself is not very long, and of course
everyone has read it. Then we went to full committee, and we made still
more amendments. There was some criticism in full committee because
amendments were allowed, that we were changing the bill in committee,
although that is what markups are supposed to be all about, and here we
are on the floor with a rule that is so open that just about everybody
who wants to offer amendments is able to do so.
Nonetheless, I understand how the ranking member might be upset
because the bill came out of committee with only 10 Democrat votes. It
was produced 33 to 10, a huge bipartisan majority for a very, very
sound bill. If it did anything like what we have been hearing here on
the floor today, of course those Democrats and all of the Republicans
would not have voted for it, but it protects investors. It protects
investors by providing a guardian ad litem or a steering committee that
their class-action lawyer will now deal with to make sure that the
clients get represented. It prevents bonus payments to favored
plaintiffs in a class action so all the class is treated equally. It
says that in the future the lawyers are going to have to pay attention
to their clients when they file these kinds of lawsuits, and they are
going to have to know that they have a case first so that the investors
in a company that might be extorted from will also be protected.
Finally I should point out that some of this I-forgot business
relates to the fact that this is a fraud statute, it is not a
negligence statute, and we do not have negligence in the securities
laws now, nor will we have it after this bill.
Mr. FROST. Mr. Speaker, for the purposes of debate only, I yield 2
minutes to the gentleman from Michigan [Mr. Conyers].
Mr. CONYERS. Mr. Speaker, I thank the gentleman from Texas [Mr.
Frost] of the Committee on Rules for according me this time, and I rise
on this rule to point out with strong vehemence my opposition to this
last minimum effort to completely undercut the jurisdiction of the
Committee on the Judiciary and allow the majority to offer an amendment
to H.R. 1058 that would end civil RICO lawsuits for securities fraud.
[[Page H2757]] The Racketeer Influence and Corrupt Organizations
legislation would now be brought to an end with one sentence that has
never been examined in either the former Committee on Commerce, the
present Committee on the Judiciary, in any subcommittees or full
committees. As a matter of fact, it was not even on this rule. It was
through a remeeting that this rule even allowed it to be joined, and
this is one of the great protections against fraud that exists in our
law today.
It is absolutely incredible that the RICO amendment that is included
in here is broader than any RICO amendment that Congress has ever
considered before. The previous attempts at this legislation have
failed, and those attempts do not ever go as far as this sweeping
amendment that we are considering with such a short amount of time.
We need more time. We could use the whole time for this bill on RICO
alone, and it is with great regret that I have to make these points
about a very important part of this rule.
Mr. DREIER. Mr. Speaker, for purposes of debate only, I yield 2
minutes to the gentleman from Westbury, NY [Mr. Frisa], a new member of
the Committee on Commerce.
Mr. FRISA. Mr. Speaker, I thank the gentleman from California [Mr.
Dreier], my friend, for yielding this time to me.
Mr. Speaker I am happy to rise in support of the rule which will
provide more than ample time for careful, thoughtful, deliberate
consideration of this much needed measure which will finally bring
about reforms to our legal system.
{time} 1545
Mr. Speaker, the American people want our system to work, and we know
that right now it has not been working. I find it rather amazing that
my good friends on the Democrat side, who have not been able to do
anything about these reforms for 40 years, are now complaining that we
are moving toward reform too quickly.
Well, I think the American people spoke last November 8, Mr. Speaker,
and they have sided with the Republican majority in saying it is long
past time to act, to use some common sense, to enact some changes to
our system.
Let us roll up our sleeves and get down to work. Mr. Speaker,
constituents in my district, hard-working, taxpayers, put in an 8-hour
day, and they can get the job done. I do not know why the Democrats in
Congress cannot get the job done in 8 hours to amend this legislation.
Mr. Speaker, I urge all of my colleagues to rise in support of this
rule so we can get to debate on the bill itself, and then for a full 8
hours, a full day's work, to amend the legislation, pass it, move it to
the Senate, so finally we will have those legal reforms.
Mr. FROST. Mr. Speaker, for the purpose of debate only, I yield 1
minute to the gentleman from Oregon [Mr. Wyden].
Mr. WYDEN. Mr. Speaker, I will shortly offer an amendment that
stipulates that if there is a major fraud that corporate managers
refuse to remedy, the corporate auditor would have to report the fraud
to Government regulators.
I want to thank Chairman Soloman and Mr. Hall from the Committee on
Rules for their effort to support it, and would like to note that the
gentleman from Louisiana [Mr. Tauzin] joins me as a cosponsor in
offering this amendment.
This amendment has passed the House twice, it has the support of the
Securities and Exchange Commission and the accounting profession. I
would like to note that if this amendment had been the law of the land
in the Keating case, the auditor, instead of slinking away when the
auditor saw the wrongdoing, the auditor would have been required to
bring that to the attention of Government regulators and taxpayers
would have been spared considerable liability.
Mr. Speaker, I urge my colleagues to support this amendment. The last
time it came before the Committee on Commerce it passed unanimously
with the support of every member of the committee.
Mr. FROST. Mr. Speaker, for the purpose of debate only, I yield 2
minutes to the gentleman from Louisiana [Mr. Tauzin].
Mr. DREIER. Mr. Speaker, I yield 1 minute to the gentleman from
Louisiana.
The SPEAKER pro tempore (Mr. Dickey). The gentleman from Louisiana
[Mr. Tauzin] is recognized for 3 minutes.
Mr. TAUZIN. Mr. Speaker, I thank the gentleman for yielding.
Mr. Speaker, I have great sympathy for those who believe this bill is
moving too fast this session, but I remind my colleagues that I offered
this bill two Congresses ago. I crafted this bill two Congresses ago
with the hopes we could have hearings two Congresses ago. We got no
hearings.
I refiled it last year, 182 Members of the Congress last year
cosponsored it; 67 Democrats. And we could get no hearings until the
very last week or two of the session when it was too late for us to
take any action on the bill.
There were 4 years for this Congress to move on this bill if we had
wanted to take that time. But for 4 years, we could never even get this
bill moving, except finally a series of hearings right at the end of
the session.
We have had hearings again this year. We have had markups,
subcommittee and the full committee. We will have a full and active
debate the next day and a half, with 8 hours for folks to offer
amendments under this modified open rule. And I am excited that we will
finally get a chance to fix something that desperately needs fixing.
The old rule that ``If it ain't broke, do not fix it'' not only
applies here, it applies in buckets. When 93 percent of these cases
settle, most of them at 10 cents on a dollar, we have a system that is
ultimately broke. We have a system made for the attorneys. When 8 cents
on the dollar is all that is recouped for the stockholders, when most
of the suits are brought to shake down companies, to shake them down
any time their stock prices drop a couple points, when these suits are
produced on Xerox machines, when the same plaintiff repeatedly appears
in the suit time after time, one of them 35 times, you begin to see a
picture of professional plaintiffs.
I ask the attorney who brought that suit for the same plaintiff 35
times if perhaps he did not have a professional plaintiff, or if maybe
this was the most unlucky person in America.
It is time for us to put an end to that kind of a legal system. When
a legal system preys upon our economy instead of trying to render
justice, something is wrong. The bill we will present to you today had
the support of eight Democrats on the Committee on Commerce, almost
half of our membership. It will have the support of many Democrats and
Republicans on the floor today and tomorrow. It will truly be a
bipartisan effort to put an end to a terrible legal system and to
replace it with one that works, one that corrects fraud, one that urges
plaintiffs to bring good cases and take them to a conclusion, to prove
fraud exists, and to make the guilty parties pay, and to end this
business of frivolous shakedown lawsuits that is threatening to cripple
many small businesses just trying to get going and discourage them to
disclose more information to us, not keep it all secret because they
are afraid of another lawsuit right around the corner.
Mr. Speaker, this is a day we have long waited for. This day and the
next day ought to produce a good legal system instead of the rotten one
we have. I look forward to it under this rule.
Mr. FROST. Mr. Speaker, for the propose of debate only, I yield the
remaining time to the gentleman from West Virginia [Mr. Wise].
The SPEAKER pro tempore. The gentleman from West Virginia [Mr. Wise]
is recognized for 4 minutes.
(Mr. WISE asked and was given permission to revise and extend his
remarks.)
Mr. WISE. Mr. Speaker, I thank the gentleman for yielding.
Mr. Speaker, I think somewhere there has to be a middle ground
between the previous Republican speaker who was ecstatic that we were
going to be allowed 8 full hours of debate. Of course, that includes
voting time, which, if you look at the chart of the last bills under
this so-called open rule procedure, means about 25 percent of
[[Page H2758]] that debate time is taken up. Somewhere between 8 hours
that the Republican gentleman was excited about and the 200 years of
common law in jurisprudence and getting into court, that threatens to
be upset. So somewhere between 8 hours of debate time and 200 years,
perhaps we could have a little more debate time.
I am delighted that the gentleman from Louisiana is happy. I am happy
it is coming to the floor. But I think on something of this magnitude,
dealing with the securities industry, one of the pillars of the economy
in our country, that you need better than 8 hours of debate time,
including the voting time.
Remember, the voting time takes a minimum of 17 minutes. Now, let us
look at the chart in the past on voting time. To those who say that the
problem is that the Democratic minority does not allocate its time
wisely enough or manage it, I might point out on the H.R. 728, the Law
Enforcement Block Grants, there were at least two Republicans, Mr.
Bereuter and Mr. Kasich, who joined a number of Democrats in being shut
out from offering amendments. H.R. 7, the National Security
Revitalization Act, Mr. Bereuter and Mr. Schiff joined a number of
Democrats in being shut out from being able to offer amendments. The
regulatory moratorium, there were at least three Republicans shut out.
Mr. Mica was shut out on the risk assessment bill. Just most recently,
Ms. Harman, who has appeared here already, was shut out, and Mr. Smith
of Michigan, a Republican, was shut out as well.
Once again, we cannot even get in the Republicans to offer their
amendments. Some might say if Republicans and Democrats are being shut
out, what is the difference? The difference is on the Republican side,
being in the majority, they get to craft the bill. Democrats do not. So
the best bite we get at the apple is here on the floor.
Also, I might point out the only bite many of us get at the apple is
on the floor, right here, and that is why this kind of rule is
restrictive and not open, and I think violates the promise that the
Republicans gave us of open rules on the contract items.
So picking right back up again, because this is the only time I get
under this with the time limitations, I would just urge people to
understand that on these very important contract items, when they say
there is an open rule, there is no open rule; that indeed 25 percent of
the time is being taken up alone on votes. Meritorious votes, some
called by Republicans, some called by Democrats, some called by Members
of both sides, interestingly enough, when it is clear that is an
overwhelming majority. So you get a situation on the risk assessment
bill, 10 hours of debate, with 2 hours taken up by rollcall votes
alone.
Mr. Speaker, we can do business better than this, If you were in a
courtroom, even under the legal reform being put forward this week, you
would get a chance to make your arguments. You would get a chance to
have a full and open hearing. You would get a chance for every point of
view to be offered for all evidence, if you would, if you consider an
amendment to be offered. You would get a chance to have that done. Not
here. Not here.
Talk about a contract, there is a breach of contract, and that is
that open rules will precede each of these items. There is no open rule
in this. No matter how you dress it up or put it, it is a race to the
clock. A race is what is involved in here. How quickly can you talk and
can you get a vote and will there be time for the next person,
Republican or Democrat, to be able to offer their amendment.
Mr. DREIER. Mr. Speaker, I yield myself the balance of my time.
The SPEAKER pro tempore. The gentleman from California [Mr. Dreier]
is recognized for six minutes.
Mr. DRIER. Mr. Speaker, this is not a so-called open rule. This is
not a wide open rule. This is a modified open rule. What it means very
simply is the Committee on Rules did not say what amendments are going
to be made in order. The Committee on Rules said that any Member who
has a germane amendment can stand up here on the floor and say ``Mr.
Speaker, I have an amendment at the desk,'' and that amendment has to
be considered.
The only constraint is the outside 8-hour limitation on debate, and
that limitation simply means that we have to responsibly determine
exactly what priorities there are and what they should be.
Now, there have been some arguments that have come forward from my
friends on the other side of the aisle that somehow this is a rule
which is closed and we are shutting out people. Well, we have heard
from the gentleman from Louisiana, making this clearly a bipartisan
modified open rule. The gentleman believes , as I am sure other
Democrats do, along with Republicans, that this rule will allow for
consideration of legislation that for years and years and years
Democrats and Republicans have tried to bring up to deal with the
question of securities litigation reform. Tragically, because of the
recalcitrant leadership of the past, they were unable to do that.
This rule allows every single idea that is out there to be
considered.
Mr. WISE. Mr. Speaker, will the gentleman yield?
Mr. DRIER. I yield to the gentleman from West Virginia.
Mr. WISE. I understand what the gentleman is saying in terms of
anyone can bring any idea up. But do you not think it is a closed rule
if any idea will not be able to be offered because of the clock,
including Republicans' ideas, as precedence goes to members of the
committee first.
Mr. DRIER. Reclaiming my time, the answer is a resounding no. This is
a modified open rule, because what it says to my friend is if he has an
amendment that he wants to offer, and one of his colleagues also has an
amendment that he decides is equally as important, they should say let
us take 10 minutes each so we can get the full membership of this House
on record to vote up or down on this amendment.
So my point, Mr. Speaker, is that every idea, every single idea, can
be considered if we can structure it in such a way that all of those
proposals move forward.
Mr. WISE. If the gentleman will continue to yield, if that is the
case, why did Mr. Bereuter and Mr. Kasich, for instance, when they were
protesting, particularly Mr. Bereuter the other day on the law
enforcement block grants, why did not Members of your party get
together? The fact is this closes people out.
Mr. DRIER. Unfortunately, they did not get together. That was
something that was not able to be worked out under that process. What
we are saying to both leaderships is establish priorities, but under an
open amendment process. Let us proceed with making
this institution accountable.
In years past the Committee on Rules would kill ideas from the left
or the right, not allowing them to even be considered here. Now every
one of those ideas can come up under an 8-hour time limit.
Now, as I listen to the people whom I represent, they know that the
Gettysburg Address was delivered in 3 minutes. They believe that we
should, within an 8- or 10- or 12-hour period, we will be spending as
Mr. Markey said, a total of 10 hours on this, with 1 hour for general
debate, 1 hour of debate on the rule, and 8 hours for amendments, they
believe within 10 hours we might be able to under an open amendment
process consider these ideas.
Mr. WISE. If the gentleman will yield further, do they know how many
days it took to prepare that 2-minute Gettysburg Address?
Mr. DREIER. I do not know, the 3-minute address.
Mr. WISE. The shorter it is, the longer is spent to prepare it.
Mr. DREIER. Reclaiming my time, I would say Mr. Tauzin, who said that
three Congresses ago he introduced this legislation, that totals 6
years that it took to prepare this, and I believe that Mr. Tauzin and
others who have been involved in this should have an opportunity to
consider this, and it is going to be done under a fair and open
process. I suspect the gentleman from south Boston would like me to
yield.
Mr. MOAKLEY. Mr. Speaker, will the gentleman yield?
Mr. DREIER. I yield to the gentleman from Massachusetts.
{time} 1600
Mr. MOAKLEY. Is it not true though that the gentleman's party
promised
[[Page H2759]] open rules, more open rules than they had the year
before?
Mr. DREIER. The gentleman is absolutely right. That is exactly what
we have provided, many more open rules than we had in the 103d Congress
or the 102d Congress. What we have got is a structure where modified
open and open rules are 82 percent, about 82 percent of the legislation
that we have considered. I think that, as we listen to people like
Cokie Roberts, who, when I was quoting National Public Radio earlier--
--
Mr. MOAKLEY. She erred, she was in error.
Mr. DREIER. Cokie Roberts erred by saying that we are doing this
under an open process. Well, Cokie happens to have spent a great deal
of time observing this institution. She also has, there have also been
a lot of other people who have looked from the outside. And they have
watched this on television and they have said, ``You all are doing it
under an open process.'' Why? Because they see that a modified open
rule, while it does have an outside time cap, does in fact give every
Member the right to offer their amendment, have it considered, have it
voted on.
Mr. MOAKLEY. The gentleman promised that the contract on America
would be based on all open rules.
Mr. DREIER. I do not know about a contract on America. I know about a
Contract With America.
Mr. MOAKLEY. Was it not true that the gentleman's people said that
these would be all open rules?
Mr. DREIER. Well, my people said that we would consider----
Mr. MOAKLEY. Did not the Speaker say that?
Mr. DREIER. It was said that we would consider these proposals under
an open amendment process. That is exactly what we are doing. We are
doing it under a modified open rule.
Mr. MOAKLEY. The gentleman is changing it. He is going to consider
them under an open process. It does not mean an open rule.
Mr. DREIER. Mr. Speaker, I suspect that it would be best for me to
say that I urge an ``aye'' vote on this fair and responsible modified
open rule.
Mr. Speaker, I yield back the balance of my time, and I move the
previous question on the resolution. The previous question was ordered.
The SPEAKER pro tempore (Mr. Dickey). The question is on the
resolution.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. FROST. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 257,
nays 155, answered ``present'' 1, not voting 21, as follows:
[Roll No. 208]
YEAS--257
Allard
Archer
Armey
Bachus
Baker (CA)
Baker (LA)
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bevill
Bilbray
Bilirakis
Bishop
Bliley
Blute
Boehlert
Boehner
Bonilla
Brewster
Browder
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clinger
Coble
Coburn
Collins (GA)
Combest
Cooley
Cox
Cramer
Crane
Crapo
Cremeans
Cubin
Cunningham
Davis
de la Garza
Deal
DeLay
Diaz-Balart
Dickey
Doolittle
Dornan
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Forbes
Fowler
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Funderburk
Gallegly
Ganske
Gekas
Geren
Gilchrest
Gillmor
Gilman
Gonzalez
Goodlatte
Goodling
Gordon
Goss
Graham
Gunderson
Gutknecht
Hall (TX)
Hancock
Hansen
Hastert
Hastings (WA)
Hayworth
Hefley
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Horn
Hostettler
Houghton
Hoyer
Hunter
Hutchinson
Hyde
Inglis
Istook
Jacobs
Johnson (CT)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Kleczka
Klug
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Laughlin
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Lincoln
Linder
Lipinski
LoBiondo
Longley
Lucas
Manzullo
Martini
McCollum
McHugh
McInnis
McIntosh
McKeon
Meyers
Mica
Miller (FL)
Mineta
Molinari
Montgomery
Moorhead
Morella
Murtha
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Oxley
Packard
Parker
Paxon
Peterson (MN)
Petri
Pickett
Pombo
Porter
Portman
Pryce
Quillen
Quinn
Radanovich
Rahall
Ramstad
Regula
Riggs
Roberts
Rogers
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Schiff
Schumer
Seastrand
Sensenbrenner
Serrano
Shadegg
Shaw
Shays
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Solomon
Souder
Spence
Stearns
Stenholm
Stockman
Stump
Talent
Tate
Tauzin
Taylor (MS)
Taylor (NC)
Thomas
Thornberry
Thornton
Tiahrt
Torkildsen
Torres
Torricelli
Upton
Vucanovich
Waldholtz
Walker
Walsh
Wamp
Watts (OK)
Weldon (FL)
Weller
White
Whitfield
Wicker
Williams
Wilson
Wolf
Wyden
Young (AK)
Young (FL)
Zeliff
Zimmer
NAYS--155
Abercrombie
Ackerman
Andrews
Baesler
Baldacci
Barcia
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bonior
Borski
Boucher
Brown (CA)
Brown (FL)
Brown (OH)
Bryant (TX)
Cardin
Clay
Clayton
Clement
Clyburn
Coleman
Collins (IL)
Collins (MI)
Conyers
Costello
Coyne
Danner
DeFazio
DeLauro
Dellums
Deutsch
Dingell
Dixon
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Evans
Farr
Fattah
Fazio
Fields (LA)
Filner
Foglietta
Ford
Frost
Furse
Gejdenson
Gephardt
Green
Gutierrez
Hall (OH)
Hamilton
Harman
Hastings (FL)
Hayes
Hefner
Hilliard
Holden
Jackson-Lee
Johnson (SD)
Johnson, E.B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Klink
LaFalce
Lantos
Levin
Lewis (GA)
Lofgren
Luther
Maloney
Manton
Markey
Martinez
Mascara
Matsui
McCarthy
McDermott
McHale
McNulty
Meehan
Menendez
Mfume
Miller (CA)
Minge
Mink
Moakley
Mollohan
Moran
Nadler
Neal
Oberstar
Obey
Olver
Ortiz
Orton
Owens
Pallone
Pastor
Payne (NJ)
Payne (VA)
Pelosi
Peterson (FL)
Pomeroy
Poshard
Reed
Reynolds
Richardson
Rivers
Roemer
Rose
Roybal-Allard
Rush
Sabo
Sanders
Sawyer
Schroeder
Scott
Skaggs
Slaughter
Spratt
Stark
Stokes
Studds
Stupak
Tanner
Tejeda
Thompson
Thurman
Towns
Traficant
Tucker
Velazquez
Vento
Visclosky
Volkmer
Ward
Waters
Watt (NC)
Waxman
Wise
Woolsey
Wynn
Yates
ANSWERED ``PRESENT''--1
Lowey
NOT VOTING--21
Bono
Chapman
Condit
Dicks
Durbin
Flake
Frank (MA)
Gibbons
Greenwood
Hinchey
Jefferson
Largent
Livingston
McCrery
McDade
McKinney
Meek
Metcalf
Rangel
Roth
Weldon (PA)
{time} 1620
Mr. MOLLOHAN changed his vote from ``yea'' to ``nay.''
Mr. RAHALL changed his vote from ``nay'' to ``yea.''
So the resolution was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________